The history of popular struggle in Bolivia took an unexpected turn when Evo Morales, the candidate of the socialist party (MAS), was elected into office on December 18 2005 as the first indigenous president that the nation, with a majority indigenous population, had seen. Morales, a former union leader for cocaleros – farmers of the coca crop – rose to power on the platform of change.
The history of popular struggle in Bolivia took an unexpected turn when Evo Morales, the candidate of the socialist party (MAS), was elected into office on December 18 2005 as the first indigenous president that the nation, with a majority indigenous population, had seen. Morales, a former union leader for cocaleros – farmers of the coca crop – rose to power on the platform of change, defeating the right-wing candidate Jorge Quiroga of the PODEMOS party.
Between Morales’s election and the final months of the Bush administration, US-Bolivian relations- already fragile from a history of failed neoliberal policies, US support of dictators in the region, and a quagmire of fiscal and geopolitical turmoil- were embittered by a series of tit-for-tat policies, that reached a climax with the suspension of Bolivia from the Andean Trade Preferences and Drug Eradication Act (ATPDEA) in November of 2008, which was estimated to cost some $155 million and tens of thousands of jobs.[i]
Given that the ideological, hemispheric warfare has by and large taken the limelight in the media, namely in the west and the right-wing outlets in Latin America, since the rise of the leftist, indigenous leader, it is essential to reflect upon the policies of the Morales administration, particularly as the 2009 presidential elections approach on the 6th of December. Polls indicate that Morales will be re-elected, but he has also promised that this will be his last — and only- re-election. Morales has taken bold steps to fulfill the promises of his 2005 campaign — a new Constitution, regulations on land ownership, large-scale nationalizations — and if re-elected, the success of the next four years will lie in how effectively his administration can reckon with the goals of a socialist agenda and the realities of a capitalist world order.
United States and Bolivia: Rhetoric and Reconciliation
While Venezuelan leader Hugo Chávez has seldom failed to turn an ordinary news program into an explosion of anti-capitalist sound-bites, Morales has attempted to distinguish himself and his vision of Bolivia from Chavezian rhetoric. Martin Sivak, biographer of Morales has described Morales’s assertiveness in private meetings with men like Chávez and Fidel Castro. According to Sivak, there was a certain assertiveness to Morales, a pronounced independence from Chávez or Castro, in spite of his deeply rooted ties and profound respect for the both of them. Sivak explains that Morales is indeed pragmatic, pointing to his zero cocaine policy, which prioritizes curbing growth of coca for cocaine, while maintaining that the crop itself, a main source of economic growth in other aspects, should not be criminalized. Sivak argues that this pragmatism should be given more credence than the anti-capitalist rhetoric studded banner of socialism, which is simply a political device to garner the support of his constituency.[ii]
But while it may be true that Morales prioritizes progress over ideology, his anti-capitalist rhetoric certainly does not ease US-Bolivian tensions. At a summit in Venezuela on the 27th of September, Morales expressed his appreciation for and approval of the injection of more investment into Banco del Sur, a fund designed to help finance social development programs in South America, by Argentina, Brazil and Venezuela. Morales commented on how countries like Bolivia could not rely upon the IMF for funding, that they needed regional alliances to prosper, alluding to how historically the monetary aid given by the US or IMF has encroached on the country’s sovereignty.[iii] In stark contrast to Sivak, Patricio Navia, a political scientist, believes that Morales is in fact more ideological than Chávez. Navia argues that, in spite of Chávez’s incendiary rhetoric, he has continued to sell oil to US, surviving even the worst of storms in US-Venezuela relations.[iv]
On the other hand, Morales has also demonstrated willingness to cooperate with US in spite of his socialist ideology and anti-capitalist rhetoric. For instance, through the bilateral agreement signed in April 2009 with US, Bolivia receives $26 million for the execution of anti-narcotic programs.[v] In fact, it was in part such overtures that seemed to promise appeared to portend improved relations between US and Bolivia, and an eventual revoking of the suspension from the ATPDEA. Morales, during the 2008 US presidential elections, expressed his excitement at the prospect of an American president who, like himself, is a minority in his country. Obama was the real maverick, pledging change, hope, all those concepts that had also colored Morales’s 2005 campaign. Thus, the hangover experienced in the US as the euphoria of Obama’s campaign faded was felt abroad as well, as the newly elected president’s policies gradually came into effect. Washington’s decision to prolong the suspension of Bolivia from the ATPDEA chagrined Morales deeply.
