|
For followers of South American politics, it may be hard to believe that a more dangerous man could emerge than current Venezuelan President Hugo Chavez. But with today's vote in Bolivia, that unlikely possibility may have become reality with the election of Evo Morales, an extremist who won by connecting with the indigenous people of the country. Already the poorest area of South America, the ramifications of this election may extend far beyond the boundaries he rules. Morales, a former coca leaf grower, is an outspoken critic of virtually all policies of free markets and free trade. Many of his supporters side with the anti-globalization coalitions and blame free trade for the continuing economic distress they have endured. Part of the problem lies, literally, beneath the surface. While Bolivia has been poor ever since its existence, much hope was given to its citizens just a few years ago when some of the largest natural gas reserves in the world were discovered lying within the borders of the country. Amazingly, this discovery has done nothing but cause continuing strife in the region as people debate not only who should own the gas and who should refine the gas, but also how to export it out of a landlocked country that is unwilling to forge relationships with its neighbors. Those already drilling in the region have braced hard for the nightmare scenario of Morales election. Now that it has become a reality, these companies face the possibility of having to pull out of the region, or abide by Morales' proposal of an outlandish increase in government taxes
associated with gas exploration. Morales has run on a politically popular but economically unfeasible platform of the gas 'belonging to the people.' His rhetoric has gained him the respect of both Chavez and Fidel Castro, two allies in the war against globalization. While Bolivia's political situation has been mired in instability (Bolivia has now elected its 4th President in 5 years), the best scenario in this situation would be another government overthrow with the possibility of obtaining a more pro-business leader. Nothing predicts more poverty than a commodity rich nation who's resources are "owned by the people," as can be attested to by former citizens of the Soviet Union. While The Commodity Investor is generally high on countries with such large reserves, especially in the energy sector, the political situation must seek to attract foreign investment. Those countries seeking to deny this influx of capital and expertise, hurt themselves tremendously. In doing so, the price of Natural Gas over the next 10-15 years may end up being far higher than it would be otherwise. While Morales is in power in Bolivia, The Commodity Investor finds it unlikely that the country will change to a more investor friendly face. If the political situation changes, perhaps an investment in Bolivia will one day become a possibility. |
