Trouble
in US backyard as Bolivia takes over private oil
NEW YORK - When Mohammed Mossadegh defied the Western world in the
early 1950s by nationalising British Petroleum in Iran, the Brits
and the Americans connived to destabilize the country, oust the
fiercely nationalist leader, and install the puppet regime of Reza
Pahlavi, later anointed as the Shah of Iran.
In
the 1970s, US corporations threatened by a socialist government
in Chile funded and abetted a CIA-inspired coup to oust a populist
leader Salvador Allende, destroying what was described as "the
oldest functioning democracy in South America" and replacing
it with the American-blessed repressive regime of General Agusto
Pinochet.
In
a new book titled 'Overthrow', Stephen Kinzer recounts US attempts
to successfully topple some 14 foreign governments during the last
110 years — from Iran and Guatemala to Chile and Iraq.
The
military misadventures were prompted by several reasons, including
American arrogance and greed, the US role as self-appointed purveyors
of democracy, the relentless search for new markets for American
surplus products, Christianizing heathen nations, and Cold War politics,
says Kinzer, a former foreign correspondent for the New York Times.
In
its review, the Times said there are no bright spots in Kinzer's
book. "In one instance after another, arrogant Americans are
shown tossing out legitimate governments and installing corrupt
brutes who turn out to cause more problems for foreign policy than
did the ousted leaders." The prime villains, according Kinzer,
are some of America's biggest corporations, including United Fruit,
ITT, Aramco, and more recently Halliburton, in Iraq.
Last
week the new left-leaning government of Evo Morales in Bolivia decided
to nationalize the country's energy reserves by dispatching the
military to occupy natural gas fields which have been "plundered"
by private companies in a poverty-stricken country. "The looting
by foreign companies has ended," Morales said, declaring that
he will take "absolute control" of all natural resources."
Among the 25 international energy firms operating in Bolivia is
the US-owned Exxon Mobil Corporation.
The
US which has scruplously protected its political, military and economic
interests in what it considers its own backyard — the entire
Latin American region — has also been irritated by the constant
taunting by another nationalist leader: President Hugo Chavez of
Venezuela, a country with the largest oil reserves outside the Middle
East. Following closely in the footsteps of Cuba's Fidel Castro,
Chavez is exploiting the spreading anti-American sentiment in Latin
America to his political advantage. The big plus he has over Castro
is that Chavez has economic clout because he is reeking in petro
dollars. And Castro isn't.
The biggest political nightmare for American policy makers is that
leaders like Chavez and Morales – unlike Castro — have
been voted into power by democratic means in a region once notorious
for military dictatorships. Since the legitimacy of these governments
cannot be challenged, there is no US justification for enforcing
its policy of "regime change" — as it did in Iraq
headed by a dictator. Since 2000, there are at least seven Latin
American leaders from countries that include Brazil, Argentina,
Uruguay, and Ecuador. They are described either as "socialists"
or "left-leaning", all elected to office in multi-party
democracies.
But as Latin America continues its trend towards left wing regimes,
the situation is made worse by the foreign policies of the Bush
administration. Chavez, for example, condemns the US for its double
standards on terrorism — one yardstick to measure Palestinian
terrorism and another to measure state-sponsored terrorism by Israel
— and is critical of the US invasion of Iraq. The Venezuelan
leader has also never forgiven the Bush administration for providing
tacit support for a failed coup against him in 2002.
Sri Lankan experience
By American standards, however, Sri Lanka got away with minor political
bruises when the government of Sirimavo Bandaranaike decided to
take over the import, storage and distribution of petroleum under
the State Petroleum Act of 1961. The equipment, property and other
assets of three British and American oil companies — Shell,
Esso, and Caltex — were expropriated by the government. But
unlike Iran, Chile of Venezuela, Sri Lanka (then Ceylon) was not
a major political or economic player to warrant high-handed US intervention.
The US government responded by saying it did not contest the Sri
Lanka government's right to nationalization, but that all three
oil companies should be compensated "promptly, adequately,
and effectively." As a newspaper editor of that time recalls,
the compensation issue resulted in a deadlock: the oil companies
claiming Rs. 40 million for their expropriated assets and Rs. 100
million for loss of business, while the Ceylon Petroleum Corporation,
which had taken over the country's oil business, only willing to
settle for Rs. 12 million.
In light of the deadlock, no compensation was paid and the US enforced
the infamous Hickenlooper Amendment to a Foreign Aid Bill under
which any country that expropriated the assets of US companies without
agreed compensation had to be denied American aid. As a result,
US aid was cut off, and one of the worst hit projects was the mordernization
of the Katunayake airport, later funded by Canada. In 1965, the
new government of Prime Minister Dudley Senanayake adopted the Ceylon
Petroleum (Foreign Claims) Compensation Act under which the oil
companies accepted compensation of Rs. 55 million. US aid was resumed
on Feb. 15, 1966.
But historically, the groundwork for nationalization in Sri Lanka
was laid with the passage of the State Industrial Corporations Act
in 1957 during the tenure of Prime Minister SWRD Bandaranaike. The
two state-owned entities created at that time — the Ceylon
Transport Board and the Port Cargo Corporation — hardly threatend
any major foreign companies in the country.
Concerned about the effectiveness of state-owned enteprises, however,
Bandaranaike invited foreign economists to visit the country and
assess the usefulness of public corporations. One of them was the
internationally-renowned Harvard University free-market economist,
John Kenneth Galbraith, who died in the US last week. "Public
enterprises have often worked badly," Galbraith declared. "The
path is liberally strewn with wreckage. Some have been congenitally
slow, some congenitally costly, and a great many of them have no
earnings but losses."
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