Bolivia's Energy Takeover: Populism Rules the Andes
By SIMON ROMERO and JUAN FORERO
Published: May 3, 2006
[Excerpt from http://www.nytimes.com/2006/05/03/world/americas/03bolivia.html]

Bolivia's nationalization of its energy industry, announced Monday by President Evo Morales, was a vivid illustration that the populist policies, championed most prominently by Venezuela, were spreading.

The impact on international energy markets is expected to be minimal because Bolivia produces mostly natural gas and exports it to just two countries, Brazil and Argentina.

Symbolically, however, the dispatch of troops to refineries and oilfields threatens to inject more nationalistic fervor into the policies of Bolivia and other energy exporters, in Latin America and abroad.

"We're experiencing the supremacy of emotional politics at this time," Gonzalo Chávez, an economist at the Catholic University of La Paz in Bolivia, said in a telephone interview. "The nationalization was received with great enthusiasm, but we'll have to wait and see how the economic impact of all this plays out."

Many countries have already taken steps to assert greater control over their natural resources, spurred by nationalist politics and lofty energy prices.

Major oil suppliers like Saudi Arabia and Iran nationalized their oil interests decades ago. Russia recently reorganized its domestic energy industries as well. But it is in the Andean region where momentum is quickly building for a greater government role.

Venezuela, a top supplier of oil to the United States, is at the forefront of this trend, recently forcing foreign energy companies to accept state control of important ventures.

Ecuador imposed rules in April that increase the state's share of windfall oil profits, while in Peru, Ollanta Humala, a presidential candidate, has called for a more aggressive government role in natural gas and mining operations.

On Tuesday, Bolivia's vice president, Álvaro García, said major mining companies would also have to pay higher taxes. "There are not going to be company expropriations, of course," he told a local radio station, according to Reuters, "but we're going to assume a greater level of state control."

The government said it expected the nationalization of its energy sector, which includes the second-largest natural gas reserves in Latin America, behind Venezuela's, to raise its annual revenues by more than $300 million, to $780 million.

"I don't think the game is over," said Lawrence J. Goldstein, president of the PIRA Energy Group, which is based in New York and is supported by the petroleum industry. "It's going to move from the Americas to the Africans. This is a very dangerous precedent."

Bolivia's step highlighted the region's changing political landscape, pointing first to the weakening influence of the United States, and to the rising profile of Venezuela's president, Hugo Chávez, who has been empowered by soaring oil revenues.

But it also threatened to open a schism among the region's new wave of left-leaning leaders. Brazil's president, Luis Ignácio da Silva, while nominally left-leaning, has drifted more toward the center since his election in 2002. Now he will have to negotiate a way out of the current crisis for his country, which is one of the biggest investors in Bolivia's energy industry and the main buyer of Bolivia's natural gas.

Brazil announced late Tuesday that Mr. da Silva would meet Thursday in Puerto Iguazú, Argentina, with Mr. Morales and with Argentina's president, Néstor Kirchner, to press for stability in energy supplies and prices. Mr. Chávez may also attend.

The Brazilian state oil company, Petrobras, the nation's largest company, is among the small number of foreign energy companies that will feel the brunt of Bolivia's decision.

At a news conference on Tuesday, André Singer, a Brazilian government spokesman, said Petrobras would maintain its Bolivian operations for the time being, though it remained wary of future investments.

Other energy companies affected include the BG Group in Britain, Repsol-YPF S.A. of Spain and Total of France. The only Bolivian investment of Exxon Mobil, the largest American oil company, is a minority stake in a nonproducing gas field controlled by Total.

The president of Repsol, Antonio Brufau, said the Bolivian decree fell "outside the norms and logic of business that should be the guides for relations between companies and governments."

Companies said they were waiting for more details to emerge and for negotiations or legal arbitration to begin with the Bolivian government, which has given them six months to agree to the new conditions or leave.

For the largest natural gas fields, the decree would give the government 82 percent control, including royalties, taxes and direct stakes, while that level would be lower for smaller fields.

But specifics remain to be clarified, in particular whether infrastructure or assets will be seized without compensation. The decree described earlier policies giving foreign companies a foothold as "treason."

Edward E. Miller, president of Gas TransBoliviano S.A., a company that operates part of the pipeline to Brazil, said people in the energy industry were still trying to make sense of the changes.

