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.