Wednesday, November 22, 2006

Got Questions for the Bolivian Ambassador to the US

In December the Democracy Center will begin a new feature, "The Democracy Center Interviews", in which we will publish transcripts of conversations with a whole variety of people – politicians, social activists, artists, and just plain folk – whose lives and thoughts can shed light on what is going on here and abroad as well.

We will begin that series with Bolivia's new ambassador to the US, Gustavo Guzman, who I will be interviewing in Washington when I am there later next week. Guzman is a respected Bolivian journalist (he was formerly the editor of the political weekly Pulso) whose appointment made news in the US mostly for his lack of fluency in English and the pony tail sprouting out the back of his hair.

Clearly, there is much more to the story of Guzman's arrival in Washington than that. We'll do our best to broaden the topics at hand when we chat.

As an additional feature of our new interview series we also want to invite our readers to offer their suggestions of what questions they'd like to pose to our subjects. So here is your chance. What would you like to ask Bolivia's new ambassador to Washington? Post those ideas as comments here and we'll do our best to include those questions that seem most burning among you, our readership.

Happy Thanksgiving to all!

The March of the Landless Arrives in Cochabamba


A short while ago, just a block from our office here in Cochabamba, the streets were filled with the arrival of hundreds of men and women (many with their children) -- a march of the landless who have traveled on foot for more than three weeks from outside of Santa Cruz. Limping with exhaustion, ill from the walk and the changing climate, they are here only for the day before continuing on their way to the capital in La Paz. Their demand – approval by the Bolivia Congress of a law that would help put portions of vast privately-owned and unused land tracts into the hands of the poor so they might eek out a living farming and grazing. Landowners in Santa Cruz, yesterday, staged their own protest against the proposed new law.

Aldo Orellana of our team here at The Democracy Center took a long bus ride into the Chapare over the weekend to catch up with the marchers en route. Here is a report prepared by Aldo and another member of our team, Alexander Provan.

Jim Shultz

The March of the Landless Arrives in Cochabamba

On October 31, more than 1,000 members of indigenous communities in the lowlands of southeastern Bolivia began marching one thousand kilometers (620 miles) from Santa Cruz to La Paz. The peasants, activists and sympathetic groups hope to rally support for modifications to the National Institute for Agrarian Reform (INRA) law that would make it easier for the government to redistribute non-productive estates to the 2.5 million farmers who are “without land or who possess insufficient lands.”

The landmark piece of legislation was originally passed by President Gonzalo Sánchez de Lozada in 1996, and had the effect of legitimating ownership of properties that were obtained illegally by large landowners in the eastern provinces. “Ten years ago we decided to pass on resistance in order to fight for power and we were mistaken,” Morales told a gathering of indigenous landless groups in July. “Now we have achieved political power, we have to recover the territory.” On May 2, Morales announced an “agricultural revolution” at a rally in Ucureña, introducing the modifications to the INRA law and plans to redistribute 77,000 square miles of land by the end of his term in 2011.

For the last six months, the legislation has been held up by Congressional deadlock. Last Wednesday, Morales’ MAS party pushed the bill through the lower house, where it has a slight majority. But the Administration still needs to pick up two votes from members of opposition parties to pass the law in the Senate, where it is currently being debated.

On Sunday, the march arrived in Villa Tunari, in the Chapare region, a few hours from Cochabamba. Marchers were joined by a number of union representatives and coca growers’ groups. The march expects to arrive in La Paz next Friday, where another thousand marchers from Oruro and Caranavi will meet them.

Marchers and supporters endured sultry jungle heat and gathered under the monstrous fronds under the banner of the march’s organizers, the Confederation of Indigenous Peoples of Eastern Bolivia (CIDOB), the Coalition of Ethnic Peoples of Santa Cruz (CPESC), and the Movement Without Land (MST). Leaders from these groups reiterated their reasons for marching, calling their efforts part of “a historic struggle of the indigenous people” and affirming that they will not return to their communities until the INRA law is modified according to their demands.

A poll taken by the Nations United for Development Program (PNUD) in July found that a majority of Bolivians see land reform as the most critical issue facing the country today, and it is certainly one of the major problems being tackled by the ongoing Constituent Assembly in Sucre. While opposition parties have admitted the necessity of reform, the locus of opposition in Santa Cruz, where large landowners control disproportionate amounts of property and wealth, fears that land will be confiscated without respect for private property and handed over to peasants without the means to make productive use of it.

