MercoPress. South Atlantic News Agency

Morales lines up land owners as next target

Evo Morales, the Bolivian president, on Thursday ruled out compensating foreign energy companies that face changes to their contracts as a result of a controversial nationalisation policy announced earlier this month.

Speaking at a summit of Latin American and European leaders, the defiant leftwing president, accused foreign companies of pillaging his country for hundreds of years and warned that large landowners were the next target of his radical reform agenda.

"We're not going to limit ourselves to hydrocarbon resources", Mr Morales told a packed news conference. "There is also huge land ownership, especially unproductive land, in our country."

Earlier this month, Mr Morales shocked foreign investors by sending in the army to gas fields to underline his move to nationalise the country's energy industry. Companies have been given 180 days to renegotiate their contracts. Some energy companies, for the time being, have to pay royalties of 82 per cent to La Paz, rising from 50 per cent. Only a year ago, companies paid royalties of 18 per cent.

On Thursday, Mr Morales indicated that companies could receive compensation for physical assets taken by the state, but that they would not be indemnified for losing their concessions.

Mr Morales described foreign energy investors as "smugglers" and argued they had broken Bolivian laws and paid no taxes on their profits.

"We don't have to talk, dialogue or negotiate when it comes to the policy of a sovereign state," he said.

He also pointed to a looming clash with the country's judiciary who have been criticised by the leftwing government for failing to impose laws to protect national interests.

"For us, the judiciary are the representatives of the colonial state, not the people," Mr Morales warned.

Analysts said the president's message was all the stronger for being delivered in Europe, where many of Bolivia's biggest energy investors are based. Spain's Repsol, Total of France and Britain's BP and BG Group are among the largest foreign energy groups in the country, along with Petrobras of Brazil.

Repsol, the Spanish energy company, said on Thursday it would defend the value of its investments in Bolivia and would take international legal action if necessary. On Friday, Mr Morales is expected to meet Spain's Prime Minister, José Luis Rodríguez Zapatero, to discuss the threat to Repsol.

Mr Morales drew criticism on Thursday from Vicente Fox, the Mexican president, who highlighted the sharp differences among Latin American leaders by describing nationalisation as a "terrible" path.

"I think that far from putting the economy in the hands of the state, you have to put it in a market with social responsibility", he said.

Separately, Mr Morales accused the US of misusing drug eradication programmes as part of its "geopolitical interests" and warned neighbouring Andean countries such as Ecuador, Colombia and Peru not to press ahead with trade agreements with Washington.

"Those countries now negotiating free trade agreements with the US are betraying the concept of the Andean community", he said.

Mr Morales, whose presence overshadowed the EU-Latin America summit, went out of his way to praise Hugo Chavez, the Venezuelan leader, and Cuba's president Fidel Castro.

He lauded Cuba for its humanitarian aid, while accusing Spain, which has close links with the country, of reneging on its aid promies to Bolivia.

"Fidel, and Cuba, deserve my full admiration and support," he said.