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Latin America squanders oil and mining income on clientelistic "bonocracy"

Latin America squanders oil and mining income on clientelistic

By Energy Policy Platform

“Our countries have an extractivist DNA; they have become accustomed to living off the income of nature, to exporting raw materials and losing in international trade ”, explained the former president of the Constituent Assembly of Ecuador Alberto Acosta to delegates of organizations from Bolivia, Peru, Brazil, Mexico, Colombia , Chile and Ecuador in the II Regional Forum sponsored by the Bolivian Energy Platform.


Enough of the rhetoric of "good living", it is time for the peoples to decide how to invest the income of countries with "extractivist DNA", urges the II Forum of the Latin American Network on Extractive Industries.

Ecuador and Bolivia were born as free and independent republics in the 19th century; sovereign nation states were declared in the twentieth century, and at the beginning of the twenty-first century they were refounded as pro "socialist" Plurinational States, but to this day they are inserted into the international market as mere providers of natural resources, as submissive and dependent as the semi-colonies of two centuries ago, researchers and experts from seven countries evaluated at the II Forum of the Latin American Network on Extractive Industries held last week in La Paz.

“Our countries have an extractivist DNA; they have become accustomed to living off the income of nature, to exporting raw materials and losing in international trade ”, explained the former president of the Constituent Assembly of Ecuador Alberto Acosta to delegates of organizations from Bolivia, Peru, Brazil, Mexico, Colombia , Chile and Ecuador in the II Regional Forum sponsored by the Bolivian Energy Platform.

The governments of Evo Morales and Rafael Correa write and talk a lot about "good living" and a harmonious relationship with nature, but all their plans for "development" and economic "growth" are based on a growing "neo-extractivism" of natural resources non-renewable with increasingly acute environmental impacts, Acosta described.

The oil companies of the Plurinational States of Ecuador and Bolivia operate "with the same logic as the transnationals, especially in their relationship with indigenous peoples," and Presidents Morales and Correa are once again betting on the export development of raw materials, a model "Impoverishing" that historically failed.

What worries the most is the irresponsible waste of mining and oil revenues in financing a kind of clientelistic “bonocracy”, Acosta observed.

“There is no serious and deep discussion in our countries about what we want to do with oil income… In recent years, money has not been directed to closing development gaps or improving equality; it was used in current spending and in paying bureaucracy ”, criticized the Mexican expert Rocío Moreno.

It seems that the governments of Latin America use the income from the exploitation of natural resources to distract people, postponing and even avoiding the great pending reforms in the fundamental sectors of the economy.

The misuse of mining and oil income

In Latin America there are very heterogeneous forms of distribution of oil and mining income, but the use of these resources has not made it possible to close the large gaps of inequality and backwardness that exist, nor has it boosted socioeconomic development in any country in the region, warned the Colombian expert Fabio Velásquez.

"We have extracted a lot of oil and we have received a lot of money and large credits, but the result has been very poor: there is no development, there is massive poverty and the environmental impacts are alarming, there is environmental pollution, massive deforestation, damage to health and diseases" Alberto Acosta stressed.


It would take several books to describe only the serious socio-environmental impacts of the exploitation of hydrocarbons in the Latin American Amazon, for example the alarming environmental damage caused by Texaco that left an environmental liability of at least 26 billion dollars in Ecuador, or the increase of contamination in various producing areas of Bolivia.

The social impacts of extractivism are even more negative in the producing areas that continue to be mired in extreme poverty due to the appropriation of oil revenues by the transnationals, which in the long neoliberal night took more than 80 percent of the profits .

“In Peru, the State's participation in the income generated by the extractive industries has been insufficient, especially in the mining sector. The 2008 crisis affected profits and state participation; then companies benefited from most of the windfall profits allowed by high prices; and in 2009 the official figures show that their contribution was barely in the order of 11 percent, ”said the Peruvian expert Epifanio Baca.

Velásquez considered that the oil and mining “boom” as a result of the high prices in the international market was not used to overcome regional poverty or to open the paths of development; and "it does not seem to be going to close social, gender, ethnic, territorial gaps, or to reduce poverty and inequality."

