Bolivian Gas

My guess is that most readers of this blog don’t have a whole lot invested in Bolivia. At least I hope not. The nationalization of its gas fields by the Morales government today is a sobering reminder that things can go wrong in emerging markets and when they do, they can be ugly. From WSJ (sub req’d):

“The time has come, the awaited day, a historic day in which Bolivia retakes absolute control of our natural resources,” Mr. Morales said from a facility operated by Petrobras in association with Repsol. After the president spoke, a soldier unfurled a Bolivian flag from atop the installation.

Yikes. This is hardly good news for the cause of borderlessness (and capitalism in general). Fortunately it is the exception rather than the rule. The companies directly affected by this, such as Petrobras, Repsol and Total, are big enough and diversified enough that something like this, while upsetting, isn’t the end of the world.

But the Bolivian lesson shows that you can never do too much country risk analysis. Countryrisk.com has an excellent set of links to resources in this area.