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Bolivian miners reject foreign investors

BBC (03/08/2002 02:06) Bolivia miners say that private ownership has failed.

Monday, 29 July, 2002, 13:47 GMT 14:47 UK

Bolivian miners reject foreign investors

Miners say private ownership has failed

Bolivian miners have won a major victory in their fight to put the country's tin industry back in public hands.

After concerted pressure, Parliament approved changes to the mining code on 24 July, restoring the right of state-owned mining group Comibol to control day-to-day operations of mining assets.

Huanuni miners' leader The private sector is less than happy, warning that the changes to the code - first written in 1997 to attract foreign capital - have created an unstable legal climate that will jeopardise future investments.

But the miners say that private management has been a disaster, and without public control any gains from the industry will flee overseas. Bolivians, they say, will not see any benefit.

Sell off

The problems surround the country's largest tin mine, Huanuni, and the highly profitable Vinto smelting plant.

Both were taken over two years ago by British trading company Allied Deals as part of the Bolivian state's policy - introduced as part of its deal for support from the International Monetary Fund and World Bank - of privatising national industries.

Earlier this year, however, Allied was declared bankrupt amid accusations of financial mismanagement.

That left Huanuni under the temporary control of Comibol, while Vinto was sold to Bolivia's largest mining company, Comsur.

But the sale was met by angry opposition from the miners who wanted both assets to pass permanently back to the state.

Who gains?

To press their point home, the miners called a civil strike in concert with other social movements in the economically depressed region of Oruro.

Allied Deals had failed to create employment, they said, and had not offered the education and health facilities it had promised.

They argued that under private ownership the smelter and mine did not function for the good of the country.

"The only thing the investors want is profits," said Miguel Zubieta, leader of the Huanuni miners.

"They take the money outside the country to benefit foreigners, without leaving anything for the Bolivians."

Popular discontent

It is not just the mining industry, and not only Bolivia, which is experiencing a backlash against foreign investors.

Only last month, angry protesters in Southern Peru forced President Toledo to back down on a decision to privatise two power generation facilities.

In Bolivia, meanwhile, the recent presidential election hinted at a broad rejection of two decades of neo-liberal policies, which have seen the private sector take over key strategic industries including oil and gas, mining and telecommunications.

The winner, Gonzalo Sanchez de Lozada, is a supporter of Bolivia's free-market reforms which he did much to create.

But he only gained 22.5% of the vote, while the parties in second to fifth place, who between them polled over 60%, have all promised to reform or revert the investment laws.

In the new parliament, these parties will be demanding the return of interventionist policies in order to confront a four-year economic crisis which has seen poverty increase and unemployment rise to record levels.

"The system is designed to benefit the trans-nationals and this cannot continue," said Hugo Peredo, VP candidate for the Movement Towards Socialism (MAS) who finished second with 20.9%.

"The extraction industries need to be managed by the state because the state, [as representative of] the Bolivian people, is the principal interested party in how these resources are used."

Investors worried

Private investors are concerned that with so much pressure to undo Bolivia's investment laws, the new government will not be strong enough to resist further changes.

"These events have created an environment of great uncertainty and political risk," said Rolando Jordan, a mining industry consultant.

"The mining code has been modified to resolve a social conflict and under pressure of road blockades.

"Now each time there is a social conflict there is a danger the laws and constitution will have to be changed."

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