The Opposition Strikes Back: Bolivia in Crisis

by Antonio Otsenre, October 1, 2008


The tragic events of the past couple of weeks in Bolivia hopefully mark the end of decades, if not centuries, of bad government policies; tragic because the traditional ruling class has literally brought on its own political demise.

The new millennium dragged in with it the consequences of the aggressive practice of privatizing industry, cutting government programs and taking on bad loans to patch up bad business practices. Studies, such as those of the Economic Policy Institute, show how most of Latin America has come out worse in the 80s and 90s than the whole period between the 50s and 70s. The economic decline came in the form of neoliberal reforms imposed by the dubious ascent of dictators and presidential figures that responded to the demands of Washington and the International Monatary Fund.

In Bolivia, when just about everything was sold off and the country was in complete economic collapse, General Hugo Banzer promised to suspend further privatizations. He continued on anyways. On top of that, he cracked down severely on unions and the indigenous coca sector. As people lost their jobs and saw everything from gas to water for sale to foreign interests, they went to the cities, especially La Paz, to campaign on the streets for a fair distribution of the benefits from their national resources.

Those grass root movements were behind the unusual success of a relatively new MAS (Movement Towards Socialism) party with an indigenous candidate, Evo Morales, who came in second place in the 2002 elections. Gonzalo Sanchez de Lozada won, thanks to an alliance of traditional parties and slick US campaign managers. Despite the campaign rhetoric about inclusion and economic reactivation, Sanchez de Lozada was obviously keeping on track with the Washington consensus for privatization and government austerity measures.

With the lack of change, the disenfranchised and newly mobilized majority mounted strikes and road blocks, bringing the country to a standstill. The pivotal issue became the control of the important gas sector. It's important to note, however, that gas alone could not have mobilized so many people if there hadn't been first such a virulent pathology for the monopolization of practically everything. Native peasants and laborers have virtually no access to arable lands, decent educational opportunities, or any social safety net. Resources enriched the few families that owned the rights to the lands or mines and had some relation to the multinationals that capitalized on those resources. Government and the general public saw little to no benefit from the nation's natural resources.

Once it was Bolivia's gold, silver and tin mines that attracted capital, now the big ticket item is its huge natural gas reserves, the second largest in South America. A big point of contention is how the gas would be transported to market, being that Bolivia is land locked. Petrobras already has a pipeline to Brazil and Repsol YPF has one for Argentina. Plans for a pipeline to the Pacific were underway either through Chilean or Peruvian territory. The idea was to supply California, at that time suffering from corruption-laden shortages. All of this was under the context of exporting the raw material with only 18% of the profits staying in Bolivia. The reformers wanted to increase Bolivian stakes in their own resource and begin refining and liquefying the product. The argument being that value added plus controlling stakes in gas ventures would provide jobs and a decent level of income for the country to improve healthcare, education and employment opportunities for its citizenry.

In 2002 the Quiroga administration wanted to build the pipeline through Chile to the port of Mejillones. Geographically that is the most direct line. Historically it is the most painful. That area on the Pacific coast was Bolivian territory until Chile wrestled it away in the War of the Pacific (1879-1884), another resource-driven act of violence involving bat guano and US and British interests.

Opponents of the plan argued that going through Peru to the port at Ilo would not be much more expensive and it would bring in much needed revenue to the impoverished northern regions of Bolivia. The Peruvian government even sweetened the deal by offering a special economic zone controlled by Bolivia for 99 years if it would export through Ilo. This issue was left to successive administration and is still unresolved. Hunt Oil and Kellogg, Brown and Root were already involved in the Camisea Gas pipeline project in the tumultuous southern region of Peru. Indigenous groups there are fighting for guarantees of their land rights against the threats of expropriations and pollution that foreign hydrocarbon interests are bringing to their region.

