German Development Minister Dirk Niebel has told Bolivian President Evo Morales of his concern about the lack of security for international investors in the country. Niebel questioned Morales's policy of nationalizing key industries, including oil, gas and coal mining.

"I am sure that German companies are interested in Bolivia," Niebel said during his visit to La Paz. "But their investments must be safe and companies cannot be nationalized."

In May 2008, the German-Peruvian company "Oiltanking" was brought under state control by Morales. The company is now trying to use international arbitration to get compensation. The dispute is over the sum of around 16 million dollars (11 million euros), as well as who should pay outstanding debts.

"Regarding the energy sector, I think the government is going to continue its existing policy," Niebel said. "You have to take note of that and adjust your business decisions accordingly."

Strategic investment

According to the German-Bolivian Chamber of Commerce, only companies investing in strategically important fields such as mining, gas, oil and transport are at risk.

Those who want to invest in such industries should think their decision through carefully, the head of the Chamber of Commerce, Joerg Zehnle, warned. However, he added there are better prospects in branches like pharmaceuticals and the paper industry.

Companies wanting to invest in Bolivia need a lot of patience - in addition to the necessary funds. The system can be bureaucratic and slow, and is prone to corruption.

Developing the market is at the forefront of the work of the German-Bolivian Chamber of Commerce. Joerg Zehnle believes that countries should work together to make this happen.

"In Bolivia there are a number of under-developed markets - that's why it's described as a developing country," Zehnle explained. "And that's where the German economy, as well as German development work, can get involved in the future."

Zehnle wants in particular to focus on education, renewable energy and energy efficiency.

Concerns about justice

The German development minister said he wanted to find new ways of cooperating with Bolivia in future. In terms of the level of financial support Germany may in future provide, Niebel wants to take into account the legal aspects of the aid.

Germany spent 62 million euros (86 million dollars) in Bolivia in the year 2009-2010, primarily directed at the fight against poverty. The country is a priority recipient of German aid funds.

Niebel is concerned about how the money is being used, notably because the judicial system is not seen as independent. Morales is accused of firing public officials who refused to toe the government line. Niebel said he'd told the Bolivian president that the Germans work differently.

"For us, someone is said to be innocent until he is proven guilty in a court of law. You cannot be fired just because the public prosecutor has brought charges against you," Niebel said.

Press freedom also under scutiny

Freedom of speech is also in danger in Bolivia. A new law may soon come into force, allowing Morales to close down entire editorial departments if journalists are found to have written racist articles. Niebel said he had not found time to discuss this issue with the president.

Niebel's first visit to South America is seen as an opportunity to promote Germany's engagement on the continent by helping cash-poor but resource-rich nations to become more independent.

"During German unification and the European Union's extension in eastern Europe, we did not pay enough attention to some other parts of the world," Niebel said. "That applies particularly to Africa and to some extent to Latin America."

Niebel continues his tour of South America in Peru and Colombia.

Author: Marcel Fürstenau, Sarah Steffen (dpa, epd)
Editor: Joanna Impey, Michael Lawton