nationalisation

Bolivia, often labelled as one of South America’s poorest countries, might pull a surprise in 2o13: the IMF expects this landlocked Andean country to grow by 6.7 per cent – its highest rate in ten years.

Despite the fierce anti-capitalist rhetoric and nationalisation policy of President Evo Morales (pictured), Bolivia’s gross domestic product has tripled to $27bn since he took office in January 2006, and economic growth has been chalking up an impressive 5 per cent average. As a consequence, the financial sector has also grown substantially. Any worries? 

Critics of Evo Morales, Bolivia’s leftwing president, say his enthusiasm for nationalisation is such that there will soon be no companies left to nationalise. But if Morales has been indiscriminate in bringing the private sector under the state’s wing since he took office in 2006, he has at least been getting selective recently over which former owners to compensate for taking their companies off their hands. 

Argentina has been nationalising things again – this time, two rail cargo routes operated, since 1999, by a Brazilian company that is Latin America’s biggest independent logistics firm, América Latina Logística (ALL), and a tourist train, the Tren de la Costa. 

By Eric Farnsworth of the Council of the Americas, Washington

Bolivia is the poorest nation in South America. Along with Haiti and Nicaragua, it is one of the poorest in all of the western hemisphere. So what’s President Evo Morales’ latest strategy to improve social indicators? Expel USAID, the US government aid agency that spent some $28m last year promoting healthcare among poor Bolivians and working to protect the environment. 

On the whole, the Hugo Chávez years went well for Polar, Venezuela’s biggest privately owned company, which did solid business despite all the president’s radical socialist rhetoric.

But with presidential elections due on Sunday, campaigning is always an especially sensitive time, with the food and drink giant last week becoming the object of particularly harsh criticism from Chávez’s successor Nicolás Maduro, a former bus driver who wants to ram it home to voters that he’s on the side of the workers, not their beastly capitalist employers. 

Can I nationalise you?

For a country with a fondness for nationalisations and getting its way, going to full arbitration might feel a little, well, odd. Bolivia has been placing companies under state control on and off since May 2006.

So how did UK-based power company Rurelec manage to get Bolivia to go to the Permanent Court of Arbitration in The Hague over the nationalisation of the assets of its local subsidiary, Guaracachi, almost three years ago? 

Hungary’s fast-expanding re-nationalisation programme, led by former anti-Communist activist Viktor Orban, on Thursday took a great leap forward.

MVM, the state electricity company and emerging energy combine, is to pay around €870m for full control of E.ON Földgáz Trade and E.ON Földgáz Storage, the Hungarian gas trading and storage companies currently owned by Germany’s E.ON. 

Evo Morales strikes again. On Monday, Bolivia’s president nationalised the operations of the country’s three largest airports – taking over the local unit of Barcelona-based Abertis Infrastructuras SA and AENA, Spain’s airport authority.

The seizure of the airport operations in La Paz, Santa Cruz and Cochabamba is Morales’ third expropriation in 10 months. In December, his government seized two electricity distribution companies owned by Spain’s Iberdrola. Six months earlier on May Day, it nationalised the assets of Spain’s Red Eléctrica. 

Trying to carve out a Bolivian mining industry purely on his own terms is proving tricky for Bolivia’s leftwing President Evo Morales.

Recently, he was forced to give out some disappointing numbers about the performance of the Colquiri mine, which the government took over from London-listed commodities giant Glencore in June of last year, during a dispute between rival mining unions. 

It looks like another tough battle is in store for one more foreign utility owner fighting back against Bolivian nationalisation.

Red Eléctrica, the Spanish power grid operator, is to seek arbitration at ICSID, the World Bank’s investment dispute settlement agency, after Bolivian troops marched in to take over Transportadora de Electricidad, which handles about three quarters of electricity transmission in the Andrean country, in May last year. 

This week’s announcement that Zimbabwe will no longer evict owners from properties covered by international investment protection agreements has been derided as “locking the stable door after the horse has bolted” by John Worsley-Worswick, who heads Justice for Agriculture (JAG), an activist group. He has little faith in the pledge by Herbert Murewa, lands minister, to honour the terms of Bilateral Investment Promotion and Protection Agreements (BIPPAs) that Harare has signed with foreign governments. 

African National Congress (ANC) delegates, December 2012The tricky beast of nationalisation is on the agenda at the ANC’s Mangaung conference, where party members are meeting to elect leaders and discuss key decisions on critical policies.

A rejection of outright nationalisation has been set out, but analysts say that the looming alternative of higher taxation is a bitter a pill to swallow for investors and the country’s struggling mining industry. 

State-owned Rosneft buys TNK-BP Photo Bloomberg

Russia’s government did its best on Wednesday to affirm its continued commitment to privatisation plans, despite carrying out what is in effect the largest nationalisation in post-Soviet history this week.

Andrei Belousov, economy minister, insisted that the purchase of 100 per cent of oil company TNK-BP by state company Rosneft did not mean the government was rethinking its commitment to rolling back state ownership of the economy. 

So much for the photo finish. Hugo Chávez won Sunday’s presidential election with a 10-point lead, emerging strengthened from what was his (or his movement’s) 16th nationwide election.

Given the ample margin of victory, many Venezuelans are already worrying to what extent Chávez will radicalise his Bolivarian revolution, as he has promised – with all the negative implications for the economy that will bring. 

He believes capitalism has grown a little old. He believes that system is in decline. He believes nationalisations would not scare away foreign investors. He believes people would rush to buy his bonds. He believes he has the right alternative. Let beyondbrics introduce you Bolivia’s finance minister, Luis Arce Catacora (pictured).

“We are facing a structural crisis of capitalism. Capitalism is the old man around, an old man that is no longer responding to the advances of mankind demands. It is time for a change.”