"We have military in front of our offices, but they're not doing anything but making sure people don't take anything out of the offices," Mr. Miller said in a telephone interview from Santa Cruz de la Sierra, in Bolivia. "They're not abrasive, they just don't want anyone to leave with laptops or documents."

In taking such a bold step, Mr. Morales appeared to have taken a cue from President Chávez, who has used his oil money to buttress alliances. In Bolivia's case, Venezuela has agreed to supply about 200,000 barrels a month of subsidized diesel, donated about $30 million for social programs and sent literacy volunteers into the Bolivian countryside.

Just a day before his nationalization speech, Mr. Morales entered into a trade agreement with Venezuela and Cuba called the Bolivarian Alternative for the Americas.

"Chávez is forcing Bolivia into a radical shift," said Roger Tissot, director of markets and countries for PFC Energy, a consulting firm in Washington. "That is the major headache for the U.S."

The Bush administration has quietly tried to engage the new Bolivian government, though that overture and Brazil's efforts to moderate Mr. Morales appear to have had little effect.

A perception that foreign oil and mining concerns have exploited landlocked Bolivia has been a driving force in the country's politics for decades. But it gained new currency after Bolivia and other nations in the region reopened the energy industry in the 1990's.

Since then, there have been boisterous protests and a tide of electoral revolts by voters who felt that the economic benefits had not spread to the poor.

Bolivians have also chafed somewhat at their dependence on Brazil. Petrobras controls 45 percent of Bolivia's natural gas fields, and part of a pipeline that supplies 51 percent of Brazil's need for natural gas.

At the same time, Brazilian companies, eager to expand into neighboring countries, have been struggling to do so without offending their hosts.

"Brazilian companies still do not have a nuanced approach, a diplomatic culture, particularly in relation to smaller countries," Luís Nassif, one of Brazil's leading economic commentators, recently wrote in the newspaper Folha de S. Paulo. "They are arrogant, like the British before World War II."

Yet while Brazil might feel tremors from Bolivia's decision, it is Bolivia that may be risking its potential as a major natural gas exporter.

Companies had been holding off on investments in Bolivia for some time, unnerved by growing talk of precisely the kind of step that Mr. Morales took this week. Foreign direct investment, much of which goes to energy and mining, fell to $103 million in 2005, from $1 billion in 1999.

What is more, unlike oil, natural gas is not easily exportable, with costly liquefaction facilities, customized tankers or pipelines needed to take the fuel to markets. Chile, a potential market for Bolivian gas, may choose instead a project to import the fuel from as far away as Africa.

Even Brazil, while now reliant on Bolivian gas, has recently discovered large offshore gas reserves of its own. Thus the window of opportunity for Bolivia to become a leading gas exporter may be closing, even as it grows more courageous in its dealings with foreigners.

Benefactor of Caribbean Immigrants Is Accused of Defrauding Them
By MANNY FERNANDEZ and SARAH GARLAND
Published: May 1, 2006
[Execerpt of article found at http://www.nytimes.com/2006/05/01/nyregion/01garifuna.html?_r=1&oref=slogin]

For years, the Garifuna people came to Southern Boulevard to mourn their past. Then they started going there for another reason, not out of grief but pride. They came to see Maria Elena Maximo.

On March 25, 1990, a fire at the Happy Land Social Club killed 87 people, at least half of whom were Garifuna, a small Central American ethnic group that has struggled to maintain its identity and traditions in this city of immigrants. The building, at 1959 Southern Boulevard, remains standing today, a reminder of one of the deadliest arson cases and mass murders in New York City history, and hallowed ground for the Garifuna.

Ms. Maximo, 53, is one of them, and a few years ago she set up a small storefront about a block away. She established herself as an advocate for the Garifuna and other immigrants, helping them prepare and file their immigration papers and offering English, computer and other classes as president of a nonprofit group.

When she discovered that the Garifuna were having trouble attracting grants without an accurate count of their numbers, Ms. Maximo made plans to conduct a census. She offered to help clean the granite monument erected on a traffic island in honor of Happy Land victims and was given a key to its gate by the City Parks and Recreation Department. In March, she paid tribute to the victims at an event recognizing the 16th anniversary of the fire.

Nine days later, she was under arrest, accused of defrauding the immigrants who looked up to her as a leader.

On Southern Boulevard and in other parts of the Bronx, there is now confusion and anger. "It hurts a lot as a Garifuna to hear this," said Elena Gutierrez, 28, a Honduran immigrant who took G.E.D. classes at Ms. Maximo's storefront. "It's very hard when something like this happens. Now no one will believe in anyone anymore."

