Bottom line: Evo Morales' expropriation of Servicios de Aeropuertos Bolivianos SA (SABSA)--a subsidiary of the Spanish businesses Abertis and Aena--is another warning for foreign investors in Bolivia. SABSA managed the country's three largest airports: El Alto in La Paz, Viru-Viru in Santa Cruz, and Wilsterman in Cochabamba. Morales said the Spanish companies had committed to a $26 million investment but had only invested $5.6 million.
Analysis: This was not his first, and will not be Evo Morales' last nationalization. In early January, the Bolivian army seized the property of four business units belonging to Spain's largest utility, Iberdrola SA (BE.MC), to nationalize it. This follows the expropriation of Spain's Repsol (REP.MC) last year. Though Morales' nationalization of the natural gas industry impacted Petrobras, generally his targets are U.S. or European-owned business. Morales' nationalization plan also includes telecommunications and water. So far, 15 companies have been nationalized since Morales launched the campaign in 2006. In addition to Repsol, Morales has renegotiated contracts with almost a dozen hydrocarbon companies, including Petrobras, Total and BG.
Recommendation: Any foreign business operating in Bolivia that encounters problems working under the strict mandates of the Bolivian government should have a back-up plan, an exit strategy, and an attorney ready to pursue compensation.
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