The consequences of nationalisation?
See “Bolivia defends takeover move” (business, page 5)By Jon Fernquest
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Nationalisation makes privately owned companies government owned. Nationalisation was popular during the first half of the twentieth century under socialism and communism and neighboring Burma during the 1960's.
Both the new president of Bolivia, Evo Morales, and the president of Venezuela, Hugo Chavez, have recently threatened to nationalise their countries' natural gas and oil reserves.
Morales is a hero to the poor indigenous coca farmers of Bolivia who elected him president last year. In democratic elections he gave these poor people political power for the first time. You could almost say that he acts on behalf of these people, but the nationalisation raises many questions.
1. Is nationalisation really in Bolivia's long term economic interest?
2. How much of a country’s land and natural resources should foreigners be allowed to own?
3. Once foreign companies buy and own a certain percentage of your country’s land and natural resources, can you go backwards and take it away from them without paying them for it?
4. If you do, what are the likely consequences and costs of nationalisation?
5. Will nationalisation really affect the country’s ability to attract future foreign investment?
6. Investment from countries like Brazil and Spain that already have large investments in Bolivia?
7. Investment from new investors not willing to take the risk?
8. Does the country even need foreign investment? What about its growing population?
9. Is it true, as U.C. Berkeley economist Brad De Long suggests, that: "Having your major extractive industries run by political hacks will be very destructive" ?
10. Will the gain for the poor people of Bolivia from nationalisation be worth more than the costs of the decision?
11. Should there be a limit on what foreigners can own in a developing country?
12. Should foreigners be able to own land and natural resources like oil reserves or forests?
13. Should foreigners only be allowed to own 50% or less of a local business?
14. Should governments allow these laws to be informally circumvented by fake proxy owners? (Common practice in Thailand).
15. The problem faced by a foreign investor: "Forming joint venture companies with majority local ownership but adequate safeguards for the foreign minority interest." However, in the most extreme case, the so-called local owners are actually powerless proxies who invested no money in the business and make no decisions. What can a developing country do when the intentions of a law are no longer being followed?
Check the Wikipedia pages on Evo Morales, Hugo Chavez, Globalization, Anti-Globalization, and Privatisation in Thailand. Also check out recent news articles about how the Venezuelan President Hugo Chavez is taking steps towards nationalizing the oil industry in Venezuela and the comments made by Berkeley economist Brad De Long in his weblog.
Update: There's an insightful article at the Guardian that looks carefully at both sides of the issue (Saturday May 6, 2006).
Vocabulary (in discussion above)
nationalise – when a government takes ownership away from a privately owned company and makes it government owned (nationalisation is the noun form) (See Wikipedia:Nationalisation)privatisation - making government owned companies publicly owned (See Wikipedia:Privatisation)
natural resources – the valuable parts of nature, the land, forests, energy sources, and minerals that a place has
on behalf of – doing something for other people
indigenous – people who originally inhabited a country like the American Indians, not the people who migrated there later
coca – a plant used in the illegal narcotic cocaine and also in a legal and popular local tea (See Wikipedia:Evo_Morales_coca)
natural gas – gas that is used in homes for cooking and heating (tanks of gas are used in Thailand, in the west gas is piped into homes)
extractive industries – industries that extract (take out) natural resources like oil and natural gas from the earth
a political hack - a politician who uses a political power for private gain, rather than public service
circumvented – go around, find a way to avoid
proxy – a person authorized to act for another person
reserves – supply of something available for use when it is needed
safeguards - actions to protect yourself from harm or being treated badly
Vocabulary (in article)
leftist – supports the ideas of socialism or communism, the “right” means conservativea summit – a meeting between the leaders of countries
rattled the region – made the countries in a region nervous
royalty payments – payments made to the owner of property for the use the property (including intellectual property such as inventions, ideas, books, musics, or artistic works)
crack down – enforce a law
conservation laws – laws that protect the natural environment, for example against cutting trees or polluting
toting – carrying
alienating – losing friends, making people unsympathetic to your problems
y is reminiscent of x – y makes you remember x which is similar to y
sympathetic – understand another person's problems and want to help
otherwise sympathetic – would be sympathetic (if the facts just given were not true)
a think tank – an organization of theorists and intellectuals who produce analysis and policy recommendations (See Wikipedia:Think_tank)
confrontational – trying to create a dispute or argument
antagonistic – showing hatred and dislike
Hydrocarbons – “Chemicals formed from hydrogen and carbon. Fossil fuels such as natural gas and oil are made up of these compounds. These fuels provide heat (in buildings), light, and power (used in cars and in plants that generate electricity). When burned, hydrocarbons release pollutants into the atmosphere.” (Source: www.ecohealth101.org/glossary.html)
unilateral – action taken without the agreement of others
