MercoPress. South Atlantic News Agency

Bolivia's energy referendum and “economic suicide”.

Bolivia's July 18 referendum to define the country's energy policy could lead to “economic suicide” a United States analyst wrote in The Wall Street Journal.

Mark Falcoff, a resident scholar at the American Enterprise Institute, criticizes the ambiguous phrasing of the referendum questions, saying that "much will depend on the interpretation the government attaches to the outcome." AEI is a conservative Washington-based think tank.

Bolivian voters will be asked to answer five questions in the referendum. The first has to do with repeal of the current hydrocarbons law, and the second with regaining sovereignty over energy-resource management.

The third question proposes returning decision-making power over business in its sector to the government energy company YPFB, and the fourth seeks support for the government's strategy of using gas as a bargaining tool in negotiations to recover from Chile part of the Pacific coastline Bolivia lost in a 19th-century war.

The fifth question is on whether gas exports should be subject to the country's needs and whether taxes collected from oil companies should be earmarked for social programs.

"Students of advanced political cynicism could learn much by examining the artful phraseology of the questions themselves, particularly the last one," Falcoff observed. As the questions are phrased the government is not likely to lose, Mr. Falcoff said, and a massive "yes" vote on the five questions would give President Carlos Mesa enough of a mandate to continue in office until his term ends in 2007.

"At the same time, however, President Mesa will have risked killing the goose that laid the golden egg by squeezing foreign capital out of Bolivia's energy sector and, in the process, crippling it", warns Mr. Falcoff.

However a "no" vote on the final question "would be even worse, since the country would then presumably be required to leave the international gas market altogether. South America's poorest republic would become poorer still, inviting lowland provinces where natural gas reserves are found to consider striking out on their own as an independent nation".

For the United States according to Mr. Falcoll a deepening of Bolivia's economic isolation would mean "a dysfunctional state in the heart of South America. This will have serious implications for the U.S. drug-eradication program and will deliver a stunning blow to the economic freedom necessary to support a viable, stable and pluralistic democracy.