Political Economy Of Resource Nationalism

The Political Economy of Resource Nationalism and Energy Security

David R. Mares
Director, Center for Iberian and Latin American Studies
Professor of Political Science
University of California, San Diego
&
Baker Institute Scholar for Latin American Energy Studies
James A. Baker III Institute for Public Policy
Rice University

DRAFT

Presented at the LASA Annual Conference, SanFrancisco May 2012

Resource Nationalism.
CORE IDEAS:
1) natural resources in the ground or under the sea are a ‘national patrimony”;
2) thus their proper usage is for the national good;
and 3) the commodity itself has an intrinsic value, not one determined by the market, and this value belongs to the nation.
Resource nationalism is thus not simply a means by which government leadersmight enrich themselves and their cronies by controlling the production, sale and taxation of the resource.

GOAL: maximize rent appropriation for benefit of sovereignty and national development
(domestic & foreign policy; employment; industrialization, now HEW)
MEANS: government sets the terms for exploration, production, transportation and distribution of energy.
Including:
whoshould extract the resource (public or private firms; foreign or national)
to which markets (foreign or domestic; middle class or poor)

Energy Security.
CORE IDEA: insulation of national economic activity from shocks (whether economic, political or natural disaster-driven) emanating from the markets in which the resources are sourced
Concept used by both the consuming and producingcountries.
GOAL: minimize the adjustment costs that a shock in the market creates
not simply economic, but also include social dislocations as jobs, consumption and investment are impacted and the political fallout that follows a major social and economic adjustment process.
MEANS:
1) government regulation of national energy markets via subordination of other policy goals to a more aggressivepursuit of domestic supplies, price controls and trade restrictions;
2) diversification of markets (import and export)

Nationalizations to the 1980s

Country | Timing | Process* | Terms** | Sector*** | Political Regime | Reversed |
| | | | | | |
Argentina | 1935/1936 | U/FCR | P | | Demo/Demo | 1993 |
Bolivia | 1937/1969 | X/X | M/P | | Autho/Autho | 1955/ |
Brazil | 1953/1964| U/X | M | E&P | Demo/Demo | 1975/1964 |
Chile | 1934/1950 | X/U | M | | Demo/Demo | 1975/-- |
Colombia | 195119741979 | CPurchaseFCR | ERP | | AuthoDemoDemo | 2003 |
Ecuador | 1972 | FCR | M | | AuthoDemo | ~19862001transport/marketing |
Mexico | 1938 | X | M | T | Autho | Partial for gas 199-2010 services for oil |
Peru | 1971?? | FCR | P | | Autho | 1991-3 |
Venezuela |1976 | Xa | M | | Demo | 1990s for extra heavy oil |

*Process: (U)nexplored areas; (C)oncession expiration; e(X)propriation; FCR forced contract renegotiation
**Terms: (M)onopoly; (P)articipation
***Sector: (T)otal ; (E)xploration, (P)roduction, (R)efining, (Tr)ansportation, (M)arketing
a. Venezuelan concessions were set to expire in 1983

NOC and Nationalization Episodes*

Country |NOC created | Dates of Nationalizations | No Nationalization with NOC |
| | | To 1980s Post 1980s** |
| | | |
Argentina YPF | (1907@) 1922 | 1910, 1935, 2012 | Multiple backand forth to 2012 |
Argentina ENARSA | 2004 | --- | 2004 – present |
Bolivia | 1936 (2006@) | 1937, 1969, 2006 | 1955-1969; 1972- |
Brazil | 1953 | 1953 | 1975-19971997-present |
Chile | 1950 | 1932 | 1975-present |
Colombia | 1948Restructured 2003 | 1969 | 1951-1969 2003-present |
Ecuador CEPE | 1972 | 1976 | 1972-1976 |
Ecuador Petroecuador | 1989 | 2006 | 1993-2006 |
Mexico Petromex | (1925@) 1934 | --- | 1934-1937 |
Mexico Pemex | 1938 | 1938 | Not yet |
Peru EPF | (1934@) 1946 | | 1934- |
Peru PetroPeru | 1968 |...