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Last Updated: Saturday, 17 July, 2004, 16:40 GMT 17:40 UK
Bolivia's gas vote fires fierce debate
By James Painter
BBC Americas analyst

It is an unusual topic for a referendum.

On Sunday, Bolivians are voting on what to do about their vast reserves of natural gas - Latin America's second largest.

Protestors in the Bolivian capital La Paz
Bolivia is deeply divided over what to do with its natural gas
The wording of the referendum is complicated. Voters are being asked five different - and sometimes lengthy - questions about the best way of exploiting the gas.

The vote has aroused huge passions.

In essence, the issue is whether President Carlos Mesa will be given the go-ahead to export more gas, and if so, what role will be given to the state company and to foreign companies.

Those companies have invested several hundred million dollars in gas exploitation in Bolivia in recent years.

Critics say they are the main beneficiaries, and want the government to re-nationalise the reserves.

But supporters say that without the know-how, investment and technology of foreign companies, Bolivia cannot earn any sort of revenue to pull itself out of poverty.

Lessons from history

Bolivia's past and present is a story about commodities.

In the colonial period it was the main source of supply of silver to the Spanish empire.

President Mesa applauds the delivery of a gas meter near La Paz
President Carlos Mesa has plenty of gas to deliver, but where will it go?

If you go to a city called Potosi high up in the Andes in the centre of the country, you will see a huge hill called Cerro Rico - or Rich Mountain - which is now pock-marked by hundreds of entrances to mining shafts.

In the 17th century Potosi had a population larger than Paris or London.

Some historians say enough silver was mined from that hill alone to have built a silver-paved road from Bolivia to Spain.

And yet not much - if any - of the wealth was left in Bolivia. Potosi is one of the poorest districts in Bolivia, which in turn is the poorest country in South America.

Who gets the money?

In the 20th century Bolivia provided much of the world's tin output, largely to satisfy the demand for the manufacture of tin cans.

When the tin price collapsed in the mid-1980s, 25,000 miners lost their jobs within a few weeks.

Next came coca, the raw material for cocaine, which certainly provided a major source of income for thousands of poor peasant farmers.

But Bolivians often point out that even with this commodity, the real profits were made elsewhere, in this case in Colombia, where the cocaine is mostly processed, and in the US where the dealers make huge profits.

Map of Bolivia

Bolivia has one of the world's largest reserves of lithium (used in batteries, among other things), but fierce local opposition to any foreign exploitation has meant the reserves are still undeveloped.

Better not to mine it at all, the local authorities said, than to have foreigners take the lion's share of the benefit.

Now it is the turn of natural gas to be at the centre of the debate.

It is a controversy that is familiar to any developing country with commodity reserves, but Bolivia's history makes it particularly acute.

Bolivia sets out gas referendum
20 May 04 |  Americas
Fresh anger over Bolivia gas plan
16 Apr 04 |  Americas
Country profile: Bolivia
06 May 04 |  Country profiles

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