Latin American progressive governments still bet on “extractivismo”

by Carmelo Ruiz-Marrero, Latin America Energy & Environment Monitor

Surely no Bolivian head of state has ever been as famous an international celebrity as Evo Morales. His pronouncements on environmental protection and against the capitalist system have earned him much fame. His participation in the United Nations summit on climate change in Copenhaguen in December 2009 was key in exposing to the whole world the hipocrisy and inaction of major polluting countries regarding global warming.

It was in response to the Copenhaguen fiasco that Morales took the initiative of organizing and hosting an alternative civil society summit meeting in the Bolivian city of Cochabamba last April. His opening speech at the summit, officially named the World Peoples’ Conference on Climate Change and the Rights of Mother Earth, was the most important and right-on-target statement ever made by a head of state on the subjects of ecology and climate change. At the international level all of his declarations and actions have earned him the esteem of environmentalists and progressives from all over the world.

However, it seems president Morales does not practice in his own country what he preaches in international fora. When he came to power in 2006, hydrocarbons, or fossil fuels, were his country’s main source of income. Mining followed closely behind in second place. The activities of both economic sectors are highly polluting and predatory of natural resources, and hydrocarbons are precisely the main cause of global warming. If anything has changed since then, it’s that Bolivia is nowadays more dependent on hydrocarbon and mining exports, according to a recent report by the Center of Studies for Labor and Agrarian Development (CEDLA).

CEDLA explains that in 1988 hydrocarbons and mining were responsible for 47% of the country’s exports and today they constitute 80%. “Between 2004 and 2005 the growth of the hydrocarbon sector accounted for nearly 25% of the country’s economic growh, and in 2008 the mining sector’s growth explained almost 40% of economic growth.”

Given the growing importance of fossil fuel exports for Bolivia’s national economy, one can hardly conceive of Evo Morales’ government making a useful contribution to moving the world towards a post-carbon economy in the near or middle term.

Environmental aspects aside, dependence on raw materials exports sentences the countries of Latin America and the rest of the global South to the lowliest state of economic underdevelopment. The writings of thinkers like Raul Prebisch, Celso Furtado and Eduardo Galeano, and the reports of the Commission for the Development of Latin America (CEPAL) have elaborated extensively on this.

The government of Morales had made a commitment to changing this situation through the industrialization of hydrocarbons, meaning the creation of industries to manufacture value-added products. In the case of petroleum, a variety of finished products can be made from it, including gasoline, kerosene, motor oil, pesticides and plastics. And with natural gas one can make fertilizer or electricity to power manufacturing and metallurgical industries.

But so far the industrialization has not taken off. Quoting an article published in Plataforma Energetica on October 10: “On the first of October president Morales admitted: ‘I want to be very sincere: what we are not being able to pull off is the industrialization of gas and petrochemicals’, he said, blaming this on the lack of ‘accompaniment’ of Bolivian experts on hydrocarbons to carry this process forth, since, he pointed out, they prefer to earn thousands of dollars a month working for the transnationals.”

In the first week of October social and labor organizations founded the National Committee for the Regional and National Development of Bolivia (CONADERENA) to push for the industrialization of hydrocarbons. CONADERENA’s founding organizations “coincided in affirming that regrettably the government of Evo Morales did not fulfill the ‘October agenda’, whose main postulates regarding the nationalization and industrialization of natural gas and all our natural resources, are not reflected in the policies and actions undertaken by the current administration and, on the contrary, it continues the neoliberal policies imposed by (previous president) Gonzalo Sánchez de Lozada of exporting gas, as well as minerals, as raw material.”

Another critique levelled at Morales’ energy policy is that in his drive towards turning his country into a major energy exporter he has neglected the domestic market. While supplying markets in Brazil, Argentina and most recently Paraguay, the Bolivian economy has been left without enough gas supply. This has led to embarassing situations, like in September when energy scarcity forced Bolivia to import 20,000 tons of cement, even when the country has the capacity to manufacture it.

According to various experts that participated in the recent Second Forum of the Latin American Network on Extractive Industries, organized by CEDLA and carried out in Bolivia, the foreign exchange obtained from hydrocarbons has not been put to good use. “Our countries… have grown accustomed to living off nature’s rent, to exporting raw materials, and to losing in international trade”, decried Alberto Acosta, who was mining and energy minister under current Ecuador president Rafael Correa, and chairman of the constituent assembly that wrote a new constitution for Ecuador in 2007.

Acosta, a leftist economist with a close relationship with the ecology movement, holds that although the governments of Evo Morales and Rafael Correa write and talk a lot about “right livelihood” and a harmonious relationship with nature, all their plans for “development” and economic “growth” are sustained by a growing “neo-extractivism” of non-renewable natural resources with ever growing environmental impacts.

He pointed out that “we have extracted much oil, received plenty 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 pollution, massive deforestation, harms to health, and diseases.”

It was also stated in the Forum that the capital generated by this extractivist activity has been spent on social programs which, while being very popular, are of an assistentialist and clientelist nature. According to Acosta, this has led to the creation of a “welfare-client class” (bonocracia clientelar).

Mexican specialist Rocío Moreno lamented that “there is no serious and profound discussion in our countries about what we want to do with the rent obtained from petroleum… In recent years the money was used to cover current spending, in paying bureaucracy, it is not oriented towards closing development gaps, towards improving equality.”

Acosta holds that the way out of this predicament is a transition towards a post-extractive economy. The presidents of Bolivia and Ecuador cannot claim ignorance about this proposal since it is written in both countries’ constitutions. He acknowledges that oil wells cannot be shut down overnight, but he urges that in light of peak oil and climate change, the transition cannot be postponed.

The Ecuadorian economist made clear that post-extractivism does not mean rejecting the exploitation of natural resources, but rather “establishing the biophysical limits of exploitation, arriving at sustainability, eliminating poverty and its cause, which is opulence,” and moving towards a post-petroleum economy. “Oil is running out, and given the growing rates of consumption we will not be able continue being oil exporting countries.”

Acosta is hopeful that the Yasuni-ITT Initiative will become a precedent that could lead Latin America towards a post-extractivist, post-petroleum future. This acclaimed initiative consists of the Ecuador government’s commitment to abstain from extracting oil from the biodiverse Yasuni national park, and in exchange receive a compensation
provided by the international community, which will be administered by a trust fund set up by the United Nations.

In conclusion: “The speakers at the II Forum on Extractive Industries agreed that the construction of a new post-capitalist economy does not depend solely on tax reform or the development of alternative energies, but basically on citizen participation in the administration of the ever growing incomes that the state has garnered from oil and mining. That’s why it is key and urgent that the peoples of the region develop effective mechanisms of social control, and denounce unilateral and improvised decisions made by their governments.”


This story first ran Oct. 26 on Latin America Energy and Environment Monitor.


World Peoples’ Conference on Climate Change and the Rights of Mother Earth

Yasuni battle continues
Latin America Energy and Environment Monitor, Sept. 6, 2006)

Despilfarran la renta petrolera y minera en una ‘bonocracia clientelar’
Plataforma Energética, Sept. 1 2010

Bolivia está en el nudo de sus contradicciones
Plataforma Energética, Oct. 10 2010

See also:

From Copenhagen to Cochabamba to Cancún
by Karah Woodward, The Indypendent
World War 4 Report, June 2010

Climate Change and Indigenous Struggle
by Bill Weinberg, NACLA Report on the Americas
World War 4 Report, January 2011

Reprinted by World War 4 Report, January 1, 2011
Reprinting permissible with attribution