Bolivia After the Storm

Raúl Zibechi, Americas Program

At the end of December, the first popular uprising in the region against a government of the left took place in Bolivia. It was caused by an excessive increase in the price of fuels. The event demonstrates the difficulties of entering into a truly alternative mode of development, but it also reveals the limits of the Bolivian government’s stated effort to re-establish and decolonize the state.

The Ipsos Institute released a survey showing that the popularity of President Evo Morales fell from 84% in 2007 to 36% in January of 2011. The results are worse for Vice President Alvaro García Linera whose level of approval fell from 46% in November of 2010 to 29%.

The ex-Minister of Hydrocarbons, Andrés Soliz Rada, was asked “if the cycle of political and economic transformation that Evo Morales has deployed in his first six years of governing has reached its end.” He didn’t manage to give a full answer, but it was the first time a question like this has been raised in the Andean country. The “gasolinazo,” the huge increase in the price of fuels decreed at the end of December and annulled just five days later to avoid almost certain upheaval, was an earthquake sufficiently devastating to bring about a radically new political situation in Bolivia.

None of the many analysts who try to explain what happened were able to foresee that a government that was reelected barely a year ago by 64% of Bolivians, could come to face such critical social protest. Moreover, the regions where the president won more than 80% of the vote were the most mobilized against the government’s decision to raise gas prices. The Aymara Altiplano and the coca-growing zones of Chapare spawned collective actions, including the attack and burning of state institutions, which focused the anger of the population against the same people they elected.

A brief summary of what happened in those five days can provide some guide to what is in play.

The Uprising that Won’t Go Away

In mid-December the media began to disseminate official announcements about the big difference between Bolivian fuel prices and those of the rest of the region, which was said to encourage contraband and the draining of the country’s currency. On Dec. 26, while Evo Morales was on a trip to Venezuela, Vice President Alvaro García Linera published Supreme Decree 748 that raised the price of gasoline 72% and revealed the fragility of the government.

On Dec. 27, drivers began a 24-hour work stoppage and various social and civil organizations came out with declarations against the measure. A day later, the miners of Huanuni also decided to stage a 24-hour work stoppage. Government officials estimated that the protests were small and isolated and declared that the decision [to raise the price of fuels] was “irreversible.” On his return, Morales announced a 20 percent increase in the salaries of educators, health workers, the armed forces and police. On Dec. 30, protest marches began in all major cities, paralyzing the country.

Civic organizations, neighborhood councils, unions and campesino and indigenous organizations rejected Decree 748. In Cochabamba, 14,000 people demonstrated. In El Chapare the coca growers, who were believed to support Evo unconditionally and who formed his main grassroots base of support, blocked the highways. Drivers announced another stoppage, this one for 48 hours. The government was supported by the Confederation of Private Businesses of Bolivia and the National Chamber of Commerce–usually its opponents.

Huge demonstrations took place in mining areas where government support is traditionally high. In El Alto, the bastion of Evismo where Morales won 81% of the vote, a crowd, which included the legendary Federation of Neighborhood Councils (FEJUVE) that provoked the 2003 uprising against Gonzalo Sánchez de Lozada and the Regional Worker Center, attacked the headquarters of organizations that supported Decree 748. They also attacked the city government and various headquarters of groups affiliated with the official Movement Towards Socialism (MAS).

The crowd burned tollbooths on the El Alto-La Paz toll road, burned a Venezuelan flag and portraits of Evo. In La Paz, there was a large demonstration of thirty thousand people and attacks on police trying to prevent the crowd from entering the Plaza Murillo, the seat of the government. On Dec. 31, Evo attended an assembly of coca growers in the Chapare region to seek support, but instead those gathered there asked him to cancel the fuel price hike.

In a message to the nation two hours before the end of the year, the president revoked Decree 748. He said that the increase was inevitable, but that he had an obligation to “rule by obeying” and that was the reason for his turn-about. On Jan. 2, the vice president asserted that the increase in the price of fuels was necessary but that the measure would be taken in consultation with the social sectors because “in the long run, this situation would be unsustainable.”