Morales has attempted to assure the representatives and businesses that the government will respect properties that were obtained legally and are productive, regardless of their size. Despite his efforts, the opposition Podemos party disavowed the legislation during debates in the House, with the party’s congressional leader, Fernando Messmer, calling it “the sword of Damocles over the head of the businessmen.” Landowners and business representatives embarked on their own march from the community of Warnes to Santa Cruz yesterday.

Whether or not an agreement can eventually be reached with those skeptical of the Administration’s plans, marchers in Villa Tunari suggested that entrenched privileges and political perspectives means, “We are not able to wait for a consensus on this issue.”

Morales encouraged legislators to break the gridlock on Thursday, warning that further delays could prompt social unrest. “The people will rise up to modify [the law] by force, in benefit of the majority” if Congress fails to do so, he predicted. But he has pledged not to compromise with Podemos, and yesterday a Morales spokesperson publicly voiced support for the marchers, pushing senators to “listen to the clamor of justice.”

In conversations with the marchers in the Chapare it is clear that all have eaten and slept poorly and many have become ill, partly due to drastic changes in climate along the route. Last week, two marchers were tragically hit by trucks and killed. After nearly twenty days of walking, the marchers, which include children and pregnant women, were fatigued but not discouraged. “The people here have hopes of gaining these lands for their communities,” said one marcher, “and they are not going to turn back until there is a solution to this issue.”

Prepared by Alexander Provan and Aldo Orellana

Tuesday, November 21, 2006

Speaking Event in Washington DC on Monday (Nov. 27th)

Dear Readers:

Next Monday, November 27th, I'll be participating in a lunchtime event on Bolivia at the offices of the Washington Office on Latin America (WOLA). If you live in the Washington area and are interested, please join us. The details from WOLA are below. Also Washington-related, for those interested, at the bottom of this post is the is the lead and the link to a Washington Post article from today on the current conflict over the Constituent Assembly, which includes some comments from me at the end.

Jim Shultz

Announcement from WOLA

The Washington Office on Latin America is pleased to invite you to a brown bag discussion, "The Morales Administration’s First Year", with Jim Shultz, Executive Director of the Democracy Center, Cochabamba, Bolivia.

Monday, November 27, 2006
12:30pm to 2:00 pm
WOLA Conference Room
1630 Connecticut Ave. NW Suite 200
Washington, DC 20009

Please RSVP by Wednesday, November 22 to Jessica Eby or call (202) 797-2171.

Article from Washington Post

6 Bolivian Leaders Cut Ties With Morales Ruling Party Moves Irk Regional Heads by Monte Reel

Tuesday, November 21, 2006; A24

BUENOS AIRES, Nov. 20 -- Six of Bolivia's nine regional governors have severed communications with President Evo Morales's government in recent days, intensifying protests against the ruling party's efforts to rewrite the constitution, implement a controversial land reform policy and limit the regional governments' powers. The governors represent areas where most of the country's economic strength is concentrated, including the agriculturally rich eastern lowlands and the urban centers of La Paz and Cochabamba.

Read the full story here.

Monday, November 20, 2006

And Now the Governors Jump In

Here's the latest turn in the renewed political battle over whether the building blocks of a new constitution require a super majority of 2/3 for approval in the Constituent Assembly (there is no dispute over the fact that the final document requires a 2/3 vote for approval.).

Now six of Bolivia's state governors have jumped in. On Saturday the governors of the departments of Santa Cruz, Beni, Tarija, Pando, Cochabamba and La Paz announced that they are "breaking relations" with the national government of President Morales over the MAS-led vote at the Assembly Friday to allow the pieces of the new proposal to be approved by a simple majority.

What "breaking relations" means at this point is unclear. More than anything, for now, the declaration is most significant for what it signals about the hot and shifting winds of Bolivian politics.

For the first time, since the new governors took office at the start of this year, they are each directly elected by the voters in their respective regions. Prior to that governors were always direct appointees of the President. Their popular election was one of the reforms that came out the political convulsions here last year.

I have said for months, it is really the governors, not the leaders of the opposition parties in Congress, which are the serious political counterweights to Morales and MAS. If you want to see who will contest for the Presidency at the end of Evo's term, look to them. That said, what is significant about the declaration is not that the governors (prefectos) of Santa Cruz, Beni, Tarija, and Pando have challenged Morales. They, after all, represent the so-called "media luna" along Bolivia's east where protests against Morales and the government are becoming a staple.

