Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Tuesday, July 16, 2019

Bolivia seeks to end its Mediterranean condition through Peru

The next enabling of its connection with the submarine cables of the Pacific is the first step. The use of the Peruvian port of Ilo and the bioceanic train project are also advancing. China sounds like one of the investors interested in the construction of the railway section, which would link the Brazilian coast with the Peruvian coast by 2030, with an estimated investment of US$14 billion. Meanwhile, state-owned Entel Bolivia is venturing into the supply of services in southern Peru.

The strengthening of the relations between Bolivia and Peru was clearly visible in the Fourth Meeting of the Binational Ministerial Cabinet, held some months ago, where progress was made in integration projects between both countries. The main interest of Bolivia is to find a solution to its landlocked condition, for which it promotes three projects of which one is almost complete (fiber optic connection with the submarine cables that reach Peru); another one that is in its early stages (use of the Peruvian port of Ilo as a basis for international trade), and that related to the bioceanic train (which is still in negotiation stage with interested countries).

The connection project with submarine cables was defined on the occasion of the second edition of the binational cabinet between both countries, held in November 2016, which also dealt with transport issues. The start-up of the project would be ready in one year but then the schedule was modified. Just in mid-2018 the company Entel Bolivia-in charge of the initiative-put as a new possible date May 2019 and recently, in the framework of the celebration of the 11th anniversary of its nationalization, they indicated that it will be in next August.

The fiber optic connection includes a total of 2,200 kilometers, of which 1,024 kilometers correspond to the land section and the rest to the submarine laying. The central objective of its placement is to improve the quality and lower Internet prices in Bolivia. The planned investment is about US$60 million.

In addition to this project, in February Entel Bolivia received a single license from the Ministry of Transportation and Communications (MTC) of Peru to operate in that country and it is expected that this will start to work once teh same happens with the fiber optics network. In this way, Entel will begin to provide different services in the south of Peru, in the regions of Desaguadero, Mollendo, Tacna, Moquegua, Ilo and Lima.

Regarding the use of Ilo port facilities, the Complementary and Amplifying Protocol was signed by Presidents Evo Morales and Alan García in October 2010, and for its full validity it had to be approved by the congresses of Bolivia and Peru, which recently materialized in 2013. The document allows Bolivia to use the Peruvian Pacific coasts for industrial, economic and tourist exchange for 99 years.

Despite the years elapsed since its approval, just this year Bolivia began to fully use this port for commercial exchange with volumes that exceed 80% compared to last year. Previously the country used mainly the Chilean port of Arica, but several measures implemented by the authorities of that port terminal, added to the ruling of the International Court of Justice of The Hague, prompted the Bolivian government to gradually derive its international trade towards Ilo and other minor ports.

The bioceanic train project is the main Bolivian objective and the most ambitious in the history of integration of South America and having a greater intercontinental trade perspective. The train will depart from Brazil, from the port of Santos, it will go through Bolivia and it will end in Peru, in Ilo. Of the more than 3,800 kilometers of roads, 1,435 kilometers belong to Brazil. On the Bolivian side, the corridor will go through 1,965 kilometers, divided into two branches: the eastern one, of 637 kilometers, and the Andean one, of 548 kilometers. Both are built but will have to be reformed. In addition, Bolivia will have to build another 780 kilometers of roads to join both branches. Regarding Peru, it is the country with the least amount of roads: it will have to build 458 kilometers, all from scratch.

Although there are 15 countries interested in participating in the project, from South America, Asia and Europe, there is still a key issue to be solved: the Brazilian government headed by Jair Bolsonaro does not have it among its priorities and so far he would not be willing to endorse its realization. It should also be borne in mind that Chile has its own bioceanic train project, which, like the previous one, starts in Brazil, goes through Paraguay and Argentina and ends in Chile. Of course, it avoids Bolivia and Peru.

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