Gas-rich Bolivia was dealt an enormous political blow today when an international court ruled in favor of neighboring Chile in a longstanding dispute over sovereign access to the Pacific.
Landlocked Bolivia lost its coastal provinces to Chile in the late-19th century Pacific war. Regaining maritime access has been a political prerogative for Bolivia for more than 130 years, never more so than for sitting president Evo Morales who took Chile to the UN's International Court of Justice in 2013.
Even though La Paz was never likely to revive a 1990s plan to export LNG through Chile even if it had won today's case, a victory might have boosted its negotiating stance with Brazil and Argentina, which receive pipeline gas from Bolivia.
The court's 12-3 ruling today stated that Chile does not have an obligation "to negotiate with Bolivia in order to reach an agreement granting Bolivia full sovereign access to the Pacific Ocean." As evidence of the importance his government placed on the case and possible hubris regarding its outcome, Morales was present in The Hague when the verdict was read.
The decision could be a harbinger of the end of the Morales era despite his bid for re-election next year. In power since 2005, Morales lost a referendum in 2016 to scrap term limits, but the country's top court threw out the result the following year, opening the possibility for another term.
A socialist ally of Venezuela, Morales ushered in a wave of nationalizations that undermined the role of the private sector in developing the country's gas reserves. Bolivia earns most of its revenue from pipeline gas exports to Brazil and Argentina, but it needs to bulk up exploration and development to sustain the sales.
While Bolivia's past presidents lined up behind Morales to support the court case, several are already gearing up to challenge him next year. Top of the list is Carlos Mesa, who served in 2003-05 and famously pledged that not one molecule of Bolivian gas would reach Chile.
Today's verdict could also push the Morales government to more actively pursue several projects to find new markets and routes for mineral and gas exports. Bolivia is actively negotiating with the Brazilian, Paraguayan and Peruvian governments to build a bi-oceanic train to move minerals and possibly LNG to the ports. The low estimate is $16bn. The Chinese, German and Swiss governments have expressed interest in the train.
Morales and Peruvian president Martin Vizcarra have met three times this year to discuss bilateral relations, including Bolivia's use of the port of Ilo in southern Peru.
Morales has talked about a gas pipeline from Bolivia through Peru to Ilo, where a liquefaction plant would be built.
Even though Bolivia has no sovereign access to the Pacific, Chile has long provided La Paz with access to its northern ports. Of Bolivia's 5.1mn tons merchandise traded through ports in 2017, 3.8mn went through three Chilean ports, primarily Arica, according to Bolivia's statistics institute. Bolivian authorities claim this dependence lowers the competitiveness of Bolivian goods.
"The cost of our exports increases quickly because of transportation to ports. The port in Arica is at capacity and conflictive, making it one of the most inefficient ports," said Bolivia's deputy trade minister Clarem Endara.
He said Arica was closed for more than 20 days last year because of labor strikes. "We need to find alternatives," he said.
Morales has not commented on today´s ruling, but the government said it would respect the decision. Vice president Alvaro Garcia Linera said the ruling "closes one door but leaves many other doors open."
Chilean president Sebastián Piñera called today´s decision a "historic triumph for Chile, international law, respect for treaties and the defense of our territory, sea, and sovereignty."
