Sending in troops in riot gear and armed with sub-machineguns to guard Bolivia’s oil and gas installations is a gesture as childish as it eye-catching. Evo Morales, the populist President elected in January on a xenophobic and anti-business platform, called the move “a fundamental means for recovering our sovereignty” and gave foreign energy companies six months to agree to new contracts or leave the country. Some Bolivians may cheer this petulant display of nationalism; most will find that all Señor Morales has done is to anger his neighbours, undermine foreign confidence, cripple a vital industry and set back Bolivia’s development by ten years or so.

His intemperate behaviour comes as no surprise; throughout his election campaign, Señor Morales played on the sense of victimhood — of the country’s indigenous people, of whom he is one, at the hands of the conquistadors’ descendants, and of Bolivia’s struggling economy at the hands of foreign “exploiters”. The two themes became intertwined, so that those supporting a better deal for the indigenous majority were persuaded that nationalising South America’s second-largest gas reserves would somehow reverse centuries of discrimination and injustice.

Little could be more counter-productive. Since the gas industry was privatised in the mid-1990s, foreign companies have invested about $3.5 billion; Petrobras, the huge Brazilian company, has alone pumped in $1.6 billion to satisfy the growing demand in Brazil. YPFB, Bolivia’s former monopoly producer, has been reduced to an administrative role, with neither the capital nor the expertise to resume control of the energy sector. Under the new proposed contracts, foreign companies running gas fields producing 100 million cubic feet of gas will be able to keep only 18 per cent of their production. Inevitably, foreign investment will dry up. There will be no money to maintain, let alone expand, the industry. And the most vulnerable groups will find that an economic lifeline is soon removed from their reach.

Other left-wing Latin American leaders have also felt the pressure to spread national income more evenly; few have been as reckless. In neighbouring Brazil, President Lula da Silva has been careful not to jeopardise his predecessor’s economic reforms or the trust of outside investors; in Argentina, President Kirchner has rescued the economy from bankruptcy without alienating foreign creditors or risking a social explosion. Even Hugo Chávez, the egotistic Venezuelan leader whom President Morales sees as a role model, has trodden with greater skill.

There have been plenty of warnings. Chinese leaders, eager to buy Bolivian gas, cautioned against this step. The country’s neighbours, on whom Bolivian gas exports rely, are aghast. Who will now sign long-term supply deals with such a capricious leader? Using troops is an outdated response to economic challenges. The danger is that this will eventually lead to another outdated response: the military coup.