Untitled Document
The recent crisis that forced the resignation of Bolivia’s second president
in less than two years stems from a much deeper problem that is plaguing the entire
Latin American region: namely, what is best for the people and who decides?
Bolivians have watched as their politicians courted Enron and other corrupt
foreign corporations, and allowed them to take ownership of the country’s
most valuable resource – natural gas. As the world’s energy giants
were logging record profits, the people of Bolivia were becoming poorer, hungrier
and more desperate.
But the part that was hardest for the poor to accept—the final straw—was
when they saw their gas being shipped across their borders to their historical
arch-enemy, Chile, with the promise that they would somehow benefit, when, yet
again, they learned the government was merely finding another way to take a
public good and turn it into private profit for a few Bolivians and their corporate
and financial backers. (The enmity dates back to 1884, when Chile swiped Bolivia’s
only sea-hugging land following the War of the Pacific, leaving the nation landlocked.)
It’s easy to see why the Bolivian people are angry. Despite holding the
region’s second largest gas reserves after Venezuela, Bolivia is one of
the poorest countries in Latin America. Nearly 65% of the population lives in
poverty. Close to 35% of Bolivians lack access to basic electric energy services,
a figure that continues to rise even as more gas is pumped out of Bolivian soil.
Two decades of World Bank and IMF prescriptions of austerity and free-market
reforms endorsed by Bolivia’s ruling elite have led to reduced government
revenues, limiting its ability to provide for citizens’ basic needs. Unemployment
is rampant. The La Paz, Bolivia-based Center for Labor and Agrarian Development
Studies (known by its Spanish acronym CEDLA) estimates that during the last
fifteen years of IMF reforms seven out of 10 new jobs have been in the informal
sector. And poverty is not diminishing. According to the World Bank itself,
extreme poverty increased 5.8% between 1999 and 2002, and the gap between rich
and poor continued to widen.
The situation reached crisis proportion when Bolivians, feeling no improvement
in their standard of living, began to ask for their gas back. Although the Bolivian
Constitution declares that all hydrocarbons are property of the State, in 1994
to comply with IMF-mandated reforms, Bolivia’s congress enacted legislation
to enable the sale of oil and gas concessions to foreign companies, particularly
from the U.S. and Europe. All of the country’s gas transportation networks
were sold to Enron and Shell. Other corporate winners included Amoco, British
Gas, Australia’s BHP, and Petrobras, the government-owned Brazilian oil
company.
Sadly, instead of ensuring that Bolivians have access to food, clean water,
education, and other basic needs, the World Bank and other development agencies
help these private companies build pipelines and exploit Bolivia’s gas
for sale outside the country. During Enron’s heyday, 21 government agencies
from around the world approved close to $8 billion in public financing for 38
Enron projects in 29 countries – all in less than 10 years. The Inter-American
Development Bank, the largest source of development finance for Latin America,
approved $132 million for an Enron gas pipeline project in Bolivia one year
after the company filed for bankruptcy in the U.S.
The shift of oil and gas revenue from the government’s coffers to private
shareholder portfolios did not bode well with Bolivians. Hundreds of thousands
of people went to the streets to demand a more equitable share of the benefits.
In response, the former U.S. trained president Gonzalo Sanchez de Lozada chose
to send in the troops, who killed dozens of people in an attempt to quench the
protests. He fled the country and settled comfortably in the United States.
In May 2005, Bolivians were back on the street demanding the very rights that
some had died for two years earlier. Sanchez de Lozada’s successor, Carlos
Mesa’s now infamous promises following his predecessor’s downfall
are known as the October 2003 Resolution, accentuating how long it has taken
for the government to do practically nothing. This most recent crisis was sparked
when the Bolivian Congress passed a new hydrocarbons law, which despite raising
taxes on foreign companies, still failed to ensure that Bolivians had increased
control and benefit sharing rights; among the people’s key demands.