Ms. Maximo was arrested in connection with a scheme to charge illegal immigrants $500 to $2,500 each to apply for work permits and green cards for which they were not eligible. State and federal prosecutors said she submitted more than 1,300 fraudulent applications in 2004 and 2005, receiving an estimated $1 million from her customers.

Most of these immigrants were seeking documents through a federal amnesty and legalization program. The authorities said Ms. Maximo misrepresented the program, telling her clients that to qualify, they had to have been in the country for just a few years — 4, 5, or 10 years. But the program was closed to anyone who entered the United States after 1981.

Many of Ms. Maximo's clients never got a green card. Many never got their money back. In a cruel twist, faulty applications filed by Ms. Maximo led to deportation proceedings for a few clients.

After her arrest, someone scrawled "ladrón," Spanish for "thief," on the door of her Harrison Avenue apartment.

"I thought it was good stuff, but she was just faking it," said Scarly Joseph, a 26-year-old day care provider from Haiti, who said she paid Ms. Maximo $2,000 to file a green card application for her after she overstayed her tourist visa. Ms. Joseph earns $250 a week and used all her savings and borrowed from a friend to pay the $2,000. She is still waiting to hear about the status of her application. "I worked so hard for that money," she said, "and I don't know how I'm going to get that money back."

Ms. Maximo was charged with two counts of mail fraud and faces a maximum of 20 years in prison for each count. Michael J. Garcia, the United States attorney in Manhattan, announced the arrest on April 4, the same day State Attorney General Eliot Spitzer filed a lawsuit against her alleging fraud. Ms. Maximo, who was released on bond after her arrest, declined to comment, saying her lawyer advised her to do so. "Believe me, I would like to spill my guts," she said. "We have nothing to hide."

Of the more than 1,300 applications Ms. Maximo filed, some have been denied and others are in the process of being denied, the authorities said. But some immigrants said in interviews that they did receive green cards after Ms. Maximo filed their paperwork.

Court documents identify at least three cases in which faulty claims for asylum and legalization filed by Ms. Maximo led to deportation hearings. Details about the outcome of those proceedings were not available.

In one of those cases, a man from Trinidad said he paid Ms. Maximo nearly $1,400 for work permits for him and his wife. Ms. Maximo had applied for political asylum on their behalf without their knowledge, he said. As a result, his wife was ordered to leave the country in January. "I just wanted my money's worth, as they say," he said. "Nothing came out of it. Only bad, no good," said the man, who was granted anonymity because of his illegal status.

allegations have shocked many Caribbean and Central American immigrants, from whom Ms. Maximo drew many of her clients. They say the charges amount to a kind of breach of trust, as illegal immigrants, often suspicious of outsiders and the government, turned to Ms. Maximo, herself an immigrant from Honduras, for help in becoming citizens. "It's difficult to believe," said Evelin Milla, 19, a Honduran immigrant who studied at the storefront on Southern Boulevard and considered Ms. Maximo a friend. "But with experience comes betrayal."

Still, among the Garifuna, descendants of West African slaves and Arawak Indians from the Caribbean island of St. Vincent who were forcibly relocated to Central America by the British, there are those who believe she is innocent.

"If you asked me if Ms. Maximo would cheat people out of a million dollars, I would say no," said Mark Ford, a Garifuna who lives in the Bronx and has known Ms. Maximo for four years. "I would trust her with my relatives. Not just friends, but my relatives."


A spokesman for the Parks Department said Ms. Maximo volunteered to spruce up the Happy Land monument, which is ringed by buckets of drooping yellow flowers and silk lilies. After being given a key to the memorial's red-painted gate, she changed the locks without the department's permission, the spokesman said. Those locks have since been replaced.

The Happy Land fire was started by a Cuban refugee who was thrown out of the club after arguing with his ex-girlfriend. He returned with a plastic jug filled with a dollar's worth of gasoline and set fire to the door. Most of the victims were trapped and asphyxiated on the crowded second floor.

A cousin of Ms. Maximo lost his son in the fire. Another cousin, Antonieta Maximo, the former consul general of Honduras in New York, helped get the Happy Land monument built.

Maria Gale, who lost her daughter and five other relatives in the fire, and Isabel Nunez, who lost her two younger brothers, said they were outraged that Ms. Maximo had received the key to the memorial gate. They said a relative of one of the victims should have been given the key, and were skeptical of Ms. Maximo's eagerness to help them.