Bolivia: Evo’s report card

[Cochabamba, Bolivia] Seven years ago the central Bolivian city of Cochabamba exploded onto the world’s business pages because of its rejection of a World Bank-backed plan to privatise its water services. When the San Francisco-based utility Bechtel put tariffs up by 50% without any improvement in service quality, the citizens decided enough was enough. Their resistance not only saw the end of Bechtel’s Bolivian adventures [the company eventually settled for 30 cents], but led to the rejection of other privatisation deals across the country.

Evo Morales, who earned his stripes as a union leader in the province of Cochabamba, was instrumental in leading the popular affront against lop-sided foreign private contracts. A year into power, Bolivia’s first ever indigenous president has made steps to reorder Bolivia’s economy towards a more equitable investment pattern. But not only is changing entrenched economic structures harder than his leftist supporters had expected, Mr. Morales’ attempts at reform are also leaving him with growing domestic opposition. Last month, a nationwide debate over greater regional autonomy spilled over on the streets of Cochabamba. Two people died and 160 were injured in the ensuing violence.

Today I spoke with Jim Schultz, a long-time resident of Cochabamba and director of the Center for Democracy*, about Evo Morales’ report card so far. Here are some snippets of what he had to say:

1) On foreign investment: the new government of Evo Morales has been very clear of the importance of foreign investment. Bolivia needs capital…The issue is the rules of the games. For twenty years, Bolivia has been a lab rat for a set of economic policies imposed here as condition of aid from IMF and the World Bank…Everything was privatised: gas, water, electricity, airlines, rail roads…Bolivians came out of the process more poor not less poor. What we’ve seen over the last seven years, culminating in the election of Morales, is a rejection of these market fundamentalist economic policies. But don’t confuse this with a rejection of foreign investment.

2) On the “Water War”: it doesn’t take an economist or a rocket scientist to understand that a foreign company comes her and without investing a dime obtains a public water system and within three weeks increase tariffs by 50%. It was just plain wrong. Bolivians fought back…Without the water war, Evo Morales would not be president. It changed the tide.

3) On private contractual reforms: four years ago, Bolivia had a shooting war between the army and police on the steps of the presidential palace, which left 34 dead, over the fact that Gonzalez Lozada refused to raise taxes on foreign oil companies to cut Bolivia’s federal deficit. Instead, he decided instead to raise taxes for Bolivia’s poor. Four years later, Evo Morales raised taxes by a billion dollars for foreign companies and they are all still here. Bolivia did not collapse. Bolivia now has a budget surplus, instead of a deficit. The social movement of the left have achieved a deficit reduction that the IMF could never have had.

4) On ‘nationalisation’: it’s proven much harder than the government thought to reconstruct the state energy company. They are onto their third director in a year. They haven’t been able to put together sufficient technical competence or the necessary capital.

5) On Evo Morales’ democratic record: here in Bolivia, democracy for a long time meant resistance to a dictatorship. Then it meant resistance to governments that were elected, but acted as if they were dictatorships…The government of the left today has its roots and connections in social movements. It is difficult to make the transition…In Bolivia today we are going through a period of transition in which democracy has a hybrid definition; half that kind of democracy that happens in the streets, and half that kind of democracy that happens in government. The left has not as yet worked out what the connection is between the two.

6) On the debate over greater regional autonomy: it’s not hard to work out what is going on [behind the demand by Bolivia’s eastern states for greater autonomy]. It is about oil, oil, oil, race, race, race, in that order. Autonomy is classic important good governance issue all over the world. There is good reason to move political power down closer to the people. Typically autonomy has to do with local decision making to allow for the economic and cultural difference region by region. That’s not what autonomy is about here. Autonomy here is about the regions where the oil is wanting to maximise their control over it and their profit taking from it.

7) On Evo Morales’ political style: Evo is partly to blame for the fact that the split [between the resource-rich east and impoverished, indigenous west of Bolivia] is so emotional. He had a chance at his inauguration to build some bridges. There was some good will. And he started to, but he lost it…Evo is at his best when he is being presidential; when he has spoken in the rhetoric of unity, reconciliation and humility…But when he takes on takes on a personality that is spiteful and decisive, it not only affects Bolivia in a negative way, it also undermines his political strength……What would it cost Evo to make a concerted effort to go and talk about the struggles that the middle classes face? It’s not just the right thing to do for the country, it is also the smartest political move…Evo is losing his middle class base not because of his politics but because of his rhetoric, and that’s just politically foolish because rhetoric is free.

*The Centre for Democracy is due to publish a new book in mid-2007 entitled: “Dignity and Definance: Stories from Bolivia’s Challenge to Globalisation”. To pre-order a copy, email: info@democracyctr.org

1 Comment

  1. Two weeks ago,Evo nationalized Vinto (a smelting facility) without any compensation, therefore he is not prone to foreign investment, as indicated in the article. On the other hand the nationalization of the hydrocarbons was more a renegotiation of contracts than anything else.

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