Bolivia on a Tightrope (6/8/05)

On June 6th 2005, after months of steady road blockades and protests demanding the nationalization of the country’s natural gas reserves, President Carlos Mesa offered his resignation to congress, explaining he was incapable of presiding over such a tumultuous country. This was one of many climactic points in a series of popular uprisings over the destiny of the second largest gas reserves in South America. At this writing, the fate of the gas, and the geopolitical future of the country, is still very much in question.

A Recent History of Division

Bolivia’s reserves constitute an estimated 1.5 trillion cubic meters of gas, which at current market prices, are worth more than US$1.5 billion. The unpopular ex-President Gonzalo Sanchez de Lozada, commonly referred to as "Goni" in Bolivia, pushed to privatize the nation’s gas reserves in a deal with foreign companies such as British Gas, Exxon-Mobil and Spain’s Repsol in 2003. Under the deal, the Bolivian government was to receive a meager 18% of revenues. This percentage struck a raw chord with many Bolivians. For centuries, foreign companies had been exploiting the nation’s natural resources such as coal, copper and tin, making enormous profits while Latin America’s second poorest country struggled on. In recent gas-related uprisings, many Bolivians have been trying to make sure history didn’t repeat itself.

Outraged by Goni’s privatization plan, activists took to the streets in what has been called Bolivia’s first "Gas War." From September to October of 2003, protests, road blockades and strikes paralyzed the country. Often without sufficient political representation, protest groups have become adept at directing political and media attention to their demands by shutting down the economy with road blockades and strikes. Protesters demanded that the natural gas reserves be nationalized, and run by the government so that profits from the business could go to poorer sectors of society, helping to build much-needed hospitals, roads and schools.

The complicating factor in this equation is that the Bolivian government is too poor and dependent on foreign aid to nationalize the gas industry itself. What could happen however is that congress could vote to take possession of existing investments set up by foreign corporations. This move could easily isolate Bolivia in the international community and create outrage among foreign investors. Yet this is what many protesting sectors have continued to demand.

In 2003, protesters also demanded the resignation of President Sanchez de Lozada, who had continually channeled state resources toward foreign investors and international donors instead of social programs to address the needs of Bolivian people. Sanchez de Lozada’s heavy-handed protest control tactics also left nearly sixty dead in the month long Gas War, the large majority of them protesters. At the end of the conflict, Sanchez de Lozada fled the country, leaving the administration in the hands of Vice-president Carlos Mesa.

Mesa knew that if he was to survive the political climate, he would have to concede to some of the diverse demands of the protesting sectors. Among his promises were plans for a national referendum on the gas exportation issue and justice for the victims of the 2003 Gas War.

On July 18th, 2004 the referendum took place. Voters were to choose yes or no to five questions including whether to repeal Sanchez de Lozada’s gas exportation plan, increase revenue with a new plan, use the gas as a strategic way to gain access to the sea from Chile, and use most of the profits from the exportation plan for the development of schools, hospitals, roads and jobs. Unfortunately for Bolivian protest groups, the referendum did not include the nationalization of the gas as an option.

Many voters did not understand the convoluted wording of the questions, which were not only pointed towards a "yes" vote, but also left open opportunities for corporate exploitation of the gas. Citizens were also reportedly forced into voting by a harsh new law which called for the imprisonment of any person who refused to participate in the referendum.

The controversial referendum led to divisions among activist leaders in Bolivia. Jamie Solares from the Bolivian Worker’s Union and Felipe Quispe, the director of the Bolivian Farm Workers Federation, led blockades and protests against the referendum, but were not able to generate enough grassroots support to stop or impede the voting. Congressman Evo Morales, leader of the Movement Toward Socialism Party (MAS) and a major coca farmers’ union, supported the referendum. Some viewed Morales’ endorsement as a strategic move to gain urban middle support for a presidential bid in the next election.

After the polls closed on July 18th, it was announced that seventy five percent of the voters said "yes" to all five questions. Yet for months, gridlock in congress, pressure from foreign investors and protesting groups postponed any major decisions on what to do with the gas.

