Is Bolivia Cozying Up to Iran?

Jean Friedman-Rudovsky, Time Magazine, Oct. 09, 2007

La Paz - Fresh from ruffling feathers and hogging headlines in New York, Iran's President Mahmoud Ahmadinejad last month got down to business in Latin America — specifically, the business of Tehran's $17 billion economic agreements with Venezuela, and a new pact involving over $1 billion of trade and investment with Bolivia. The idea of Iran's controversial President poking around in what had once been Washington's backyard provoked predictable expressions of alarm, but there may be less than meets the eye to the image of left-leaning Latin American governments cozying up to Tehran.

"Latin American leaders like [Bolivia's President Evo] Morales are not the staunch ideologues they are often portrayed as," says Nadia Martinez of the Institute for Policy Studies in Washington, D.C. "They are pragmatic: When Iran offers a billion dollars, Bolivia's going to accept. It does not mean the beginning of the next cold war."

Take away the fact that both men are strong critics of U.S. policy, and there's very little left in common between Morales and Ahmadinejad. The Bolivian leader is an ardent leftist, while the Iranian is a conservative religious fundamentalist. And despite his criticisms of Bush Administration policy, Morales' government maintains strong economic ties with Washington. But the Iranian investment means a lot for Bolivia, whose GDP barely reaches $9 billion annually. Over the next five years, Iran's $1.1 billion investment will open Middle Eastern markets to Bolivia's goods, and will finance everything from milk processing plants to hydrocarbon exploration and new farming equipment here in the Andes.

It is such investment, along with massive amounts of aid and trade pouring in from oil-rich ally Venezuela, as well as from Spain, Italy and India, that has put South America's poorest nation's economy on the upswing for the first time in years.

The sudden availability of all these alternative sources of capital would appear to offer the Bolivians an opportunity to move out from under the shadow of their traditional prime benefactor, the United States, under whose patronage Bolivia has begun to chafe. Sure, the U.S. has invested billions in recent decades to build Bolivian roads and hospitals, fund public schools and even to support inner-city youth theater. But the money has always come with strings attached, and often with consequences. During the 1990s, access to international finance required Bolivia to privatize its natural resources and liberalize its markets, causing unemployment to spike at over 11% and widening the gap between rich and poor. And since the '80s, U.S. aid has been conditional on Bolivia's undertaking domestically unpopular coca eradication. Even now, the U.S. Congress is threatening to levy import duties on Bolivian textiles as punishment for Morales' refusal to sign a free-trade agreement with the U.S.

An even darker cloud over U.S.-Bolivia economic ties emerged recently with revelations in declassified U.S. State Department documents that the United States Agency for International Development's (USAID) showed a bias against Morales' ruling MAS (Movement Towards Socialism) party, even when it was just an opposition movement.

According to internal memos, funding priority was given in 2002 to a "planned USAID political reform project" that aimed to "help build moderate pro-democracy political parties that can serve as a counterweight to the radial MAS or its successors."

Then, in June 2006, half a year into Morales' term, the assistant administrator in USAID's Bureau for Latin America and the Caribbean, Adolfo A. Franco, told the U.S. House of Representatives' Committee on International Relations that his agency was still financing anti-MAS elements.

"USAID is focusing assistance to Bolivia on programs that strengthen vibrant and effective democracies," Franco stated. "Including the support of counterweights to one-party control." Critics, such as Venezuelan-American lawyer Eva Golinger, have alleged that USAID's Office of Transition Initiatives, charged with "democracy promotion," has been funding organizations and programs working against the the Morales government.

U.S. officials in Washington deny the allegation, and insist that the U.S. has a positive relationship with the current Bolivian government. "Our aid programs are not partisan," Assistant Secretary of State for Western Hemisphere Affairs Thomas Shannon told TIME. "They are aimed at creating capacity within civil society and political parties, and we're prepared to work with everyone on all sides of the political spectrum."

Despite mounting government anger over USAID funding activities that it alleges are fueling a potentially catastrophic civil conflict, Bolivia is not about to trade in its often troubled historic relationship with Washington for a new alliance with Tehran. "We have no desire to fit into a black-and-white world," says Pablo Solon, head of the Integration and Commerce section of Bolivia's Ministry of Foreign Relations. "We want to have relations with everyone and will work towards that goal."

Indeed, despite its complaints, Bolivia renewed its agreements with USAID on September 30. And Bolivian officials continue to lobby congress over trade issues, and for inclusion in the Millennium Challenge Account — President Bush's initiative to increase resources to the developing world.

"We as a people have a right to have access to whatever knowledge and technology exists that could best help our society's progress and well-being," Morales stated on September 27. "But for that to happen we should not have to give into pressure from any of the world's superpowers." For now, the changing global balance of power gives Morales greater options than were available to his predecessors throughout Latin America. But escalating conflict between the U.S. and Iran may eventually once again narrow the choices before him.