Venezuela Rivals U.S. in Aid to Bolivia

Simon Romero, February 23

LA PAZ, Bolivia — To understand Venezuela’s growing influence here, consider that more than two dozen ambassadors are in this capital city, including those of Bolivia’s leading trading partners like Brazil, the United States and Argentina. Yet none enjoy the direct conduit that the Venezuelan ambassador, Julio Montes, has established with President Evo Morales.

Mr. Montes often accompanies Mr. Morales on domestic and international trips on executive jets provided by Venezuela’s national oil company, say officials who have seen them traveling together. On many days Mr. Montes, who arrived in La Paz a year ago, can be found at the presidential palace huddled in meetings with Mr. Morales or the president’s top aides.

Since Mr. Morales became president little more than a year ago, Venezuela has quickly come to rival the United States as Bolivia’s main patron. It has provided assistance for the army, cattle ranches, soybean cultivation, microfinance projects, urban sanitation companies and the oil industry.

Perhaps most important to Washington, despite its opposition, Venezuelan financial assistance has helped Bolivia push ahead with plans to increase exports of its industrial production of coca, the main ingredient in cocaine.

The coca financing plan has helped Venezuela accomplish one of its foreign policy goals: limiting the regional influence of the United States, which for years has provided Bolivia with millions of dollars in aid in an effort to curb coca production. The United States recently cut its drug enforcement aid to Bolivia by about 25 percent, to $33.8 million, after Mr. Morales acknowledged that the size of the country’s coca-growing areas were about double official estimates.

A senior American official here, speaking anonymously out of concern that Bolivia’s already fragile relations with the United States could erode further, said it was difficult to know the exact amount of Venezuelan aid because many of the agreements between Venezuela and Bolivia were not made public.

Citing Mr. Morales’s efforts to assert greater government control over the energy industry and to rush a military agreement with Venezuela through the Bolivian Congress, the American official said, “It is clear that Venezuela has strongly influenced policy in Bolivia.”

Analysts who have reviewed the various Venezuelan assistance projects say the total may surpass the $120 million in antidrug and humanitarian assistance from the United States, which made Bolivia one of the largest recipients in the world of aid from Washington per capita.

[A report in the Venezuelan newspaper El Nacional over the weekend of Feb. 17-18 said President Hugo Chávez had approved a $100 million assistance fund for Bolivia, though it was not clear whether that included assistance for military or petroleum projects.

[“What we are doing in Bolivia is the same that Cuba has done in Venezuela,” Mr. Montes told El Nacional, referring to the thousands of Cuban doctors and social workers who had been sent to Venezuela. “The difference is that the greatest resource of the Cubans is their human capital. We have the possibility to help our Bolivian brothers with economic resources.”]

Not all are pleased with Venezuela’s new role. “We’ve become a client state of Venezuela, in what is a new form of imperialism,” said Óscar Ortiz, an opposition senator with the Podemos Party who has publicly criticized Bolivia’s relationship with Venezuela.

Mr. Ortiz and other opposition legislators have been particularly critical of Venezuelan ambitions that they believe may conflict with Bolivia’s interests.

For instance, even as Venezuela advises Y.P.F.B., Bolivia’s national energy company, in its efforts to assert greater control over ventures with foreign energy companies, Venezuela has moved forward with its own plans to build a pipeline that would export gas to Brazil, currently the main customer for Bolivian gas.

Political supporters of Mr. Morales argue that the alliance with Venezuela has allowed Bolivia to avoid some of the potentially detrimental effects of United States trade and drug policies in Latin America.

“Our comrades in Venezuela are rescuing our way of life,” said Jerónimo Meneces Mollo, director of coca industrialization for Bolivia’s government, which is receiving $250,000 in financing from Venezuela to build two coca-processing plants that will produce coca tea for exclusive export to the Venezuelan market. “No one but Hugo Chávez is brave enough to do this.”

Others point to a prospective trade agreement between Colombia and the United States that could ease the entry of American soybean exports to Colombia and potentially deprive Bolivian farmers of one of their key markets.

In a boon to Mr. Morales’s government, Venezuela answered the threat by announcing that it would purchase a large portion of Bolivia’s soybean crop. Venezuela also says it plans to import 300 tons of Bolivian beef to meet demand in its domestic market, along with as much as 7,500 tons of beans and poultry.

Though much of Venezuela’s aid is related to agriculture, like the donation of more than 300 tractors produced by a joint Venezuelan-Iranian venture, its military assistance has attracted the most scrutiny.

