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Financial Times: Bolivia: nationalise this

Monday 12 February 2007

It seems that whenever things start going badly for Evo Morales, he nationalises something. So it was again last Friday when the Bolivian president announced the state was taking back control of Vinto, a tin smelter owned by Swiss company Glencore.

It was an extravagant way of covering up what had been a terrible week, marked by an extraordinary U-turn on a plan to raise mining taxes. After two days of protests in La Paz, Mr Morales agreed to freeze taxes paid by mining co-operatives. Those protests followed a weekend in which Mr Morales had used troops against demonstrators in southern Bolivia demanding a more radical nationalisation of the gas sector.

Yet gas nationalisation has seemingly run into the ground. Incompetence at YPFB, the state energy company, means new contracts signed last year with foreign investors have still not come into effect, while gas price talks with Brazil have stalled. Now Carlos Villegas, the hydrocarbons minister, looks to be on the verge of quitting after publicly voicing his frustration with YPFB. Mr Villegas failed to show up for work last Thursday and Friday.

With swathes of his own base now turning against him, Mr Morales seems likely to hit another sticky patch soon – and has already signalled how he plans to get out of it. Last week he threatened to expel Transredes, a Shell subsidiary, for allegedly stirring up the gas protests. Given how promptly his administration kicked out Brazilian steelmaker EBX last year, this may be no idle threat.

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