BOLIVIA: WHO RULES?

The President, The IMF And The New Social Movements

International Monetary Fund officials were staying in a luxury hotel in La
Paz, Bolivia, earlier this year, negotiating the refinancing that would
harshly restructure the nation's economy. They had a perfect grandstand
view therefore when an open revolt began in the streets against the
government and its deals with those who run the world's economy for their
own advantage. What happens next, nobody can yet predict.

GONZALO Sanchez de Lozada, who leads Bolivia's National Revolutionary
Movement (MNR), began his second term as president on 6 August 2002 after
winning the elections with only 22% of the vote. As a long-term resident of
the United States, he speaks better English than Spanish; and on an
official visit to Washington in November 2002 he declared that the US
represents "the hope for the future".

He then met with International Monetary Fund (IMF) officials and launched
his economic programme, known as Plan Bolivia (1). The primary goal was to
create 200,000 jobs. many on a national read network. But to get an extra
$5bn of IMF loans, his administration had to take harsh measures to
restructure the Bolivian economy. The IMF, which had urged Lozada to
implement its customary strict policies, sent a delegation to La Paz, the
capital of Bolivia, in February 2003, to begin drastic action on the fiscal
deficit, now more than 8.5% of Bolivia's gross domestic product.

To satisfy IMF orthodoxy, the government had two choices: raise taxes on
fuel, including petrol, or lower income levels, which were already among
the lowest in Latin America. Since introducing new business or wealth taxes
was ruled out, Lozada brought in legislation to levy a 12.5% tax on all
personal incomes over 840 bolivianos ($110), and this set off the powder keg.

On 13 January Bolivia's social movements began blocking roads linking
Cochabamba and Santa Cruz, in the coca-producing Chapare region (2). The
roadblocks, set up to protest against the forced destruction of "illegal"
crops, became targets for repression and 15 coca farmers were killed (3).
Though the farmers' tactics were only partially successful, they forced the
government to make concessions. On 20 January the opposition launched the
Estado Mayor del Pueblo (EMP, Bolivian people's staff). Evo Morales, a
coca-grower and leader of the Movement for Socialism (MAS), who came second
in the election, presented Lozada with an ultimatum: address the grievances
or resign (see opposite).

On 11 February the police's special security group (GES) protested. One of
its key demands, abolishing the proposed tax increase, appealed to most
Bolivians. When the GES rebellion broke out IMF officials staying in a
luxury hotel in La Paz were witnesses to the uprising on the streets below
(4). It turned into open revolt, shaking the government to its foundations.
The conflict, originally about police grievances, brought together the
jobless, workers, highschool students and other disgruntled citizens, all
against the military. Army snipers on top of public buildings became the
last line of defence for major institutions; 33 people were killed and more
than 200 wounded over two days.

In the middle of the fighting Lozada appeared on television, nervously said
"God save Bolivia", appealed for order and delivered a curt message: he was
scrapping the tax increase. Protests continued for another 30 hours.

The crisis dates back to 1999 and is mostly due to the flawed economic
model adopted in 1985 by the MNR and its then leader, Victor Paz
Estenssoro, who had served three terms as president (1952-56, 1960-64,
1985-89). Successive governments hoped foreign investment would be their
salvation; and though they managed to conquer inflation and privatise state
enterprises, they were unable to stop occasional national financial
surpluses from flowing abroad (5).

Seeking to force Bolivia to repay its massive foreign debt, international
financial organisations refused to provide new loans. Meanwhile Bolivia's
two main economic sectors, the staterun oil fields (Yacimientos
Petroliferos Fiscales de Bolivia, YPFB) and coca-related drug money ($500m
annually), were in free fall. The governmerit dismantled and privatised the
YPF13, and in response to US demands issued orders to destroy the coca
fields completely (6).

Bolivia has no true domestic markets because increasing concentrations of
wealth and widespread poverty have brought ruin. The productive sector is
some 550,000 self-subsistence family farms; 770,000 urban businesses
operating in the informal economy; and just 500 capitalist enterprises.
Almost 12% of the working population is unemployed (7), and average incomes
are stagnant at 420 bolivianos, $55.

