Brazil Displeased at Bolivian Decision to Revoke Highway Contract

| Thursday, April 12th, 2012 | No Comments »

Americas QuarterlyThe Brazilian government expressed its displeasure yesterday at Bolivian President Evo Morales’ decision to revoke the contract of a Brazilian construction company to build a controversial highway through the Amazon. According to the Brazilian newspaper Valor Económico, Morales’ announcement on Tuesday that he would rescind Construtora OAS’ contract to build the Villa Tunari-San Ignacio de Moxos highway “was poorly received in the Brazilian government, which considers it a sovereign decision but not a positive one from the point of view of Brazilian investors in that country.” The newspaper also said the subject would likely come up when Brazilian President Dilma Rousseff meets with Morales later this week at the Summit of the Americas in Cartagena, Colombia.

Morales suspended construction on one part of the highway last fall, following a series of protests over the road’s planned path through an Indigenous rainforest known as the Parque Nacional y Territorio Indígena Isiboro-Secure (Isiboro Sécure National Park and Indigenous Territory—TIPNIS). He announced on Tuesday his plans to annul the contract to build the other two sections of the highway, saying during a news conference that “the company hasn’t complied” with the terms of their agreement and that it had “suspended construction without justification or authorization.” Morales did not say if construction of the highway would continue without OAS or if the company would be compensated.

Funding for the project was due to come largely from Brazil’s national development bank, Banco Nacional de Desenvolvimento Econômico e Social (BNDES), which had approved a $332-million loan for the project that Brazil hoped would link the Brazilian Amazon to Peruvian and Chilean ports on the Pacific coast. Bolivian Minister of the Economy and Public Finance Luis Arce Catacora on Tuesday declared that the loan’s interest rate was too high and that Bolivia could “likely obtain other sources of financing…with better terms for Bolivia.”

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