No, what is significant is the political calculation by José Luis Paredes (aka Pepe Lucho), of La Paz and Manfred Reyes Villa (aka Bon Bom) of Cochabamba to join the fray. The two are on very similar trajectories. Both were mayors of big cities in their region (El Alto and Cochabamba, respectively). Both were just elected governor a year ago in departments with solid MAS majorities for President. And both have pretty obvious presidential ambitions. Reyes Villa ran in 2002 and was the front runner until the very end when he was finally undone by a targeted campaign against him by Gonzalo Sanchez de Lozada.

Both have also been noticeably absent, until now, from the political noise at the national level – leaving that to the opposition parties PODEMOS and UN.

Ryes Villa, for months, has reminded me of Dory, one of the fish characters in the movie, "Finding Nemo" (Can you tell I have a four-year-old?). Amidst panic and chaos on all sides, she blissfully keeps singing to herself, "Just keep swimming. Just keep swimming." For months Manfred's political slogan has seemed to be, "Just keep building. Just keep building" as our Sunday papers are filled with full color state-financed ads for the latest ribbon the new governor has cut.

It has also been a pretty good strategy. While national politicians battle, Manfred just keeps racking up more credits for paved streets, work on the Misicuni dam, and a newly color-lit Jesus. That simultaneously avoids angering the MAS base he needs to mine if he runs national again and builds his image as a man "who knows how to govern." He may well be betting that the latter is just the right way to position himself for a post-Evo election.

So, why the dive into turbulent national political waters? Maybe it really is about political principle. Sometimes politicians do act on those. But as I wrote in my last posting, I think principle is less the issue here than power politics by both sides. More likely it is a measure of how one of the most skilled politicians in the country reads the winds here. I can't believe that either Reyes Villa or Paredes would have done this if they didn't think there was a reservoir of public concern about MAS simple-majority move in the Assembly. Consider the two barometers.

Meanwhile the MAS government has responded by announcing that it will ask to Congress to censure the six governors and open investigations into "irregularities" in their administrations.

Tonight the question in Bolivia remains the same as it was during the last round of heightened tensions – when the four departments staged their anti-Evo general strikes in September. Is all this the precursor to a real national meltdown and conflict (that could get ugly fast) or just the loud noise of rival political forces trying to undermine the power of the other in ongoing negotiations about Bolivia's future?

Saturday, November 18, 2006

Vote Issue Explodes Again in the Constituent Assembly

The majority vote vs. two-thirds vote debate in the national Constituent Assembly has exploded again. This is the same issue that led to a day of work and road shutdowns in four Bolivian departments a few months ago. Leaders of the Santa Cruz civic committee say they are already examining options for “resistance”. All this comes just three weeks before a dozen Latin American heads of state are expected for a summit here in Cochabamba starting December 8th.

The vote dispute has raged for months in the Assembly charged with drafting a rewrite of the country’s constitution. MAS, the political party of President Evo Morales, has a comfortable majority in the body elected last July, but not a 2/3 majority. Not coincidently, while MAS readily agrees that the final product of the Assembly should require 2/3 vote for approval, it believes that the votes on the various pieces along the way ought to be passable by a simple majority.

Opposition parties, led by Tuto Quiroga’s PODEMOS, are demanding a 2/3 vote for every piece of the new proposal as it is constructed. Also not coincidently, that would give the opposition an effective veto over MAS and its solid majority. It also avoids a political scenario they clearly don’t want – facing a fully drafted new Constitution months down the road full of things they don’t like. It would be much easier for the opposition to block its development piece by piece along the way than to try to stop the freight train of political momentum it might have behind it at the end of the process.

Negotiations have been ongoing to develop a compromise alternative, centered around proposals by the small third force in the Assembly, Samuel Doria Medina’s UN party, that the more controversial elements under debate require a 2/3 vote and the rest require a majority. UN party members, including Medina, the wealthy owner of Bolivia’s Burger King franchises, have been staging a hunger strike to draw public attention to their demands.

On Friday the Assembly approved, by a lopsided vote of 140 to 87, a resolution calling for a majority vote on everything. MAS critics charge that the vote – in which MAS members voted as a solid block – was orchestrated directly by President Morales and have declared that it is a sign of his intentions for authoritarian rule. MAS officials have criticized the opposition of being anti-democratic by trying to use a minority block to hold up the substantive work of the popularly elected Assembly.

