May 09, 2005

Under Pressure

President Mesa is under tremendous pressure to either veto or sign the newly passed Hydrocarbons Law. As posted previously, the Bolivian Congress passed a new Hydrocarbons law, thus passing the ball on to the executive's court. The law is not without controversy. As one congressmen put it, "this law is a time bomb".

The pressure comes from three sides. The first and foremost opponents are the social sectors, a group of civic and workers organizations. These groups see the new law as insufficient against their demands to regain control of Bolivia's natural resources. Additionally, some internal groups have their own interests to further. The second group exerting pressure on President Mesa is the Congress. The executive and legislative branches are engaged in a political struggle for power. Mesa has made it a hallmark of his presidency to stand up to Congress and from time to time shake it with sudden moves. His last move was to delegate Congress with the responsibility to create a "viable" Hydrocarbons law. Now the Congress have acted and are eagerly awaiting Mesa's response. They are expecting Mesa to sign the bill and move on.

Lastly, the companies most affected with the law, are expecting Mesa to veto the law, as they see it as confiscatory and bad for investment. In addition, Mesa has organizations like the IMF breathing on his neck, waiting to see what he's going to do.The companies need a law that permits them to go ahead with planned investment. If the law is signed in its current form, it will present serious problems to these companies. Most likely, it will result on investment stopped and perhaps some legal actions against the Bolivian government. Although, it is necessary to mention that some companies have shown their intention to go along with 50% taxes, but most of them are firmly against the migration of old contracts to new ones under the new conditions.

It has been three days since the law was passed by Congress. Uncertainty is setting over Bolivia because President Mesa has not indicated if he will sign it or veto it. Also, there is absolute silence amongst the members of Mesa's cabinet and his government.

Although, it would be a bit premature, I would venture to say that Mesa could once again choose to act against Congress and veto the new law. That way he does what the social sectors, the private sector and the international community want him to do and he rids himself of all responsibility of promulgating such an unpopular law. This would mean that the (fire)ball would come back squarely in the hands of Congress.

Note: Images from fairfaxdigital.com.au and elmundo.es.