In September of 2003, protestors paralyzed much of the country and the Bolivian army got more violent. Sanchez de Lozada was accused by indigenous groups of pandering to the US on both issues of hydrocarbons and traditional coca cultivation. In Cochabamba and La Paz, 80 thousand people were mobilized against any pipeline project. The resulting police and army violence provoked labor strikes and road closures. With Labor Unions and the Indigenous Movement on one hand and the police and army on the other, major transportation routs became a virtual battle ground. The government refused to recognize representatives from the protests, so dialogue never took root. There were fuel and food shortages. Indigenous folk figured that either way they were going hungry. They could neither own productive lands nor work to buy food. They weren't stopping until the president resigned along with Government Minister Yerko Kukok and Minister of Defense Sanchez de Berzain for the massacre of protestors.

Martial law was imposed on October 12 in the indigenous area of El Alto, up the mountain from La Paz, after 16 more people were shot by police who were opening the way for a caravan of oil tankers. The next day Sanchez de Lozada postponed any decision on the pipeline. Vice President Mesa and others in the administration withdrew, supposedly in disgust over the more than 80 people killed on the streets by government forces and the obvious discontent of the majority of the citizens. Change was in the air and the rats were jumping ship. However the US department of State delivered a statement in support of Sanchez de Lozada stating that "The international Community and the United States will not tolerate any interruption of constitutional order and will not support any regime that results from undemocratic means." Sanchez de Lozada still stepped down having virtually no support from the people or even those fellow oligarchs in the government.

Mesa took the reigns promising that there would be no more military or police violence and that he would call for a referendum on the gas issue. Difficult details and political wrangling dragged the process on until finally in May of 2005 congress passed laws to increase taxes on the profits from hydrocarbons from 18% to 32%. The public, recognizing that there was still no local control of production budgets on these raw materials, demanded full nationalization. Again, tens of thousands of people walked down on a daily basis from El Alto to La Paz to protest against the government, effectively shutting down everything. This time, authorities only used tear gas and rubber bullets. By the end of the month police decided on their own that they weren't going to repress the protestors. They were reprimanded for insubordination.

Mesa tried to appease the indigenous protestors while catering to the welltodo by offering elections for a new constitutional assembly and referendum on autonomy. Neither side liked it. By June 6th there were half a million people on the streets protesting. Mesa was forced to resign. Congress could not convene because politicians couldn't get through the crowds. Radical farmers occupied oil wells owned by transnational corporations and blockaded border crossings. Succession was marred by a publicly unacceptable chain of command which included Mario Cossio (the current "moderate" head of the opposition). Eventually Chief Justice Edwardo Rodriguez was chosen for his perceived neutrality until elections could be held. He upheld the new hydrocarbons law triggering many foreign companies to invoke bilateral treaty stipulations that gave some language on which to sue Bolivia for lost profits by going to the International Centre for Settlement of Investment Disputes (ICSID), which is dependent on the World Bank.

By the end of 2005 there were elections and Evo Morales was voted into office. On Labor Day, May 1st 2006, he signed a decree that all gas reserves were to be nationalized. In the years to come, state revenues would jump six fold from 2002 levels. This increase has benefited the federal government and more so the coffers of the Departments where the resources are found and from which the opposition strikes back.

The Morales Administration and Actions from the Opposition

The thrust of Evo Morales' rise to power comes from Bolivia's first-hand experience and understanding of the traditional way the country's business was run. No complicating magic economic theories, just the hard facts of majorities starved out of their country's riches. Essentially, Morales says, all treaties since independence and especially the heavily marketed Free Trade Area of the Americas are mere arguments meant to legalize the colonization of the Americas. The stated purpose of the Morales administration is to get out of stifling relations with multinational corporations and use the money from their resources to improve conditions for all Bolivians.

In truth Morales has taken a middle ground approach to Bolivia's relation to key industries. His hydrocarbons law guarantees at least 50% of Bolivian actions in the commercialization of its own resources. Nationalization has meant buying the parts of the pie traditionally taken by oversees investors. This in no way excludes foreign capital; it just limits it to a tolerable level and guarantees that Bolivia can take control and advantage of its own resources. Companies were given six months to think about and enter negotiations with the government. Essentially these are buy outs not expropriations or confiscations, as right wing groups insist. The latest accomplishment is Shell's agreement to sell off its 25% stake in Transredes, a natural gas pipeline company.