What is democratic here and what isn’t? The debate reminds me of the old saying, “In politics, where you stand depends on where you sit.” I have little doubt that if PODEMOS and the UN were in the MAS position of a solid majority, but shy of 2/3, they would be solidly in favor of a simple majority vote. I also have little doubt that if MAS were in the opposition it would be screaming for a 2/3 vote.

The debate in governmental institutions over when “super majorities” should be required is not unique to Bolivia. In the California Legislature where I worked for years, there has been a debate for decades over whether the state budget should require 2/3 approval, as it does under the constitution, or whether it would be more “democratic” to let it be approved by a simple majority. The fact that Democrats favor a majority and Republicans 2/3 is strictly about who is in the majority (Democrats). The Republicans majorities in the US Congress have been famous the last two years about calling for an end to super majorities to cutoff filibusters and approve [Bush] judicial appointments.

To be sure, in Bolivia there is a reasonable debate to be had over principle on simple majority vs. 2/3 and I suspect that a handful of political scientists somewhere are eagerly engaged in that debate. But let’s not be foolish – the debate in Sucre is about power not principle and both sides are playing to work their advantage. That doesn’t mean that compromise isn’t a good thing on the issue – not so much for the sake of democratic principle but because Bolivia’s process of political transformation needs to keep moving forward without blowing up the country.

Wednesday, November 15, 2006

Bolivian Exodus

She’s 22 years old and I have known her since she was seven. Now she has a seven-year-old son of her own. Three weeks ago she came to my house for a tearful goodbye. On November 6th she boarded a plane and headed for life as an undocumented immigrant in Barcelona. She left her son – with whom she is very, very close – behind to live with his father. She doesn’t know when she’ll be back, but years at least.

She is one of as many as a thousand Bolivians who are leaving here each day. The Bolivian exodus.

Heartbreaking stories of people leaving their lives behind are very easy to find here. A Taxi driver named Johnny, who I spent a day with recently, driving out to the countryside, told me he hopes to leave for Madrid in January, with a formal invitation letter from his brother who moved there years ago. He plans to stay for three years. To get his kids ready for the absence of their father he has adjusted his work hours to be around them less and less. “I don’t want it to be so drastic for them,” he told me.

An older friend of mine, a social worker in her early 60s, left a year ago to join the large Bolivian ex-pat community in Providence, Rhode Island. Her case was different. She went in legally, the recipient of a resident visa from the US government. She left behind her grandchildren, several of whom lived with her, to work for a few years and try to save enough money to retire on. She complained to me later about the cold weather and misses home, but she made the move anyway.

It would be easy to cast judgment on many of those leaving. Some will condemn those going illegally for breaking the rules and jumping the line. Others will condemn parents for leaving their children, and there is ample evidence of an increase in child abuse and neglect as children get left behind with uncles, aunts, grandparents and others – along with promises that “Mama will send for you” or “Papa will come back.”

They know all this. They know the risks. Many get sent back from Spain on arrival, deported by officials who doubt the planeloads of stories from young and poor Bolivians who say they managed to save more than $1000 for a ticket to have a look at the King’s palace in Madrid. But they go anyway.

“In six years my husband and I have built nothing,” said my young friend, who worked as the cook in a local restaurant popular with foreigners and whose husband repairs TVs and radios. “We work just to eat day by day. We have to do something to have a future.” So she followed in the footsteps of her older sister and went to Barcelona to seek her fortunes as a nanny or a maid. She dreams of putting away or sending home several hundred dollars of savings a month. She wanted to take her son but her family convinced her that she should wait to be sure she could handle the move. I suspect that she didn’t want to go at all but the opportunity opened up and her family decided that she should go instead of another sister, whose daughter is still a toddler.

Johnny, the Taxi driver, told me, “If I go for three years I can save enough money to come home and build my own house and buy my own taxi. Then I can work and earn money for my family here and we can have a better life.”

The Bolivian Exodus to Spain has exploded in recent months, not because of any quarrel or act by the Bolivian government (the lack of economic opportunity is non-partisan here, a cruel fact of life under seven presidents for more than a decade). What accelerated things is the announcement by the Spanish government that in the next few months it will begin requiring visas for Bolivians to enter Spain. As the door looks to be closing, tens of thousands of Bolivians hope to make it through beforehand.