Since 1985 Bolivia has relied on its traditional parties and electoral
pacts: parties elected with slender minorities enter short-lived agreements
to prevent (non-existent) political alternatives from emerging. Power is
concentrated among the elites -landowners, business interests, technocrats
and multinational representatives who share the same interests. The people
have resigned themselves to this neo-liberal consensus, which the media
supports unconditionally. In its attempts to weaken the trade unions, the
governmerit has demobilised and depoliticised the nation, undermining the
social fabric. Until 1999 the system held together. The crisis took some
time to emerge because Bolivia's macroeconomic indicators remained stable,
inflation was bearable (which is proof of highly concentrated demand) and
the people no longer had to queue to purchase basic goods.

Social activism finally arrived in April and September 2000. At first the
activists included almost all of those marginalised by the system:
indigenous peoples, farmers, poor city-dwellers. They began erecting
roadblocks, the start of a real resistance movement. Once they had defined
their political goals they quickly became a force for change. These groups
include the MAS and also Felipe Quispe's Pachacuti Indigenous Movement
(MIP), with its links to the Aymaran people.

The influence of these groups has grown since they took on the government
in the altiplano region, demanding recognition and greater participation
for trade unions (8). Their success also stems from having fought and
beaten a subsidiary of the multinational Bechtel Corporation in September
2000, after it had proposed drinking-water price increases.

The June 2002 elections took the MAS into the second round. Morales lost
the presidency because of a last-minute deal between the social
democrat-leaning Revolutionary Left Movement (MIR) and Lozada's MNR. But
the MAS did elect 35 new deputies and senators, an important shift in
legislative power. In a country previously governed by whites and metis 20%
of the members of the new congress come from indigenous groups. This is a
purely symbolic victory: over seven months, against ferocious opposition
from the ruling coalition, the MAS was unable to pass any legislation to
benefit its own supporters.

The political system closed ranks to fight the social activists, hence
January's uprisings. Morales sent a clear message to the nation: since
changing the system by legislative means was impossible, he was opting for
street mobilisation. In his view this was the only way to prevent the
government from relinquishing control of vast oil resources (primarily the
natural gas sector, about to be sold off to the Pacific LNG consortium) to
the multinationals. Morales also opposed the government's attempts to end
coca cultivation in the Chapare region and to secure Bolivia's position
within the Free Trade Area of the Americas (FTAA). These were the three
issues that led to the upheaval.

Lozada's decision to use violence to obstruct the movement became a
catalyst for resistance, involving the powerful Bolivian Workers'
Confederation (COB), regional unions and groups fighting to preserve water
rights. Working alongside the MAS and the MIP, these groups joined forces
to create the EMP, a super-union that again called on Lozada to resign.
These developmerits meant a further loss of legitimacy for his government.
On 12 February he was forced to abandon his official residence in the
Palacio Quemado while his ministers vanished, amid looting. The police
decision to join the protest had created a dangerous power vacuum; only the
army kept the government functioning.

Once the panic ended, the powers-that-be began to regroup. But even Carlos
Calvo, who heads Bolivia's confederation of private enterprises, called for
a new economic model. To signal his new direction officially, Lozada
reshuffled his 16-member cabinet on 19 February, dismissing four ministers
and announcing new measures. He promised to forego his salary and cut
ministerial pay levels; and he appointed a secretary of state to review the
privatisation programme. The IMF, which had originally sought to cut this
year's fiscal deficit from 8.5 % to 5.4%, eventually had to settle for
6.4%. Moreover it was decided that there would be no fuel tax increase
(which had been the alternative to raising income taxes).

But official sleights of hand have failed to stabilise the situation.
Bolivia's movements are still active and observers have predicted major
conflict when Lozada announces the sale of the natural gas sector, a
mega-development opportunity, he claims. Three questions still remain
contentious. What will be the price of privatised natural gas? What
revenues will Bolivia earn from its privatisation? And why is the
government incapable of defining an effective development strategy?

According to the proposals Pacific LNG is studying, it intends to pipe gas
to a Chilean port on the Pacific, even though Peru has offered 1 better
terms. This may cause the Bolivian army to revolt since its key officers
and many citizens oppose the pipeline initiative: Bolivia's territorial
dispute with Chile dates back to the War of the Pacific (1879), when
Bolivia lost its coast-line to Chile.

