Bolivia Proposes Joint Executive-Legislative Approval for Future Nationalizations

Bolivia's government has proposed a new framework for nationalizations, requiring joint approval from the Executive and Legislative branches. This measure aims to curb "political discretion" in applying such policies and is part of the new Investment Law submitted to Parliament. The goal is to ensure that decisions to nationalize or estatize industries are treated as matters of "national priority" requiring legislative sanction.

Economy and Public Finance Minister José Gabriel Espinoza explained that this change would prevent any single executive authority from making unilateral decisions. Instead, Congress would have the final say on whether nationalizations are justified, while also recognizing the patrimonial value of the assets being expropriated. This approach seeks to limit the "political discretion" that has characterized past nationalization drives.

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This means that no executive authority will be able to make a unilateral decision going forward; they will have to consult Congress, and Congress will decide whether these types of actions are worthwhile or not, recognizing, and this is another fundamental element, the patrimonial value of what is expropriated or nationalized.

The government is now assessing the "costs" incurred from the "cycle of nationalizations and estatizations" over the last two decades, particularly under the presidencies of Evo Morales and Luis Arce. Historically, strategic sectors like hydrocarbons, electricity, telecommunications, and mining have been nationalized, impacting foreign companies from various countries. Legal disputes stemming from these nationalizations have already cost Bolivia over $714 million as of 2022.

President Rodrigo Paz has been critical of past nationalizations, especially in the hydrocarbon sector, arguing they failed to deliver promised results, deterred investment, and depleted reserves without fostering new exploration, leading to a decline in natural gas production. Espinoza emphasized that past nationalizations often violated property rights enshrined in the constitution, leading to costly arbitration and legal battles for the country. The new law seeks to establish clear, predictable, and stable conditions to attract much-needed investment, without relinquishing the government's regulatory authority.

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Therefore, without renouncing the normative power that any government has to carry out an expropriation or nationalization, we establish clear rules for this to be carried out.