Arlington, Virginia, is home to more Bolivians than any other place in the US, so many that Los Tiempos, the Cochabamba daily, publishes a Virginia edition. A Bolivian colleague of ours, Leonardo de la Torre Avila, who just published an important book on Bolivian immigration, says that some of the construction crews that rebuilt the Pentagon after 9/11 were made up of undocumented Bolivian immigrants. “They were in there rebuilding the Pentagon speaking Quechua,” he told me.

If Bolivians can borrow enough for airfare and other costs, they go to Virginia to build houses or to Barcelona to be maids. Those who an only afford a bus ticket head to Buenos Aires – home to more than a million Bolivians – to sell fruit or bake cakes.

One of the big beneficiaries of the exodus are the two Bolivian airlines, LAB and Aerosur, who are filling so many seats from Bolivia to Madrid that Aerosur just added a 530 seat jumbo jet to its fleet.

And the “remittance” money sent back to families is becoming a major source of national income. Some communities profiled by de la Torre Avila have developed a community-based remittance program in which Bolivian workers abroad send the money back to their small towns that use it to finance infrastructure projects like school construction that they can’t get the government to fund.

A little over 100 years ago my great grandfather, a tinsmith, left his wife and children behind in Romania to seek his fortunes at the St. Louis World Fair. He also promised to send for his family but after two years of waiting my great grandmother took matters into her own hands (it was an arranged marriage and not a blissful one) and made the long and dangerous sail across the Atlantic with a brood of small children, one of whom almost died en route.

Governments sign free trade agreements to let capital flow freely where it will at the push of a button, but labor is offered no such ease. No one leaves behind his or her family cavalierly. Most every story in every seat flying across the Atlantic tonight (in the other direction from my ancestors) is a story of tears and of people feeling they have no choice.

For years economic pressures have been forcing so many people from the countryside here to the cities that many small pueblos face extinction. Now Bolivia is losing tens of thousands of its most ambitious and hard-working people who, facing similar economic pressures, are moving abroad. What Bolivia needs is a viable plan to make it possible for people to stay where they are, if that is what they want. So far, no plan powerful enough to achieve that is anywhere in sight, not in Bolivia and not in any of the other dozen countries in Latin America where exodus to elsewhere is changing everything.

Friday, November 10, 2006

Blog from San Francisco

The other day, on my visit here, I stepped into an elevator with my four-year-old daughter, Mariana. She looked the tiny, unfamiliar room over for a minute as we waited for it to lift us up a couple of flights and then asked me, “Dada, what is this?” I have felt the same way a lot of the time I have been here in California these past two weeks.

My visit here has been a run through the touchstones of the US experience. I went “Trick or Treating” (which is an actual verb) in Southern California and got to see my little one experience the true joy of dressing up in a poofy pink princess dress and, in the experienced company of older cousins, have dozens of strangers give her a bagful of candy. I was radiant as a Catholic Nun (and perhaps if there is enough request we’ll run that photo on the Blog) and made off with all of my daughter’s Butterfingers. I love Halloween.

We spent a full day at Disneyland, where no ride could compare to the joy of meeting the real Ariel (the Little Mermaid, for those not in the know about such things). It turns out the real Winnie the Pooh, real Tigger and real Mickey Mouse all live there. Who knew?

My eldest daughter Elly, who is twenty, guided me through the other Disneyland-like experience, visits to California shopping malls, which I admit overwhelmed me and made me long for the more stinky and wild environments of La Cancha in Cochabamba, where stalls of women’s blouses mingle with hanging llama fetuses for sale.

Many people here have spaceship-like command centers in their sparkly new cars that offer drivers minute-to-minute directions on how to best arrive at their destination. We have that in Cochabamba too. Taxi drivers open up their windows and shout to passers by, “Donde esta Calle Uriquidi, sabes?” The second one, while less reliable (A note for Cochabamba visitors: always ask for directions three times and go with whatever advice you get twice) is more friendly.

And I was here, of course, for the US elections.

Watching a TV of any kind is always an experience for me since I haven’t owned one for eight years (and have never actually bought one) but watching TV in California during the closing days of the election was something else altogether. Wall to wall ads each one trying to up the next as a measure of how badly people can waste money.

There were the ads for Cruz Bustamante, the notoriously chubby Lt. Governor who staked his campaign for State Insurance Commissioner on the fact that he had lost a lot of weight. “I made a promise to my family that I would lose 70 pounds and I did,” he declared into the camera. “And I will keep my promise to you as well...” Later an LA Times reporter brought a scale to an interview and made the candidate weigh himself to see if his boast was exaggerated (it was). Really, I am not making this up. My friend Nettie coined the slogan, Lose with Cruz, and he did. So much for mixing Jenny Craig with campaigning.

