Sunday, May 5, 2013

Bolivia: President Morales Expels USAID from Country on May Day

President Evo Morales on Wednesday (May 1) expelled the US Agency for International Development from Bolivia, accusing USAID of meddling in the internal affairs of the Bolivian government.

Since taking office in 2006, Morales has traditionally chosen International Workers Day (AKA May Day) to announce the nationalization of a foreign firm or the assertion of public control over infrastructure or natural resources.

Bolivian ties with Spain took a major nose-dive earlier over the last year after Morales ordered a third nationalization of Spanish commercial interests in the Latin American country.

Last year, Argentina nationalized Spain's majority share in the country's largest energy company YPF.

Latin American governments increasingly are leaning toward tougher rules in a bid to manage foreign investors and extract better terms. Unfortunately, though, governments such as Bolivia and Argentina are developing a reputation as being anti-foreign investor.

The diplomatic and political damage caused by nationalizations often lasts for years. When state-run enterprises fail to deliver better results than their former owners, governments get deeper into trouble, as we have seen in Venezuela.

Spanish investors say Bolivia raised salaries by 140% in less than a decade, but barred the airport operators from raising tariffs.

Spanish Foreign Minister José Manuel García-Margallo said Madrid intended to mobilize all national and European resources against Bolivia. Spain's Repsol also made similar declarations, but talks on Argentine compensation have not moved because of Buenos Aires' unwillingness to negotiate.

Last year Morales nationalized five energy utilities owned by Red Electrica and Iberdrola S.A.

Bolivia last month renewed accusations that the US Embassy in La Paz was continuing to spy on his government. Morales expelled US Ambassador Philip Goldberg and drug enforcement agents in 2008. Charge d'affaires Larry L. Memmott heads currently heads the diplomatic mission.

Morales, the first indigenous head of state of this Indian-majority country, ordered the US Drug Enforcement Administration out of Bolivia in 2008, the same year he told Washington’s ambassador, Philip Goldberg, to leave.

COMMENT: Denying any wrongdoing by its officials, the United States immediately expelled the Bolivian ambassador, leaving relations between the two nations at the level of a charge d’affaires.

The United States regrets La Paz’s decision to expel USAID and rejects the accusation of political interference as “baseless and unfounded,” US State Department spokesman Patrick Ventrell emphasized.

It is extremely rare for USAID to be asked to leave any country, given its significant foreign assistance funding provided to foreign governments in cash-strapped developing governments.

That being said, President Morales is by far one of the most left-leaning presidents in Latin America who by his actions in recent years has made it clear that he has nothing but disdain for the US.