Note: This article was first published by the authors in esglobal, a Madrid-based think tank, in January 2020. Daniela Ruegenberg is a Senior Researcher at DARA, a Spanish non-profit focused on humanitarian aid and action, and Delmira Aramayo is an economist affiliated with the Barcelona Graduate School of Economics. To access the original version in Spanish, click here.
Bolivia has found itself at the center of international attention following the fraudulent general election on October 20, 2019 that gave former President Evo Morales’ Movement to Socialism (MAS) party the win. Peaceful social pressure that lasted 21 days and the publication of an electoral audit by the Organization of American States (OAS) eventually led to the resignation of President Morales. Bolivia is now working toward returning to normalcy amid a complex economic and political situation. How did the country reach this point and what can it do in terms of peacemaking, diplomacy and economic restructuring to achieve stability in the short term?
Social convulsion and pacification
Bolivian society had accumulated years of discontent for a president who not only appropriated all of the state’s powers, but limited freedom of the press and violated the State’s Political Constitution (CPE) by failing to recognize Article 168, which limits the number of times Morales could govern to two consecutive terms. Morales took advantage of Constitutional Court (TC) rulings and ignored the results of a 2016 referendum that disabled him to run a fourth term. The grotesque electoral fraud, and the lost lives and wounded protestors who fell victim to violent groups linked to MAS, ended the president’s credibility. Morales resigned when the Bolivian police (PNB) and the armed forces (FFAA) withdrew in support of the people.
However, the conflict worsened in La Paz and Cochabamba (two Morales bastions) when the police were overtaken by the violent and armed MAS groups, who demanded the restitution of the former president and under the battle cry of “let there be civil war,” barricaded, for more than 10 days, these two cities. In the surrounding areas (Senkata and Sacaba) the groups faced the FFAA, resulting in 19 deaths and several wounded.
The negotiations led by interim President Jeanine Añez and her cabinet, and mediated by the Catholic church and national and international institutions, were transcendental to ending the mobilizations and acts of vandalism that occurred during this period. Peace arrived on November 25, with the unanimous approval by the Legislative Assembly (with majority MAS lawmakers) of a law calling for new elections.
The electoral process in underway. New elections have been set for May 3, 2020 under the premise of transparency and justice to elect a representative government. To this end, the participation of international delegations will be essential to ensure that the conditions of independence are met, and act as electoral observers and advisors in ensuring transparency and accountability of the final tally (TREP).
There are currently eleven possible candidates (including the MAS party) in the running. Now that there is an open opportunity toward political renewal, it is essential that these candidates affirm the population that, in the case of a political or economic transformation, there won’t be a significant setback in their rights. Restoring national unity is a very important challenge, and although a single front opposing the MAS party does not seem feasible, it is essential to restore citizen confidence to cancel out the instrumentalized racism discourse. In the absence of a candidate, the MAS party continues its polarizing discourse with Evo Morales now as campaign manager. Although the party has a solid vote of 15 to 18 percent, it is unlikely in any case that the presidency can be defined in a first round vote.
While the respective government proposals are being developed, it is recommended that candidates move away from populism and prioritize education and ideological debate so that Bolivian society can regain relevance, stop looking up at caudillo-type leaders and demand much more from their elected officials. Additionally, the inclusion of a mandatory debate during the elections will allow the electorate to make a more informed decision about the candidates’ proposals and preparedness level. As was seen at the beginning of this controversy, it is expected that citizens (now more active) and the free press will act as inspectors throughout the electoral process.
Political and international conflict
The transitional government signed an agreement with the Inter-American Commission Human Rights (IACHR) to carry out an on-site visit to Bolivia and write a report that will assess the latest violent episodes, this time including all those affected. It would also be wise to extend the investigation to include the 89 deaths in the 31 social conflicts that occurred during Morales’ 14-year mandate, when he refused to let the IACHR enter the country.
The complex situation in Bolivia is far from over, radical movements announced that peace will end on January 22, when the legislative management of the MAS could end. Eighty-five percent of municipalities in Cochabamba have gone three months without allowing entry to police and military forces. Morales also recently declared that “upon returning to Bolivia he will organize armed militias like in Venezuela.”
At the executive level, the difficulty of governing with a majority MAS assembly is evident. A MAS dominated assembly recently approved the retroactive law that favors impunity for crimes of sedation and corruption. Despite these attacks on democracy, the acting president has pledged to guarantee the functioning of the state, without structural changes, curbing cases of corruption, fraud and sedition. In case of prosecution, respect for the CPE (processes and rights of the accused) should be prioritized, with or without the questioned law of guarantees.
The next government must return independence to the institutions and state powers promoting meritocracy. The country’s Attorney General’s office that served Evo Morales in the past appears to have started acting; although not with the efficiency that was expected—for example, in the fraud investigation against the former spokespeople of the Supreme Electoral Tribunal (TSE), the court allowed the escape of key witnesses. In the three cases against Morales for crimes of sedition and terrorist financing; usurpation of public functions; and for the impersonation of evidence in the murder of three foreigners in 2009, progress is slow and highly questioned.