My old friend Phil Angelides, part of a small group of guys I hung out with in my 20s when we were all young staffers together at the State Capitol, gave everyone a lesson in how not to run for governor. When I saw his ads walking amidst cardboard cutouts of Arnold and throwing around wincingly contrived stuff like, “And the winner for impersonating a Governor...” I wanted to reach into the TV set, slap him around a bit and say, “Phil, just be real for a minute and tell us what you want to do if you get elected.” Getting real is not what running for office is about here these days. With the millions Phil blew running for Governor for a year he could have taken everyone in Bolivia out to lunch – a good lunch, we’re talking a big plate of meatballs and chuno at the comedor in Cochabamba – for three days in a row.

That would be a good campaign ad. “Hi, my name is Phil Angelides. This will be the only TV ad from me you will see this year. Instead, I am spending all my campaign funds to take everyone in Bolivia out to lunch three times. I think it is a better use of the money. I’ll govern California the same way. Oh, Cruz Bustamante, if it fits with your diet you can come too.” Instead all the TV stations got the money.

George Bush also showed us how to lose an election. Take the country to war on a lie and then tell us we have to stay the course. His Texas predecessor, Lyndon Johnson, had similar success with the same formula in Vietnam forty years ago. We now have scientific evidence that collective amnesia in the US takes forty years to mature. But now people here are waking up to the war and Democrats rode the wave.

Too bad Democrats won’t actually end the war. Many will try to use the new majorities to do so but the safer political course is to not rock the boat too much and let the war linger like an albatross around the Republicans' neck for another two years in hopes that the White House too will become a Democratic conquest and the Democrats can have the war all to themselves. This is the formula by which quagmires linger.

There is a parallel to Bolivia here that I drew before the packed crowds that came to hear about Bolivia this week when I spoke at UC Berkeley and at New College in San Francisco. In December of last year MAS backers were euphoric at Evo’s victory. This week Democrats in the city of the new House Speaker are similarly joyous about the return of the Congress to Democratic hands. A year later many in Bolivia are disenchanted and MAS has learned how much easier it is to win a vote than to put together the government you promised. Soon Democrats in the US will see how easily their victory gets bogged down in the politics of timidity.

Here is what I said to my audiences here this week. Bolivia teaches us that democracy is about more than elections. It is about people following what is going on and taking action to make governments accountable to their people. It is about not losing sense of right and wrong.

Halloween is wonderful. Disneyland was fun. Shopping malls are convenient. Peet’s coffee is tasty. Bagels are God’s gift. But the comfort lulls us too easily into believing that we have done our political duty by punching the card and relishing victory at the polls. The war goes on. The war based on a lie.

Hold their feet to the fire my countrymen and countrywomen. End the war as quickly as possible. That, more than the election results on Tuesday, is the first step toward putting my country back on a track as moral and good as the people who live here.

Sunday, November 05, 2006

Book Review: Impasse in Bolivia


Again we bring you a review of a recent English publication on Bolivia, an important academic offering, Impasse in Bolivia by Ben Kohl and Linda Farthing. The Democracy Center’s assistant director, Melissa Draper, writes a review. More information on the book can be found here.

Jim Shultz

Book Review: Impasse in Bolivia
by Ben Kohl and Linda Farthing

Impasse in Bolivia is a thoughtful and thorough analysis of Bolivia’s struggle over the past two decades with neoliberal policies. This new book by Ben Kohl and Linda Farthing fills a critical gap in literature on Bolivia, providing an astute analysis of the forces that have dictated the course of Bolivia’s recent history. These are the forces that have sparked a backlash led by the Bolivia’s majority indigenous population, one which has put the nation into international headlines and thrust its first indigenous President into power.

Impasse offers an impressive review of the history, theories and policies that have created the unique national identity for this sparsely populated Andean country. In the first two chapters, the authors lay out the basics of neoliberal theory and the historical backdrop of the country that leads up to the implementation of neoliberal policies. Kohl and Farthing examine the origins of neoliberal theory, from the academics who sketched out its premises to the politicians and institutions that turned those ideas into policies for developing nations like Bolivia. A legible historical outline beginning in the sixteenth century helps readers grasp the ensuing implications of these policies on contemporary Bolivian history.

