BIF News Briefing, July 2012

Posted on | augustus 6, 2012 | No Comments

1. TIPNIS consultation begins
2. Mallku Qhota: government nationalises mining concession
3. Indian steel company Jindal abandons Mutún project
4. Santa Cruz governor faces suspension
5. Cristina Fernández visits Bolivia to negotiate gas deal
6. The Bolivian economy grew 5.17% in 2011

1. TIPNIS consultation begins
Consultation with communities that live in the TIPNIS national park and indigenous territory began on 29 July, to decide whether they accept or reject the plans to build a road through the park. Consultations will be carried out with each of the communities in the area during the next three weeks. Previously a second indigenous march within a year had reached La Paz to protest against the road project, but after 14 days in the capital they decided to return to the TIPNIS to oppose the consultation. The leaders of the march say the consultation process is flawed because it is not ‘prior’ as a contract was signed in 2008; they also argue that the government is not acting in ‘good faith’ since it wants the project to go ahead.

The first community to be consulted was the Oromomo, which voted in favour of the road and also asked for economic compensation for the parts of the road that pass through their territory. Subsequently, the community of San Miguelito voted to reject the road. The consultations are expected to continue up to 25 August, with the final results due to be announced on 6 September.

The leaders of the IX indigenous march, who oppose the consultation, have appealed to the Constitutional Court in an attempt to stop the process from proceeding. They argue that the government is not complying with a previous ruling of the Court that instructed the government to reach agreement with the indigenous communities of the TIPNIS before moving forward with the consultation process.

There were also criticisms of the form of the consultation, which refers to the question of intangibility, meaning a ‘no’ vote would also affect other economic activities that the local population carry out in the park. Amnesty International issued a public declaration criticising this aspect of the consultation. Amnesty also expressed concern about compliance with the Constitutional Court ruling.

2. Mallku Qhota: government nationalises mining concession
The dispute over the mining concession in the area of Mallku Qhota intensified at the end of June and in early July as the community took engineers from the mining company and a police officer hostage, and one community member died in subsequent confrontations. The government announced that it will nationalise the mine, which appears to have quelled the conflict.

The hostages were taken by the community to pressure for the freedom of Cancio Rojas, a local leader, and for the government to expel the company which controls the mining concession there – Compañía Minera Mallku Khota, a subsidiary of the Canadian mining firm, South American Silver.

Following the taking of hostages, police were sent to the area where they clashed with members of the local population. One community member died and several others were injured. Several policemen suffered injuries because of the dynamite and stones hurled at them by the protesters.

The government and community resumed dialogue following these clashes. Negotiations held between President Morales and indigenous leaders led to an agreement to nationalise the mine – which contains large deposits of silver as well as indium and gallium (valuable metals used in electronic components). The community has been divided over whether to expel the company.

In a subsequent press conference, Vice-president Álvaro García Linera said that the Bolivian state has sufficient “economic strength” to carry out exploration, exploitation and processing of the minerals in Mallku Qhota, and that South American Silver would be compensated for the investments it had made prior to the nationalisation. On 2 August the nationalisation was formally approved, with the state company, COMIBOL, taking over the running of the mine.

3. Indian steel company Jindal abandons Mutún project
The Indian company Jindal Steel & Power has announced that it will leave Bolivia after it failed to meet conditions required by the Bolivian government. The company had entered into a joint venture with the a state mining company in 2007 in which it would produce iron ore and subsequently steel from the large El Mutún deposit in Santa Cruz, but the agreed investment did not materialise.

The company announced it would leave the country after the Bolivians asked it to deposit a further guarantee of $18 million. Jindal had accused the government of failing to comply with agreed conditions, principally in the supply of natural gas for the production of iron and steel.

The relationship has ended in acrimony as the Bolivian government accused the company of speculative practices and initiated judicial proceedings against executives. Jindal announced it would launch a case for damages against the Bolivian state, and Bolivia responded with a counter-claim against the company for non-compliance with its investment contract.

Following the exit of Jindal, the government announced it would put the venture out to tender once again, with 13 international investors already having apparently expressed an interest in the project. Meanwhile, the president of the state mining company Empresa Siderúrgica del Mutún (ESM), which was set up to work on 50% of the Mutún deposit, announced that it expects to produce 2 million tonnes of iron ore for export in 2013 and to produce up to 400,000 tonnes of steel for internal demand by 2015.

4. Santa Cruz governor faces suspension
Rubén Costas, the governor of Santa Cruz, risks suspension on account of accusations by the public prosecutor’s office of misusing state funds. On July 27, the departmental assembly in Santa Cruz decided to shelve the accusation, but lawyers argue that the assembly is duty bound to suspend Costas under the Law of Autonomies. Costas is accused of using 10 million Bolivianos to organise an illegal referendum on departmental autonomy in 2008. Attempts to mobilise support for Costas on the streets of Santa Cruz have failed to elicit a strong public response. The Comité Pro Santa Cruz (CPSC), once the most powerful civic committee in Bolivia has lost much of its influence in recent years. The powerful economic groups in Santa Cruz now look askance at an institution that helped foment violence on the streets; the CPSC allegedly even lacks the cash to pay its own monthly wage bill.

5. Cristina Fernández visits Bolivia to negotiate gas deal
Argentine president Cristina Fernández de Kirchner made a flying visit to Cochabamba where she met with Evo Morales to sign new contracts guaranteeing Bolivian gas exports for the next 15 years. Also discussed were future deals by which Argentina would purchase butane, propane and/or Liquefied Natural Gas (LNG) from Bolivia.

Fernández and Morales also signed agreements in the areas of education and culture. Both countries agreed to recognise each other’s university degrees and they set up initiatives to share knowledge and experience to increase digital inclusion.

6. The Bolivian economy grew 5.17% in 2011
According to data from the National Statistics Institute (INE) Bolivia’s GDP grew 5.17% in 2011. This was 1.04% more than the growth registered for 2010. The departments with the highest levels of economic growth were La Paz (6.02%), Santa Cruz (5.58%) and Tarija (6.34%). Bolivia’s finance minister, Luis Arce Catacora, commented that Bolivia’s high economic growth was the result of income redistribution policies, which increased internal demand. At the same time, foreign reserves have hit a new high of $12.7 billion, equivalent to 55% of GDP. Both Moody’s and Standard and Poor’s have recently upgraded Bolivia’s credit rating. Despite declining mineral prices, Bolivia’s exports in the first half of 2012 were up 25% on the same period last year.

AUTHOR: Bolivia Information Forum
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