The Power of the Oil Companies

The events described above indicate that if the decree hadn’t been withdrawn, the country would have advanced toward its fourth social breakdown since the impressive insurrection in Cochabamba in April of 2000 known as the “Water War”, which forced the rightwing government to reverse the privatization of potable water. The current government complained about the popular rejection of the increase in fuel prices, but it didn’t open a public debate about how to prevent the economy from losing $380 million annually from subsidies, $150 million of which is the result of contraband.

According to Soliz Rada, “The gasolinazo has generated a feeling that the petroleum companies have regained domination of the country,” neutralizing and even reversing the effect of the hydrocarbon nationalization nearly six years ago. The ex-minister defended the “state advances” in mining such as the installation of a lithium carbonate processing plant and another one for copper, the enlargement of the mining refinery of Huanuni, a tin foundry and the creation of the Bolivian Gold Corporation, which assured state control of the precious metal.

However, all Bolivians know that George Soros’s San Cristóbal mine, which mines zinc, silver and lead, generates annual profits of a billion dollars and pays barely $35 million in taxes. The ex-minister charges that the monetary reserves of $10 billion, the largest amount the country has ever had, are used for current expenses (salaries and social benefits) and not for the strategic investments the country needs if it wants to make the promised “industrial leap” a reality.

Specialists are familiar with the macroeconomic data, and most of the population also understands and discusses it, which limits any government’s room for maneuver. The ex-Vice Minister of Lands, Alejandro Almaraz, explained that the losses from contraband and the money spent in subsidizing fuels is a trifle compared to the $1.5 billion that the state corporation YPFB has committed to pay oil companies for supposed losses on investments, even though these companies continue to own and benefit from these investments.

He denounced the $250 million paid to the transnational Transredes despite proof that it had committed grave crimes against the State and also criticized “the $700 million dollars we give away to Brazil every year in gas and the other petroleum products that we sell them in the absence of the famous and long-announced separation plant that would cost just $150 million dollars”.

Almaraz added that, “the few oil fields currently in production are declining and can no longer produce enough oil to satisfy internal consumption.” But most of the new blocks of available oil reserves have been set aside for the same transnationals “that already have in their power more than 80% of our remaining hydrocarbons”. In other words, Petrobras, Repsol and Total. They stand to be the main beneficiaries of the increase in domestic prices, a requirement for them to return to invest in exploration for new wells.

Meanwhile, the government has not been able to explain clearly to the people the reasoning behind the increase. Evo cited smuggling of contraband by women in baby bottles and men in their belts, which only increased the anger of the population.

The debate over development

Many analysts insist on the need for an open debate on the development model. The director of the Bolivian edition of Le Monde Diplomatique, Pablo Sefanoni, appears to lean towards “a new [kind of] development with an ecological conscience.” Trotskyists, who exercise significant influence in Bolivian unions, pulled out the same tired arguments: “If the oil companies don’t invest because they don’t get what they want, the only solution is to nationalize them and put them under worker control.”

Raúl Prada, former Vice Minister of Planning, maintains that the way in which the measure was implemented and the argument was presented shows that “neoliberal logic” continues operating in the government in spite of loud anti-colonialist declarations.

He affirms that the Bolivian economy is still far from entering into even the initial phase of an alternative model. This points to the need to revitalize “the decolonization process, the foundation of the plurinational, communitarian and autonomous State, with inspiration from models of civilization antagonistic to capitalism – that offer real alternatives to modernity and development.”

Good words and the best of intentions, without doubt. But that discourse, already written into the new constitution of 2009, does not offer specific solutions to the urgent problems of small, dependent countries in the region. In this sense, the problems Bolivia is facing are not unique to it.