In Bolivia, these theories became law with the introduction of the New Economic Program (NEP) in 1985. The NEP prepared the way for the neoliberal policies reaffirmed by Gonzalo Sanchez de Lozada’s Plan de Todos (1993), which fundamentally changed the concept of citizenship in support of a capitalist economy. Impasse carefully weaves together the political, economic and social tensions produced by these reforms.

Further discussions of policies, such as the political decentralization initiated by the famous Law of Popular Participation, are grounded in important comparative cases ranging from Nepal to Africa. Kohl and Farthing also display a solid understanding of what these policies meant for Bolivians and point out the faults in their implementation.

The penultimate chapter places the strength and efficacy of social movements’ resistance to neoliberal policies in the context of foreign policy and the national dynamics that fed repeated backlashes between 2000 and 2003. We find out why coca growers gained enormous power and how their support of newly formed water coordination committees paved the way for the now famous war over water privatization in Cochabamba in 2000. We see how successive protests on land distribution and tax reform between 2001 and 2003 shifted the crux of national politics to El Alto, elevating newly formed community-based organizations like FEJUVE (Federación de Juntas Vecinales) that would lead the most recent battle against neoliberalism, the Gas War of October 2003.

This all builds the foundation of a comprehensive study of the failure of a much-espoused economic model that did little to satisfy the needs of a diverse and impoverished country. It becomes starkly clear how public resistance to neoliberalism gained strength and why it continues on Bolivia’s streets today.

The book’s conclusions, repeated several times throughout the book, focus on three strands that dominate Bolivian history: international domination and lack of sovereignty; indigenous resistance; and regional pressures. The continually changing role of the state is key to all those factors. Neoliberal policies, in theory, help shrink government presence so that market forces can dominate and growth can be maximized. As the Bolivia case shows, however, the demobilization of the government rendered it useless in its new regulatory role, usurping any power it might have had to act in the people’s interest. And with the shift of power from the state (public) to the market (private), so went the corruption, unchecked by any legitimate supervising authority.

Impasse’s only weakness is that the recommendations the reader so eagerly awaits in its final conclusions are not as clearly developed as the book’s historical analysis. As one searches for how Bolivia could possibly harness its lively democracy for the advancement of the country as a whole, the only thing to grab onto is repeated in the last paragraph. What Bolivia needs to present a viable alternative to its neoliberal past, according to the authors, is “a strong global civil society capable of re-embedding the economy into social life.” The reader is left wanting more.

Impasse makes a real contribution to the English literature available on Bolivia. At a time when the country is once again in the international limelight, we can thank Kohl and Farthing for sorting out the intricate threads of political culture, identity and resistance that make up Bolivia's national fabric and determine its role in the global community. Policy-makers, journalists, academics and students of Latin American politics alike will benefit from the window this book offers into the complexities of a country that has taught the world about the dangers of foreign prescriptions and highlighted the chasm between Western theoretical solutions and the Andean reality.

Reviewed by Melissa Draper

Wednesday, November 01, 2006

Bolivia and Foreign Oil Companies Sign New Contracts


This past weekend marked the official 180 day deadline by which the Morales government pledged to sign new contracts with foreign oil companies doing business in Bolivia. Below is a Blog posting from one of The Democracy Center's oil and gas researchers, Gretchen Gordon, about the signing of new agreements with the ten biggest firms -- a major development in this story.

Jim Shultz

Bolivia and Foreign Oil Companies Sign New Contracts

Late Saturday night, Evo Morales and representatives of Bolivia’s state oil and gas company, Yacimientos Petroliferos Fiscales Bolivianos (YPFB) signed new contracts with 10 of the largest oil and gas companies operating in Bolivia. Saturday marked the 180-day deadline by which foreign companies were required to ‘migrate’ their existing contracts to a new framework or leave Bolivia, as established in the government’s Nationalization decree issued last May.

The reactions from the government, Bolivian business interests, the foreign companies, and their home governments have been extremely celebratory. The companies applauded their new legal stability and expressed contentment with their share of oil and gas profits. Morales promised that in four years, $4 billion in annual government revenue from oil and gas will pull Bolivia out of poverty.

Because the details of the new contracts have not yet been made public, however, it’s difficult to know exactly under what terms the foreign companies will be operating: What revenue will the government secure? What did it concede? Who will have the final say on how Bolivia’s gas is utilized and who benefits?