The Washington Office on Latin America (WOLA) released a report in June 2009, soon after the White House announced its decision, analyzing the premises of this puzzling policy decision and revealing that the decision seemed unfounded, given the overtures in place since April 2009- including the $26 million bilateral deal and the continued cooperation between Bolivia and the US embassy’s Narcotics Affairs Section.[vi]
Despite WOLA’s calls for a reversal of the decision, the President concluded during the September 15th certification that Bolivia, along with Burma and Venezuela, "failed demonstrably during the last 12 months to adhere to international counter-narcotic agreements and take counter-narcotic measures."[vii] However, Obama did execute a national interest waiver so as to safeguard the aid programs already in effect in Bolivia. Regardless, the continued alienation of Bolivia is confusing, given Morales’s intolerance of narco-trafficking and his willingness to partner with the US. Thus, how genuine his ideologically-charged rhetoric remains unclear, but it is evident that Morales is, rationally, inclined toward building partnerships that will enable development, while also ensuring sovereignty, of his country.
Land Reform and Regional Tensions
The outlook for the Bolivian elections and for the future of the country at large provided by the Economist Intelligence Unit, a research firm that provides in-depth country analyses, is bleak, if not harsh. The report, released in September 2009, maintains that, while Morales is likely to be the President until 2014, friction between the national government and eastern landowners will hinder the success of the socialist agenda.[viii] In Bolivia, the conflict between socialism and capitalism is accentuated by the stark political differences that exist within the country’s borders. Santa Cruz was the homeland for the Civic Committee, an organization opposed to Morales’s presidency because of, in particular, his redistribution policies.
Daniel Beeton, the International Communications Coordinator at the Centre for Economic Policy and Research, emphasizes the sobriety of the situation: "The elite families (in Santa Cruz) want to hold on to their land."[ix] And hold on they do. Beeton explains, "The largest farms in Bolivia, while only 0.63 percent of the total, include more than 66 percent of all agricultural land. Some of the largest concentrations of land holdings are in the department of Santa Cruz, and I don’t think it’s surprising that Santa Cruz has been the epicenter of the violent, extreme right wing resistance to Morales’ government."[x] While it would seem logical enough that in order to develop the country and mitigate rural poverty there would have to be a re-appropriation of land, this logic was lost among those Bolivians who think not in nationalist but regionalist terms.
The regional politics surrounding land policy is hindering national development. Patricio Navia succinctly describes the Bolivian predicament. Historically, when countries were more rural, revolutions were geared toward land reform. However, the revolutions of the 21st century, in particular, strive for improved access to education and greater economic growth. Meanwhile, Bolivia "is still in the first chapter, as it has been for the last 50 to 60 years."[xi] The new administration will have to hone the resources to close this chapter, even if it means a politically unfavorable decision for the Morales government. However, if Morales is re-elected, perhaps losing some popularity will not be the worst of trade-offs, given that he will not occupy the presidential seat again.
Natural Resources and Bolivia: The Populist’s Predicament
In a recent speech at the United Nations General Assembly, Morales spoke out against capitalism: "The origin of this (climate change and financial) crisis is the exaggerated accumulation of capital in too few hands. It is the permanent removal of natural resources and the commercialization of Mother Earth. The origins come from the system and an economic model of capitalism."[xii]
The underlying problem with this anti-capitalist methodology is that Bolivia will indelibly partake in the "commercialization of Mother Earth," whether it is the national government or foreign companies in control, as the country develops its primary commodity: natural gas. With 710 billion cubic metres (bcm), Bolivia has the second largest natural gas reserves in Latin America. Annually, Bolivia produces about 11.3 bcm for export, of which Brazil takes the lion’s share, at 10 bcm.
In 2005, Morales campaigned assiduously on the promise of nationalizing hydrocarbons because of the unbalanced geographical distribution of reserves and subsequent regional tensions over the revenue generated. Within four months of assuming office on the 1st of May, 2006, Morales succeeded in the partial nationalization measure.[xiii] Subsequently, 56 natural gas fields were occupied by troops, shocking large shareholders, namely Petrobras of Brazil and Repsol YPF of Spain. The government gave companies an ultimatum of either restructuring – including a 32% increase in taxes and royalties on the production of gas and the transfer of total authority to YPFB – or evacuating the country within 180 days. Regardless of political motivations, the nationalization was economically advantageous; following the nationalization, $1.3 billion was generated in revenue.[xiv] Still, the economic growth of the country was minimal.
