GREAT ARTICLE CONCERNING BOLIVIA
Huge reserves of lithium – the element used to make high-tech batteries – are in Bolivia's salt deserts. Photograph: Jose Luis Quintana/Reuters
Bolivia idles at a crossroads. The country has an unprecedented opportunity to use its newfound lithium deposits to bring itself out of poverty and in part save the planet from climate change. The trouble is, Bolivia can't fully do so without the help of foreign firms.
Lithium is a mineral that currently serves as the battery for BlackBerrys and other electronics. The big hope for lithium is in the automobile industry – it is so light that electric cars running on lithium batteries can store more energy, emit less pollution, and drive longer distances.
General Motors' Volt, the new car GM hopes can rescue it from near bankruptcy, will deploy a lithium-ion battery with a petrol engine. Future models of Toyota's hybrid Prius intend to use lithium batteries as well.
This is great news for Bolivia. According to the United States Geological Survey, 5.4 million tons of lithium could potentially be extracted in Bolivia's Salar de Uyuni region.
Bolivia may lack the technological capacity to exploit this resource to its full long-term potential in an environmentally sound manner. Yet because the World Bank and US-based Bechtel corporation so horridly botched water privatisation in Bolivia, and the IMF recommended that Bolivia lift taxes from corporations and tax the poor, engaging with foreigners of any kind can be seen as complete blasphemy.
Indeed on 14 June the head of Bolivia's mining agency told the Latin American Herald Tribune that the government may want to mine and manage lithium without foreign help. This is a marked change from the famous UN speech where President Morales said he would partner with foreign firms but that "we want partners, not bosses".
A bold negotiating stance would be for Bolivia to leverage foreign technological capabilities for mining lithium and for moving up the value chain.
What if Bolivia demanded that foreign firms not only formed joint ventures for mining lithium, but foreign firms would also be required to form ventures: to bring battery makers and assembly plants and an automobile manufacturing plant or two; to establish research and development centres in Bolivia; to help build Bolivian infrastructure for exporting lithium, batteries, and cars; and to help train Bolivians to be engineers? What's more, such a deal would also require fair wages, labour rights, and environmental protection.
Now that's a partnership.
Similar deals were commonplace in East Asia during the second half of the 20th century. Nations such as Taiwan leveraged their assets to attract foreign firms and learn from them. In exchange for allowing foreign firms to come to these countries, foreign companies were required to form joint ventures with domestic firms, to locate research and development facilities that employed local engineers, source inputs from domestic firms, pay taxes, train the workforce, and more.
Though tensions with Brazil over energy have been acute, Bolivia need look no further than the state-owned Petrobras as a Latin American success story in terms of leveraging foreign technology for local benefit. Petrobras serves as the lead co-ordinator of a web of foreign firms that helped Brazil acquire ultra-deep water drilling for oil. Brazil complements such efforts with policies to enable domestic producers and upstream technologies. Now Brazil is not only poised to be one of the world's biggest oil exporters but it has collaterally developed a biofuel industry and a flex-fuel engine that can take oil or biofuels – all through carefully targeted government policy.
Mexico, on the other hand, provides an example of how to drive a great opportunity into the ground. It sat on huge oil deposits but hijacked its state-owned oil company Pemex for close to 100% of its profits to supply the government with close to 40% of its revenue. Unlike Brazil, Mexico doesn't allow the company to deploy Petrobras-like policies that learn from foreign firms. Now, Mexico has only nine years of proven oil reserves left and at this point if they wanted to be pro-active they would be shot down by Nafta.
Given that the country has so much lithium, and that the world is looking for every opportunity to develop in a climate friendly manner, Bolivia has more leverage than most nations before it. Japan, with its hybrid and electric car technology, might make an interesting partner.
If Bolivia chooses an East Asian or Brazilian path and partners with foreign firms it can accelerate sustainable economic development. Slamming the breaks on carefully thought out foreign partnerships may jam Bolivia's development prospects and steer the planet away from a cooler road.