Bolivian President Evo Morales announced the nationalization of Sabsa on February 18, 2013. Photo: Reuters.
Bolivia’s nationalization of three Spanish companies in less than ten months is starting to look like a trend. After the most recent one, an airport operator, international investors have a two-part question, who will President Evo Morales appropriate next and when?
One way to divine the answer is to seek a pattern in the more than 20 companies Morales has nationalized since arriving to power in 2006. The president’s desire to control the country’s resources and to expand his control over the nation’s economy underlines all of the actions. Morales eagerness to transfer from private to state-owned compasses, gas companies, commodities firms, like the Swedish Glencore who has been hit twice or Bolivia’s largest telephone operator, Entel, which had been controlled by Italy’s ETI.
Coincidently or not, Bolivia’s last three nationalizations have been of Spanish-owned companies. With Spain experiencing its worst economic crisis in decades, Morales has taken to the highest degree the idea of hitting someone when he’s down. It hurts Spain’s efforts to grow its presence in Latin America and reconfirms the change of economic importance from Europe to Latin America.
Spain has not retaliated in the previous two nationalizations, but after Abertis’s take over, the Spanish Foreign Ministry said that the move would have consequences for bilateral relations. We are yet to see exactly what that will mean.
An independent arbiter is expected to conduct an audit to decide how much compensation Abertis should get for its seized airport operations. Like Iberdrola, which claims $100 million, and Red Electrica which claims $74 million, it can expect to be short changed. Morales has justified the nationalizations with a simple economic argument, the companies’ failure to make all the investment as expected. Thus the values to be compensated are commensurately lower.
Even though Morales‘s recent actions have been against Spanish companies, other international firms are aware of the risks to their assets in the country. The president has quickly forgotten the pledge he gave at the E.U.-CELAC summit in Santiago when he agreed, as stated in the final declaration, to “provide legal certainty for economic operators.”
Morales’s nationalizations could quickly catch up with him. The debt the country acquires with the expropriated companies is high, more than $1 billion, with half of it yet to be paid. Each one of the 10 million Bolivians “will be obliged to pay around $100 per capita for such measures,” according to the Bolivian El Diario newspaper.
Meanwhile, international markets still wonder: Who’s next?
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