Bolivia: Straddles Between Popular Reform and Illegal Resistance

June 24th, 2008

Two members from a rightwing Santa Cruz youth group were arrested outside the Trompillo airport on June 19 with a rifle, telescopic sight, and 300 rounds of ammunition in a purported assassination attempt on President Evo Morales. In an unprecedented and highly questionable move, the accused were freed the very next day by a Santa Cruz attorney sympathetic to their separatist cause. This potentially violent scenario is telling of the fractious nature of politics currently unfolding in Bolivia, a country plagued by extreme social inequality and political marginalization.

Three days after the alleged attempt, a referendum aimed at increasing the autonomy of the Tarija department from the national government was resoundingly approved, marking the fourth such victory for the departmental autonomy movement in Bolivia over the past two months. While Morales hopes to strengthen the central government in an effort to equitably redistribute Bolivia’s resource wealth throughout the country, his opposition, a number of departmental political leaders, aspire to increase their autonomy from the central government in order to preserve the privileged status the country’s elite have enjoyed for centuries. The stage is now set for a dramatic showdown that will undoubtedly shape the future of Bolivia, the choices offered to its citizenry, and their prospects for more meaningful lives.

Bolivia’s Natural Wealth

Bolivia is rich in natural resources. According to the CIA World Factbook, the landlocked Andean country has more than 650 billion cubic meters of proven natural gas reserves, second only to Venezuela in all of South America. Bolivia exports over 10 billion cubic meters of natural gas annually, making it the sixteenth largest exporter in the world. In addition, the country is home to a variety of mineral deposits, including zinc, tin and silver. Consider also that Bolivia is a net exporter of crude petroleum, and the importance of the wealth of its vast commodity resources – real and potential – becomes abundantly clear. Possession of such valuable commodities should guarantee Bolivia prosperity on a national scale. However the reality for the majority of the population is far from this egalitarian ideal. Indeed, Bolivia is narrowly divided along geographic and ethnic boundaries by ideologies, language, race, cultural and fiscal policies that, until recently, have ensured that the majority remain impoverished while an economic and political elite few inordinately benefit.

Bolivia’s Poor Majority

Bolivia’s indigenous peoples, who account for well over half of the population, have been systematically oppressed for centuries. Living primarily as subsistence farmers in the arid western mountainous regions of the country – the Andean Altiplano – Bolivia’s indigenous majority largely lacks access to basic educational, health, and economic opportunities. The Federal Research Division of the Library of Congress reports that over 80 percent of rural residents lack access to clean water and means of sanitary waste disposal. The 2007/08 UN Human Development Report ranks Bolivia languishing behind every country in the western hemisphere except for Guatemala and Haiti, with regards to life expectancy, educational opportunities, literacy, and GDP per capita. One may question how a country so blessed with natural riches can suffer such poverty.

The Rich Minority

Living conditions in the eastern lowlands, home to the country’s mestizo (30 percent) and white (15 percent) populations, are dramatically different. Nestled in the corner of the Amazon, the tropical climate allows for much more arable land, evident by greater agricultural production as well as different land usage. In the east, large landholdings are not the exception but the rule. According to the United Nations Development Program, 25 million hectares of prime farmland is controlled by some 100 families. In comparison, the remaining 5 million hectares of farmland in the country are shared among 2 million campesinos. This lopsided pattern of land use is reminiscent of the hacienda system, the form of land organization utilized during the high days of Spanish colonialism.

The case of U.S. national Ronald Larson, who owns more than 140,000 acres of land in the eastern department of Santa Cruz, exemplifies the intensity uneven land distribution. The white landowner employs large numbers of indigenous farmhands, and although he is not an oppressive employer by any means, the fact that the existing land tenure system has tolerated a single individual being able to amass such extensive landholdings essentially guarantees the continuation of the rigid divide between rich and poor in Bolivia. Says one laborer: “We are not slaves, but we are not prospering. We just exist” (New York Times, American Rancher Resists Land Reform Plans in Bolivia). As long as such vast tracts of land are held by a privileged few, the potential wealth hidden in Bolivia’s soil will remain largely inaccessible to most of the population.