Bolivia has strengthened the role of the State in the economy, applied prudent macroeconomic policies and sought to contain inflation through the appreciation of the national currency. The reserves accumulated thanks to the elevated prices of primary products and the promotion of realistic policies to industrialize them have not led to the desired and predicted results. Industrialization is revealing itself to be a much more complicated path, longer and steeper than foreseen.

In fact, the proposed increase of fuel prices is an admission that without the “know-how” of the giant multinationals, it will be almost impossible to adopt a new model to add value to primary products—even with enough monetary resources to do that. This is not a problem caused just by imperialism, capitalism or multinationals.

Well-known examples reveal that the “industrial leap” normally requires decades of joint effort between the State and national capital, and participation of international capital. Brazil and its giant businesses such as Petrobras started down this road in the 1950s, and after half a century have just begun to bear fruit. While this is not an ironclad rule, the leap can´t be made over the course of one or two governments. Even less likely to happen are changes as ambitious as those attempted in the Bolivian Constitution.

To add to the difficulties, the world is facing a new wave of inflation, greater even than that recorded between 2003 and 2008. The FAO announced recently that world prices for rice, wheat, sugar, barley and meat would continue increasing through 2011 and will exceed the record set in 2007 and 2008. According to the organization, the rising prices will affect more than 80 countries, each of which could face situations similar to Tunisia’s unrest, but also unrest in southern Chile where the price of gas increased by 20%.

Towards a Political Crisis

After the turbulent period between 2000 and 2005, when Evo became president, stability came at the price of increasing State expenses through subsidies, food vouchers, and a broad range of social policies focused on diminishing poverty. The cycle of rising prices in commodities permitted the government to cover the increased expenditure with a degree of ease. However, the cycle now appears to have broken and the generalized rise in prices is beginning to have a boomerang effect.

But there’s more. In the last year, Evo’s government committed several errors that cost him politically in the municipal elections, where there was a strong reversal in the bastions of the MAS. In the Dec. 2009 presidential vote, Evo was re-elected with an overwhelming 64%, while in April of 2010 his party lost seven of the ten largest cities and suffered a sharp drop in El Alto. Various conflicts rooted in the laws of autonomy followed, with campesinos in the province of La Paz and with the Civic Committee of Potosi over the establishment of production initiatives.

The Aymara sociologist Pablo Mamani Ramírez, one of the exponents of the new Indian intellectualism, points to four problems: the failure of the nationalization of hydrocarbons, which in reality was a modification of contracts to improve the terms for the State; the failure of decolonization and reestablishment of the State; the fallacy, as the Vice President indicated, that with the present government the country’s huge structural problems would be resolved; and the re-emergence of social conflict that weakens the government’s grassroots base of support.

All four problems indicated are important, but the last one could lead the country into a grave political crisis since active popular support has come to be the principal argument the government uses to manage delicate situations. Mamani’s description of what happened in El Alto (assault on and burning of government and social movement buildings) leads one to conclude that “grassroots leadership allied with the government has been overtaken by its own rank-and-file,” who are acting on the margins of and even against the organizations they belong to.

The Emergency Committee against the Gasolinazo, created by independent social organizations to confront the crisis provoked by Decree 748, released a communiqué which “proposes to suspend the intermission of struggles of October of 2003,” which overthrew Sánchez de Lozada.

Bolivia remains a major battlefield in the struggle for power. It’s an interesting case because, in spite of massive electoral support, the government appears fragile and is having to pull back on a measure to impose an adjustment in the State’s account. And here we see a paradox of leftwing governments: they close ranks and consolidate strength before the Right but don’t know what to do when faced with grassroots social mobilization.

The situation in Bolivia shows the underlying problems in the development model, which continues to be fundamentally neoliberal even though it is not privatized. This could soon be seen in other countries that currently believe themselves to be safe from crisis.

Bolivia: Cochabamba Still Thirsty

Franz Chávez

(Tierramérica) - There is still no apparent solution to the unsatisfied demand for drinking water in Cochabamba, 11 years after this central Bolivian city made international headlines with a popular uprising that halted the privatisation of water service.