The explanation for this stagnation is primarily because and the scant amount of funds left to the national government – 25% – and YPFB, -25% – after sub-national governments absorbed their share of the revenue. In this vein, Daniel Beeton posits that "the Bolivian government is probably distributing too much hydrocarbons revenue to departmental and provincial governments – more than any other government in the world."[xv] Due in large part to the Media Luna alliance – the lowland provinces of Beni, Tarija, Pando, and Santa Cruz – but also other regional governments, there is stark imbalance in revenue distribution. For instance, in 2007 Tarija made $237 million, 60% of the revenue generated by the national government that year.[xvi]
It is important to note that these nationalizations, did not effect a complete dissolution of ties between foreign companies and Bolivia. For instance, the former owner of the Chaco gas fields Pan-American Energy, a JV between British Petroleum and Argentina’s Bridas, relayed soon after the January 2009 decision that "it will defend at all levels…the objectives and interests of the Republic of Bolivia."[xvii] In May 2008, an agreement between Repsol and YPFB transferred majority stake in the hitherto subsidiary of Repsol, Andina. Repsol received $6.3 million for this transfer of power and continued to support the exploration of oil wells and production operations. Notably, in October 2009, Repsol invested $1.6 billion, with an emphasis on improving the plant in the Caipipendi fields to produce about 18 million cubic metres of natural gas per day.[xviii] Further, plans are underway for the formation of a Joint Venture between Total, Russia’s state-owned Gazprom, and YPFB, to continue exploration and possibly finance a trans-continental pipeline. Currently, major foreign oil operators include Brazil’s Petrobras, Repsol YP Spain, British Gas Group UK, Total (France), and Pluspetrol Argentina. The Bolivian government agrees that it needs to acquire from outside US$7 billion to meet $11 billion investment target for 2009-2013.[xix]
Adam Green, an expert on Latin American oil and gas and Editor of Exploration and Production: Oil and Gas Review points out that "oil companies are thick-skinned" and have been accustomed to yo-yo politics and the dramatic political dynamic of still developing countries grappling with how best to harness their resources.[xx] Therefore, in the case of Bolivia, the populism does not so much work to the detriment of the international investors, as it does to the sub-national governments themselves. Green emphasizes that it is the populist aspect of the nationalization that "clouds the judgment of the leaders," and, given the volatility of commodities like oil and gas, it is wise to reinvest the revenue in other sectors instead of solely fuelling "populist programs."[xxi] Venezuela’s PdVSA, for instance, has been lauded for achievement of development goals using the revenue from the oil company; however, there have also been charges of corruption and inefficiency. Thus, Green posits that the primary weakness in the Chavezian model of controlling all operations of PdVSA lies in the innate volatility of oil and gas, which simply creates additional responsibilities that the state-owned PdVSA must balance. On the other hand, semi-privatized Petrobras has the "operational independence" that PdVSA lacks; thus, although Brazil is "still very nationalist on how they conceive their oil, they want to make sure that some contracts will go to local Brazilian companies."[xxii] In this vein, Petrobras would be superior to PdVSA as a paradigm after which YPFB can model itself.[xxiii]
The public declaration by Morales and the MAS party to industrialize the lithium reserves raised eyebrows. For instance, a New York Times article by Simon Romero in February 2009 carried the polemical headline: "Bolivia has lithium, and the president intends to make world pay for it." Romero’s piece, like several other articles in the latter part of 2008 and early 2009, expressed that, due to Morales’ socialist leadership, Bolivia would be unable to successfully exploit the lithium. However, despite the skepticism centered around how a state-owned initiative could properly exploit the lithium, plans are coming to fruition as an increased number of private investors become interested in assisting exploration and are willing to comply with the ownership regulations. While a consensus has yet to be reached on the true potential – that is, how much can actually be extracted and converted to usable lithium metal from the reported 5.5 million tons of lithium in the reserve base – investors, especially those looking to expand their electric car sectors, have turned a keen eye to Bolivia.[xxiv] To date, South Korea and Brazil have signed agreements with Bolivia and negotiations are underway with the French company Bolloré.