The large agribusinesses of the east have normally generated healthy profits, but it is what lies beneath the soil that traditionally has accentuated Bolivia’s grievous earning gap. Most of Bolivia’s natural gas and petroleum deposits are located in the wealthier and more educated eastern regions of the country, in such departments as Santa Cruz, Tarija, Pando, and Beni. Until recently, profits from the exploitation of their resources have been unfairly shared sparsely with the rest of the country through an imperfect tax system. The revenues that the energy sector has generated in the east are largely responsible for the development of the bulk of the financial markets and business services located there. As a result, this region enjoys a much higher cross-the board per capita standard of living compared to the rest of the country.

Evo Morales and Democratic Reform

The marginalization of the masses is now being challenged by a populist indigenous movement. Evo Morales was elected President of Bolivia on December 18, 2005, running on the Movement for Socialism (MAS) party ticket. As president, he has introduced a new economic model aimed at the equitable redistribution of the nation’s patrimony. “Capitalismo Andino Amazónico” (Andean-Amazonian Capitalism) represents a pluralist approach to economic growth designed to give every citizen equal access to Bolivia’s literal goldmine. Vice-President Álvaro Gracia Linera explains, “Industry in Bolivia should learn to coexist with forms of self-organization and commercial development owned in particular by the people in the Andes and Amazon.” The Agencia Nodo Sur (South Node Agency) explains that Andean-Amazonian Capitalism is neither socialism nor neoliberalism, but a system catering to the contemporary realities of Bolivia which recognizes communal, state, and private forms of economic organization as being equal under the law.

One of Morales’ primary objectives as president has been to implement a new constitution that protects the rights of all citizens. To this end, the Bolivian Constituent Assembly approved a relatively moderate constitution in December 2007. Still, its approval was highly controversial. Members of the opposition party claimed that they were physically prevented from attending the proceedings by pro-government social movements, such as trade unions and coca growers; the MAS maintains that those who were absent from the vote on the constituent assembly were so in order to boycott the proceedings. Regardless, the draft constitution contains two progressive measures that, if promulgated, should quickly serve to benefit the majority of Bolivians. First, it creates the strong central government necessary to ensure the equitable division of the nation’s natural resources amongst the citizenry. Second, the proposed constitution will respect regional autonomy while protecting the rights of indigenous groups on a level equal to their mestizo counterparts, so as to promote a more pluralist national cultural identity. This arrangement is being contested by some orthodox politicians who fear that allowing indigenous groups to practice traditional customs, especially in those regions with a mixed demographic profile, will further splinter an already badly fractured political system. Other contested issues include agrarian reform and the division of natural gas profits through taxes.

Morales Makes His Move

While the new constitution awaits ratification by the electorate, Morales has not waited to make his populist vision a reality. First, he has nationalized the all-important energy sector. On May 1, 2006 – International Workers Day – Morales ordered the army to reclaim gas fields, pipelines, and refineries throughout the country. He announced that “the state recovers ownership, possession and total and absolute control” of Bolivia’s vast natural gas reserves (Reuters, Bolivia’s military takes control of gas fields, May 2, 2006). The government demanded that private firms relinquish at least 51 percent of ownership to the Bolivian state energy firm, Yacimientos Petroliferos Fiscales Bolivianos (YPFB), within 6 months. Although the existing private companies and multinationals based in Bolivia were not pleased by the above moves, they for the most part accepted Morales’ terms. According to the BBC, the 10 largest private firms operating in Bolivia signed new contracts accepting the government’s terms just days before the predetermined deadline lapsed.

However the nationalization process was not as “absolute” as it may seem. Indeed, the appropriation of the energy sector falls in line with the mixed-economic model of Andean-Amazonian Capitalism. The new agreement provides for state ownership of hydrocarbons and control of their sale. Some private companies will continue to operate production facilities, and may receive up to 50 percent of the value of production, so long as they respect the stipulations of law. On June 2, 2008, Morales shifted control of the natural gas pipelines previously owned by Ashmore Energy International and Shell Gas to YPFB because the foreign companies had failed to be in compliance with government regulations.

The idea behind the new arrangement is to retain the efficiency of a private company while securing profits for state use. The dual involvement of state and private interests effectively balances productive capacity and social welfare, a healthy approach to achieving the national prosperity that is too often absent in South America. Although it may be unnecessary in the long run, a strong central government is viewed by many political scientists as being necessary for Bolivia at the present time in order to deconstruct the racial and cultural barriers which have divided society over the decades. In this regard, Morales is attempting to mediate between several competing groups so as to create a unified Bolivia. It is clear that the overall success of Bolivia takes precedence over the benefits to any particular party, regardless of its respective affiliation. As he explained during the nationalization of a processing plant formerly owned by Glencore International AG, a Swiss mining company, “Companies that respect Bolivian laws that do not steal money from the Bolivian people, will be respected. But if the companies do not respect the laws, I have no other alternative than to recover those companies” (Associated Press, Bolivia to Nationalize Mineral Plant, February 8, 2007).