Only 326,504 people, representing 48 percent of the population of Cochabamba, have piped water service, and the poorest are forced to purchase drinking water at exorbitant prices.

Meanwhile, sanitation service coverage extends to only 48 percent of the city’s inhabitants, according to the municipal drinking water and sanitation company, Servicio Municipal de Agua Potable y Alcantarillado (SEMAPA).

SEMAPA produces 20.6 million litres of water daily and provides service for less than 16 hours a day in this city nestled in a valley of the Andes mountains, 2,600 metres above sea level.

Often water is illicitly diverted from SEMAPA and then sold from tanker trucks in neighbourhoods on the farthest outskirts of the city, a local woman who asked to remain anonymous told Tierramérica.

This critical state of affairs in Bolivia’s third largest city, with a population of 680,597, is the outcome of a series of failed experiments, beginning with a process of privatisation which, after unprecedented opposition, ended with the return of water management to the publically owned SEMAPA.

The company is run by the local municipal government, but urgently needs support from the departmental and national governments, SEMAPA general manager Julio Vargas told Tierramérica. Saddled with debts, it cannot tackle on its own the challenge of investing the 170 million dollars needed to expand service in the next five years, he explained.

In 2010, the company managed to overcome its cash deficit, but "we still can’t say that it is completely solvent," said Vargas.

In 2009, that deficit had reached three million dollars. Numerous irregularities contributed to the creation of SEMAPA’s debt, including thefts of materials, purchases of materials at overly inflated prices, and the presence on the company’s payroll of a number of employees who did not actually work there.

To balance its finances, the company was forced to lay off 150 people, Vargas said. SEMAPA currently employs at least five workers for every 1,000 household connections, significantly more than the standard considered adequate for the efficient provision of water services in Latin America, which is three workers per 1,000 connections.

Bolivia has one of the lowest water and sanitation coverage rates in the region: 85 percent of its inhabitants have access to drinking water and 46 percent are reached by some form of sewerage services, according to 2004 figures gathered by the United Nations.

The theme selected by the United Nations for this year’s World Water Day, Mar. 22, is "Water for Cities". Every month, five million people join the urban population of the world’s developing countries.

In Cochabamba, the only possible option to at least partially satisfy the demand for water is a project that involves damming three rivers in the Misicuni River basin and the construction of a reservoir to supply water for human consumption and irrigation, along with a hydroelectric power plant.

The project is being undertaken 20 kilometres from the city and is managed by Empresa Misicuni, a "social public" entity whose board of directors is made up of representatives of the government, local municipal authorities, and water users. The planned facilities are not scheduled to begin operating until 2013, however.

"In the case of Bolivia, the private and state models have both failed," Carlos Crespo, a researcher at the Centre for Higher University Studies, told Tierramérica. Crespo proposes a decentralised water management system directed by the consumers themselves.

The involvement of the state inevitably implies centralisation, which combined with a "terrible kind of corruption" in Cochabamba and ended up absorbing the social control of citizens, turning them into clients of this irregular administration, he said.

Crespo supports a proposal put forward by residents of the southern section of Cochabamba, who want to establish an association, purchase water from SEMAPA or Misicuni, and handle water management themselves, distributing it through a network of pipes to the association’s members.

This is a more democratic and "face-to-face" model of water management which could make it more efficient than previous models, Crespo believes.

SEMAPA was created in July 1967 to provide water service in the province of Cercado, of which Cochabamba is the capital, under autonomous and decentralised administration.

In 1999, the government of Hugo Banzer (1971-1978 and 1997-2001) granted the concession to provide the service administered by SEMAPA to Aguas del Tunari, a consortium made up by International Water Limited of the United Kingdom, Edison of Italy, Bechtel of the United States, Abengoa of Spain, and two Bolivian companies, ICE Ingenieros and SOBOCE.

