May 3, 2006

Bolivian nationalization may spur Andean leftists

By Helen Popper

LA PAZ, Bolivia (Reuters) - Evo Morales' sudden energy
nationalization in Bolivia could fuel growing demands for an
end to the free-market economic policies that have done little
to ease grinding poverty across the Andean region.

For Bolivia's indigenous majority, this week's
nationalization decree and troop deployment at gas fields is
the culmination of a struggle for the control of natural
resources that is being played out in Ecuador and Peru too.

It also comes against the backdrop of growing state control
of the oil sector in Venezuela, orchestrated by Morales' main
foreign ally, leftist President Hugo Chavez.

But Morales' move, which alarmed investors and angered some
friendly governments, is the most sweeping so far and could
galvanize others in the region to go further in limiting
foreign ownership.

"(The nationalization) will be seen in the region as
someone making a choice and as an example of leadership," said
Xavier Albo, a Bolivian anthropologist who works for an NGO
supporting indigenous groups.

"It could be seen as an audacious step toward sovereignty
... Evo is already a source of inspiration in the region," he
said, adding Morales' criticism of U.S. influence in the area
has raised his regional profile.

His decision resonated in Peru, where the camp of
nationalist Ollanta Humala, the first round winner of a
presidential race, applauded the move.

"We respect what Bolivia has done ... it is a search for
autonomy," said Gonzalo Garcia, who advises Humala on economics
as he battles rival leftist Alan Garcia for the presidency.

"There's a real need for Latin America to achieve an energy
independence to bring down costs and pass the benefits on to
the poor," he added.


By nationalizing vast natural gas reserves, Bolivia's first
indigenous president has taken up the baton of increased state
control from Chavez, even at the risk of alienating Brazil, its
massive neighbor whose energy investments will suffer.

The hardline stance against Washington's free-market
prescriptions, which have done little for the 100 million Latin
Americans living on $1 a day, is popular.

"It's about time someone stood up to the foreign
companies," Carla Medrano said in the slum city of El Alto
where priests gathered on Wednesday to thank Mother Earth for
the energy nationalization announced by Morales on Monday.

Bolivia, South America's poorest country, has more
indigenous people than European descendants, while Ecuador and
Peru have large Indian populations as well.

Some 50 million people live in the three countries that are
the heart of the Andean region.

In unstable Ecuador, indigenous peasants have blocked roads
in recent months to protest negotiations on a U.S. free trade

Indigenous groups have also called for nationalization of
the energy sector and particularly the expulsion of U.S.
companies from South America's No. 5 oil producer.

"(Bolivia's nationalization) represents an important
outside reference point for Ecuador's indigenous movements that
have lost power in recent years," said Hernan Reyes, sociology
professor at Ecuador's branch of the Latin American Faculty of
Social Sciences.

In Peru, Humala has won support with calls to champion the
poor and scrap a trade deal with Washington.

Facing a second-round runoff next month, he says that while
he does not plan to nationalize mining and energy companies, he
wants to rewrite their contracts to increase the state's

But Larry Birns, director of the left-leaning Council on
Hemispheric Affairs in Washington, expects Morales' influence
to spread.

"He (Morales) is capable of becoming an important regional
leader and (the nationalization) could be the opening salvo in
a new battle to return to an era when state control of natural
resources was unquestioned," he said.

(With additional reporting by Alonso Soto in Quito, Robin
Emmott in Lima and Mario Roque in El Alto, Bolivia)