The Moon Rises in Bolivia

Morales’ reforms, however, have faced stiff opposition. Indeed, the constituency of his popular movement is fiercely opposed by the far more affluent mestizo minority, as the redistribution of wealth and resources threatens the power maintained by this elite class. The country’s so called “Half Moon,” where most of the opposition forces are based, is made up of the four previously mentioned hydrocarbon-producing departments situated along Bolivia’s eastern border. These departments particularly have taken issue with the aforementioned redistribution of wealth, claiming that the earnings from natural gas production, for example, should stay in the region where the resource was found.

The big political debate, then, revolves around who should have first draw on the profits from the sale of natural resources. The current hydrocarbons tax (Impuesto Directo a los Hidrocarburos), drafted in 2005, divides 12.5 percent of hydrocarbon tax revenues between the four aforementioned producing departments; 6.25 percent goes to each of the five non-producing departments; and 56.25 percent goes to the national government. Having the majority of profits going to the national government seems to be the most appropriate policy in a country sharply divided since Spanish colonial times along ethnic, economic, and political boundaries because it allows the government to address these problems with a unified approach. Indeed, critics of Bolivia’s current situation insist that a strong, transparent and democratic central government is needed to achieve meaningful reform. Morales’ administration has thus far filled this role surprisingly well, given the obstacles it has had to face and the tenacity of his political foes.

The Vote for Autonomy

Leading the opposition to Morales is Ruben Costas, the prefect of Bolivia’s largest and wealthiest department, Santa Cruz. Costas spearheaded a referendum, held on May 4, 2008, calling for increased regional autonomy and voiding some of Morales’ reforms to prevent Santa Cruz’s copious wealth from being redistributed to the entire nation. Key provisions of the entirely illegal referendum on autonomy, which Costas’ side overwhelmingly won, reserves Santa Cruz the right to negotiate its own contracts with foreign oil companies and gives it control over the possession, distribution, and administration of its own land holdings. According to Bolivian federal authorities, Morales is in favor of granting some autonomy to both departments and indigenous communities, however only if this condition is pursued through a legal constitutional framework and will preserve the integrity of the nation. The May referendum in Santa Cruz clearly did not meet this criterion.

Nevertheless, pro-autonomy forces received more than 80 percent of the vote in all of the autonomy-seeking departments. Santa Cruz’s results were replicated on June 1 in the smaller departments of Pando and Beni and on June 22 in Tarija, however the legitimacy of the Tarija vote deserves even greater scrutiny than the others. There, the department prefect, Mario Cossío, refused to recognize a similarly illegal vote organized by his opposition on June 15 that selected a sub-prefect and departmental councilor. Cossío’s critics claim that his position, clearly guided by politics and not the law, further undermine the results of Tarija’s autonomy referendum.

A Growing Problem

The Tarija case is characteristic of the situation being played out on a national scale. Competing political groups are attacking each other through illegal means and neither side is willing to negotiate with its respective opposition. If these counterproductive methods continue, with neither side conceding to the other, it could trigger the political disaster that has thus far been avoided. Succession was once merely a threat used by the Half Moon departments to bring attention to their cause, but it is once again gaining steam in various forms. In Tarija, for example, residents of the Gran Chaco region have expressed interest in splitting from their current department and forming a new one. The proposed “Chaco” department, which would be the nation’s 10th such political division, is indicative of the multitude of political alliances currently at play in Bolivia.

“MASismo has failed,” said the conservative Costas, in reference to Morales’ political party, “We have set out on a road towards a new republic and modern state that will be forged in the four autonomous provinces, until this becomes the most decentralized country in Latin America” (Galdu.org). The primary point of contention between Costas and Morales is the question of to whom autonomy should be granted. Morales wants to recognize regional, departmental, and indigenous groups in a mixed political system comparable to his diverse economic model. Meanwhile, Costas is trying to divide the country strictly along political and geographic boundaries without granting indigenous groups any special powers, a concession which he opposes because it would undermine his administrative capabilities as well as those of nation’s other prefects. Although Costas is essentially proposing a federalist society, he is careful to avoid the term because of the negative connotations it produces in Bolivia, namely its association with the Federal War of 1899, in which mestizo elites first allied with and then betrayed native Aymara indigenous groups.

