Mocking Pilate

Growing protests in Bolivia

May 19th 2005 BRASíLIA
From The Economist print edition

President Mesa washes his hands, but may not save his head

CARLOS MESA faced a bleak choice: to risk his job by vetoing a law that sharply raises taxes on foreign energy companies, thereby provoking street protests that could topple his government; or to risk irrelevance by letting the law stand, even though he deems it a threat to the country's unity. Bolivia's president chose the latter course. On May 17th the head of the Senate signed into law a measure that Mr Mesa had refused to approve or veto. Ironically, this evasive manoeuvre may not forestall protests or keep him in office.

The law slaps a 32% production tax on top of royalties of 18% paid by producers of natural gas and oil, which have invested $3.5 billion in Bolivia since the mid-1990s. It also obliges them to turn over possession of the pumped gas to the state-owned energy company, YPFB. There is no chance now of new investment in projects such as a pipeline to boost exports to Argentina, says Carlos Alberto López, an energy consultant. The eastern provinces of Santa Cruz and Tarija, where the energy industry is based, are demanding autonomy and popular election of provincial governors.

Yet the law is not tough enough to satisfy radical social movements, some of which are now demanding complete nationalisation of the gas industry. Thousands demonstrated in cities on May 16th and some roads to La Paz, the capital, were blockaded.

In the short-term, Mr Mesa's survival probably depends on the intensity of these protests. He came to office in 2003 after 60 demonstrators were killed in clashes with the army, forcing the resignation of the previous president. As a result, Mr Mesa refuses to use force against protestors, even when they blockade roads.

Even if tempers cool, it is hard to see how Mr Mesa, now mocked as “Pilate” for dodging responsibility for the energy law, can restore his authority. The main political forces spurned his invitation to discuss a possible compromise on the energy law and on such burning issues as a new constitution and provincial autonomy.

The head of the army worries that Bolivia could be “on the way to disintegration”. Mr Mesa threatened to resign twice in March and may soon renew the offer. The presidency could then pass to the Senate's president, Hormando Vaca Diez, who clearly wants it, or new elections could be held. But it may be that no president can win a mandate to govern Bolivia.

Copyright © 2005 The Economist Newspaper and The Economist Group. All rights reserved.