We’ll be following this issue and updating our analysis as more information becomes available, but from public statements by the government and the companies over the past two days, here’s what we can discern so far:

Why did the companies need to sign new contracts?

Though the October deadline comes from Morales’ May 1st Nationalization decree, the migration of contracts was actually legislated during the government of Carlos Mesa as part of the New Oil and Gas law passed in May of 2005, but never implemented. Bolivia’s Constitutional Court ruled in 2005 that the existing contracts were unconstitutional because they were never approved by congress.

Which companies did the government sign with?

The government signed contracts with 10 companies: Spanish Repsol, French Total, two affiliates of Brazilian Petrobras, Argentinian companies Matpetrol and Pluspetrol, Andina (controlled by Repsol), British Gas, Chaco (controlled by British Petroleum), and US Vintage (controlled by Occidental).

What kind of contracts are they?

The contracts are for exploration and development. Contracts covering transportation, or establishing export volumes are still to be negotiated. The type of contract agreement is called an “operation” contract. The private company handles the extraction of Bolivia’s gas- using their own machinery and personnel. The gas is handed over to YPFB who then compensates the company for its costs, investments, and a profit margin.

How will gas revenues be split between Bolivia and the private companies?

This is still quite unclear. Basically, what the government is saying is that Bolivia will get 50% in taxes and royalties, and the other 50% will be split between the private company and the state company, YPFB. The company’s share of that 50% will vary depending on the level of production, what’s being produced, whether the gas is being sold in the domestic market or exported, and whether or not the company has recovered their investments. So, in shorthand, the government’s take will increase over time. As the private companies recover their investments, they will pay more to the government. Companies operating in small gas fields will also pay less than those with larger production.

The range of the government’s take is being described as between 50% and 80%, but exactly how that’s calculated is unclear, specifically whether that percentage is taken after the company’s costs are subtracted. 80/20 is a common government/private split in the oil and gas industry, after costs are subtracted.

How does that compare with what companies were paying before?

After the May 1 decree, most companies operating in Bolivia were paying 50% in royalties and taxes, which is what they paid before rates were slashed during the privatization of the mid nineties. Petrobras and Total, which operated Bolivia’s two largest producing fields were paying an extra 32% above that, leaving them with 18%. Repsol, which operates another of Bolivia’s largest fields, will likely be paying more than the 50% it paid previously, but Petrobras and Total will now be paying less, though theoretically all rates will increase with time.

Bolivia’s gas is a particularly lucrative business because it has one of the lowest costs of production in the world. A president of Repsol boasted a few years ago that for every dollar invested in Bolivia, the company made $10 in profit. Unfortunately, the extreme profit margins previously enjoyed by oil and gas companies operating in Bolivia came at the expense of benefits for Bolivians.

What will new tax and royalty rates mean in terms of revenue for Bolivia?

According to YPFB’s president, with the new contracts, the government will receive over $1.3 billion dollars a year which is nearly triple revenues from 2004. Evo Morales stated that in four years, that number will increase to around $4 billion in oil and gas revenues each year. For Bolivia, the poorest country in South America, those are very significant resources.

What are some possible concerns with the contracts?

Without seeing the details, it’s impossible to know. In many ways these contracts, which are for durations of between 23 and 31 years, are more important than legislation or the nationalization decree in terms of their impact on government revenues or the level of control YPFB will have over the industry. Some important questions on the details are: How is the revenue split calculated? Will the contracts leave foreign companies in control of the industry? Will the companies or YPFB decide how Bolivia’s gas will be used, who it will be sold to and at what price?

There are also, however, important broader development questions that have been conspicuously absent, such as: Are the companies required to make investments in development of new fields or diversifying the industry? Are they required to contract with local businesses, or to share technological know-how with YPFB? How will YPFB with minimal resources and staff monitor and enforce the contracts? What provisions will be taken to prevent environmental and health hazards from increased oil and gas operations? How will the new revenues be spent?

What’s next?

The next step is that the contracts will need to be approved by Bolivia’s congress. The government plans to deliver them within the next three weeks. The contracts signed Saturday, however, are only one component of implementing the nationalization decree. The government still has several other tasks pending: negotiating a buy-back of shares in five exploration, refining and transportation companies that were carved out of YPFB when it was privatized; negotiating a higher export price with Brazil; and the biggest task, providing YPFB with the resources, infrastructure and staff to actively participate in the entire chain of production so that it has the ability to make and enforce decisions about the development of Bolivia’s gas.

Written by Gretchen Gordon