President Evo Morales is intent upon gathering unchallenged and
unending power to impose "21st Century Bolivarian Socialism" in
Bolivia. Although pro-democracy, free-market forces appear to have
scored a significant victory in a May 4 referendum about control of
the country's mineral-rich and economically more successful eastern
lowlands, Morales and his followers will surely not give up their
quest to subjugate the industrious and independent-minded
Department of Santa Cruz.
Instability in Bolivia is a threat to the entire South American
continent and to the United States. The Bush Administration and
Congress, joined by other pro-democracy U.S. allies, should do
everything possible to support the establishment of market-based
democracy in Bolivia.
Power Struggle. In a referendum on Sunday, May
4, voters in the Department of Santa Cruz, which includes Bolivia's
largest and most industrialized city in the country's
agriculturally rich and energy-rich eastern lowlands, delivered a
powerful rebuke to leftist President Evo Morales by calling for the
creation of a provincial legislature with broad powers to challenge
the authority of the central government in La Paz. Among the most
significant of these powers would be the authority to approve
royalty agreements with foreign companies for the exploitation of
the department's abundant natural gas. Much of the tax revenue in
Bolivia comes from levies on hydrocarbons, and Morales'
nationalization plans call for Santa Cruz to bear the heaviest
costs of his politics of redistribution.
The statute also gives departmental officials more control over
Bolivian national security forces as well as "over land titles-a
move aimed at countering Morales's proposals to break up large
parcels of land and redistribute plots to landless farmers."
Approval of the autonomy statute further challenges Morales'
efforts to draft a more centralized and authoritarian constitution
and has pushed Bolivia to the breaking point. It could "spark
violence." Three other departments (Beni, Prando, and
Tairja) are scheduled to hold similar referenda in June.
Although Bolivia is "one of the poorest and least developed
countries in Latin America," the eastern lowlands are the wealthiest
part of it and are blessed with "an impressively diverse economy,
including not only oil and gas but also forest products and
commercial agriculture." Mark Falcoff of the American Enterprise
Institute points out that, economically speaking, "the lowland
departments, particularly Santa Cruz, eastern Chuquisaca, and
Tarija" are "extensions of the Argentine north" and have higher
People in the lowlands "have every reason to regard normal trade
with the outside world as the key to prosperity."Most of the country's
"mestizo" (racially mixed, representing 30 percent of Bolivia's
population) and white European (15 percent) citizens live in the
lowland areas. Residents of gas-rich Santa Cruz, where
about 25 percent of Bolivians live, have demanded more control over
their resources and greater decision-making powers.
Critics claim the departmental leaders are selfishly seeking to
retain a veto power on economic policy at the expense of Bolivia's
impoverished majority. Overall, Morales has pursued a divisive,
ethnic, and redistributionist strategy that tends to polarize
Bolivians and has fostered the current autonomy movement.
Bolivarian Socialism. The highlands power base
of Evo Morales, formerly head of the coca leaf-growers union, is
home to the majority indigenous Quechua and Aymara Indians. Advised
and funded in part by Venezuelan President Hugo Chávez,
Morales came to power in December 2005 after mounting a ruthless
and sometimes violent populist campaign in 2003 and 2004 that
stoked and exploited anger over a proposed pipeline to export some
of Bolivia's newly discovered natural gas. By May 2006, the Morales
government had "issued a decree 'nationalizing' the hydrocarbons
sector and calling for the renegotiation of contracts with
Morales has relentlessly pushed an anti-U.S., anti-globalization
21st Century Bolivarian Socialist agenda and wants to undo many of
the privatization reforms that neo-liberal governments undertook in
Bolivia in the 1990s under the International Monetary Fund's
Washington Consensus program. To increase his regime's
control over the lowlands, Morales has followed the same strategy
and usedthe same legalistic tactics employed by Chávez in
Venezuela and President Rafael Correa in Ecuador: pushing for a new
constitution that centralizes power in the presidency and empowers
Morales to redistribute national income to his impoverished
political base. "Morales's backers passed the proposed constitution
December 9, 2007 in a constitutional assembly boycotted by much of
the country's political opposition," although they say they
"were prevented from attending."
The political uncertainty has resulted in lower levels of
foreign investment in Bolivia. "Investment in exploration and
production in Bolivia's oil and gas industry fell to $149 million
last year, the lowest since 1996, according to the Santa Cruz-based
Hydrocarbons Chamber. The chamber's members include Petroleo
Brasileiro SA, Total SA, and BG Group Plc."
What Should Be Done. The setback to Morales can
be compared to the defeat on December 2, 2007, of a constitutional
referendum in Venezuela that would have granted Hugo Chávez
unlimited rule. Electorates in Venezuela and Bolivia are not ready
to give blank checks to their populist leaders and have begun to
show resistance to populist/socialist steamrollers.
While breakdown of national unity, destabilization, and violence
along regional lines benefits no one in Bolivia, the May 4
referendum should force Morales and his government, which has
declared the referendum illegal, to reconsider its divisive and
reckless assaults on the country's most productive areas. In an
effort to shore up support and regain the political upper hand,
Morales and his opponents have agreed to hold a recall referendum
on August 10.
Morales needs to recognize there are limits on the power of the
central government and on his ability to reshape Bolivia into a
socialist workers paradise. That model has been tried before-in the
former Soviet Union. It failed miserably then, and the people of
Bolivia know that it is doomed to fail again in the future. The
U.S. should remain vigilant throughout and seek, through public
diplomacy, coordination with regional allies, and work with
institutions of civic society, to foster the spirit of democratic
capitalism in the Andes.
James M. Roberts
is Research Fellow for Economic Freedom and Growth in the Center
for International Trade and Economics and Ray Walser, Ph.D., is Senior
Policy Analyst for Latin America in the Douglas and Sarah Allison
Center for Foreign Policy Studies, a division of the Kathryn and
Shelby Cullom Davis Institute for International Studies, at The
 U.S. Department of State, "Background
 Reel and Abramson, "Four Bolivian
States Challenge Morales."
 Painter, "Bolivia Poll Sparks Crisis
 Faries, "Bolivian Autonomy Vote May
Undercut Morales, Spark Violence."