In addition to nationalizing hydrocarbons, Bolivia has moved to buy the lucrative metal processing plant owned by the Swiss company Glencore International AG. The plant processes tin, lead, and silver and has not been totally transparent with its books. There are also discussions on how much land an individual should be allowed to own when so many peasant farmers are without land.

As far as labor practices, the Morales administration has increased the minimum wage 50% and has been open to communications with unions and labor organizations. The military enjoys an increase in pay and more socially relevant roles such as overseeing customs and the border.

The primary goal is to draft a new constitution to project into the future a more inclusive and equitable system of rights for Bolivian citizens, including autonomy clauses for the nation's departments. This is all presently under negotiation, with the opposition trying to postpone the referendum.

Morales was elected in 2005 with 54% of the votes, but in the richer sectors of the country right wing politicians were elected. Since then the US embassy has been working with those local governments on their autonomy movements rather than dealing with the diplomatic work that would correspond with the federal government. USAid grants totaling some 4.5 million dollars have been funneled to these opposition groups to "provide support to fledgling regional governments." There is also the Millennium Foundation, managing funds from the National Endowment for Democracy (NED), which has also provided funds for decentralization efforts through The Center for International Private Enterprise. There have even been accounts of Fulbright scholars being mobilized to share with the Embassy if they find Venezuelan or Cuban citizens in Bolivia.

The "media luna" (half moon) departments of the eastern low lands, Santa Cruz, Tarija, Beni, Chuquisaca and Pando, have mobilized their own protest movements. There are two parts to this coordinated effort: 1) the Consejo Nacional Democratico or CONALDE (National Democratic Council) that provides the political framework for the conservative governors of the media luna and 2) the youth and foreign street protestors that have gone from verbally abusing peasants and workers with racist epitaphs and beatings to shooting people and destroying public property. The idea is that if these traditional whiter elites can't control the national government they will secede in order to continue their control of the most lucrative resources.

Along the way there have been shifts in the demands of the opposition. First, Jorge Quiroga had the helm and tried to say that the Morales administration was illegitimate and called for a referendum, before any stability could be reached. That plan backfired, resulting in Morales putting forth the referendum and winning even more support (67% of the vote), while some affluent provinces slipped. Then came Ruben Costas and Leopoldo Fernandez with their strong arm tactics that stirred up and armed the proto-fascist street gangs that killed more than 30 people and drove many into the mountains. They have also assaulted personnel guarding public institutions and looted government buildings. They have occupied and shut down airports and burned or vandalized state offices. This wave of violence was the worst since the 2003 repression of the protests that brought Morales to power. This time it was not by the hands of state forces but by the privateers who are seeing their grip on the nation's wealth slipping. The consistency is in the fact that it's the elites who are continuing to summon violence against indigenous and labor groups.

The images from the last couple of weeks turned off the bourgeois base Governor Costas pretended to lead. When he called off the street fighting for the sake of the nation's largest agro fair, the hypocrisy was unbearable even for many opposition supporters. The opposition closed down roads so no food or fuel gets by, but costly new farm equipment to be displayed and sold at the fair is allowed through. Many supporters saw that the call for autonomy was more specific than the neopopulist messages being touted in the media. The exception made for a privileged sector went against the populist rhetoric that up to that point strung along some of that razor thin middle class in Bolivia.

Unasur nations (including Colombia and Peru, still lead by right wing, Washington friendly governments) were quick to repudiate the violence. The opposition suffered a debilitating political blow in the eyes of the whole region. The presidents of most countries have come out individually to strongly condemn the violence against Bolivian Democracy. United Nations and Organization of American States representatives have also called for the opposition to cease the violence. The US was noticeably silent.

During the turmoil, Morales showed great restraint with the military, risking the ire of the victimized indigenous groups. On September 15, state forces were ordered to confront the hooligans but not to shoot. Pando Governor Fernandez (ex-paramilitary officer in the 70s), a major instigator of the violence, was arrested and the US Ambassador Phil Goldberg (of Kosovo fame) was sent home for fomenting insurrection instead of diplomacy. The youth allegedly trained by Fernandez to be a "citizen's protection force" were essentially a militia set to carry out the dirty work of the secessionist governorship. Pando government vehicles were used to chauffer these armed groups to the sights of peaceful marches.

