Bolivia : A New Weave For ALBA
By Toni Solo
The decisive numbers of Evo Morales' election victory in South America's poorest country give him the legitimacy he
needs to redistribute Bolivia's wealth in favour of the impoverished and excluded majority. But he faces enormous
pressure from foreign corporations and international financial instituions to continue promoting superficial economic
growth for the benefit of a small elite. Of all the progressive leaders elected in Latin America in recent years only
Venezuela's Hugo Chavez has successfully managed that challenge, defeating savage resistance from the Venezuelan
oligarchy and their US and European backers.
The issues of poverty reduction and natural resources management dominate regional arguments about political and
economic policy. Local elites parrot corporate propaganda promoting "free markets" and globalization. "Free markets"
mean terms of trade dominated by powerful foreign corporations and financial institutions to the detriment of local
people. Corporate globalization denies national governments the least vestige of sovereignty necessary to redistribute
wealth. But Bolivia's election result confirms that a large majority of people in the region expect widespread benefits
from exploitation of their countries' energy and other resources.
Even before assuming the Presidency in January 2006, Evo Morales faces conflicting demands from across the domestic and
international political spectrum. Workers' and indigenous organizations in Bolivia want a clear timetable for radical
change. Whereas International Monetary Fund chief Paul Wolfowitz threatens to help Bolivia with "mechanisms to ensure,
transparent, responsible and intelligent investment" [1] - maybe thinking of the Iraqi model he designed under George W.Bush. The IMF's recent decision to forgive Bolivia's
foreign debt with the fund hardly changes the country's overall debt burden. In sometimes obscure ways, Bolivia's case
shows the multiple strands winding into the regional economic and political tug-of-war
Free markets crash...into ALBA
Despite menacing offers of "help" from IMF chief Wolfowitz, Evo Morales seems to be the unintended beneficiary of
disastrous "free market" policies that wrecked Bolivia in the 1990s under minority governments overseen by the World
Bank and.....the IMF. During that time, publicly owned mining and energy resources were privatized based on arguments
that more open market policies would attract foreign investment beneficial for the country. The policy was sold as
"capitalisation".
But Bolivians soon discovered that foreign investors are only interested in capitalising themslves. When Gonzalo Sanchez
de Losada became Bolivia's President, he did so with just 22% of the vote. The US government, so outraged about
"undemocratic" Venezuela at the time, welcomed de Losada's minority win and backed him hard as he tried to force through
ever more fierce "free market" policies against popular opposition. De Losada had to flee Bolivia in 2003 after mass
protests in which over 80 people were killed by security forces acting under his government.
Neo-colonial "free trade" policies promoted by corporate proxies loyal to the US government, like Sanchez de Losada and
his replacement Carlos Mesa are completely discredited. Among the wreckage of those policies, the Venezuelan and Cuban
governments are successfully building ALBA, the Bolivarian Aternative for the Americas, inspired by the integrationist
vision of 19th century South American Liberator Simon Bolivar. ALBA represents a program of sovereign cooperation and
economic integration that prioritises social justice. Venezuela's recent entry into the Mercosur regional trading bloc
should deepen ALBA's strength and reach by revitalising Mercosur to overcome its recent stagnation. The head of
Mercosur's Representative Commission, Carlos Alvarez, wants Bolivia to sign up soon as well. [2]
ALBA's fundamental logic is for sovereign governments to redistribute wealth created from nationally controlled natural
resources so as to promote equitable development for all the region's peoples. Nothing could be further from the elitist
"free market" trickle-down vision hawked by acolytes of corporate globalization. Evo Morales' friendships with
Venezuela's President Hugo Chavez and Cuba's Pesident Fidel Castro place him on their side, against the United States
government and its faithful regional allies, Chile, Colombia and Peru.
