Bolivia Dares to Dream of the Sea, Again

Stratfor Worldview reports:

Bolivia Dares to Dream of the Sea, Again

To the victors go the spoils: In the 19th-century War of the Pacific, Chile bested its two foes, grabbing territory from both Peru and Bolivia. The defeat stung Lima but devastated La Paz, as Bolivia lost its access to the sea. Ever since, Bolivia has pursued an irredentist agenda, demanding that it receive back its irreplaceable portal to the world. From time to time over the past century, Santiago and La Paz have sought to iron out their differences amid some of the worst ties anywhere in Latin America. Now, however, a breakthrough could be on the way. The International Court of Justice (ICJ) in The Hague is expected to issue a ruling on the matter by the end of the year after hearing the countries’ final arguments on the dispute last month. The court may not grant Bolivia back the land it lost so long ago, but it could pave the way for talks that could finally please La Paz.

The Major Sticking Point

It took 131 years, but Peru and Chile finally settled their territorial dispute stemming from the war in 2014, when an ICJ ruling maintained Chile’s current land borders but reduced its maritime frontier, allowing Peru to extend its boundaries in the Pacific Ocean. Ultimately, the resolution paved the way for Lima and Santiago to proceed with infrastructure and trade integration projects. But in contrast to the contention with Peru, Chile is finding Bolivia’s territorial claims much more difficult to stomach. Peru’s primary territorial claim affected only Chile’s maritime frontier, but Bolivia has demanded an area that includes the port city of Antofagasta. La Paz lost the city in the war, and just last month, Bolivian President Evo Morales contended that Antofagasta belongs to his nation.

For Morales, the land dispute is about more than national sovereignty, including electoral considerations as well. Bolivia’s Constitutional Court approved a request last year by the ruling party, Movement Toward Socialism (MAS), to permit Morales to run for a fourth term. The president will now seek re-election next year and hopes to use the territorial dispute – an issue that unites all Bolivians regardless of their political persuasion – to increase his domestic support.

Morales faces another challenge in his Chilean counterpart, Sebastian Pinera. Last year, then-Chilean President Michelle Bachelet launched a process to finally normalize relations with Bolivia, but Pinera’s election in December 2017 appears likely to complicate those negotiations. Since taking office, Pinera has provided no indication that he will follow Bachelet’s lead until the ICJ passes judgement. In fact, Pinera has even said Chile has no obligation at all to sit down with Bolivia regarding its demand for access to the ocean. In his current attitude toward La Paz, Pinera appears to be following the tenor of his previous term in office, from 2010 to 2014, during which time Chilean-Bolivian relations went sour. The countries had been working on a common agenda to settle their disputes, only for negotiations to stall in 2011, prompting Bolivia to take Chile to the ICJ.

Leaving the Door Open

Still, Chile has previously demonstrated itself to be amenable to finding a solution to Bolivia’s lack of sea access – provided that the deal does not include Antofagasta. Today, the area around the city houses one of Chile’s most important ports and boasts one of the highest per capita incomes in the country, while its environs also provide much of the nation’s lithium, copper and salpeter resources. In 1975, when Chile was under the military dictatorship of Gen. Augusto Pinochet, Santiago offered La Paz a land corridor connecting Bolivia with the Pacific Ocean that would have traced the Chilean-Peruvian border north of the Chilean city of Arica. Negotiators from the two sides failed to make headway at the time, but current Bolivian Vice President Alvaro Garcia Linera has admitted that La Paz could discuss the terms of the Pinochet-era offer.

The ICJ decision is unlikely to include awarding Chilean territory to Bolivia, but the court could oblige Santiago to negotiate on the issue with La Paz. Accordingly, Bolivia is hoping that its ruling will strengthen its bargaining power in future talks with Chile. But Chile, however, fears that a ruling compelling it to sit down with Bolivia will imply that its neighbor must ultimately receive some manner of sovereign access to the Pacific Ocean.

Natural Gas the Catalyst?

Politics, however, is not the only factor shaping the long-running territorial dispute, as energy will perhaps play an even bigger role in influencing how the countries tackle their conflict. Because it is landlocked, Bolivia has no option for international trade except through its neighbors. The country’s main export product is natural gas, yet its two main buyers, Argentina and Brazil, are likely to double their own natural gas production over the next decade, meaning Bolivia must gain new customers elsewhere to maintain its income. Argentina has a contract to import Bolivian natural gas until 2026, but Argentine Energy Planning Secretary Daniel Redondo said his country would succeed in meeting its own natural gas demand – apart from in winter – by 2021, leading Buenos Aires to push for a renegotiation in the current deal so as to reduce imports of Bolivian natural gas in summer.

Brazil has also served notice that Petroleo Brasileiro (Petrobras) will not renew its current natural gas contract with Bolivia when it ends next year. La Paz could continue to sell natural gas to private buyers in Brazil, but it is also likely that demand for Bolivian natural gas from those importers will decline in the coming decade. Diminishing returns in Brazil and Argentina accordingly oblige Bolivia to push hard for sea access that could facilitate exports to markets in Asia.

But all of Bolivia’s export trials and tribulations bring it back to Chile; the latter, for all of its mineral wealth, possesses no natural gas of its own, forcing it to instead depend on expensive liquefied natural gas imports. Currently, Bolivia refuses to export its natural gas to Chile due to their unresolved territorial dispute. In the past, the two have broached the possibility of Bolivia exporting its energy resource to Chile in exchange for sovereign access to the Pacific. An ICJ ruling forcing Santiago to the negotiating table could push such a solution to the forefront.

After close to a century and a half, a resolution to Bolivia’s dispute with Chile is on the horizon. Santiago has previously expressed its willingness to discuss the ceding of territory to provide La Paz with an outlet to the sea, and energy concerns could expedite the process. The ICJ could order Chile to find a negotiated solution to Bolivia’s problem, and La Paz might be only too eager to jump at the opportunity to offer natural gas to Santiago in exchange for a coastline – especially amid decreasing demand for the resource in its biggest markets. The international court’s decision will go a long way to settling the long-running border dispute, but the question of energy is likely to determine its ultimate fate.

Published by Bolivian Thoughts

Senior managerial experience on sustainable development projects.

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