EU official backs Bolivia nationalisation

Page last updated at 23:51 GMT, Sunday, 9 May 2010 00:51 UK
EU official backs Bolivia nationalisation

A senior European Union official has said Bolivia has the right to nationalise companies as long as they are offered "fair compensation".

Kenneth Bell, the head of the EU delegation to Bolivia, said nationalisation was a sovereign right of the Bolivian government.

Mr Bell was speaking a week after the Bolivian president controversially seized four electricity companies.

Two of the plants were partly owned by a British and a French firm.

More:
http://news.bbc.co.uk/2/hi/americas/8671618.stm

The guy said Bolivia had the right to nationalize. That's like saying orcas have the right to eat seals. He was saying something that's self-evident and not disputed. It doesn't follow he thinks seizing the plants is a good idea. Notice the words "fair compesation" were used. Most companies are in full agreement with nationalization, as long as "fair compensation" is paid. The problem, you see, is that fair compensation isn't paid by the likes of Chavez, Correa, etc.

I should add, the reason why companies like to have an international arbitration clause in their contracts is to have the ability to go to an outside arbitrator (usually in Sweden, NY, or similar), where the fair compensation issue can be decided. Countries which don't intend to honor the fair compensation of nationalized companies hate such arbitration clauses. And this is the reason why nobody is really investing in Venezuela. I know the deals are "signed", but the reality is very ugly: they are barely investing at all, waiting to see if Chavez' government will lose the elections in September.