Under the terms of the privatisation contract, Aguas del Tunari would provide drinking water and sanitation services to the entire population of Cochabamba, thus doubling the area of coverage at the time, while also supplying electricity and irrigation water to the area.

But the Bolivian authorities approved the contract through a law that granted wide powers to the consortium to administer water resources that even SEMAPA did not control, such as communal water systems.

This fact and a steep hike in water rates triggered a popular uprising in January 2000. Massive demonstrations, strikes and roadblocks continued through April, making news both nationally and internationally.

One person was killed and 30 were wounded in the violent crackdowns against the demonstrators, but in the end, Aguas del Turani was forced out of the country and the controversial law was overturned by the congress.

SEMAPA was resurrected, but its administrators placed priority on paying high salaries to its staff, ignored the public’s demands for more transparent management, and disregarded the growing demand for water.

In Cochabamba, SEMAPA customers pay roughly 0.80 dollars for a cubic metre of water, according to company figures from the third quarter of 2010. But the poorest often pay many times that amount for drinking water.

In the ongoing and widespread debate over water service, some propose the creation of a cooperative. For Vargas, this is not a viable solution, since there is no entity that would be willing to take on SEMAPA’s debt.

*This story was originally published by Latin American newspapers that are part of the Tierramérica network. Tierramérica is a specialised news service produced by IPS with the backing of the United Nations Development Programme, United Nations Environment Programme and the World Bank.

A Revolution in Bolivia: Brief Lessons for Progressives

By Alvin Finkel

We hear little of Bolivia in the Western press. But as I was able to witness this past November, this small land-locked South American country is engaged in a unique revolution that embodies a new 21st century vision of socialism quite at odds with its 20th century counterpart. The latter tended to be centralist, modernist, materialist, and hierarchical, egalitarian in impact but not in governance.

By contrast, the Bolivian model is decentralized, rooted in indigenous experiences, spiritual, and egalitarian both in governance & impact. Local community circles of all the people replace the Politbureaus and Central Committees of the last century. Evo Morales, who is an Aymara (there are two large indigenous cultures in Bolivia, Aymara & Quechua, and along with some smaller indigenous groupings, they form the majority of the Bolivian population) and a former farm union leader, was elected the president in 2005 of this country which, since colonial times, has been governed by Spanish-origin individuals, usually military leaders from the aristocracy.

His Movimiento al Socialismo (the letters form the Spanish word, “More,” and express the workers’ and peasants’ point of view that they have been denied their fair share of the nation’s wealth) has nationalized telecommunications and much of the oil industry, and improved social programs. It has renamed the country El Estado Plurinacional de Bolivia, devolved a great deal of power to local communities, and given the Indigenous languages the same footing as Spanish in the nation’s business.

It should be noted that all of this is vigorously opposed by the descendants of those who enslaved the Bolivian people five centuries ago, forcing them to work in unspeakable conditions in the silver mines and on the encomiendas.

The bourgeois media operates without censorship and six of the seven national dailies are hostile to the government to the point where nothing the governments, or unions of workers and campesinos do, gets real coverage within their pages. Yet they have undertaken a hypocritical international campaign complaining that the elected government is a dictatorship that is suppressing them.

The workers & campesinos are mobilized to fight the efforts of the bourgeoisie to paralyze their government. On two days in a row in La Paz, we saw the biggest demonstrations that we have seen in our lives: over 100,000 people, mostly women in their traditional Indigenous costumes.

The first called on the government to complete the nationalization of the oil industry and to also put the sugar industry under state ownership to reduce the cost of living. The second was a protest against the Archbishop of Cochabamba, a recent arrival from Italy, who repeated the CIA line for the benefit of an appreciate media, that the cocaleros–the coca growers–, including four year olds, are all part of the international cocaine smuggling trade. But coca and cocaine are different.

Andean peoples in pre-colonial times cultivated coca leaves and incorporated the coca into their religious ceremonies and daily social rituals. This mild stimulant continues to be used by Aboriginal peoples in the Andean countries and indeed most non-Aboriginals also drink mate de coca as an herbal tea.

