Bolivia to revoke mine licence after protests

President Evo Morales to revoke concessions of Canadian silver mine following violent opposition from Quechua Indians.

Bolivia’s president said he would revoke a mining concession from Canada’s South American Silver Corporation and give the state control of the site due to violent protests over the company’s plans.

The announcement on Wednesday is the second time in less than a month that President Evo Morales has given in to protesters’ demands for him to step up a drive to increase state control over natural resources in the poor Andean country.

Violence flared last week at South American Silver’s Malku Khota project after protesters held five Bolivian employees hostage to demand the Canadian company leave.

They hailed the president’s decision as a definitive solution to the conflict in which one protester was killed and a dozen more injured.

“The company [South American Silver] put brothers, brothers-in-law, cousins and neighbours at odds with one another,” Morales said at the presidential palace as he explained the deal between protesters and his government.

“How can we be at odds with each other over an international company that comes to loot our natural resources?” said Morales, an ally of Venezuela’s Hugo Chavez, who has increased state control over the economy with a series of nationalisations.

Pictured: Bolivian president, Evo Morales, gave into protester demands regarding Canada’s South American Silver Corp [EPA]

Spain Struggles to Control Escalating Bank Crisis

It wasn’t so long ago that the Spanish banking system was the subject of glowing praise. As financial institutions in Germany and many other European Union countries began to falter because they had badly gambled on high-risk US mortgage securities, the situation remained remarkably quiet in the southwestern part of the continent. The reason was that Spanish banking regulators had largely restricted the country’s banks from engaging in the risky business.

In the meantime, Spain’s banks are now amongst the greatest problem children in the euro zone. Developments on Wednesday night underscored just how dire the situation has become. The Spanish government announced that Bankia, the country’s fourth-largest financial institution, would be largely nationalized. The announcement, made with little notice, suggests a hectic situation. The cabinet of Prime Minister Mariano Rajoy had actually been planning to announce a new bailout program on Friday.

So what led the situation in the Spanish banking market to escalate so quickly? The problem was that the Spanish regulators recognized the threat abroad, but not the one that was brewing at home. Just like in the United States, a real estate bubble had also grown in Spain. The only difference between the two was that Spain’s wasn’t hidden in the form of complicated financial products. Spain’s cajas, or savings banks, speculated badly with normal loans.

In contrast to their German counterparts, the Sparkassen, which are only allowed to do business in the areas where they are located, the Spanish eliminated such a “regional principle” in 1988. This allowed all the country’s cajas to participate in the construction boom that saw large parts of the country’s coast dotted with new concrete apartment buildings. It is estimated that the cajas are currently saddled with €180 billion ($233 billion) in troubled mortgage loans.

“The Spanish deregulated in the wrong way,” says Hans-Peter Burghof, head of the Institute for Banking and Financial Services at Germany’s University of Hohenheim. But the government has been trying to move in the other direction for some time now. Bankia, which was nationalized this week, is the product of the fusion of seven cajas at the end of 2010, mergers precipitated by pressure from Madrid. Officials hoped that the institutions could weather the crisis together.

Pictured: Nearly 10 percent of Spanish savings are held at Bankia, which the government in Madrid nationalized this week. REUTERS

Democracies can stop predatory financiers – Argentina and Bolivia are showing how

Kirchner’s and Morales’s renationalisation of energy companies has been seen as mere populist demagoguery. But it was a response to toxic speculation

While Europe forces yet more privatisation on Greece and Spain under the Orwellian name of “liberalisation”, Latin America in 2012 is challenging the orthodox view that private always is better than public. On 1 May Bolivia seized the Spanish company that controlled its electricity grid, just after Argentina, on 14 April, effectively renationalised YPF, its main oil company, expropriating 51% owned by Spanish firm Repsol. Both critics and supporters have understood Cristina Fernández Kirchner’s and Evo Morales’s actions in terms of energy nationalism and populist demagoguery. But we should see both instead as responses to the failures of privatisation and its toxic connection to complex forms of financial speculation.