In Bolivia, the government energy plan emphasizes the excessive and dangerous export of gas and oil, in the frantic search for income to cover internal obligations such as fuel subsidies, social bonds and public investment in the regions. , pointed out the specialist of the Center for Studies for Labor and Agrarian Development (CEDLA) Julio Linares and the expert Juan Carlos Guzmán.

Linares and Guzmán agreed that the government of Evo Morales struggles to turn the country into the "energy exporting center of the region", but pays little attention to the domestic market, imports more and more fuel, loses energy autarky and is far from achieving the long-awaited industrialization of hydrocarbons.

The way in which the Bolivian State invests the income generated by extractive activities has a political, conjunctural and short-term nature. The growing rentismo does not allow to lay the foundations of a solid productive development, much less overcome the extreme dependence on non-renewable raw materials, Guzmán observed.

The most serious problem in Bolivia is the extreme dependence on the surplus of extractive activities, which tends to generate a disturbing volatility of tax revenues, strong regional financial imbalances and dangerous fiscal inertia, said specialist Linares.

In his opinion, "the instability in the international price of oil determines that the income from hydrocarbons is uncertain ... an eventual fall in these revenues will affect public management, predominantly at regional levels." Furthermore, the extreme dependence on transfers of resources from the central level does not stimulate the search for their own income in the autonomous administrations.

As if that were not enough, the growing regional expectations to control extractive activities, such as lithium in Potosí or iron in Puerto Suárez, together with pressure from “non-producing” regions, constitute sources of potential distributional conflicts.

The road to post extractivism

The Political Constitutions of the Plurinational States of Bolivia and Ecuador postulate post-extractivist economies, but the neo-developmentalist political sectors that doubt the existence of “real” alternatives to the exploitation of natural resources are still very strong and influential.

Acosta acknowledged that "we will not get out of extractivism overnight" because it is not possible to "close all the oil fields", but called for combating the "false idea" that it is not possible to initiate a "plural transition" towards an economy. post extractivist.

He explained that post extractivism does not mean rejecting the exploitation of natural resources but rather "establishing the biophysical limits of exploitation, reaching sustainability, eliminating poverty and its cause, which is opulence," and moving towards a post-oil economy.

He argued that "oil is running out and given the growing consumption rates we will not be able to continue being oil-exporting countries." Climate change and the Hubbert peak show that it is not possible to continue extracting fossil fuels at the current rate, and that it is necessary to stop exploiting hydrocarbons in places of particular environmental and social fragility such as the Yasuní, the Niger Delta and other territories of the Amazon like Madidi in Bolivia or Laguna del Tigre National Park in Guatemala.

In this context, the Yasuní-ITT Initiative must be located, which opens the door to the construction of a post-oil and post-extractivist economy subordinated to the laws of operation of natural systems, said Acosta.

The Ecuadorian economist proposed executing various state reforms that would allow "organizing the world in a different way" and taking advantage of alternative sources of energy and financing to the extractive industry, such as hydroelectricity, which would save "more than 2.6 billion dollars" in Ecuador. .

On the other hand, he suggested substantially modifying the current subsidy structure in Ecuador to “overcome aberrations in the energy sector”, such as the gas subsidy that reaches 600 million dollars and “that benefits only 20% of the poorest , and 80% goes to the great power groups ”.

The debate on the most appropriate mechanism to capture a higher income stood out on the agenda of the II Extractive Industries Forum and almost all the speakers proposed modifying the tax structure that punishes low-income sectors. "Those who earn the most and have contribute with a lower percentage of taxes," said Julio Linares.

A reform would have to be implemented to raise Ecuador's tax pressure from 13% to the levels of other countries in the region such as Bolivia (20%) or Chile (25%), and even Europe (40%), and “also expand the income tax for those who have the most and inheritance tax ”, said Acosta. "It could be a tax mechanism, a tax on extraordinary profits or the general payment of royalties," added Baca.

The exhibitors II Forum of extractive industries agreed that the construction of a new post-capitalist economy does not depend only on tax reforms or the development of alternative energies, but basically on citizen participation in the administration of the growing state oil and mining revenues.

That is why it is essential and urgent that the peoples of the region develop effective social control mechanisms and challenge the unilateral and improvised decisions of their governments.

Energy Policy Platform - La Paz, 08/02/10 - Bolivia


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