Coca is also used in Coca Cola. But, like most harmful substances, cocaine combines a natural substance, in this case, coca, with various chemicals. Coca growers have no way of knowing which buyers of their product want it for its natural properties and which are connected to the cocaine trade.

The American government has pressured the Andean governments to suppress the growing of coca altogether. They have all refused but the Americans have singled out Bolivia for denunciations (rather than Peru, with its neo-liberal government, for example) mainly because they oppose Bolivia’s embrace of socialism.

The Roman Catholic Church has always played an ambivalent role in Latin America. Its leadership has, in most periods, been closely tied with the economic elites who exploited the indigenous peoples. It has used force to convert people from beliefs that their ancestors held for millennia to Catholicism.

But a section of the Church at various times has taken to heart Christ’s defense of the poor & challenged efforts to strip the indigenous peoples of their traditional lands and beliefs. Reactionaries within the church in Bolivia have always opposed the cultivation of the coca because it provides a link to the pre-Christian period in the country.

Much can be said about this fascinating country. However, what was clear to me during my visit, is this; Bolivians are on a long social justice journey. As evolving experiment, I believe Bolivia offers a model of a humanitarian society that merits the observation and the defence of its ideals by progressives everywhere.

About the Author: a resident of Edmonton, Alberta, Alvin Finkel is a professor of History at Athabasca University, and the co-chair of the Alberta Democratic Renewal Project http://www.drproject.ca

Bolivian President Evo Morales snubs US drugs agents

BBC - Bolivian President Evo Morales has refused to invite US anti-narcotics agents back into the country.

He also accused the US of trying to use the arrest of the former Bolivian drugs chief to defame his government.

US agents arrested former head of the Bolivian anti-narcotics police Gen Rene Sanabria last week on charges of drug trafficking, which he denies.

Mr Morales said the affair did not mean that the police as a whole or the government had links to drug dealers.

President Morales expelled all the US agents working for the Drug Enforcement Administration (DEA) from Bolivia in 2008, saying they were aiding his opponents.

'Blackmail'

Since the arrest last week of Gen Sanabria by DEA agents in Panama, some opposition politicians have been calling for the return to Bolivia of the American agents to help the Andean country in its fight against drug trafficking.

But President Morales said the DEA was "an instrument the US uses to blackmail those countries who don't comply with imperialism and capitalism".

He said that even though Bolivia was only a small country, its government, armed forces and police would not bow to the DEA.

"The fight against drugs is driven by geopolitical interests," he said.

"And when a policeman is tainted, that's the problem of that policeman, but they're using him to implicate the government," he added referring to the arrest of Gen Sanabria.

Gen Sanabria is facing charges in a Miami court of trying to smuggle 100kg of cocaine into the US and heading a drug-smuggling gang made up of a dozen Bolivian police officers.

He headed Bolivia's anti-narcotics operations from 2007 to 2009, and was in charge of an intelligence unit in the Bolivian interior ministry at the time of his arrest.

According to the United Nations 2010 World Drug report, Bolivia is the world's third largest producer of coca, the leaf from which cocaine is made.

In a report published on Thursday, US authorities accused Bolivia of "failing demonstrably" in its fight against the drugs trade.

Gasolinazo Challenges Bolivia’s 'Process of Change'

Emily Achtenberg

Christmas in Bolivia was short-lived last year, as tens of thousands thronged to the streets to protest the gasolinazo, a massive increase in gasoline prices provoked by the MAS (Movement Towards Socialism) government’s abrupt cancellation of fuel subsidies on December 26. Five days later, the government was forced to rescind the decree.

As shockwaves from the gasolinazo continue to roil Bolivia’s social movements, politics, and economy, urgent questions are being raised about the direction of the “process of change.” Political analyst Raúl Zibechi calls the episode “an unprecedented event in recent Latin American history: the first massive popular uprising against a leftist government.”