Bolivia and Argentina have both shown that private firms were investing less, not more, than their public predecessors were. Morales noted that only $81m had been invested in Bolivia’s electricity grid since privatisation in 1997. YPF in the 1990s drilled three times as many exploratory wells in Argentina as it did in the 2000s under Repsol. Argentina’s oil and gas output was falling, and new reserves were not being found to replace exploited deposits.

In both cases Spanish multinationals had prioritised the repatriation of dividends over investment. This indirect form of asset stripping was driven by the priorities of bankers in London and New York. Behind the Repsol-YPF affair, in particular, was something very close to the sick capitalism that caused the 2008 crisis: high-yield, high-risk assets, sliced and diced via complex derivatives.

Pictured: President Kirchner holds a sample of the first petroleum extraction in Argentina as she announces that YPF is subject to expropriation. Photograph: Daniel Garcia/AFP/Getty

Bolivia nationalises Spanish-owned power grid

Bolivian troops occupy installations owned by Red Eléctrica, following Argentina’s move to nationalise oil company

The trend for South American nations to reclaim privatised energy businesses has strengthened after Bolivia’s president Evo Morales said he planned to seize control of the main power grid from a Spanish-owned company.

The move is a blow to Red Eléctrica Corporaciión, which has operated most of Bolivia’s electricity distribution since the grid was privatised 15 years ago.

It follows Argentina’s controversial move last month to take control of the country’s oil company, YPF, from the Spanish energy company Repsol, which had a majority interest.

Spain’s ambassador to La Paz expressed alarm that another overseas Spanish asset was effectively being seized. He said the electric grid takeover “is sending a negative message that generates distrust”.

Morales chose to press ahead with the move on May Day, the international labour day, by ordering troops to occupy the company’s installations.

Red Eléctrica is the sole operator of the transmission grid in Spain, and the Spanish government holds a 20% stake in the company.

Morales did not say how much the company would be compensated, but the nationalisation decree says the state would negotiate a compensation fee.

Pictured: Bolivian president Evo Morales (second from the right) and members of his government celebrate May Day. Photograph: EPA

Argentinian president moves to nationalise Spanish-owned oil assets

President Cristina Fernández de Kirchner shocks oil industry by planning to seize 51% of Repsol’s Argentinian assets

Argentina sent shock waves through the oil industry by announcing plans to nationalise local oil assets controlled by a Spanish company, in a controversial move that threatens to sour the already troubled relationship between the two countries.

The move to seize 51% of Repsol’s YPF business in Argentina sent the company’s shares spinning down 18% on Wall Street and will worry other big foreign investors such as BP.

Cristina Fernández de Kirchner, Argentina’s president, introduced the new measure to Congress in a bid to recover sovereignty over its national hydrocarbon resources.

Kirchner accused Repsol of failing to produce enough oil through YPF to meet Argentina’s energy requirements. Repsol’s alleged failure threatened to “practically turn us into an unviable country,” Kirchner said. Economic and political interest in the country’s hydrocarbons has rocketed since the end of last year when YPF announced it had discovered a shale oil site that could potentially yield 1bn barrels.

Politicians have accused Repsol of failing to invest enough in future production at a time when the high cost of oil is undermining the country’s economy.

The nationalisation comes amid escalating threats against operators drilling for oil off the disputed Falkland Islands.

Argentina is expected to expropriate about 24% of YPF from Repsol and another 26% from Argentina’s Peterson Group at a price yet to be determined by the government.

Kirchner said the price would be set by the national appraisal tribunal and insisted the business could continue to be managed “professionally”. She said Argentina was one of the few countries that did not control its own oil.

Pictured: The Argentinian president, Cristina Kirchner, said YPF had not produced enough oil. Photograph: Pablo Porciuncula/AFP/Getty