Bolivia on a razor’s edge

The current political upheaval in Bolivia threatens to undo the reforms undertaken by Evo Morales over the last thirteen years, as well as the economic turnaround promoted by the former president. Bolivia now faces great uncertainty that could inflict irremediable damage on its economy, which has slowed in recent years due to a significant increase in public debt, a fall in the production of hydrocarbons, the fiscal deficit and a reduction of the country’s foreign exchange reserves.

The crisis currently facing Bolivia is rooted in a long history of abuses against the country’s large indigenous population, whose situation improved in part thanks to the government of Evo Morales, which recognised long-ignored rights and helped to improve material conditions for the most disadvantaged.

Morales chose to stand in October’s election despite a majority ‘no’ vote on a 2016 constitution referendum that would have allowed the former president to seek an additional term, later authorised by the Constitutional Tribunal. With opposition fragmented between eight candidates, including former president Carlos Mesa, Evo continued to reap the benefits of more than 13 years in office. But dark clouds were already starting to gather.

Morales’ success as Bolivia’s leader was primarily due to the empowerment of a huge section of the indigenous population that makes up 62.2 per cent of the country’s 11.3 million inhabitants, according to the most recent census.

The second key to the former leader’s success was the nationalisation of hydrocarbons in 2006 (on the 100th day of his first government), which allowed the population to benefit from the sale of gas, thus increasing domestic demand and consumption. The second aspect of Morales’ energy model consisted of the production and sale of energy to Bolivia’s neighbouring countries. His government also fostered cooperation with large-scale agrarian landowners in the east of the country and turned a blind eye to the informal economy, which makes up more than 80 per cent of the Bolivian economy. These measures resulted in a reduction of extreme poverty from 38.2 per cent to 15.2 per cent, and general poverty from 60.6 per cent to 34.6 per cent, according to government data.

Bolivia also benefited from the ‘raw materials supercycle’ of 2004 to 2014, which favoured general economic growth in Latin America. The year 2015, however, marked a turning point. Brazil and Argentina, the main buyers of Bolivian gas, began to diversify their purchases whilst multinationals from Russia, France, Spain and China demanded new exploration in non-traditional territory in exchange for continued investment. Morales’ initial commitment to the environment changed when he opened up Bolivia’s large national parks to oil and gas exploration. Another critical project during his second term was the approval of the construction of the Bala hydroelectric dam, which will affect large tracts of virgin forest and indigenous communities.

Elections against a backdrop of economic downturn

On the eve of October’s elections, Bolivia’s economic outlook was less than hopeful. GDP growth had slowed (from 6.8 per cent in 2013 to 4.22 per cent in 2018) and public debt had skyrocketed from 38 per cent of GDP in 2014 to 53 per cent in 2019. A sufficient industrial base for ensuring internal productivity had not been created, Bolivia had the largest fiscal deficit in the region, poverty reduction had stagnated and the drop in international reserves was affecting the competitiveness of production and exports. Morales’ opponents were additionally able to argue that the country’s economic situation was critical due to the loss of nearly US$2 billion in annual profits from the exploitation of gas fields due to falling international fuel prices and a trade deficit.

Many of the social programmes funded with money from Bolivia’s ‘commodity supercycle’ also had to be slowed down and, despite a significant reduction in poverty, Bolivia remained the poorest country in South America.

The large revenues derived from the exploitation of hydrocarbons increased the economic standing of Bolivians but did not guarantee some basic living standards, such as health care. Doctors and others protesting shortages at hospitals soon formed a base for more widespread mobilisation against Morales. This latent social discontent was reflected in the demonstrations that erupted after the opposition denounced the alleged alteration of the results of the Supreme Electoral Tribunal in the October elections, with protesters demanding Evo’s removal from power.

Even the smallest villages in Bolivia now have a football field or sports facilities, many of them dedicated by President Morales himself. Far fewer have health clinics and even fewer have basic hospitals. According to official government data, 51 per cent of the population has no medical coverage, new doctors are not being trained and hospitals are not being equipped with the most basic necessary infrastructure.

Opposition leaders have harshly criticised the government, claiming that there has never been more money in state coffers and that is has never been more squandered. They claim that millions of Bolivianos (Bolivia’s currency) are dedicated to ‘subsidising’ support for Morales amongst peasant, mining and indigenous leaders in order to ensure a dedicated following willing to do anything to preserve the economic privileges they’ve gained. When Morales left the capital city of La Paz during the current crisis, before being given asylum in Mexico, the still-president went to Chapare, the area of Bolivia with his most loyal acolytes, many of whom are coca growers. This is a group that has been accused of burning a large part of the Bolivian rainforest to make room for their crops.

Chapters yet to be written in Bolivia’s political transition

Bolivia continues to be the Latin American country with the most violence against women. According to official data, out of a total of 86,679 criminal acts committed in 2018, 28,000 were assaults against women. An estimated 2.3 out of every 100,000 women are murdered in Bolivia, making it the country with the highest percentage of femicides in all of South America. Children have also failed to benefit from the economic boom. Child labour is widespread in Bolivia and the country was the first to legalise it, first allowing work from the age of ten with a 2014 law and then, in the face of international criticism, raising that age limit to 14 years. According to official statistics, 17 per cent of children between the ages of seven and 17 work in Bolivia.

One issue that came to the fore after Morales’ departure from power and amid accusations of a ‘coup d’état’ orchestrated from abroad was that of the Bolivia’s lithium deposits, the largest in the world at 21 million metric tons. Morales’ fall was attributed to the alleged interest of foreign powers in the mineral. The facts, however, do not seem to support the claim.

Lithium is used to manufacture rechargeable batteries for electronic devices and electric vehicles, hence the interest in the exploitation of lithium carbonate. However, the potential of the mineral is not in its mere extraction but in the advanced technology and scientific knowledge required for manufacturing such devices and their batteries. To reach this level requires a significant amount of time and neighbouring countries with large reserves of lithium, such as Chile and Argentina, are decades ahead.

Certain segments of the international left have accused the United States of planning to seize Bolivian lithium. These accusations, picked up by the press, do not hold up under scrutiny considering that the United States has excellent diplomatic ties with Chile and Australia, whose deposits are much easier to exploit than those of Bolivia, where the ore contains magnesium difficult to separate from lithium.

The conditions of the Uyuni salt flats, where a good part of the Bolivian lithium is found, are not favourable for extraction and require multimillion-dollar technological investments that, at the moment, only Chinese companies seem willing to make. Other obstacles include the social instability of the departments of Potosí and Oruro, where the lithium salt flats are located, and the fact that this exploitation will have a very negative environmental impact in an area of significant natural and tourist interest.

Old complications might compound the economic difficulties that Bolivia will face if a proper political transition is not made. Morales’ party, the Movement for Socialism (MAS), has not sought an alternative to Evo, a reflection of the cult of personality that developed around him which, in the opinion of many experts, is another reason for his fall.

The former president did not hear the alarm triggered by the economic downturn, even though it was not the first time he had faced such warnings. As early as January 2011, his government was on the verge of falling in the face of massive protests after announcing the elimination of fuel subsidies. The price of fuel soared by almost 80 per cent, which had repercussions on the rise of commodity prices and inflation. Morales was forced to back off and abolish subsidies.

In October 2019, Morales crossed the red line drawn by the Bolivian people and paid dearly. As it transitions away from the Evo era, it remains to be seen whether Bolivia will be able to preserve the many undeniable achievements of its former president and, more importantly, whether it will learn from his mistakes.