The violence of the 2003 conflict still hasn’t been fully investigated, and members of Bolivia’s security forces have not been charged. However, Mesa has differed from his predecessor in one significant way: he has refused to call upon the use of lethal security force to break up the many protests and road blockades. In the year and half that Mesa has been in office, though confrontations between protesters and security forces have resulted in injuries, no deaths have been reported.

Gas War: 2005

In March of 2005, protest groups made up of unions, farmers, civil society organizations and students, were tired of waiting for the government to nationalize the gas. Through both independent and coordinated efforts, protesters marched, blockaded vital highways and shut down four oilfields near the central city of Cochabamba.

On March 6, after facing an estimated 800 protests during his term in office, Mesa stated that the country had become "ungovernable" and offered his resignation. He blamed Evo Morales for the chaos in the country and used the resignation announcement as a threat to hand power over to the President of the Parliament, Hormando Vaca Diez. Due to his ties to foreign investors and the main right-wing party in government, Vaca Diez was highly unpopular with Bolivian leftists and was likely to respond more violently to protests than Mesa.

Mesa was hoping the gesture, which many called a plea for sympathy, would force the left to back off. Yet not only was Mesa’s resignation rejected by congress, but his announcement backfired. During Mesa’s show of weakness, diverse protest groups led by Morales, Quispe and Solares came together to re-launch a past protest front known as the People’s General Staff. The group, formed to unite the country’s social movements, called for continued strikes and demanded that governmental royalties from the sale of the gas be raised to a minimum of 50%.

On May 17th 2005, the Bolivian Congress passed a gas law which imposed a new 32% tax on production on top of the existing royalties of 18%. However, it fell short of the protesters’ demands as they said it would be easy for the oil companies to evade the 32% tax. This set off another round of marches and road blockades. The legislation also agitated foreign investors, who claimed it gave far too much control to the government. The law increased taxes for foreign companies and stated that indigenous groups would have to be consulted about further use of gas in their areas and would receive compensation for the use of their land. Many foreign investors had been pumping money into Bolivia’s gas industry since 1996 and felt that the new law was confiscating their investments. Some threatened to sue the Bolivian government in international courts.

Jeffrey Webber published an article in ZNet, which quoted US Treasury Department`s Assistant Secretary of International Affairs, Randal Quarles as saying that, if the new gas law were to go into effect, it would be a "sure thing that the first measure would be the suspension of investments, at minimum while Bolivia continues this uncertainty." Quarles also suggested that the law might influence the amount of financial support that organizations such as the International Monetary Fund and the World Bank offer to the Bolivian government.

The day before the law was passed, 100,000 protesters, primarily from El Alto, a working class community near La Paz, the country’s capital, rallied outside parliament demanding Mesa’s resignation. In the proceeding days, other sectors joined the El Alto protesters. The La Paz teachers’ union called a strike, peasant unions across the country organized road blockades, and the National Congress of the Miners’ Union also began marching in La Paz. The MAS party organized a massive march from the city of Cochabamba to La Paz, a distance of 190 kilometers.

In an article on ZNet, Nick Buxton quotes a miner named Iriaro, who had traveled six hours to join protests in La Paz, as saying, "People are suffering to get here as they have so little money. But I decided to come because we need to reclaim our natural resources. We have been robbed for centuries and our government is robbing us again."

Not all protesters shared the same goals. Evo Morales said that Bolivia should receive 50% of the royalties from the sale of the gas; a demand which had been previously supported by protesters but by this point was viewed by many as too moderate. As the perhaps strongest leftist presidential candidate, Morales and his positions are often highly scrutinized. In an article in CounterPunch, Forrest Hylton explained that "Morales poses as the defender of democracy in hopes of winning over the urban middle class…Though the U.S. Embassy, the weak and divided Bolivian elite, and the London Economist see Morales as a wolf in sheep’s clothing, a strategic radical disguised as a tactical moderate, in rhetoric and fact Morales is the strongest defender of Bolivian democracy as presently configured. Neither he nor MAS want to see the constitutional order unravel, as both have had their sights set on the 2007 elections since 2002, when Morales nearly won the presidential race."

