In a marathon session in Congress which continued into the small hours of Wednesday, Deputies approved the new gas royalty and tax law using the formula proposed by President Mesa, but with one significant difference: the tax of 32% on multinationals will be charged from the outset and not gradually instituted, thus avoiding the advantages of tax deductions. This 32% tax, applicable immediately, will be in addition to the 18% royalty payable on all gas extracted. This occurred, despite alleged bribes being handed out the MAS deputies in recent vote procedures.

Morales shows excellent judgment

Movement toward Socialism (MAS) leader and deputy, Evo Morales, had originally demanded a full 50% royalty on gas extraction, but adjusted his position when Congress passed the law in its above format. The road blocks which had paralyzed the country have been lifted as a goodwill measure, on the condition that the Senate approves the law in this form as well, which does not allow for the multinationals to reclaim taxes paid on gas to the Bolivian state.

Multinationals � what to do now?

Reactions from the gas multinationals which include Spanish Repsol-YPF, Petrobras from Brazil and Shell (Netherlands) were muted, but one spokesman from the Hydrocarbon Chamber said that the new law was the same as Morales had demanded and that effectively, "they were being confiscated".

The signing of 1997 contracts between the Bolivian state and the multinationals could leave the country open to multi million dollar law suits, as they revise their contracts. The only way out for the multinationals to fulfill their profit projections, is if there is an amendment to the law allowing them to "reclaim" taxes paid.

If this were to happen, the social movements and Morales would simply re-institute the country wide blockade.

A victory for the Bolivian people

In effect, the pressure of the blockades and social protests paid off handsomely for the Bolivian people under Morales� leadership and determination, and could be a major setback for the unbridled greed of the global corporate empire. There are many more hurdles to cross in Bolivia, now that this first major one has been overcome in favor of the majority, for one of the few times in Bolivian history.

The other victory in recent times was in 2000, when the Californian multinational Bechtel was forced to abandon the country, once again in the face of massive protests by the indigenous majority. This is people power at work, and we are confident that they French multinational Suez des Eaux, will also be forced to leave Bolivia, after continuing the exploitation of this basic natural resource.

The next hurdle will be the referendum to separate Santa Cruz province from the rest of Bolivia in June/July � then the holding of a vote on a Constituent Assembly due in December.

Mesa could resign and elections be called

Now that President Mesa has lost this round against the MAS, Morales and other social movements, his political gambit calling for early elections in August has also backfired. This proposal will be rejected by Congress and the Senate as it is unconstitutional, and Mesa now finds himself in a corner and may have to step down, but this time "irrevocably".

This will open the door for elections and could mean a measuring of the traditional conservative forces of Bolivia, led by ex president Jorge Quiroga, against the new left headed by Evo Morales.

Morales has a lot of wok to do to unite the left and all social movements behind his possible candidacy, to defeat the traditional oligarchy. However, this happened in Uruguay for the first time in history, with the Broad front triumphing, so why not in Bolivia? (If this scenario does transpire, we will publish an analysis of this contest in good time)

We Bolivarians, congratulate the Bolivian people on this victory, which is just one battle won, as the war for control of their country and South America continues.

However, we are certain that other indigenous, social and workers movements throughout this most unequal on continents will be inspired by both the resolve and commitment shown by the Aymara people in the Bolivian gas war.

� Copyright 2005 by AxisofLogic.com

(This article has been updated with new developments today, March 17, 2005 - Update - Bolivia: Mesa to seek early elections in August)

Carlos Herrera has been writing this important series on Developments in Bolivia as they occur on an almost daily basis.

You can also read his articles on other countries, like Ecuador, as the ripples of the Bolivarian Revolution spread into other countries in Latin America.

You can also find his analyses on the Bolivarian Republic of Venezuela, where he resides on VHeadline.

You can read Mr. Herrera's bio on Axis of Logic and contact him at:  carlos@axisoflogic.com