The Legal System: A Political Reality Check

Regardless of their successes, the aforementioned referendums were blatantly illegal. Two months before the Santa Cruz vote, the Bolivian National Electoral Court (CNE), the nation’s highest governing authority with plenary jurisdiction over elections, declared the then planned referendums unconstitutional. Admittedly, the CNE is loaded with Morales’ supporters – including its president, José Exeni – but the ruling was also backed by the Bolivian Congress and other institutional bodies. Several international organizations have also sided with the government; the OAS and the EU both chose not to send electoral monitors to oversee the referendums due to their illegality, representing a strong show of support for the CNE decision. Furthermore, the results of the referendums also have been rejected by the newly formed South American Union, UNASUR. Up to now, the U.S. has encouraged dialogue between the involved parties, but has otherwise remained mum on the issue.

MAS, using some creative mathematics, has nonetheless claimed victory in the referendums, citing a 38 percent abstention rate in Santa Cruz, 46.5 percent in Pando, 34 percent in Beni, and 35 percent in Tarija, according to the Latin Daily News. When these numbers are combined with those who voted “no” to autonomy, it can be established that the referendums have been rejected by 52 percent, 56 percent, 40 percent, and 55 percent, respectively, in terms of the absolute percentage of the electorate. In addition, MAS has brought attention to numerous omissions on voter registration lists and other irregularities designed to assist the opposition in its illegal bid for autonomy.

It is interesting to note that Costas, Cossío, and Bolivia’s other prefects were elected by popular vote, and not selected by the president as is stipulated by law. Thus, Morales could demand the resignation of the leadership of this regional opposition, but according to Dr. Martin Mendoza, a Cambridge political science professor, this would be far too controversial a step to take during these tumultuous times. Such an action could ignite the political tension into outright violence. At least one person died during the Santa Cruz referendum and many were injured there as well as in Pando and Beni during skirmishes instigated by the anti-Morales, ultra rightwing Youth League (to which the two accused in the assassination attempt belong). Instead of exercising his constitutional power to preserve his presidency, Morales has opted to leave this decision up to the people through a new referendum.

An Uncertain Future

Responding to the opposition, Morales has called for another referendum aimed at gauging national confidence in the President and all of the prefects. According to this template, the contested leaders must be affirmed by at least the percentage they received when voted into office. If not, their positions will be vacated and new elections will be held. This “confidence vote” – which is legally sanctioned – is scheduled for August 10th. Some experts, including Juan Carlos Hidalgo of the Cato Institute, have claimed that the recall vote is a ploy by the opposition to delay a vote on the new constitution. Indeed, Bolivian law stipulates that only one national referendum can be held in any given year, so the August 10 vote will push back a vote on the constitution until at least 2009.

However this move by the opposition could very well backfire. Many of the opposition prefects are no longer confident that they will survive the recall vote and have thus joined forces under the Conalde (national democratic council) to voice their disagreement. On June 23, the prefects from the four aforementioned departments, along with Manfred Reyes Villa from Cochabamba, publicly rejected the upcoming referendum. None of these prefects were elected by a clear majority and their newfound hostility to the legally-sanctioned referendum is a telling sign that they fear dismissal by their constituencies in August. Instead they have called for the renewal of “national dialogue,” which although necessary to quell the worsening political turmoil, is in this case guided by self-serving interests and for that reason serves only to confound the problem.

Meanwhile, in a recent opinion poll, 55 percent of respondents approved of the president, a slight increase from April. For this reason, it is widely believed Morales will win the upcoming vote. He was elected by 53.74% of voters in 2005, an unprecedented victory in Bolivian politics, so it is unlikely that he will be ousted in August. What matters, then, is the margin by which Morales wins. A clear victory will further legitimize his government, strengthen the MAS party, and expedite the referendum ballot needed to approve the new constitution. A narrow victory, however, may serve to unify the somewhat divided opposition and give it new leverage against Morales. Even if he loses, there is no constitutional mandate to legitimize the ouster of the president in such circumstances, so Morales will likely be able to stall the impact of any vote until the next scheduled elections in January 2011, at which time it may no longer be relevant.

This analysis was prepared by COHA Research Associate Chris Sweeney

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