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Monday, April 10, 2006

LatAm Leftists Hurt Markets

From MarketWatch:

[Latin American] Governments – driven by pressure from poorer voters who feel they are missing out on the prosperity – are seizing a bigger share of the action. "Latin America has become the prime stage for resource nationalism," says Michelle Billig, analyst at PIRA, a New York-based energy consultancy.

If Mr [Ollanta] Humala does win Peru's election and then carry through threats to intervene it will be the latest blow to international companies and raw materials producers, with examples of radical action coming thick and fast...

Earlier this year Venezuela's radical anti-American government imposed new tough operating contracts on more than two-dozen foreign oil companies. Last week it took control of two oilfields operated by Eni and Total after the Italian and French companies refused to comply in time with the new rules. Bolivia's newly-elected President Evo Morales has already benefited from cash generated by a new 50 per cent "take" (tax and royalties) on gas output imposed in 2005 on gas output and says he will nationalize the industry – which controls South America's second largest reserves of natural gas – later this year. Argentina's Néstor Kirchner has imposed export taxes and other restrictions on exporters of soya, wheat and meat. And the Ecuadorean legislature is discussing new rules that will significantly increase its take from oil contracts.

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