By May 24, tens of thousands of protesters had again descended into La Paz from El Alto. They were met with rubber bullets and tear gas from security forces. Six protesters were reportedly injured in the clashes. Road blockades were set up on main roads across the country, shutting down routes to La Paz, the nearby international airport, and roads to the borders with Peru and Chile.

On June 2nd, as a last ditch effort, Mesa announced plans to re-write the constitution in a national assembly. With such an assembly, Mesa hoped to calm the protests by offering marginalized indigenous people a larger voice in the government. Under his decree, members to the constitutional assembly would be elected on October 16, 2005. According to a June 3rd report by the AFP News Service, Evo Morales, stating that Mesa’s proposal could easily be rejected by congress, said it had "good intentions, but is unconstitutional…a new show put on by the government [to demobilize the protests]."

Protesters were not satisfied with Mesa’s proposal, as it didn’t offer an immediate response to their demands for nationalization of the country’s gas. Protest groups pledged to continue road blockades and marches until the gas was nationalized and plans for the constitutional assembly were passed by congress.

Mesa also proposed a referendum on the autonomy of resource-rich areas in Bolivia, such as the province of Santa Cruz, where much of Bolivian gas is located. There is a strong drive in this region to privatize the gas. Protest groups are deeply against right-wing demands for such autonomy, as it would thwart any plans for full nationalization.

On June 6th, after another full day of protest and road blockades, Mesa again offered his resignation to congress. "This is as far as I can go," Mesa stated in a televised address. The Andean Information Network reported that Mesa also said that he had done his best, and that he asked Bolivians for forgiveness if he shared responsibility for the profound political crisis that was gripping the nation.
Although the MAS party demanded Mesa’s resignation, it was not a key demand of many groups; most primarily advocated for the nationalization of the gas. For many protesters, the issue wasn’t who was President; it was who was in control of the nation’s gas. As such, Mesa’s resignation is unlikely to offer a solution to Bolivia’s crisis.

Promising not to repeat the mistakes of his predecessor, Mesa did not call upon the use of lethal force by police to quell protests. However, should Mesa’s resignation be accepted, the presidency would then go to Vaca Diez, who has often advocated the use of force to stop the protests. During the Sanchez de Lozada administration such crackdowns only fueled national discontent.

Even before Mesa offered his resignation, Vaca Diez said that the idea of having early elections is "gaining momentum as a way out of the problem". Morales also told reporters that holding early elections "is the only way we will find a political solution." If early presidential elections do take place, Morales may have a solid chance of winning. He lost to Sanchez de Lozada in 2002 by less than 2% of the vote. Whoever ends up becoming president will continue to face similar pressure from foreign investors, international donors and a largely discontented majority of citizens.

On June 9th, a protester was killed by police fire in Sucre. He was the first fatality in the conflict. Later that same day, congress accepted Mesa’s resignation. Hormando Vaca Diez and Mario Cossio, the two in line to become president after Mesa, declined to accept the presidency. The position then went to Bolivian Supreme Court justice Eduardo Rodriguez. President Rodriguez announced that elections will take place within the year.

As the conflict has proven so far, only full nationalization of the gas is likely to satisfy protesters. Meanwhile, the second largest natural gas reserves on the
continent remain in the ground.

Benjamin Dangl worked at the Andean Information Network in Bolivia in 2003. He is the editor of Thanks to April Howard for editorial help with this article. To read more of Dangl’s articles, click HERE

The Andean Information Network, Linda Farthing, Kathryn Ledebur:
Democracy Center, Jim Schultz:
ZNet, Jeffrey Webber (5/9-5/25/05)
ZNet, Jorge Martin (4/26/05)
Counterpunch, Forrest Hylton (5/2/05)
BBC, (6/2-6/7/05)
AFP Story (6/3/05):
Green Left Weekly,Federico Fuentes (3/23/05)