MercoPress. South Atlantic News Agency

Bolivia on the verge of another major crisis

Powerful Bolivian Indian leader Evo Morales rejected Wednesday President Carlos Mesa call for a consensus, insisting that his party will press for the immediate implementation of the Hydrocarbons bill which significantly hikes royalties and taxes for foreign oil and gas companies operating in the country.

Mr. Morales, leader of organized coca-leaf growers, a former presidential candidate and current head of the radical Movement Toward Socialism, MAS, said the proposed national-unity conclave will only serve interests of the multinational energy companies.

On Tuesday President Carlos Mesa refused to sign the energy bill into law, sending it back to Congress with an appeal for fundamental changes and called on the country to join him in forging a pact of national unity which is scheduled for next Monday, May 16, in the southern city of Sucre, seat of the country's Supreme Court.

Mr. Morales said he would take part in the conclave only if it becomes a "social summit" involving unionists, Indian leaders and grassroots activists who favour the reassertion of government control over Bolivia's oil and gas. He also announced a march on to the country's capital La Paz for next Monday.

In a national broadcast Tuesday night President Mesa claimed that Congress redrafted a hydrocarbons bill that promised "a horizon of certainty" for Bolivia turning it into an "instrument of division". The new bill adds an extra 32% flat, non-deductible tax on oil and gas production above the current 18%, while establishing that Bolivia owns the oil and gas "at the wellhead", plus giving government owned YPF a bigger role in the industry.

Even more controversial the bill authorizes the government to compel companies to accept drastic changes to the 40-year contracts signed at the time of the 1996 privatization of the energy sector.

Multinational corporations operating in Bolivia openly criticized the law passed by Congress indicating they would challenge its effects in international courts of arbitration and threatened to leave the country.

President Mesa described the Congressional bill as "an instrument of division" which is being used by "forces with different objectives and conflicting visions that can end leading Bolivia to the risk of insurmountable confrontation".

The Sucre meeting will strive for "minimal accords" acceptable to everyone on such controversial topics as the hydrocarbons bill, decentralization and a constitutional convention which threaten to dismember the country.

Mr. Mesa became president following the tragic events of October 2003 when elected president Sanchez de Lozada was ousted because of popular uprisings and road blockades contrary to his plans to export Bolivia's rich natural gas resources to North America through Chilean or Peruvian territory.

Furthermore Santa Cruz province which holds most of the country's gas reserves feels it's entitled to a greater share of revenue and has a strong autonomous movement.

President Mesa so far has bought time by agreeing to the election of provincial governors, currently appointed by La Paz, and holding a referendum on regional autonomy.

As to constitutional review, most political parties favour such a move, but can't agree on how to elect delegates.