The Bolivian government's manoeuvring came to light when it asked Intec, a
multinational engineering firm, to carry out an "impartial" study to
determine how Bolivia could export natural gas to the US most profitably.
Independent analysts discovered that Intec , whose study was subsidised (to
the sum of $386,000) by the US Trade and Development Agency, has close
links not only with the Bechtel Group, but also with Repsol-YPF, British
Gas and British Petroleum Amoco (all three are part of the Pacific LNG
consortium (9).

Why did Lozada refuse to resign on 13 February? The new social movements
are weak. Even though they have regional power bases and significant local
support, they have yet to establish a nationwide following. Though their
message is radical, it is not original. They are able to paralyse the
country and the government by their numbers. But they are structurally
shaky and their leaders are inexperienced, so they have failed to come up
with an alternative economic or administrative model. Even though they are
increasingly given to open confrontation, during the uprising they were
overshadowed by the mobs who almost brought down the government.

Bolivia grapples with its deteriorating system, but any replacement has yet
to emerge. To Lozada's televised address, in which he claimed to be the
only man able to save the country, the opposition said: "After he's done,
there'll be no country." The traditional parties are no longer able to
bring the people together. The state-run enterprises and the urban middle
class are stuck in no-man's land. But in the public opinion, the social
movements' only major victory was to advance the idea that there are two
sources of power: governmental institutions versus trade unions and
corporate interests.

This shift in thinking, however limited, may worry the authorities and
their US backers. On 28 March the US ambassador, David Greenlee, submitted
a report to the Bolivian government in which he condemned apparent plans
for an April coup, and with MAS deputies Morales and Filemon Escobar
accused as "plotters". More disturbingly, Greenlee, who was in fact the top
CIA agent in Bolivia in 1988, also claimed that a MAS faction intended to
assassinate Morales and Escobar during the intended "coup". Were Greenlee's
allegations meant to prepare for the arrest or disappearance of Morales?
Or, as Manfred Reyes, who heads the opposition New Republican Force,
claims, were they actually designed to trigger a coup?

Translated by Luke Sandford

(1) During his first term in office (1993-1997), Lozada promised, falsely,
that he would create 500,000 jobs.

(2) The term social movements includes farmers' groups, coca growers, trade
unions, water activists and NGOs.

(3) Bolivian law provides for a coca production area of 12,000 hecatares in
the subtropical Yungas region to meet the needs of the pharmaceutical
sector and to satisfy ancient custom, which includes chewing coca leaves,
Any excess production, particularly in Chapare, is seen as fuelling drugs
trafficking and remains banned.

(4) El Juguete Rabioso, La Paz, 16 February 2003.

(5) Privatisation in Bolivia is known as "capitalisation". Multinationals.
having now acquired a 5117, stake in Bolivian staterun companies, have
taken effective control over decisionmaking.

(6) See Maurice Lemoine, "Narco-trafficking and war in the Andes", Le Monde
diploimatique, English language edition, February 200 1.

(7) These unemployment figures are from the Bolivian confederation of
private entrepreneurs. La Razon, La Paz, 26 December 2002.

(8) The altiplano region covers the high plateaus in the Bolivian Andes.

(9) Bolivia Press, no 16, Cochabamba, 14 October 2002.

A Hyperactive New Left

BOLIVIA'S general elections of June 2002 unexpectedly shook up the
entrenched political order. Even though the National Revolutionary Movement
(MNR) came first, it won only 22% of the vote and two indigenous Aymaran
leaders earned record scores (1): Evo Morales's Movement for Socialism
(MAS) took 20.9% of the vote while Felipe Quispe's Pachacuti Indigenous
Movement (MIP) won 6%.

According to the Bolivian constitution, the president is elected by direct
universal suffrage with a clear majority of the vote. If there is no
majority Congress then decides between the two leading candidates, with the
winner determined according to shifting political trends or alliances (2).
Recently the traditional parties, heedful of IMF decrees, formed a
coalition to block Morales, ensuring the election of MNR leader, Gonzalo
Sanchez de Lozada. His term should expire in August 2007.

But the two opposition parties' greatest feat was electing 41
parliamentarians from indigenous and farmers' groups. These launched
culture-related demands, to ask for official recognition for indigenous
languages such as Aymara, Quechua and Guarani. The MNR was forced to
concede this symbolic victory to the new left.

The MAS was created by farmers' groups in Chapare and Cochabamba, which
have borne the brunt of police repression, financed and assisted by the US
Drug Enforcement Administration and other US-based organisations. Both
regions are coca-growing centres, and 250 farmers have died in the past 15
years defending their rights.