By the way, in Pando, Morales won 53% of the votes during the August Referendum, so it's not like Fernandez was heading a democratically substantiated autonomy movement. Let's not lose sight that what counts here is who controls the resources and for what end. Will the state be allowed to fulfill its electoral mandate of distributing the profits from key industries in the form of healthcare, education and retirement assistance, or will a few families handle the contracts with multinational corporations and get wealthy from pimping resources to overseas speculators at the expense of the local population?

Morales is now giving a lot of time to negotiations with the opposition, currently lead by the more diplomatic Mario Cossio. Some say it's all a waste of time. The opposition revealed its true colors and is politically hobbled by its own actions. Regardless, it has retained through violence a seat of preferential dialogue with a government of unprecedented democratic backing. Destabilization seems to be the recourse of an opposition that feels it can't stop the progress of the Morales majority and the only way to keep their privilege is to seek autonomy.

Negotiations with the Opposition

Again the crux of the matter is the constitution. Morales and his indigenous and labor base were enjoying the momentum provided by the referendum and were excited about getting on with the constitutional reforms. The opposition turned the tables radically with its violent attacks on fellow citizens and public property. On one side of the negotiating table sits a popular government. On the other, the men who still control the sources of wealth for the country. And, around the table loom observers from the Catholic Church, Unasur, the OAS and the UN. Morales smiles cynically as he sees the opposition leaders respectfully calling him Mr. President for the first time as they are watched by observers. But, as long as all these people are bogged down in averting more violence, nothing can be done about improving the constitution or the situation for the vast majority of Bolivians. In a sense, the opposition's tactics have worked at stalling the democratic process.

The opposition was allowed a disproportionate amount of influence within the constitutional assembly, leading to a lot of stalling and the eventual inclusion of measures to respect private property and international investments. The opposition was allowed to proceed with its own illegitimate departmental referendums for autonomy, resulting in a huge propaganda piece for national and international media. Finally, when it comes to the government's basic duty to protect its citizens, it did not forcibly put down the violence perpetuated by paramilitary and gang-type forces on peaceful indigenous and labor protestors.

Despite all these concessions and the fact that there is clear democratic mandate behind Morales, opposition groups are demanding all the revenues from hydrocarbons and complete autonomy from the Federal Republic. In other words--you keep the Indians and their votes; we'll take the resources and our international connections. The problem is that there are Indians everywhere and they are not going away from their ancestral place, much less when they are so close to being able to share in the benefits of their national resources.

The Bolivian Government and CONALDE representatives have been sitting down to dialogue for over a week. The government asked that a pre-agreement be signed. It stipulates for three work tables to be established. The first one refers to the direct tax on hydrocarbons, which the opposition insists is wholly theirs. The second includes the autonomies within the framework of the constitutional project. The third corresponds to the election of authorities.

The agreement allows for the one month suspension of the constitutional referendum process, with the possibility of longer suspension depending on the outcome of the negotiations. It also expresses that the government respects the departmental right to autonomy and to the tax revenues, as long as there is a Federal payment of Renta Dignidad from which the people's retirement is paid.

There is a lot of room for Morales to give in to these right-wing demands. Maybe Morales at first thought that there was more muscle behind the attempts at. Perhaps he didn't know how much support he actually had from the neighboring governments and the international community. After all, Brazil and Argentina are now paying a lot more for their gas than they were before the Morales reforms. For now, perhaps the most important thing is that both sides agree to stop the street violence while the negotiations are taking place.

No one is falling asleep while the politicians are negotiating. Although protestors just agreed to disband, they were in the streets, plazas, airports, oil wells, pump stations and major transport routs poised on every word that came out of the negotiations. The other side has more lethal weapons, but Morales supporters have the numbers. The government is working with one hand tied behind its back, not wanting to project its power in the form of a military show of force. It definitely doesn't want US troops stationed in Peru or Paraguay to come in to "keep the peace."

For not having the democratic, legal or ethical right to impose its will, the violent opposition has managed to play a mighty hand from such a weak and almost isolated political position.



Antonio is a writer and professor currently living in Florida. He specializes in Latin American issues and helps present documentaries or foreign films for college or community events.

South America watch

Home Page