MercoPress. South Atlantic News Agency

Lula reminds Bolivia the “importance of Brazil”

In yet another chapter of the natural gas struggle, Brazilian president Luiz Inacio Lula da Silva called Thursday on the Bolivian government to understand “the importance of Brazil” for Bolivia's resources.

"I trust Bolivia has the exact notion of the importance of Brazil for Bolivia, as Brazil has the exact notion of what Bolivian natural gas means for Brazil", said Lula da Silva in an interview with the country's main network O'Globo.

"I've told President Evo Morales: Evo you can't keep a sword over the head of Brazil because you have gas; because we can also have a sword hanging over your head since we buy most of your natural gas, and if it's not sold to us, it's kind of difficult to see whom you will be selling it to", warned the Brazilian president.

Lula's words follow Bolivian incoming Minister of Hydrocarbons Carlos Villegas statements that he will apply the full force and extent of the nationalization decree in negotiations with multinational energy corporations, particularly with Brazil's Petrobras, which is threatened with the loss of two refineries and no compensations.

"Petrobras will not twist our arm", Minister Villegas was quoted in the Bolivian press.

Villegas is also quoted saying that come October 28 (the 180 days contemplated in the May first nationalization decree) "there will be no period extension and the decree will be fully implemented".

"I'm publicly saying that in the negotiations we will show two non excluding positions but also complementary: our willingness to dialogue but also our determination that corporations abide and accept the nationalization conditions and contracts", added Villegas.

"We're seeing a political behaviour which is not in accordance with the negotiations round; what we're hearing when we sit round a table is one thing, and what is published in the press is different", pointed out Lula da Silva.

"There seems to be great divergence inside the Bolivian government", he highlighted.

However Lula da Silva said he trusted that "eventually, hopefully" an agreement between Brazil and Bolivia will be reached.

Bolivia and Brazil are negotiating the nationalization of Petrobras assets in Bolivia and the price of natural gas massive exports to Brazil.

Petrobras is the main foreign investor in Bolivia's hydrocarbons industry.

Nevertheless it's a face saving game for both leaders. President Lula da Silva is running for re-election next October first, and Evo Morales, Bolivia's first indigenous president, is in the middle of a political battle to impose his majority in a constitutional assembly tasked with the job of drafting a constitution for the re-foundation of an "aboriginal" Bolivia that recognizes on the same ground, Indian roots and Spanish settlers.