Opposition legislators are trying to overturn a military agreement reached last year that could provide Bolivia with as much as $47 million in assistance intended, among other things, to strengthen the government’s presence in the eastern lowlands, where separatist sentiment runs strong.

The International Institute for Strategic Studies, a British research group, said in a recent report that Venezuela, which is undertaking a rapid armaments buildup, could be providing Bolivia with weapons and financing for new military bases.

Officials from both countries minimized the report, saying any military assistance was intended to assist Mr. Morales by lending him helicopters and flight crews to travel throughout Bolivia. [Citing military officials, the Bolivian newspaper La Razón reported on Feb. 19 that Venezuela was giving Bolivia two SuperPuma helicopters in a good-will gesture.]

“Bolivia is a tremendously poor country,” said Gustavo Torrico, a leading supporter of Mr. Morales in Congress. “Any help we can get is positive.”

Not least, the Venezuelan aid has given Bolivia a source of assistance outside the International Monetary Fund, whose policies are widely criticized in much of Latin America as not having helped the poor. It has also given Mr. Morales the breathing space to carry out popular social welfare programs.

“The direct relationship with Chávez hasn’t been problematic for Evo Morales so far,” said Jim Shultz, executive director of the Democracy Center, a nonprofit institute in the Bolivian city of Cochabamba. “The I.M.F. is a banker without clients in parts of Latin America.”

Republished from New York Times

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Jim Schultz comments on "Venezuela Rivals Us in aid to Bolivia"

The New York Times on Evo and Hugo
Today’s New York Times has a good article, by Caracas-based reporter Simon Romero, checking in on the ongoing story of Venezuela’s close relationship with Bolivia and the Morales government. The article focuses on a comparison between US aid and US influence versus that of the government of Venezuelan President Hugo Chavez.

I am not an expert on the military connections between the two governments, or the specifics of Venezuela’s role in Bolivia’s gas nationalization efforts – two issues covered in the article. There are, however, two other points that I think are worth a closer look.

First, the article notes Venezuela’s much-publicized investment in Bolivian facilities to support the “industrialization” of coca. Chavez has also pledged to import Bolivian coca tea and other similar products. The Times describes this as a major issue for Washington. I think that US concern about industrialization of coca is misplaced.

If the Bush administration’s concern is about Bolivian coca being exported for cocaine production then the issue is the size of the coca crop and its ultimate uses. If the Bolivian government can actually succeed in sucking up a good portion of that crop for the production of herbal coca tea (a product served to guests in the US Embassy in La Paz to help with altitude illness) then that ought to serve US purposes, not violate them.

On this issue the Bush policy seems more driven by ideology than practicality, a practice that has not served the administration too well in other parts of the world, Iraq to name one. This issue of whether Bolivia can globally export its coca tea is likely to heat up in the next year as efforts increase to get the UN to remove the green coca leaf from the world list of banned substances – alongside cocaine and heroin.

The second issue worth a closer look is the one I spoke to Romero about when he was preparing the article (I am quoted at the very end), the role that the Chavez government has played in helping its Latin American neighbors seal their divorces from the International Monetary Fund. Venezuelan loans directly enabled the Argentine government to end its dependence on IMF lending. Bolivia let its last IMF agreement expire a year ago without seeking a new one. That was largely enabled by the Fund’s cancellation of Bolivia’s debt (alongside many other countries as well), but the backstop of Venezuelan aid may have added to the Morales administration’s confidence in telling the IMF goodbye.

A Bolivian opposition lawmaker is quoted saying that, “We’ve become a client state of Venezuela, in what is a new form of imperialism.” If one measures the relative “conditionalities” associated with Venezuelan aid vs. IMF loans, it’s not even a close call.

It is unclear what direct negative effects Venezuelan aid has had on Bolivia so far. The IMF’s list is long. It played a key role in pushing for the privatizations of gas and oil, and other industries, in the 1990s, an economic experiment that robbed the national treasury of billions in lost revenue and ultimately sparked a series of bloody national rebellions. More recently, as the Democracy Center has documented in great detail, the IMF directly pressured the Bolivian government into the 2003 disaster of Febrero Negro that left 34 people dead.

As legitimately controversial as Venezuelan aid to Bolivia may be, so far Chavez hasn’t had anything like the impact on Bolivia that the economists from Washington had. Bolivia is, quite clearly, far more independent of foreign pressures today than it has been for the last two decades.