At the political juncture, friction with some Latin American and European governments (Venezuela, Cuba, Nicaragua, Argentina and Spain) that protect, defend and have allowed Morales to continue dictating policy as an asylum seeker or refugee is making matters worse. The renovated Bolivian diplomacy must continue to defend the sovereignty of the country, demonstrating, with evidence, who was responsible for violating the constitution, to curb interference and in that way strengthen international relations.
On the other hand, Bolivia is beginning to regain the confidence of the other countries most affected by drug trafficking since, in only two months, the interim government found more cocaine production laboratories (six) than in the previous year. Cargos have been intercepted in Argentina (to an ex-consul of Morales), Paraguay, Brazil and Chile, and the government initiated investigations into why 85 percent of those pardoned (4,700 people) since 2014, were for this type of crime. There is a real fight against drug trafficking underway that should continue in the future and expand into the entire drug trafficking structure.
Bolivia’s economic situation
Morales reduced poverty from 60 percent in 2005 to 30 percent in 2012, through redistributive policies dependent on the economic boom—which is why these levels remain around 35 percent, but extreme poverty has suffered a rebound. On the other hand, according to several economic studies, the apparently constant economic growth is due to the cancellation of the external debt, fixed gas export contracts, the rise in oil prices and the boom in exports of raw materials. In an interview with Infobae, experts such as economist Diego Escobari and the Millennium Foundation point out that the revenue from the sale of hydrocarbons increased from $782 million in 2005 to $3.78 billion in 2012. The World Bank published that income gas sales for Bolivia fell from 4.85 percent to 1.52 percent of GDP in 2017, a trend that has since caused a trade deficit, which has been financed with public debt and net international reserves (NIR)—which have declined to less than half compared to 2014 levels—and that could trigger the devaluation of the exchange rate, according to the Millennium Foundation.
In the 2019 Economic Freedom Index, published by the Heritage Foundation, Bolivia is ranked 173 out of 182 countries and only above Cuba and Venezuela in Latin America. It is also the country with the highest public deficit in South America after Venezuela, taking up 8.3 percent of GDP in 2018 and an estimated 10 percent in 2019, according to data from the Millennium Foundation. To reverse these figures, income distribution policies should be reviewed and inefficient public spending decreased—Morales spent 5.5 times more than any other government—otherwise reserves could collapse from the current $8.11 billion to $1.36 billion by 2022 or could face a crisis due to lack of foreign exchange. For his part, Roberto Laserna, an expert in economics, also suggests eliminating the fiscal deficit, lowering taxes to stimulate local economic activity (and exports) and allowing savers to dollarize their transactions, allowing the dollar to find a realistic price.
State companies present a total fiscal deficit for the past seven consecutive years. In 2018, the expenses of 29 of the 32 state-owned companies exceeded revenues by 2.2 percent of GDP, showing a lack of planning, market research and inefficiency. Under MAS, the size of the state apparatus multiplied, only in 2019, the budget assigned to state companies grew 39.6 percent. Myths such as the nationalization of hydrocarbons, that keep the state as a minority partner, are beginning to be proven real, and several crimes of corruption, influence peddling, abuse of authority, nepotism and embezzlement in 11 companies and public institutions have been discovered. Internal and external audits are being carried out to clarify unusual expenses and losses, such as the disbursement of $74.75 million to three public companies from the Central Bank of Bolivia (BCB) without guarantees and outside the legal processes. To amend this issue, lawyer Angélica Siles says that cases of corruption must be impartially investigated and a clear action plan to restructure state companies put in place, conducting a profound market research to avoid unfair competition and to strengthen the country’s productive apparatus.
As hydrocarbon revenue fell, the Morales government tried to replace this income with agribusiness, biodiesel and bioethanol, and tried to expand the agricultural frontier by passing seven laws and three decrees that also allowed to extend the cultivation areas of coca crops; illegal settlements and indiscriminate and uncontrolled burning. This led to the greatest environmental disaster of the decade with an economic loss of $1.14 billion and the burning of 5.3 million hectares of the Amazon and the Bolivian Chiquitanía in 2019. The transitory government has not reversed these norms yet, generating distrust in the population that expects to see these modifications included in the electoral plans.
Until the arrival of the new government, and with the main contract for the sale of gas with Brazil already expired, in addition to the corresponding negotiations, new markets should be sought for export—with Peru as a transit country. The government should also study the concessions to companies for the exploitation and industrialization of lithium reserves, and implement a change in the economic model diversifying Bolivia’s source of income and currency, toward sectors of greater added value, while taking into account, as economist Jorge Dávalos told Infobae, the environmental impact and opportunity cost from these future measures. This will be one of the biggest challenges for the next government. In short, Bolivia must work very hard to recover economic and institutional stability, attract foreign investment and move markets to generate wealth and sustainable economic growth over time.
