[Marxism] Cold snap prompts Chile to seek gas deal with old foe Bolivia

Walter Lippmann walterlx at earthlink.net
Tue Aug 7 18:32:44 MDT 2007

It was the late James P. Cannon who said that fortune smiles 
on the Godly (he didn't capitalize the "g"), and if you live 
right, you get a lucky break now and then. Evo Morales, the 
elected President of Bolivia, and also the first indiginous 
President in Latin America's history, who leads a party called
Movement Toward Socialism (MAS), must surely be living right.

The weather in the Southern Cone is acting as an engine toward
Latin American integration, a key element in the realignment of 
forces taking place internationally.


from the August 08, 2007 edition - 

Cold snap prompts Chile to seek gas deal with old foe Bolivia

As temperatures fall, neighboring Argentina has cut some 
gas shipments to Chile, causing prices to skyrocket.

By Matthew Malinowski | 
Contributor to The Christian Science Monitor
Santiago, Chile
A South American cold snap is causing Chileans to pay up to four
times more for heat and electricity, and could spur the government to
speed reconciliation with its bitter – but gas-rich – foe, Bolivia,
observers say.

As temperatures dropped to near-record lows in recent weeks,
neighboring Argentina has had to cut off some gas shipments to Chile
in order to meet its own domestic demand.

Now, an increasingly disgruntled Chilean public is pressing the
government to seek gas deals with other countries, including Bolivia.

"I believe that we need to leave behind these historic feuds once and
for all and start an open and frank dialogue with Bolivia," said
Chilean senator Nelson Ávila after the latest round of gas cuts last
month. "Bolivia has some of the largest natural-gas reserves on the
planet, and we could easily benefit from them."

In 1995, Argentina promised a cheap, steady supply of natural gas to
satisfy Chile's residential, industrial, and electricity-generating

Still, what was then perceived to be the cure-all to Chile's energy
woes has since morphed into one of the country's biggest problems.
Today, Chile imports nearly 100 percent of the commodity from its
Andean neighbor. This winter's cold temperatures have exposed this

"Depending on Argentina is wishful thinking; they do not even have
enough gas to meet their internal demands," Eduardo Frei, president
of the Chilean Senate, told reporters recently.

In response to the shortages, many Chilean businesses, particularly
electricity-generating companies, have reluctantly switched to diesel
fuel. The situation reached a low point in June, the first month
since the 1995 agreement that Chile used no natural gas to generate
electricity. Diesel costs up to four times as much as natural gas and
pollutes far more.

The consequences have been disastrous: electricity bills have risen
sharply. Some industry analysts expect them to rise by as much as
another 13 percent by winter's end.

Additionally, Santiago, the country's capital and largest city, has
experienced a sharp spike in air pollution, including its smoggiest
day since 1999.

New solution with an old foe?

In light of the increased pressure to find new energy sources, the
Chilean government has begun to explore purchasing natural gas from
neighboring Bolivia.

On the surface, this partnership seems like an ideal match. Chile
needs natural gas to satisfy internal demands.

Bolivia, which has South America's second-largest natural-gas
reserves, also stands to benefit from better ties: The country is
seeking more potential gas customers as well as foreign investment to
help modernize its gas-industry infrastructure.

But the two countries have a long legacy of diplomatic feuds.

Chile and Bolivia have had icy relations since the War of the Pacific
in 1883. At that time, Chile took Bolivia's access to the Pacific
Ocean, a loss that soured relations. Diplomatic ties were eventually
broken off in 1978 over Bolivia's insistence on regaining access to
the sea.

'First step toward reconciliation'

In spite of this sensitive history, relations between the two nations
have thawed in the last year. Since Chilean President Michelle
Bachelet and her Bolivian counterpart, Evo Morales, assumed their
respective positions in 2006, officials from both countries have
tried to boost dialogue and reconciliation.

The latest sign of rapprochement came last week, when Chilean Energy
Minister Marcelo Tokman and Bolivian Hydrocarbon Minister Carlos
Villegas met in Bolivia's capital, La Paz, to discuss energy

The two ministers discussed cooperation on geothermal energy at
length. But they decided to put off detailed discussions about gas
until a later date, which has not yet been set.

Chilean politicians and officials have spoken out in favor of the
renewed dialogue.

"I think that last Monday's meeting was a very important first step
toward reconciliation," says Paula Vasconi, an official at Terram, a
Chilean think tank that promotes environmental protection and
sustainable development.

Still, Ms. Vasconi went on to vocalize Chilean concerns over the
talks' most serious sticking point: Bolivia's territorial demands.
Chile has tried to keep its energy discussions separate from
landlocked Bolivia's desires for sea access, and this could represent
a point of contention in future negotiations.

"I think that these talks could lead Chile and Bolivia to establish
diplomatic relations once again," says Vasconi. "But it all depends
on how Bolivia deals with the sea access issue. If things with that
issue do not get too complicated, then there could be very positive

Temperatures go down, prices go up

This winter, Santiago's Meteorological Association has recorded some
of the coldest temperatures since 1984. In early July, temperatures
dropped to as low as 23 degrees F. in Santiago's outlying Pudahuel

The Nation Energy Commission (CNE) warned Chilean consumers in late
July that their electricity bills will rise another 6 to 7 percent in

Also, some industry sources say higher generation costs could
translate to higher electricity bills through October.

Chilean Finance Minister Andrés Velasco announced that the government
will distribute funds to the poorest 40 percent of the Chilean
population in order to defray the higher costs. Each family will
receive 800 pesos ($1.40) in two installments. According to Mr.
Velasco, this plan will cost the government more than 800 million
pesos ($1.55 million).

But these payments only go so far; for 140 kilowatts of electricity,
monthly electricity bills can easily reach as high as 20,000 pesos
($39) in parts of southern Chile.

For most Chileans, it is becoming more clear that maintaining the
status quo is not viable.

"It is horrible. Electricity prices have been going up for a while,"
says Santiago resident Hugo Velasquez.

"If you look at my past few energy bills, they have gone up
considerably for the past two or three months 
 and now I have to
reach a special agreement with the company on how to pay because, if
you are late on making your payments, they charge you even more,"
says resident Carlos Larrain.

"The government is getting used to making decisions in its
technocratic circle without taking into account the problems which
affect normal people," said Senator Ávila.

But that could be changing.

"The pressure put on the government has undoubtably pushed it to look
to Bolivia as a source [for gas]," says Vasconi. "The faster Chile
reaches an agreement with Bolivia, the faster Chile can opt for this
new energy source for the country."

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