Bolivian Marchers Protest Chile Pipeline Plan

Thousands of protesters marched through the streets here Friday, opposing plans to sell natural gas to California via a pipeline through Chile.

The demonstration resurrected a century-old territorial grudge and underscored the deep disappointment among Bolivians that more than a decade of pursuing foreign investment in this Andean nation has done little to erase poverty and unemployment.

The marchers voiced the anti-globalization complaints heard across Latin America these days: that foreign investment, especially involving the privatization of state-owned companies and resources, has only led to layoffs and a rise in the misery index.

“They have turned administration of the phone company over to the Germans, and they haven’t spent one peso on it, just taken all the money back to Germany,” protester Reynaldo Illanes said.

The natural gas controversy laid bare a festering sore in Bolivian history: its long anger over Pacific Coast territory lost to Chile during a 19th century war, leaving this nation landlocked.

“Chile took the sea from us, and because of that Bolivia is so behind in the economy and in development,” said demonstrator Carlos Rodriguez, 87, a decorated veteran of the 1930s Chaco War with Paraguay, which also cost Bolivia a significant chunk of territory.

The government is trying to decide between Chilean and Peruvian routes for a pipeline that would connect natural gas reserves in Bolivia’s Amazon basin to markets in Mexico and California. Enough gas could be shipped annually to fill 15% of California’s demand. Shortages of gas and the high prices they caused were among the reasons for California’s energy crisis.

A consortium of energy companies, including British Gas, British Petroleum and Repsol YPF, has proposed spending $5 billion to build the pipeline from fields it controls here. But the group says only a Chilean route is economically feasible.

Many Bolivians favor a longer and more expensive pipeline through Peru.

Sempra Energy of San Diego and CMS Energy Corp. of Michigan have agreed to purchase the gas, which would be transported by ship to a terminal they would build south of Rosarito in Baja California and piped north.

But what might seem to outsiders a golden opportunity for Bolivia to exploit a market hungry for its vast reserves of natural gas is perceived by many locals as just one more case of the nation selling its resources on the cheap to foreign interests.

Many would prefer that Bolivia keep its 52 trillion cubic feet of gas in the ground.

“We don’t want them to sell our gas at the price of a dead chicken,” said Pedro Humeres, 67, a retired factory worker who joined Friday’s protest.

“We don’t want to sell it at any price,” he said. “It’s the only asset we have left.”

That has been the position of Evo Morales, a former coca farmer who finished a surprising second in the June 30 presidential election.

Bolivian leaders see California as a good opportunity to diversify the market for its natural gas. Sales to Brazil through a pipeline completed in 1999 are at half the volumes expected. Still, a Pacific pipeline could produce $300 million in revenue for Bolivia, equal to that expected next year from the Brazilian route.

But the controversy that has erupted over the route seems to have paralyzed leadership.

President Jorge Quiroga was expected to make the decision after the election but is now expected to leave it to his successor. Bolivia’s Congress will select the new leader next month, with the likely winner to be Gonzalo Sanchez de Lozada, who barely edged out Morales as top vote-getter.

Several efforts at privatization in recent years--including the Cochabamba water system, the Huanuni tin mine, and the national airline and railroad--are widely perceived by Bolivians as exploitative failures.

Although some foreign takeovers have been successful, including that of the electric power system, they are usually forgotten in the rising sense of frustration with the poor economy.

“There is a feeling among the people that they have been tricked, that the private companies will make a lot and the state not enough,” said Carlos Miranda, a former energy minister.

Though acknowledging that some cases of privatization have fallen short of the benefits promised, Carlos Enrique Kempff Bruno, the minister of economic development, said Bolivia’s problems are also due to forces beyond its control, including a poor global economy, low mineral prices and unstable economies in neighboring countries.

Bolivia’s exports of $1 billion are the same as they were in 1975, mainly because of fallen prices for tin and zinc, once leading products.

“Our economic problems are proof that Bolivia is not immune from the impact of the international crisis,” Kempff Bruno said.

The minister added that a a coca eradication program sponsored by the United States has eliminated $500 million from the Bolivian economy.

After Bolivia’s 16-year process of liberalizing investment rules and opening markets to foreign producers, the economy is mired in a three-year recession and an unemployment rate of more than 15%. The promises made by leaders in the 1980s have failed to materialize.

Carlos Toranzo, a La Paz economist, said the pendulum of opinion is swinging against neoliberalism.

“People are upset with economic policies that are driven by economic goals tied to inflation, investment and low debt, when it should be a science of benefiting people,” Toranzo said.

Meanwhile, a delay in selecting a route for the natural gas pipeline could derail the project.

“Unless the pipeline is built the shortest and least expensive route, it won’t get built,” said Ronald MacLean, an economist, former mayor of La Paz and unsuccessful candidate in the June presidential race.

Gary C. Hufbauer, a senior fellow at the Institute for International Economics in Washington, said a bigger risk for the region is that “the political dial would turn inward rather than outward, toward the past rather than toward the future.”