Lula criticised over Bolivia gas deal

Brazil's president has come under fire from critics who say he caved into pressure from neighbouring Bolivia and failed to defend Brazil's energy interests after Bolivia nationalised its natural gas sector.

    Lula (L), Kirchner and Chavez met in Argentina on Thursday

    Many Brazilians expected Luiz Inacio Lula da Silva to win concessions from Bolivia's Evo Morales when the two leaders met on Thursday at a regional summit with Nestor Kirchner, the president of Argentina, and Hugo Chavez, the president of Venezuela, in the Argentine city of Puerto Iguazu.

    Silva was expected to demand guarantees that Bolivia won't interrupt gas supplies to Brazil. The government's oil company Petroleo Brasileiro SA, or Petrobras, has invested roughly $1.6 billion in Bolivia and is the country's biggest taxpayer.

    Critics said on Friday that Silva, known popularly as Lula, instead undercut Petrobras and failed to assert Brazil's importance as the continent's largest country and the primary consumer of Bolivian gas.

    While Petrobras has repeatedly said it won't invest new money in Brazil because of the new business climate there, Silva suggested that Bolivia could get more investment from the company.

    "Lula was confused, contradictory, neither in favour nor in defence of Petrobras," said Paulo Kramer, of consultants Kramer and Associates.

    Soldiers sent

    Morales announced his nationalisation decree on Monday, sending soldiers to guard Petrobras installations and others operated by foreign companies in Bolivia.

    The nation hasn't produced gas on its own since the 1990s, when a wave of privatisation drew foreign companies to the Andean nation.

    Morales (C) nationalised Bolivia's
    gas industry through a decree

    Bolivia gave Petrobras and other foreign energy companies 180 days to renegotiate and sign new contracts. Petrobras executives were furious and said the company had suspended all investments in Bolivia.

    But Silva on Thursday said Petrobras would continue investing in Bolivia and agreed to negotiate gas prices, starting next week in Bolivia.

    "I don't know how secure supplies are ... if they already have broken contracts," Kramer said. "We don't have any guarantees - not even what will happen to Petrobras' investments."

    Silva, who is widely expected to announce that he will run for a second term in October elections, said he was acting in the best interests of Brazil and Bolivia, the poorest country in South America.

    Gentle or tough?

    "People say 'Lula has to be tough with Bolivia'," Silva said on Friday. "I think being gentle is better than being tough."

    Brazilians don't dispute Bolivia's right to nationalise its reserves. After all, Brazilian law states that all its own underground resources belong to the government.

    "Brazil's role is to defend its interests, which is Petrobras. Its attitude was very weak, but that's Lula"

    Carlos Lopes,
    Santa Fe Ideias Consultants,

    But many Brazilians think Silva was duped by Morales, who had long called Silva his "big brother" and spoke of the importance of Petrobras for Bolivia before his surprise nationalisation.

    Presidential meetings "don't resolve technical questions. They're symbolic, and the symbolism was bad from Brazil's viewpoint", said Carlos Lopes of Santa Fe Ideias consultants in Brasilia.

    "Bolivia's sovereignty defends Bolivia, not Brazil," he added. "Brazil's role is to defend its interests, which is Petrobras. Its attitude was very weak, but that's Lula."

    No more investments

    Sergio Gabrielli, Petrobras' president, insisted on Friday that the company had no immediate plans to put new money in Bolivia.

    Bolivia has given foreign firms
    180 days to renegotiate deals

    "New investments are not viable," Gabrielli said in a televised interview. "But I'm always willing to negotiate."

    Miriam Leitao, a respected economic columnist for Rio's O Globo newspaper, said on Friday that Silva "offered help to a government that breaks contracts signed with Brazil. In practice, Brazil will pay Bolivia for causing us losses".

    She referred to a statement signed by the four leaders in which they "agree to encourage joint investments to promote the full development of Bolivia".

    Arthur Virgilio, a senator of the centrist Brazilian Social Democracy Party, the main opposition to Silva's leftist Workers Party, said Brazil should recall its ambassador from Bolivia.

    SOURCE: Agencies


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