Thursday, May 11, 2006

Bolivia Gas Plan Causes Rift in S. America

By ALAN CLENDENNING AP Business Writer

SAO PAULO, Brazil May 10, 2006 (AP)— It wasn't long ago that South America's leftist leaders were sharing bear-hugs and talking about forming something like the European Union, with a pipeline network to solve energy problems, a unified parliament, and a currency good from Colombia's Caribbean beaches to Argentina's frosty southern coast.
Bolivian President Evo Morales changed all that: He abruptly took over his country's 53 foreign-owned natural gas installations and installed white-helmeted military police with semiautomatic rifles to guard the continent's second-largest gas reserves.
The nationalization evokes comparisons to decades past when Latin American regimes ruled with brute military force. It also has created a serious rift between the region's center-left governments and the hard-left administrations of Morales and his mentor, the socialist Venezuelan President Hugo Chavez.
"South America is back to its unstable ways, big time," said Gary Hufbauer, a senior fellow at the Institute for International Economics in Washington, D.C.
The takeover threatens to cause energy shortages and price hikes that could seriously damage the economies of Bolivia's biggest customers, Argentina and Brazil.

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