Within the wider regional and global conflict between corporate "free market" policies and sovereign redistributive
economic policies to benefit their countries' peoples, each Latin American government faces its own set of often very
different political and economic problems. In Bolivia's case the main domestic issues Morales has to face are decisions
on future management of energy and mining resources, trade issues and agricultural policy, especially traditional coca
production. Impinging on that domestic agenda are pressing concerns relating to foreign policy, the interventionist US
government "war on drugs", the strategic dispute with Chile over a route to the Pacific and future relations with
Bolivia's other neighbours.
Bolivia's domestic economic trends
Bolivia's main exports in recent years have been natural gas, soya and soya products, unrefined petroleum, zinc ore and
tin. Only around 3% of Bolivia's land was devoted to arable agriculture in 2004. But that percentage may well increase
somewhat as 2005 saw large increases in acreages of soya, wheat, sunflower and sesame. As a leader of the country's coca
growers, Morales is also obviously committed to promoting coca leaf production.
Coca leaf is Bolivia's most important crop after soya and coffee, despite heavy-handed attempts to criminalize
cultivation by the US government and its local allies. Coca is used for a wide variety of legitimate purposes unrelated
to narcotics. For a successful agricultural program the Morales administration will need to design agricultural economic
policies with the credit, technical support and marketing arrangements necessary to promote more sustainable use of
available land. Certainly developing soya production on the Brazilian and Argentinian model is clearly a destructive,
short-term export-earnings fix.
Until recently, mining has always dominated Bolivia's economy, in 2004 tin, zinc, gold, silver, lead, antinomy and
tungsten made up over 40% of Bolivia's export earnings. Foreign mining companies have discovered substantial sources of
these metals in Bolivia and will be watching Morales for signs that may tip investment decisions one way or another.
Morales will probably try and rebuild Bolivia's State mining company COMIBOL that was cut back drastically like its
state-owned oil and gas counterpart YPF in the "free market" smash-and-grab years of the 1990s But mega-projects like
the massive Mutún iron ore mining project near the frontier with Brazil in Santa Cruz raise serious environmental and
other policy issues that may affect Morales' credibility even before he takes over the presidency
In the gas sector, a 2% fall in shares in the Madrid stock market valuation of Spanish energy company Repsol may have
resulted from Evo Morales' electoral win, since Repsol has a big stake in gas production in Bolivia. The drop still left
Repsol's shares trading well within the middle of their range for the year and may have had as much to do with concern
about Venezuelan government demands for Repsol to migrate to a new contract for a large Venezuelan field it owns jointly
with US energy giant Exxon-Mobil. A more interesting development in terms of corporate reactions to Morales's win is an
apparent decision to sell resources by the owners of Argentina's Bridas energy group which manages important energy
reserves and assets in Bolivia.
Bridas, owned by Argentina's powerful Bulgheroni family, operates in Bolivia as owners of 40% of Panamerican Energy
together with the UK transnational BP-Amoco which owns the other 60% of the company. Bridas is reportedly [3] trying to sell off about US$5bn in energy assets amid fears that its exposure in Bolivia may force it to write down the
value of its total reserves. If reports are correct that China's National Petroleum Company is the main prospective
buyer, that will be another major advance into the Latin American energy market by China, consolidating deals it has
already reached with Brazil and Venezuela. It is not clear whether Bridas is interested in selling off its reserves and
assets as Panamerican Energy or as Bridas, so the extent of any effect on Bolivia is still uncertain.
North American, European and Australian energy and mining corporations have often threatened to cut investments in less
developed countries if governments impose high levels of taxation. But access to energy and mining resources is getting
harder while competition for those resources from Asian competitor countries like China gets keener every year. Morales'
government will be a beneficiary of that dynamic as US and other corporations find they have to either pay more for the
resources or watch them sail away to benefit competitors in Asia. In any case, increased benefits for the State from
energy and mining resources is a regional trend. Apart from Venezuela the Brazilian and even the Chilean governments are
likely to increase taxation on foreign corporations in those sectors through 2006.
