Originally from World Arbitration And Mediation Review (WAMR)

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BOLIVIAN GAS NATIONALIZATION:

NEGOTIATION V. ARBITRATION
By Mauricio Ipiña Nagel

I. INTRODUCTION
Bolivia has long been an exporter of raw materials, relying on foreign
firms for the extraction of its natural resources. The country’s relationship
with foreign firms operating in that capacity has been one of bitter
interdependence.
During the era of Spanish colonial rule, which lasted almost three
hundred years, Bolivia proved to have one of the richest silver reserves in
the world. Those reserves supported the Spanish crown1 and its colonies
throughout the world. During the Twentieth Century, Bolivia, which had
gained its independence in the early 1800s, based its economy on the tin
industry, becoming the second largest tin producer in the world, exporting
around 20% of the world extracting capacity.2 During that period, political
and social events revolved around the mining industry.
Today, Bolivia has one of the largest reserves of hydrocarbons in the
region, second only to Venezuela. Naturally, political and social events now
revolve around that industry and Bolivia’s relationship to foreign firms
involved in exploitation and exportation. There is a resurgent popular
belief, often manipulated by Bolivia’s political leaders, that the country is
exploited by transnational companies to the detriment of the Bolivian
people. This has resurfaced over the past years in a manner not witnessed
since 1982.3 The past five years of social and political upheaval have
resulted in the “constitutional” replacement of three Presidents in less than
three years, seventy deaths, hundreds of wounded, millions of dollars in
damages, and has finally culminated in a measure anxiously expected by the
Bolivian people: The nationalization this year of hydrocarbon resources.
Even though the measures are described as “nationalization,” they, in
fact, do not bear such characteristics. The Government has not confiscated
the assets of the foreign companies in Bolivia, nor has it expelled their
representatives and technicians. The “nationalization” of Bolivian