Report Excerpt: Bolivia – The Historical Context

Readers,

As promised, we are going to begin posting excerpts here on the Blog from The Democracy Center’s new report, Interpreting Bolivia’s Political Transformation. We wrote the report as a response to Bolivia on the Brink by Professor Eduardo Gamarra, published by the U.S. Council on Foreign Relations. Links to both reports can be found here.

We are posting these excerpts to create a forum for informed dialogue and discussion on current events in Bolivia. Our report will also be translated to Spanish and posted here in a few weeks. We have encouraged the Council to publish a translated version of its report as well, because obviously Bolivians have a right to see what is being written about events in their country.

One last note, as visitors to this Blog know, there are some people who believe that the best form of analysis is not actually analysis but insult, and certainly doing that takes less time and thought. To be clear, our paper is no way an attack on Professor Gamarra or the Council, both of whom we consider colleagues and both of whom we respect. They certainly understand that and we gave both Professor Gamarra and the Council an advance draft of our report and invited them to comment and point out anything that either considered to be unfair. We would certainly hope that our readers would treat both Professor Gamarra and the Council with similar respect in their comments here.

Jim Shultz

Report Excerpt: Bolivia – The Historical Context

No country can be separated from its history and no analysis of current events in Bolivia would be complete without a solid understanding of the historical context that has brought Bolivia to the moment of important change where it finds itself today.

Bolivia is the most impoverished country in South America and the most economically unequal. It is also the most indigenous country in all of the Americas. Its roots, going back five centuries, have been shaped by interventions from abroad, most of which have produced exploitation and hardship. In the 1500s and 1600s the Spanish mined Bolivia’s famous Cerro Rico in Potosí, the single hill that was so filled with silver that it virtually bankrolled the Spanish Empire for two centuries. The fact that Bolivia sat atop one of the largest sources of mineral wealth on the planet and ended up the poorest nation on the continent is a well-remembered injustice here and an unfortunate precursor for much of its history since.

The Dominant Role of the “Washington Consensus” in Bolivia

While Bolivia on the Brink devotes a good deal of attention to the new role of Venezuela and Cuba in Bolivia, strikingly absent from the report is any substantial analysis of the outside forces that have most shaped Bolivia’s path for the past two decades: international financial institutions such as the International Monetary Fund (IMF) and the World Bank.

For twenty years, Bolivia was one of Latin America’s main testing grounds for a package of market-driven economic reforms known as the Washington Consensus. John Williamson, the U.S. economist who coined that phrase in testimony before the U.S. Senate, has called Bolivia “the big bang” of implementation of the IMF and World Bank economic model in Latin America. Understanding that history is essential to understanding the dynamics of current Bolivian politics.

Under direct IMF and World Bank pressure, conservative Bolivian governments throughout the 1980s and 1990s engineered a radical change of direction in national economic policy. Often in order to comply with conditionalities that those institutions tied to essential aid, Bolivia privatized most of its key national industries and resources, from its gas and oil to its public water systems. Bolivia undertook those reforms based on predictions and promises that the results would help lift the nation from poverty. The new jobs and substantial boost in revenues from gas and oil privatization never materialized, a topic we discuss in more detail below. The water privatizations coerced by the World Bank as loan conditions in 1997 led to substantial rate hikes and the now-famous Cochabamba Water Revolt in 2000.

Bolivia on the Brink is correct when it attributes the political rise of President Evo Morales as due, in part, to the country’s “efforts to follow a market-oriented development model.” However, by failing to mention the central role that U.S.-dominated institutions played in pressuring Bolivia to adopt that model, the report misleads readers into thinking that Bolivians set out on that course strictly by their own choice. Pressure from international financial institutions was pivotal in that policy shift, a fact that still casts an important shadow over the nation’s politics.

Repressive Governments

All Bolivians over the age of forty have vivid memories of living under brutal dictatorships, marked by torture, disappearances, and the suspension of key civil liberties. Many of these authoritarian regimes during the 1970s enjoyed the support of the U.S. governments of the time and were propped up by loans from foreign financial institutions. That repression reappeared as well under elected governments after democracy was restored in Bolivia in 1981. During the Cochabamba Water Revolt in 2000, for example, a dictator who returned as an elected president, Hugo Banzer, turned armed troops on protesters and imposed a suspension of civil liberties. The role of political repression in Bolivia’s history, despite its importance in understanding current events, is absent from Bolivia on the Brink.

More important, however, is the paper’s direct misrepresentation of the events in September and October 2003 that led to the resignation of President Gonzalo Sánchez de Lozada. The author writes, “To many observers, Sánchez de Lozada’s resistance to the demand for a new Constituent Assembly was the main factor responsible for his fall.” The actual events leading to President Sánchez de Lozada’s resignation and subsequent fleeing to the U.S. are well documented and dramatically at odds with the author’s representation.

The protests that spread across Bolivia in October 2003 were clearly not about the proposal for a Constituent Assembly to rewrite the nation’s constitution. They were directly in opposition to a plan by Sánchez de Lozada to export under-priced Bolivian gas through Chile to the U.S. That opposition, which led tens of thousands of Bolivians into the streets, was an expression of both mistrust of Sánchez de Lozada’s economic plans and Bolivians’ historic and deep resentment of Chile’s seizure of their nation’s last access to the sea more than a century ago.

More importantly, the protests were transformed into a broad public call for Sánchez de Lozada’s resignation only after troops dispatched by Sánchez de Lozada to break-up the protests engaged in a wave of repression that left more than sixty people dead. Even Mr. Sánchez de Lozada’s own Vice President, Carlos Mesa, broke with him over the repression. The author’s failure to mention these events surrounding Mr. Sánchez de Lozada’s resignation – the killings in particular – leaves readers with a woefully incomplete understanding and damages the paper’s credibility.