In the early 1980s migrant farmers from the altiplano (Bolivian Andes)
began moving into Chapare. In 1985 Victor Paz Estenssoro's government
issued decree 21060, transforming the state-controlled mixed economy into
an orthodox, hardline neoliberal regime. State-run companies were
dismantled, including the Bolivian Mining Corporation, throwing more than
20,000 tin miners out of work. Many moved to Chapare and did the only thing
they could, grow coca. Other agricultural products are unprofitable and
lack guaranteed markets.

In the late 1980s the US government began to worry about the expansion of
illegal crops in Chapare, claiming that the region had direct links to
narco-traffickers. But President Jaime Paz Zamora (1989-93) refused to
penalise coca production. Asserting a historical understanding of the
issue, he undertook diplomacy, with the slogan "coca is not cocaine". At
the end of his term, he was harshly attacked by the US ambassador to
Bolivia. Several leaders from his party (the Revolutionary Left Movement)
were brought to "justice", including Oscar Eid, who spent four years in
prison for alleged links with narco-traffickers. Zamora had his US visa
withdrawn.

These incidents were all part of a campaign of intimidation targeting
Bolivian politicians. The message was clear those failing to oppose coca
policy in Chapare were against US policies in Bolivia. Through the 1990s
the US embassy in La Paz devised schemes to eradicate coca; the farmers
were the only ones who stood firm. Morales was a key figure to emerge from
this resistance movement.

In the early 1990s Quispe, an Aymaran indigenous leader, assumed the
leadership of the Tupac Katari Guerrilla Army (EGTK) in the altiplano. The
police forces soon dismantled the EGTK and its leadership was imprisoned.
Quispe spent five years in a maximum-security facility; shortly after his
release he was elected executive secretary of the farmers' trade union
federation (CSUTCB), a post that he still holds. He then reorganised his
support base and in 2001 founded his own political party, the MIP, which he
later led in the 2002 elections.

Besides political forces rooted in social movements, there is a third bloc
which includes the farmers' trade unions, the new water activists, the
indigenous Ayllus community of the altiplano, NGOs and landless farmers.

Their combined efforts have tackled and even reversed orthodox
neoliberalism, as with the "water war". In April 2000 the inhabitants of
Cochabamba, working together with activists, rose up against a subsidiary
of the multinational Bechtel Group, Aguas del Tunari (Tunari Water), which
administered Cochabamba's drinking water and charged steep rates for it.
Violent street protests prompted the government to dispatch troops to the
region, but the people of Cochabamba eventually won the battle and Aguas
del Tunari executives were forced to flee the country (3).

These three blocs are leading the reshaping of Bolivian politics.
Representing farmers and indigenous groups, opposition leaders have gained
prominence by defending their lands and cultures. The new left is no longer
made up of middle and upper-class intellectuals styling themselves
political leaders. Unlike the social movements of the 1960s and 1970s, the
new leftists seek neither class struggle nor an end to the state. They want
increased participation within the democratic system, local community-based
government, and official recognition of their traditions.

Because the new left is assimilated within the social movements rather than
the trade unions, it is able to rally large numbers. The events of recent
years have prompted the social organisations to embrace a wider range of
issues, including those relating to urban sectors: reducing prices,
protecting natural resources and reversing the effects of privatisation.

Traditional notions of political partisanship are absent in the new left.
Sectarian practices and political hierarchies may no longer be the guiding
principles, but the structural weaknesses could still have detrimental
long-term effects. History shows social movements tend to disintegrate over
time.

Translated by Luke Sandford

(1) According to the most recent census (2000), 2.5 million Bolivians claim
Aymaran roots, out of a total population of 8.2 million.

(2) In 1989 the MIR joined forces with National Democratic Action (AND),
led by former general Hugo Banzer, who had supervised the torture of MIR
activists under the military dictatorship. This temporary alliance handed
the presidency to the MIR leader, Jaime Paz Zamora. Similar manouevring
happened in 1997 when Banzer became president.

(3) The ruling coalition includes the MNR, MIR, UCS (Civic Solidarity
Union) and the MBL (Free Bolivia Movement). The leader of the water
activists, Oscar Olivera, said -We, the Bolivian people, have defeated the
forces of globalised capitatism for the first time in world history."