On Saturday, May 12, Bolivian president Evo Morales officially announced that the Bolivian government was taking full control of two oil refineries, Gualberto Villarroel in Cochabamba and Guillermo Elder Bell in Santa Cruz. Following weeks of intense negotiations, the Bolivian government agreed to pay Petrobras, a Brazilian state-owned transnational, $112 million USD for control of the refineries.
After a transition period of 30 days, the Bolivian state oil company, Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), will begin running the refineries. Overall, the government expects to earn $60 million USD per year by taking control of the plants.
One day later, Morales announced that the government would invest $10 million USD in both plants to modernize them and increase their output in order to satisfy both internal and external demands for the gas, diesel, kerosene, jet fuel, and lubricants produced by the two plants.
The purchase of the refineries is part of the broader "nationalization" of the Bolivian hydrocarbon industry begun by Morales on May 1st, 2006 in which the Bolivian government took a controlling share of the hydrocarbon industry stocks and renegotiated more favorable contracts with the transnational oil companies operating in Bolivia.
In his speech on Saturday in Cochabamba, Bolivia, Morales highlighted the huge financial benefits of this hydrocarbon contract renegotiation. In 2005, the government received a total of $300 million USD in tax revenue generated by the hydrocarbon industry. In 2007 (as a result of 2006 tax income), the tax revenue increased more than five times over to $1.6 billion USD.
While a lot of this increase is due to skyrocketing oil prices over the last year, much of it is related to the contract renegotiations which increased hydrocarbon royalty taxes on transnationals to 82%. This is a huge jump from the just over 50% guaranteed by previous contracts and an absurdly large increase from the 18% charged by the neoliberal governments before huge protests, centered around the call for nationalization of the hydrocarbon industry, kicked out two neoliberal presidents in 2003 and 2005.
This rise in hydrocarbon industry-related income has had huge benefits on a state and local level. In 2005, the Cochabamba prefecture received $53 million USD. In 2007, it will receive $211 million USD. The state university in Cochabamba has also seen its hydrocarbon income skyrocket from $6.92 million USD in 2005 to $48 million USD in 2007.
Citing these figures, Morales announced plans to expand the "nationalization" process in the near future, naming five companies in particular, four of which are related to the hydrocarbon industry and one of which is a telecommunications transnational. All of these companies were privatized in the late 1990’s during the expansive privatization process which took place in Bolivia during previous neoliberal governments.
We Need Democratic Community and Worker Control of the Refineries
Alternativa Socialista Revolucionaria (CWI-Bolivia) supports the re-taking of the Gualberto Villarroel and Guillermo Elder Bell refineries as a progressive change which can improve the lives of the worker and peasant poor majority in Bolivia. Along with the huge increases in revenue from the renegotiation of the hydrocarbon contracts in 2006, the income generated can be used to provide much needed improvements to the education and health care system, jobs for unemployed workers, and tractors and other farming equipment for indigenous campesino communities.
The money should also be used to begin the important task of further industrializing Bolivia’s hydrocarbon industry so that all of Bolivia’s petroleum can be refined and sold at higher prices instead of having to sell the majority of their petroleum unrefined and at relatively dirt cheap prices.
But simply buying the refineries and putting them under the control of the state-run oil company will not in itself solve all of the problems created by the capitalization of the refineries. Just before buying the refineries, Morales met with the Petrobras workers’ union and guaranteed that labor conditions would remain the same. This is good news for the official Petrobras workers whose salaries start at around 14,000 Bolivianos/month ($1750 USD). It is bad news, however, for the hundreds of contract workers who work in the refineries under 2 year contracts and are not part of the Petrobras workers union.
In recent months, the 250 plus contract workers at the Gualberto Villarroel refinery in Cochabamba began an organizing campaign to fight for union recognition, higher wages, permanent contracts, safer working conditions, and a full nationalization with some form of worker and community control of the refineries.
They were met with hostility from all sides: the official Petrobras union refused to accept them and when they started their own "mixed" union, six union leaders and 12 workers were fired.
For these workers, guaranteeing that labor conditions will remain the same means that they will continue making 700 Bolivianos/month ($87.50 USD), they will have no union recognition, and no right to organize either.
In the weeks leading up to the purchase of the refineries, after trying unsuccessfully to solicit support from the Morales government, the contract workers at the Gualberto Villarroel refinery were planning to take direct action by occupying the refinery and demanding that the fired workers be reinstated and their demands be met. Now that control of the refineries has passed into the hands of the YPFB, the workers are giving the Morales government a chance to satisfy their demands. If their demands are not met, they have promised that direct action is inevitable including a possible factory occupation.
Alternativa Socialista Revolucionaria, and the CWI internationally, support the Gualberto Villarroel contract workers in their struggle for higher wages, permanent contracts, the right to organize, and a full nationalization of the industry under worker and community control. Also, in order to prevent the refineries from being bureaucratically run by a privileged caste of government officials, the Alternativa Socialista Revolucionaria proposes that the refineries be run by an elected body made up of 1/3 state representatives, 1/3 community representatives, and 1/3 worker representatives.
Only with democratic community and worker control can we guarantee that the production and income generated by the refineries serve the best interests of the Bolivian people as a whole (and not just a privileged bureaucratic caste) while at the same time ensuring that all workers in the plant have a voice in the production process and stable jobs with good wages, safe working conditions, and the right to organize.
Why Pay for Control of Our Own Refineries and Our Own Natural Resources?
Alternativa Socialista Revolucionaria opposes the payment of $112 million USD of the Bolivian peoples’ money to take control of the refineries. These plants should be expropriated without payment.
It is the right of the Bolivian people to take control of their own economy, their own industries, and their own resources and as a matter of principle they should not have to pay to do so. Instead this money should go towards industrialization projects and social services mentioned above.
Furthermore, the refineries were undemocratically sold in 1999 by neoliberal president Hugo Banzer to Petrobras for $102 million USD. There was no referendum, nor even a public debate about the privatization of the refineries.
During the last eight years, Petrobras has earned an average of $70 million USD or roughly $560 million USD. They have already been repaid more than five times over for their investment and the Bolivian people should not have to pay any more.
Only a Socialist Economy Can End Poverty and Inequality in Bolivia
As mentioned before, the renegotiation of the hydrocarbon contracts have produced incredible results. But simply increasing tax revenue from one industry is not enough to eradicate poverty in Bolivia and guarantee a decent life for every worker and peasant. For that to happen, we need to put all of the wealth generated by the Bolivian economy into the hands of Bolivian people and take it out of the hands of the wealthy elite, large-landowners, and transnationals.
Organizing and struggling for a full nationalization of the Gualberto Villarroel and Guillermo Elder Bell refineries under genuine democratic community and worker control would be an important first step towards genuine nationalization and worker and community control of the hydrocarbon industry as a whole. This in turn could pave the way for an organized struggle to nationalize the rest of the Bolivian economy while also taking the land away from the large landowners and putting it under the control of the indigenous peasant population.
A simple renegotiation of the oil contracts generated $1.3 billion USD in new revenue in just two years. Money that otherwise would have gone to transnational corporations, instead will go to the Bolivian people.
Imagine the immense revenue that would be created by nationalizing the Bolivian economy as a whole, by taking all of the wealth that now goes to the Bolivian elite, the large landowners, and the transnational corporations and instead using it to industrialize the economy and satisfy the basic needs of Bolivian workers and peasants.
This is what a socialist Bolivia would look like, a Bolivia without poverty and inequality, and that is what Alternativa Socialista Revolucionaria and the CWI are fighting for in Bolivia and around the world.