Spain writes off Bolivian debt to save gas firms

5th January 2006, Comments 0 comments

5 January 2006, MADRID — Spain has told Bolivian president-elect Evo Morales that it will write off a large part of the Latin American country's debt to Madrid.

5 January 2006

MADRID — Spain has told Bolivian president-elect Evo Morales that it will write off a large part of the Latin American country's debt to Madrid.

Spanish officials said Morales had agreed that the  EUR 99 million debt would be spent on improving educational programmes in Bolivia.

In return Madrid asked Morales to bolster legal protection for foreign investments in his country and to ensure any disputes to do with Spanish corporate interests be resolved by means of negotiations.

The future Bolivian president met Jose Luis Rodriguez Zapatero and King Juan Carlos during a two-day visit.

Morales has promised what he describes as a non-confiscatory nationalization of his country's vital natural gas industry.

But when Spanish foreign minister Miguel Angel Moratinos met Morales he was emphatic about the need to "strengthen legal protections" for investments, and of negotiation as the only way to deal with any eventual disputes.

Between 1996 and 2002, foreign firms invested more than EUR 3.06 billion in exploration in the Andean nation, finding enough additional natural gas to bring Bolivia's proven and probable reserves of the fuel to more than 52 trillion cubic feet, second only to Venezuela in Latin America.

Moratinos also expressed his "willingness to continue increasing" the presence of Spanish companies and Spanish investment in Bolivia, a subject that has become a core issue of the Bolivian socialist leader's visit here before he takes power on 22 January.

Moratinos and Morales also discussed topics related to Spain's ongoing development aid to Bolivia, and the need to create a mixed commission to work out a plan of action "adapted to the new political circumstances".

Among the subjects discussed were also questions of consular cooperation and the growing migration of Bolivians to Spain, the ministry said.

Immigrant aid organizations estimate that some 120,000 Bolivians work in Spain, of which only about 50,000 are in the country legally.

Morales also talked with industry minister Jose Montilla, who said he trusted that the future president would protect Spanish corporate interests in Bolivia according to "existing agreements".

Nonetheless, Montilla admitted later to reporters that Bolivia is bound to see "certain changes in the rules of the game," but said that Morales mentioned neither nationalization nor confiscation, and that the future president "showed a great deal of prudence".

The Spanish-Argentine oil company Repsol YPF has invested heavily in Bolivia, and since 1995 has put more than EUR 820 million into the Andean country in long-term, shared-risk investments, generating more than EUR 516 million in revenue for the government.

The Spanish company currently employs some 3,000 people directly and indirectly in the Andean nation.

Morales and the Movement toward Socialism (MAS) won the election on 18 December with a programme that seeks the nationalization of oil and natural gas. The industry law approved last May obliges companies to renegotiate their contracts.

The newly elected Bolivian authorities have declared their intention of hiking taxes on oil companies once they have recuperated their investments in the country, and of making the government a full partner in all stages of production and commercialization, which will include setting prices.

Spanish companies with the greatest investment in Bolivia are Repsol YPF, Spanish Electric Grid (REE), the Iberdrola power company, the Bilbao Vizcaya Argentaria Bank (BBVA), and the publishing groups Prisa, Santillana, and Cobra (ACS).

[Copyright EFE with Expatica]

Subject Spanish news

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