Bolivia's Irresistible Reserves

According to Bolivian officials, investment in 2008 will total at least $876 million. They expect that pending investment pacts -- including those with the governments of Venezuela and Iran -- will probably push the total to a record $1.5 billion this year. Russia's state-controlled Gazprom also signed a memorandum of understanding with Bolivia last year, although details of possible cooperation have not yet been announced.

Some of the investment coming into La Paz appears to be driven as much by politics as economics.

On a recent afternoon, Villegas sat at a conference table in the Energy Ministry, going over a PowerPoint presentation with a group that embodies the new kind of potential investors: Iranian diplomats, not private executives.

Morales and Iranian President Mahmoud Ahmadinejad don't share much political ground -- other than a pronounced dislike of the U.S. government. But Iran is eager to form alliances where it can, and last year Ahmadinejad pledged $1 billion to Bolivia over the next five years. Much of it is expected to go to the energy sector.

"We don't have any specific agreements yet, but in three months we'll know the projects and the amount of investment," Villegas said last month during a brief break in talks with the Iranian delegation.

Although such agreements could pump up investment totals, Morales's critics haven't abandoned their gloomy predictions for the energy industry.

Guillermo Torres, who was energy minister under Morales predecessor Carlos Mesa, said he is doubtful that some of the contributions, particularly from Iran, will prove much more than political theater. Even if they do, he said, he is skeptical about the government's ability to manage a sector that for years depended on more diverse sources of expertise.

"There's great confusion in the management of the sector," Torres said. "They obsessively talk about investment and the importance of it, but they never say exactly where they're going to invest."