Uncertainties in the Bolivian Process

Theme: In the context of the complex political transition which commenced at the end of last year, the results of the 2 July elections confirm the trend made evident in the December poll, but at the same time raise further questions in regard to the democratic governability and strengthening of a plural political system in Bolivia.

Summary: The institutional crisis and political deadlock which have characterised Bolivian politics in the last few years seemed to have been overcome through the broad majority which was secured by Evo Morales in last December’s elections, bringing the chance to implement political reform which would have been unthinkable in the past, and at the same time re-steering economic and social policy. Effective democratisation and decentralisation of the State are in a way the initial transformations of a much wider political programme for political inclusion, the repairing of social injustices and imbalances and the modernisation of economic structures. However, constitutional reform for political inclusion and the establishment of a territorial regional autonomy system has evidenced the opposing positions of the country’s western and eastern regions, respectively. The outcome of the 2 July election has widened the gap between the two positions, accentuating institutional instability and threatening to undermine future governability, unless positions in the political and geographical centre are strengthened, and compromises are found to further territorial and ethno-cultural autonomies within a formula combining both dimensions.

Developments in Bolivia’s situation have broad-reaching repercussions for its regional neighbours, starting from the country’s readjusted situation on the complex South American game board, based on its huge natural gas reserves and the physical infrastructure which it shares with its Atlantic and Pacific neighbours, which afford it an unprecedented opportunity to change its pattern of development and fulfil a pivotal role in central South America. There is also, however, a danger that the country might become the scene of complex geopolitical wrangling if it does not administer its internal reforms and the demanding international relations deriving from its geographical position in a balanced manner.

Analysis: The reforms which Evo Morales’s government has begun implementing in Bolivia are evidence of the end of a political cycle and the start of a complex transition towards renewed modes of organising the State and arranging the political system, as well as of the basic orientation of economic policy and international relations. To begin with, the magnitude of these plans is in stark contrast with the constitutional characteristics of Evo Morales’s party, in government since 22 January 2006. It is worth recalling, in fact, that MAS is not really a political party in the classic sense of the term, because it lacks organisation, election mechanisms and verifiable doctrines, and much less previous experience of public administration, except for the few years in which it has governed in rural municipalities. It is more like a confederation of highly diverse social movements, which began to form around peasant unions of the Cochabamba tropics, and whose demands and political practices are hard to reconcile in a coherent and systematic administration of public policy.

Nevertheless, the elections of 18 December 2005 gave it an overwhelming victory, well ahead of the political groups PODEMOS, led by former President Jorge Quiroga, and Unidad Nacional (UN), led by social-democrat businessman Samuel Doria Medina. The results were first and foremost an expression of the social repudiation of the traditional parties (MNR, MIR and ADN), which were all but swept off the political map, and whose parliamentary representation has not made any attempt to try to organise itself as an effective opposition force, leaving all the initiative to President Morales and his political followers. Since taking office, Evo Morales has maintained that the first phase of his mandate would last until the establishment of a Constituent Assembly which would see the State rest upon new foundations. Since then, the government’s action has pointed in this direction, and the sequence of measures implemented in the last five months has sought to strengthen the hegemony of MAS and the possibilities of winning a two-thirds majority in the Constituent Assembly.

Consequently, at no time has the President stopped his proselytising campaign, paying little attention to governmental matters; he has also sought to disqualify any actual and potential opposition with a number of unproved accusations, and has also thereby made great strides towards gaining a complete stranglehold on the political scene and all the bodies of State power and security. This strategy has received the foreign backing of Venezuela (with financial resources and advice in regard to hydrocarbons) and Cuba (with numerous health personnel and adult literacy programmes).

Criticism of the ill-disguised interference of President Chávez became the pivotal aspect of the election campaign by PODEMOS for the 2 July poll, although this tactic already brought it a heavy defeat in the previous vote. The UN party led by Doria Medina has tried to position itself as a third option by offering a clearly reconciliatory stance firmly positioned in the centre of the political system that is under construction. It is therefore safe to say that campaigns for the referendum on autonomy and the choice of Constituent Assembly members have done little to change the strategies which the various parties deployed in December, with MAS and PODEMOS frontally opposed in a radical fight which led to the polarisation of the citizens’ preferences, while contributing nothing to truly clarifying the options on the table.

