IPS-English BOLIVIA: Visit by Iranian President Kicks Up Dust Storm Date: Thu, 27 Sep 2007 14:38:33 -0700 Franz Chávez LA PAZ, Sep 27 (IPS) - Bolivia's President Evo Morales is beginning to forge his foreign policy in the conflict-torn Middle East as he announced the establishment of diplomatic relations with Iran, under the worried gaze of the United States and against stiff opposition from the local business community. The leftwing government headed by Morales, who is hosting a visit by President Mahmoud Ahmadinejad Thursday, has the backing of the social movements that form the indigenous president's main support base. One might ask what a poor country like Bolivia could have in common with a far-off country like Iran, which is at the centre of controversy and criticised by Western powers for its nuclear technology programme. Their new ties came as a surprise. So much so that Washington's ambassador in La Paz, Philip Goldberg, paid an unannounced call on Morales in the early hours of Saturday morning, when the president was packing his bags to travel to the 62nd General Assembly of the United Nations in New York. Goldberg's untimely appearance on Morales' doorstep was urgent because of the imminence of Ahmadinejad's arrival in La Paz. The Iranian president will be in La Paz for a few hours on Thursday to sign agreements on energy cooperation and on technical assistance for setting up factories for dairy products. Goldberg has stated in Bolivia that Iran backs global terrorist activities, and that his government's concern is shared by the international community. Echoing these statements, the business community in the eastern departments (provinces) of Cochabamba and Santa Cruz expressed fears of possible difficulties arising in foreign trade, and recommended strengthening trade agreements with the United States, which is one of the foremost buyers of Bolivian commodities and manufactured products. As a non-aligned country, Bolivia has prudently kept its distance from states like Iran. However, it is now being said in diplomatic circles that links with Libya are also on the cards. Morales apparently intends to replace part of the natural gas production currently undertaken by 12 foreign oil companies, which have little interest in exploring for new natural gas reserves, with Iranian capital, in order to widen export markets for gas and strengthen domestic distribution of fuels. In the face of this lack of interest, the president threatened to revoke the companies' concessions. The Iranian government, meanwhile, told La Paz through envoys that they were interested in investing in the natural gas industry, where they would complement investments already announced by the governments of Venezuela and Argentina. An agreement with Iran for investment in natural gas production will allow the Movement Towards Socialism (MAS) government to strengthen the recently resuscitated but still puny Bolivian state oil company (YPFB). Although they haven't said so in public, the oil companies working in Bolivia are afraid their operations will be gradually sidelined, so they are concentrating on producing enough gas to fulfil supply contracts with Brazil, totalling 30 million cubic metres a day, and with Argentina, for four million cubic metres a day. The government successfully pressured the 12 foreign firms to announce an investment programme of 587.8 million dollars up to the end of 2007, but this amount is insufficient to guarantee satisfaction of external and internal demand, which continues to grow. Lack of capital and technological know-how has so far prevented the resurgence of YPFB, and support from Iran and Venezuela could facilitate this goal. A strong state company is needed to approach anything like a balance with the giant foreign oil companies. Iran produces four billion barrels of oil a day, compared to Bolivia's modest production of 40,000 barrels a day. Bolivia also has 48 trillion cubic feet of proven and probable natural gas reserves. The two countries currently have no trade ties whatsoever. They both have modest rates of growth of around four percent a year, but gross domestic product per person is 8,700 dollars in Iran and only 1,156 dollars in Bolivia. Forty percent of Iran's 70 million people are living below the poverty line, as are 67 percent of Bolivia's 9.3 million people. Iran is an Islamic Republic governed by a spiritual Supreme Leader designated by an Assembly of Experts, and administered by a president elected by popular vote. Bolivia is a democracy, with its president and lawmakers elected every five years. Bolivia is in the process of rewriting its constitution, with 36 indigenous groups in the Constituent Assembly demanding recognition of their ancestral forms of self-government, lands and financial resources for their administration. In contrast, the conservatives want provincial autonomy, and say the indigenous people's proposal is a threat to the country's territorial integrity. In Iran, 61 percent of the population is Persian, Kurds make up nine percent of the population, and two percent are Baluchi. There is also a large number of other minorities. Morales has repeatedly expressed his respect for the different religions that exist in Bolivia, where there is freedom of religion, while Ahmadinejad, speaking at the U.N. General Assembly on Tuesday, repeatedly advocated ”monotheism.” Most Iranians are Muslim. ***** + POLITICS: Iran Nuke Moves Hint at Interest in Deal (http://ipsnews.net/news.asp?idnews=39171) (END/IPS/LA MM IP IF DV IN NR/TRASP-VD-SW/FC/DM/07) = 09271825 ORP011 NNNN