The populist hopes that with nationalization he can spread the wealth between the rich and the poor indigenous population. Although European Union representative Kenneth Bell believes that nationalization is a right of the Bolivian government and sees nationalization as a common historical theme during economic downturns, his view underestimates some trends of Latin America’s leaders.
A primary example is the strong influence of Hugo Chavez who finances the Bolivian government. Following his recent loss of the Congress, he has responded with nationalization of opponent firms and nationalizing an American bottle company. This is practically a truism regarding Venezuelan news yet it is a clear demonstrator that nationalization is a muscle of the government meant to increase their power.
In the case of a corrupt government, however, nationalization is thievery with only idealism as the foundation.
How can such claims be made? Out of ten points, with zero being the perception of a purely corrupt government, assigned by Transparency International’s Corruption Perceptions Index in 2008, Bolivia earned a 3, Venezuela a meager 1.9 and Colombia with a 3.8. World Governance Indicators from 2009 show similarly high levels of corruption with Bolivia, Venezuela, and Colombia receiving rankings of 27.6%, 8.1% and 48.1% respectively.
These rankings point to a strong question mark when asking the true intentions of Venezuela and Bolivia’s nationalization movements. Although they claim to be based on the interests of the people, government mismanagement and wealth distribution has not proved to be a historically beneficial proposition for Latin America.
Take Cuba, an extreme example of how wealth distribution in poor nations is not beneficial. Cuba still faces a government with socialist intentions despite Fidel’s withdrawal from power. Even the economic troubles have forced the once purely communist nation to privatize certain jobs in an effort to promote internal business growth.
Other negative effects of this wealth distribution include the drop in labor incentives and capitalist activities. For example, nationalization of the Bolivian energy corporations is a hindrance to foreign investment, and combined with the form of military influence in the matter, gives an already low level of investment into Bolivia a harsher future. While the Bolivian government claims it will be compensating corporations, this will only lead to further regulation and even decreases in profits during economic downturns, both primary causes of investment deterrence. Natural capitalist forces and taxes should be guiding the path to redistribution of wealth, not full out nationalization. Dependency on a government with high levels of corruption, weak political infrastructure and slow economic growth points to potential disaster.
The perspective would be different if Morales and Chavez were alone in this battle, but new friends are on the horizon from the newly elected Colombian president, Juan Manuel Santos. New improvements in relations between Colombia and Venezuela are important shifts in the strategy of the leaders. While their diplomatic efforts appear wholesome, they maintain a sense of government control over economic relations.
It is not merely pessimism that veils the analysis of these Andean leaders but sheer historical reality. Not only has Morales demonstrated a lack of democratic values through his plans to establish his administration indefinitely in office, but his consistently confrontational diplomacy with the U.S. is a reflection of Chavez and his hopes to socialize Latin America.
These nations do not need more corrupt government manipulation of any sector and deserve to develop by necessity. Indigenous farmers receiving government subsidies are not going to engage in capitalist investment over the years because they will lose incentive to learn the ways of this trade. Over time, the Bolivian and Venezuelan governments can easily create a control over natural resources similar to OPEC with little real returns to the people.
The debate rests on how reliable Morales is in promoting Bolivian development. From the perspective of Morales’ main source of influence, Hugo Chavez, the prospect of success is slim.
The debate rests on how reliable Morales is in promoting Bolivian development. From the perspective of Morales’ main source of influence, Hugo Chavez, the prospect of success is slim.
Wow. I actually had high hopes for Morales when he was first elected. I even wrote a leader profile paper on him my sophomore year for World Political Leadership. That goes to show what I know. I'm really disappointed in his indefinite term as President and the fact that Bolivia still is having transparency troubles. Hugo Chavez may be a pain to The US and the EU, but he seems to be very influential, especially on neighboring leaders. Very enlightening.
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