To be sure, popular revolts over government hydrocarbons policy are nothing new in Bolivia. During the “gas wars” of 2003-5, two neoliberal presidents were toppled by social movements demanding an end to public giveaways of Bolivia’s vast gas and oil resources to transnational corporations. Evo Morales, then a radical leader of the coca growers’ union, played a prominent role in these struggles, which eventually catapulted him into the presidency.

In 2006, Morales put the hydrocarbons industry largely under state control. Since then, Bolivia has benefitted from a vast increase in royalties and tax revenues from natural gas exports (now exceeding $1.5 billion annually) to fund social and economic programs. Largely as a result, Bolivia’s economy has been among the most vibrant in the region, with annual fiscal surpluses and impressive reserves.

Accordingly, the government’s decree raising gasoline prices by 73%, and diesel prices by 82%—the largest increase in 30 years—came as a shock to most Bolivians. At $3.42 per gallon, gas would now cost more in impoverished Bolivia than in the United States.

Overnight, bus and taxi fares doubled, food prices soared, and panic buying caused long lines for disappearing staples at state-run markets. Some $200 million in bank deposits was withdrawn, sparked by rumors of imminent government restrictions.

The government pledged compensatory measures to soften the impact, including a freeze on utility rates, a 20% pay increase for public sector and minimum wage workers, and emergency jobs for the unemployed. Funds were also promised for rural infrastructure projects and agricultural price supports. The army baked and distributed bread at pre-gasolinazo prices to counter a bakers’ union strike, and provided free transportation.

The government explained that the decree was necessary to prevent the rapid growth of gasoline subsidies and contraband from “bleeding the economy.” While exporting abundant natural gas, since the late 1990s Bolivia has imported gasoline and diesel (mostly from Venezuela and Argentina) at the market price, reselling it at a discount to Bolivian consumers. This “neoliberal” fuel subsidy, Morales argued, cost the state $380 million last year, but primarily benefitted Santa Cruz-based agribusiness and smugglers who resold the gas at double or triple the price across the border (wasting $150 million of the subsidy in the process). With the subsidy, gasoline in Bolivia has been cheaper than beer or water.

The decree would also promote energy sovereignty by stimulating domestic gasoline and diesel production, ending Bolivia’s dependency on foreign imports. With crude oil prices frozen at $27 per barrel, less than a third of today’s world price, the transnational companies that Bolivia still depends on for new production are unwilling to invest in exploration. With the near-depletion of existing oil reserves, Bolivia’s crude oil production has dropped more than 50% since 2006.

Unlike similar fuel price hikes imposed by prior neoliberal governments to enrich transnational corporations, Morales argued, the decree was a patriotic measure designed to protect the economy and redirect wasteful subsidies into social and economic programs. Morales blamed “unscrupulous” sectors (such as the taxi owners who control Bolivia’s public transportation system) and local elected officials affiliated with the center-left political opposition (who set local taxi rates) for escalating prices more than necessary after the decree was announced.

But few were satisfied by either the compensatory measures or the explanations. Critics noted that informal sector workers, who constitute 70% of Bolivia’s economically active population and would be hard hit by soaring transportation and food prices, would receive little protection. The government’s approach was “classic shock therapy, right from the IMF playbook,” said energy analyst Carlos Alberto López. The daily BolPress editorialized: “The MAS government has succeeded in doing what no neoliberal government was able to do for 25 years.

On December 30, massive protests, including civic strikes, road blockades, and marches, paralyzed virtually every major city. The mobilizations were led by sectors that have been traditional bastions of MAS support—neighborhood groups and informal sector workers in El Alto, miners in Potosí, even coca farmers in Cochabamba--joined by political opposition parties and conservative civic groups in a rare display of unity, demanding that Morales either annul the decree or resign.

National mobilizations were scheduled for January 3 by the COB (Bolivian Workers Central, the national trade union federation) and CONAMAQ, representing highland indigenous groups. However, the major national peasant union organizations continued to back the government.