Trade and the regional balance of power
The most urgent trade issue to face Morales early in 2006 will be negotiations with the United States on a "free trade"
agreement. The pro-US Toledo government in Peru has already broken ranks from its Andean partners in regional
negotiations to sign a bilateral deal with the US government which may be ratified early next year before presidential
elections in Peru in April. All the Andean countries face the dilemma of whether or not to sell out their sovereignty in
order to sustain benefits from earlier preferential trade deals with the United States. US negotiators make it clear
that benefits of earlier trade deals may be in doubt if the current round of "free trade" agreements with the Andean
countries fails.
The US government is ruthlessly exploiting its trade advantage in order to recover political ground lost to increasingly
assertive popular resistance against its influence in Latin America. Bolivia is relatively well placed to resist that
trade blackmail since both its imports and exports with the US represent only around 11% of its total international
trade. Its most important trading relationships are with its regional neighbours. While a trade deal with the US is
important, Morales can point to his huge majority as a mandate for pacing negotiations slowly. That in its turn will
help consolidate resistance to US "free trade" blackmail in Ecuador and also underlines the importance of the clear
support Bolivia is getting from the Mercosur countries, which now include Venezuela.
Constituent Assemblies - a chance for radical change
Morales' election win gives new impetus to regional popular movements demanding radical change. The most important
domestic political process Morales has promised is a Constituent Assembly in 2006 to remake Bolivia's political
settlement. The same demand for a constituent assembly in Ecuador has been deliberately frustrated by Ecuador's
political establishment, despite unconvincing attempts by interim President Alfredo Palacios to organize a Constituent
Assembly in 2005.
The Constituent Assembly in Bolivia is bound to provoke more urgent demands to free up the stymied process in Ecuador
and for more popular participation in countries like Paraguay and Peru. Venezuela's example in redrafting its
constitution in the late 1990s set an empowering precedent for popular movements throughout South America. Bolivia is
likely to consolidate that example, throwing the discredited regional model of democracy promoted buy the US government
into even greater disrepute than it suffers already.
Evo Morales' election signals a profound disruption of long-standing regional political arrangements in Latin America
dominated by corrupt local oligarchies. Political redefinition is likely to extend not just to Ecuador but also to Peru.
There, the upcoming presidential elections in April seem bound to turn into a run off between Lourdes Flores,
representative of the conservative pro-corporate oligarchy, and Ollanta Humala, a nationalist former army officer with
an anti-corporate agenda. Humala is running a close second to Flores in recent opinion polls with the election still
over three months away.
US government concerns about the multiplier effect of radical political change in the region is well founded. Just as
Bolivia's example will encourage popular movements in Peru and Ecuador so feedback from popular resistance in those
countries to the current round of "free trade" treaties with the US is likely to affect Bolivia's own trade negotiations
with the US government The close interweaving of popular resistance from one country to another across South America is
something the US government seems incapable of unravelling. For the moment, outright use of US military force seems out
of the question.
Morales will be president into the next decade. Hugo Chavez is almost certain to win the Venezuelan presidency again in
December 2006. Various other countries in Latin America will hold important elections throughout the coming twelve
months. 2006 will see a decisive shift in the region against the disastrous influence of the United States government.
In Bolivia, explicit resistance to imperial corporate domination is certain to modulate into concrete efforts by the
popular majority to ensure that the new government meets its commitments to redistribute wealth and promote profound
social improvements for the disinherited majority.
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toni solo is an activist based in Central America - contact via www.tonisolo.net
FOOTNOTES
1. "Banco Mundial, dispuesto a ayudar al gobierno de Evo Morales: Wolfowitz" La Jornada, at Rebelion 22-12-2005
2. "Chacho Alvarez dijo que propondrá la incorporación de Bolivia al Mercosur" Clarin. December 19th 2005 http://www.clarin.com/diario/2005/12/19/um/m-01110401.htm
3. "Bridas eyes $5bln oil asset sale" LatinPetroleum.com, ARGENTINA news, 28.Nov.2005, Source: NEWSWIRES