San Diego Union Tribune

October 23, 2003

Plan to tap Bolivian gas unleashed the furies
Indians determined to protect resources


and Diane Lindquist

LA PAZ, Bolivia – At the center of an angry throng, Toriboa Acha explained why he had joined the massive protests that paralyzed this city for nearly a week and led to the resignation of President Gonzalo Sánchez de Lozada.

"We are here to defend our gas," the 36-year-old electrician and Aymara Indian said.

It was a proposal to build a pipeline to tap Bolivia's huge reserves of natural gas that unleashed political and social furies in this impoverished nation.

The project – it would export gas to Mexico and California – is so sensitive that Carlos Mesa, who became Bolivia's new president Friday, immediately pledged to hold a national referendum on it.

San Diego-based Sempra Energy has been weighing Bolivia's natural gas reserves as a long-term source for the liquefied natural gas receiving plant it hopes to build in Baja California.

Sempra's agreement to negotiate exclusively with the consortium building the pipeline expired in August 2002, but the company continues to cite Bolivia as a possible source.

If Bolivia approves the project, a consortium of Spanish and British companies could spend up to $6 billion to extract natural gas from country's interior, build a pipeline through Chile and construct a plant on the Chilean coast. There the gas would be turned into LNG and shipped to Mexico.

Sánchez de Lozada said the project is vital to the economic future of his country, where two-thirds of the people live in poverty, unemployment is rampant, and working-class jobs typically pay less than $100 a month.

But distrust of foreign energy companies runs deep – almost as deep as the conviction that government corruption has enriched the political class at the expense of the Indian majority.

Early last week, as bloody confrontations between protesters and the Bolivian Army pushed the number of civilian dead to about 70, Sánchez de Lozada suspended talks aimed at finalizing the gas project.

By then, however, public outrage at the violence had triggered a movement for his resignation. He resigned Friday and flew to Miami.

During previous terms as president and as minister of planning, Sánchez de Lozada pushed for privatization of state-run companies with the help of Paul H. Boeker, the former U.S. ambassador to Bolivia and president of San Diego's Institute of the Americas until he died in April.

The railways, the telephone system, the national airlines, and the great tin mines of Oruro and Potosi all were sold, mainly to foreign investors.

The gas project would be the biggest foreign investment of all.

"Bolivia is sitting on unbelievable reserves of gas, and their domestic market is minuscule," said Jeremy Martin, director of the Institute of the Americas energy program.

The project was controversial from the beginning, tainted by historic bitterness over foreign exploitation of Bolivia's mineral wealth.

The pipeline's route through Chile created another problem. Many Bolivians still are angry they lost their only seaport in a 1879 war with their western neighbor.

Another factor leading to ánchez de Lozada's resignation was the organization of Bolivia farmers opposed to Bolivia's U.S.-backed policy of eradicating the production of coca, the raw material for cocaine.

The New York Times reported today that Sánchez de Lozada told President Bush at the White House last year he needed more money to ease the impact on farmers.

Otherwise, Bolivian officials recalled him as saying, "I may be back here in a year, this time seeking political asylum."

Bush was amused, Bolivian officials said, and told his visitor all heads of state had tough problems and wished him luck.