The result is that MAS has consolidated its foothold throughout the country, despite a reduction in its overall support since the December election. Its call for the ‘No’ vote in the referendum was victorious (with 58% in the country as a whole and between 63% and 75% in five of the nine Departments). In contrast, PODEMOS saw a drastic slide in grassroots support, which was focused mainly in the east of Bolivia. As for the composition of the Constituent Assembly, of the 255 members, MAS will have 130, PODEMOS 63, the three formulae with which the MNR went to the polls gave it a total of 18 seats, UN will have 8, and the remaining 36 are for eleven citizens’ groups of very different types.

Redirecting Economic Policy
Economic conditions in Bolivia vary greatly depending on the timeframe. In the short term, the international situation of high mineral and energy prices, a broader range of exports, encouraging growth in neighbouring countries and remittances by emigrants provide significant support to maintain economic growth slightly above its level of the last few years (around 4%). A quite different kettle of fish is the long-term perspective, where a multi-layer effort is required to generate much higher levels of growth, and to tackle the serious problems of unemployment and low productivity in the economy in general, based on a sustained strategy of productive reconversion and business modernisation.

Some hopes were harboured in regard to certain novelties in the recently unveiled National Development Plan. However, the Plan –known as ‘A dignified, sovereign, productive and democratic Bolivia for a better life’– shows no great advances with respect to the campaign slogans from last year’s elections: the central ideas of decolonising the State and eradicating neoliberalism remain. So does the generic thesis of nationalising all natural resources, although the measures at the operating level are not specified in this connection. The Plan envisages a central presence of the State in all spheres of the economy, but it leaves much to be desired when it comes to the instruments of policy, as well as the availability of institutional and financial resources to carry forward the redistribution strategies they propose.

The Constituent Assembly and Autonomies
The campaigns implemented by MAS and the opposition parties have contributed little to the debate about reforming the political Constitution of the State and neither have they helped clearly explain to citizens the alternatives and implications of autonomy. One of the most complex themes refers to the link between the Constituent Assembly and the referendum for autonomy, since in the recent past the various social movements spearheaded by MAS advocated the establishment of a Constituent Assembly with absolute power to re-lay the country’s constitutional foundations. Civilian leaders in the east and south of the country rallied to protect themselves with a mandatory referendum in each Department from the possibility of an overwhelming majority of constituents being able to implement unfavourable decisions in regard to their production practices and ways of life. The collection of sufficient signatures in the Department of Santa Cruz and the subsequent establishment of a council enabled them to show that this region’s position had sufficient popular support, which in turn translated into the parliamentary decision to add departmental prefects to the general elections of December 2005 for President, Vice-President, Senators and Members of Parliament. The December elections yielded an unprecedented national majority to the presidential candidature of Evo Morales, but at the same time saw a boost in support for the opposition’s candidates to Prefect in the six most economically significant departments.

The demands for political and administrative decentralisation date back from the 1930s, but there have never been the political and economic conditions to fulfil them, and indeed the strongly centralised sectoral and regional structure did not provide the minimum conditions to implement them without causing major political and social imbalances. Against the backdrop of serious conflicts in regard to this, it was hoped that MAS would honour the political agreements reached by the Parliament to simultaneously call the elections to the Constituent Assembly and hold the binding referendum on autonomy. However, President Morales unexpectedly changed his mind and decided to support the ‘No’ vote in the referendum, arguing that the autonomy of Departments benefits regional oligarchies and not grassroots sectors and indigenous communities.

The Indigenous People and Natural Resources
Among Latin American countries, Bolivia has the largest proportion of indigenous people, although in all likelihood this population is considerably less than official estimates say it is. Nevertheless, even in the real dimension of things, there is absolutely no doubt that they are nationalities and peoples who, since the colonial era, have been subjected to various kinds of economic exploitation, ethnic discrimination and social and political exclusion. The emergence of the indigenous people on the national stage cannot currently be examined without linking it to the issue of access to renewable and non-renewable natural resources. In fact, the demands for indigenous self-government in their lowland territories are not the same as those of the Aymara and Quechua people in the western region in terms of the recognition of their cultural and political rights.

The smallholders’ crisis in the west led to widespread migrations eastward, which in turn triggered incursions by migrant peasants into forest reserve areas, the seizure of recreational and productive properties, and a widespread spiralling of land disputes in eastern and southern areas of the country. To tackle the flagrant inequalities in land ownership, the government has proposed a second agricultural reform, which began with the announcement of a massive redistribution of fiscal land, a review of the legality of title deeds and verification of the economic and social role of fishing and agricultural properties.