Polls and Beyond
Daniel Beeton observes that the "Morales’s government has had success in regards to economic growth, fiscal balances, balance of payments, and international reserves."[xxv] This success is in large part due to the government’s reclaiming of control "over the hydrocarbons sector and increasing hydrocarbons revenue from 5 percent of GDP in 2004 to 13.3 percent in 2006." Beeton adds, "Bolivia has also weathered the global downturn much better than many other countries, partly due to a relative lack of foreign involvement in its banking sector – meaning it avoided toxic contamination – and largely due to its control over hydrocarbons."[xxvi] The incoming administration will inherit an economically intact country, which will allow for a more immediate focus on addressing the issues of land reform and continued growth of natural resources, namely gas and lithium.
While it would be quixotic to expect Morales to renounce his anti-capitalist rhetoric, it would be wise for his administration, if re-elected, to cease the vilifying of capitalism, in terms of development. For, let it be lithium – in which Morales invested $400 million in September – or natural gas, the development of an entire country, where 60% of the population is impoverished, demands the expenditure of money – and carbon.[xxvii] An 8,000 km trans-continental pipeline snaking through Bolivia and connecting with Argentina, Brazil, Venezuela, Paraguay, and Uruguay, is unlikely to be the greenest of endeavors; the environmental costs, whether the mode of production is capitalist or socialist, are likely to be high. Hence, the best a leader- especially that of the single-commodity, developing nation – can do is determine how to harness the various strengths of the nation to keep the process as environmentally low-impact as possible. Calming the storm of ideologically charged rhetoric, from both ends of the spectrum, will provide for a more stable landscape on which the incoming administration can effectively embody the change it wishes to see in its country.
[i] "The Importance of ATPDEA for Bolivia," Confederación de Empresarios Privados de Bolivia, Oct 2008, <http://www.cepb.org.bo/sitio/archivos/The%20importance%20of%20ATPDEA-BOLIVIA.pdf>.
[ii] Martin Sivak, Personal Correspondence, May 2009. For a more in depth analysis of this perspective, see Sivak’s biography of Evo Morales, Jefazo.
[iii] "Banco del Sur tendrá más capital de Argentina, Brasil y Venezuela," 27 Sep. 2009, http://www.eluniversal.com/2009/09/27/eco_ava_banco-del-sur-tendra_27A2797931.shtml.
[iv]Patricio Navia, Personal Correspondence, 6 Oct. 2009.
[v] WOLA, August 2009.
[vi] WOLA, August 2009.
[vii] Ian Kelly, ‘Presidential Determination for Major Drug-Transit and Major Illicit Drug-Producing Countries,’
[viii] Economist Intelligence Unit, "Bolivia," 2009.
[ix] Daniel Beeton, Personal Correspondence, 1 Oct 2009.
[x] WOLA, Aug. 2009.
[xi] Patricio Navia, Personal Correspondence, 6 Oct. 2009
[xii] Agencia Boliviana de Información, 23 Sept. 2009.
[xiii] The Ministry of Hydrocarbons and Energy have recognized that further development of hydrocarbons will engender environmental concerns, as outlined in the September 2008, "Estrategia Boliviana de Hidrocarburos."
[xiv] Dan Beeton, Personal Correspondence, 1 Oct 2009.
[xvi] Mark Weisbrot and Luis Sandoval, 2008.
[xvii] Pan American Energy, 2009. See Reuters, 26 Jan 2009.
[xviii] YPFB, "Repsol Invertiré $1.600 Millones En Bolivia," 16 Sept. 2009.
[xix] Economist Intelligence Unit, 2009.
[xx] Adam Green, Personal Correspondence, 2 Oct 2009.
[xxi] Adam Green, Personal Correspondence, 2 Oct 2009
[xxiv] United States Geographical Survey, Jan 2009.
[xxv] Daniel Beeton, Personal Correspondence, 1 Oct 2009.
[xxvii] Instituto Nacional de Estadística, BOLIVIA: INDICADORES DE POBREZA MODERADA, SEGÚN ÁREA GEOGRÁFICA, 1999 – 2007, 2007.