Of historical scale, the protests completely paralyzed the capital of La Paz,
and managed to make the entire world witness to the will of Bolivia’s
disenfranchised. Now with Mesa also shamelessly out of the picture and a third
president in power, the international community should make every effort to
support Bolivia’s struggle for democracy.
In 1981, following strict adherence to the Structural Adjustments prescribed
by the IMF and World Bank, Bolivia’s economy collapsed, resulting in six
years of negative economic growth. In 1987 positive economic growth returned
to Bolivia but was coupled with tough pressure from the IMF and World Bank to
privatize many of its public services in the name of efficiency. In 1993 the
pressure materialized through the Sanchez administration: the national airline
company was privatized along with electricity, trains, and finally Cochabamba’s
water in 1999. The water company was sold to the London-based International
Water Ltd. As usual, advocates of privatization argued that a private company
would supply water more efficiently and at lower costs.
Instead, the opposite happened. According to a report by Public Citizen, prices
tripled and quality and supply problems were quick to follow. Furthermore, for
thousands of families, paying for water after the price hikes meant half their
salaries. The Bolivian people didn’t hesitate to stand up for their rights
then and the result was that in April 1999, the Bolivian government announced
the termination of the water contract.
Recent events, not only in Bolivia but also in the rest of Latin America, have
shown the extreme unpopularity of measures that favor foreign corporations over
the needs of the people, and the lengths to which the poor will go to ensure
they are not enacted. They also offer policy-makers an opportunity to reevaluate
the current policies and practices of their governments and institutions, particularly
in the U.S. Congress should take the opportunity to more closely scrutinize
the policies, practices and outcomes of the lending institutions to which taxpayers
contribute, such as the World Bank. They should scrutinize, too, how taxpayer
dollars are helping to create instability in Latin America and elsewhere, while
facilitating the corrupt dealings of presidents, U.S. corporations, and repressive
regimes like Sanchez de Lozada’s.
During the 2002 Bolivian elections, when Evo Morales almost became president,
the U.S. ambassador Manuel Rocha warned Bolivia that the U.S. was willing to
cut its aid and institute an economic blockade if Morales was elected. The elections
amounted to a deadlock to be decided by Congress between Morales and Lozada.
As the picture worsened in U.S. officials’ eyes, Bush stood behind Sanchez
de Lozada and denounced Morales as an unfit candidate, exerting considerable
pressure over Congress to elect Lozada. Then, when 86 people were killed in
the massacre of 2003 during the first installment of the Gas War, the State
Department said: “The American people and their government support Bolivia’s
democratically elected president.” Shortly after, news began to surface
in the Bolivian press of U.S. involvement in the violent repression. The newspaper
Pulso, for instance, reported that the U.S. military command took effective
control of the Bolivian army, installing Col. Edward Holland as the head of
the operation along with others assigned to troop deployment and logistical
support.
In order to prevent further instability, the U.S. should urge the IMF, World
Bank and IDB to stop forcing borrowing countries to privatize utilities. It
would also help for these institutions to not dictate how borrowing nations
structure their budgets. Indeed, these measures have proven to be ineffective
and reckless. Furthermore, if the U.S. really wishes to see a stable democracy
it should stop threatening Bolivia’s Congress with aid cutoffs and economic
blockades whenever it suits its agenda and should immediately cease all funding
to local political parties that advance its interests. Development aid should
not be provided for fossil fuel projects that undercut poor countries’
ability to supply clean, sustainable energy services to their populations.
Bolivia’s new interim president, Eduardo Rodriguez, has called for early
elections, so the country will be going to the polls in a matter of months.
It’s unclear what he will do about the urgent and yet unresolved issues
such as that of oil and gas, which were the main focus of the protests. Prior
to resigning, Mesa tried to address the problems by presidential decree but
was attacked from all sides of the political spectrum as unconstitutional. It’s
unlikely that any solution will be found until after the upcoming elections,
but at least this time, if democracy really works, it will be consistent with
the will of Bolivia’s people.