In his New Year’s Eve announcement abrogating the decree, Morales recalled his inauguration promise to “lead by obeying” the Bolivian people. “The measure was necessary,” he stated, “but the timing was not right.”

The government remains committed to ending the fuel subsidy, he emphasized, but will develop a revised policy “in consultation with the people.” Reportedly, the military demanded authorization to repress the protesters as a condition of its continued support for the gasolinazo, a step that Morales was unwilling to undertake.

The gasolinazo has opened a new chapter in Bolivia’s “process of change.” The social movements historically aligned with MAS have shown renewed strength and independence, effectively renegotiating their relationship with the government. At the same time, the loyalty to Morales demonstrated by organized peasant groups—arguably those most negatively impacted by the gasolinazo—signifies a new cleavage in the popular alliance that brought him to power.

The mobilizations featured a resurgence of grassroots autonomy, often at the expense of traditional social movement leadership. El Alto protesters stormed the headquarters of FEJUVE and COR, chief protagonists of the “gas wars,” whose leaders were perceived as co-opted by the government. Dissident coca farmers in the Chapare blocked highways without official authorization. “With the December uprising,” says Oscar Olivera, a leader of the 2000 “water wars,” “the people recovered their voice, their memory of struggle.”

Most analysts agree that the gasolinazo represents a significant setback for the MAS. Protestors attacked sites and ideological symbols closely associated with the government, including Morales’s coca federation headquarters in Cochabamba, the Venezuelan flag in La Paz, and the Che Guevara statue in El Alto. For ex-MAS cabinet minister Félix Patzi, these incidents underscore the popular outrage at “a supposedly socialist government issuing a neoliberal decree.” Many wonder how Morales—an astute politician who acknowledges that in his former role as union leader, he, too, would have opposed the gasolinazo-—could have failed to anticipate the breadth of opposition to the fuel price hike. While some fault a growing “arrogance of power” that disconnects the MAS leadership from its bases, many popular organizations blame particular ministers for undermining the “process of change.” Morales’ recent cabinet announcements, which keep the economic team intact have not satisfied the expectations of groups looking for a new policy direction.

A recent poll puts Morales’ approval rate in the four largest cities at just 30%, in sharp contrast to his 64% electoral mandate in December 2009. Still, few are willing to predict his political defeat, given his strong support in the countryside, the lack of any formidable political rival, and the continued vitality of the economy.

The gasolinazo has exposed significant problems and contradictions in Bolivia’s energy and hydrocarbons policies. Many who criticized the abruptness of the price hike agree that the escalating fuel subsidy is unsustainable and should be eliminated over time.

For others, the episode reveals the limitations of the 2006 hydrocarbons “nationalization,” which has brought neither energy sovereignty nor sustainability to Bolivia while maintaining its dependence on oil and gas transnationals. “There wasn’t a true nationalization,” says El Alto activist Carlos Rojas. “The foreign companies have retained control, and pressured the government to dictate the gasolinazo.”

UNADERENA, a coalition of popular organizations seeking alternatives to the gasolinazo, thinks the government should beef up the state oil company’s productive capacity and allow it to take full control of the hydrocarbons sector. They propose eliminating other wasteful energy subsidies, such as the $700 million annual giveaway to Brazil when Bolivia sells its natural gas without separating out liquids that can be converted to petroleum products.

The government could reduce dependency on petroleum, they argue, by securing new natural gas reserves solely for the domestic market and developing pipelines to advance regional and local industrialization projects. Groups like CONAMAQ want a moratorium on all new extractive projects, which are primarily located in indigenous territories.

The gasolinazo has opened up a broad debate about Bolivia’s political and economic future, creating new tensions and opportunities for the “process of change.” Whether the MAS government will accept this challenge as a “wake-up call” for a new, more participatory direction remains to be seen.

Emily Achtenberg is an urban planner and a NACLA Research Associate. Republished from NACLA