The situation in the rural west is characterised by an increase in mining activities on the back of high mineral prices in the global market, leading to violent disputes between mining cooperatives and private companies operating under the shared-risk concessions system, on the one hand, and the Federation of Cooperatives and historic Federation of Mine Workers’ Unions, in respect of the institutional reconstruction of the sector, on the other. So far, no agreement has been reached between the parties, although both are part of the movement which backs Evo Morales.

Hydrocarbons and South American Geopolitics
The prevailing dynamic in Bolivia is not understandable outside the context of the existence of huge natural gas resources which position the country in an entirely new geopolitical constellation in South America. In this context, the nationalisation of hydrocarbons has certainly been the most significant measure implemented by the government, although it is hard to fathom the takeover of companies via the acquisition of a majority shareholding of 51% plus the military occupation of their facilities, which has triggered highly unnecessary diplomatic tensions with Brazil and Spain, which until then had shown clear signs of support for President Morales.

At the meeting between Presidents Kirchner and Morales on 29 July, a significant increase was achieved in the export price valid until year-end, and the way was paved for a new long-term contract, enabling construction of a new gas pipeline for export volume equivalent to current outflows towards Brazil. The price increase between Bolivia and Argentina will be passed on to Chile via tax mechanisms on exports, so that energy prices in the internal Argentine market are left unchanged.

The relationship with Brazil rests on a different footing, since President Lula has preferred to keep talks within the context of the contract between YPFB and Petrobras, which stipulates periodic changes in prices in line with a benchmark fuel basket. Relations between the two countries are cool, to say the least, and it is unlikely that there will be a gas price increase along the lines of the one obtained with Argentina, especially in view of the pressure on President Lula as he seeks re-election.

Integration Mechanisms
It is in this context that one must examine the complications of Venezuela’s withdrawal from the CAN (Andean Community) and its recent entry as a full partner in MERCOSUR. The Presidential Summit of Andean countries in Quito yielded some success for Bolivia’s new diplomacy. In the first place, it made evident its independence from Venezuela, which had decreed the demise of this integration mechanism in the wake of talks of a Free Trade Agreement (FTA) between the US and Colombia, Peru and Ecuador. Far from backing this view, the personal intervention of President Morales with his colleagues in Quito culminated in the signature of a joint letter to President Bush from the leaders in attendance requesting extension of the ATPDEA tariff preferences.

It is worth recalling that the tariff preferences facilitate clothing, furniture and jewellery exports in the city of El Alto, directly generating several thousand jobs of a higher quality than in other economic sectors. If this facility is not extended, there will definitely be severe social unrest in this town, which has already ousted a previous President through mobilisations. Bolivia’s links with South American integration mechanisms will probably not change as long as the country is exercising the rotating presidency of the CAN and prior to the next South American Summit scheduled for December 2006.

Conclusions: In the light of the 2 July election outcome, the following conclusions may be drawn from Bolivia’s political situation.

(1) Voting once again evidenced that the electorate in Bolivia supports change, but does not want a concentration of power and therefore seeks to maintain a diversified spectrum of political options. Consequently, MAS confirmed its political presence across the board, but fell short of the two-thirds majority it aspired to in order to attain absolute control of the Constituent Assembly. This has led it to try to secure a much sought-after qualified majority through agreements with various smaller political forces prior to opening the Constituent Assembly on 6 August. It is unlikely to succeed, and this will benefit the development of real debate and the search for thematic consensus on a case-by-case basis among Assembly members.

(2) There is no doubt that the issue of autonomy has taken centre-stage in terms of the difference in left- and right-wing policies, on the one hand, and regional differences between east and west, on the other. In the interests of accuracy, it is only fair to point out that there is an artificial component in these dividing lines. The overall results of the referendum clearly show a country that is divided between eastern and western Departments, but the results conceal the fact that in the west there was actually a high incidence of ‘Yes’ votes, and that in the Departments of the east there was a considerable percentage of ‘No’ votes. Accordingly, there is nothing final about the prevalence of Assembly-members’ loyalties to their respective territorial constituencies or to the organizations in whose electoral lists they ran. It all hinges on how the constitutional debate is arranged and how the rest of the country decides to follow it.

(3) The opening of talks between Assembly members meeting at Sucre is likely to signal the start of the second stage of the Morales administration, in which there will have to be initiatives to conduct constitutional debate in parallel with focusing government attention on Executive and Legislative power, on containing social disputes, and on the country’s international relations.

(4) Construction of robust democratic institutions is still pending in Bolivia, and it will be no easy task in the absence of certain conciliatory gestures and minimum compromises in regard to basic democratic values. Otherwise, authoritarianism will be an increasing threat hanging over Bolivia’s political stage.

Horst Grebe López
Economist