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Barbara Hogenboon, 2009, Revolutionary Politics. Bolivia's New Natural Resource Policy

Barbara Hogenboon, 2009, Revolutionary Politics. Bolivia's New Natural Resource Policy

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Revolutionary Politics

:
Bolivia’s New Natural Resource Policy

Contributing authors: M. Alexandra Contreras Ochoa ; alexcontreras8a@hotmail.com Jose Alice Diemel; j.a.diemel@student.ru.nl Emilie Ph. Fokkelman; emiliefokkelman@gmail.com Jetske Hylkema; jetskehylkema@hotmail.com Jos M. Maalderink; Jos.Maalderink@student.uva.nl Julia McCall; j.mccall@student.ru.nl T. Marijke Renzema; tmrenzema@hotmail.com Janine Strijdonck; j.strijdonck@gmail.com Bart-Jaap Verbeek; bjverbeek@hotmail.com

Coordination: Dr. Barbara Hogenboom; b.b.hogenboom@cedla.nl

Cover: Reuters

This book is the final result of the Master course ‘Politics and Protest in Latin America: The Politics of Natural Resources in Bolivia’ at the Centre for Latin American Research and Documentation – CEDLA, Amsterdam, The Netherlands (October 2008 – January 2009).

Amsterdam, March 2009

Revolutionary Politics:
Bolivia’s New Natural Resource Policy

iv .

......................................................................................................................................................................................................... 40  CONCLUSION ................................................................... 55  THE RELATIONS WITH MERCOSUR................................................................................V  PREFACE....................................................................................................................................................................... 32  CHANGING INTERNATIONAL RELATIONS: BOLIVIA’S CALL FOR SELF-DETERMINATION ............................................................................................................................................................. 33 Bart-Jaap Verbeek PERIODS OF INTENSIVE FOREIGN INTERFERENCE .................................................. 57  THE RELATIONS WITH ALBA........................................................................................................................................................................................................ SOVEREIGN AND PRODUCTIVE BOLIVIA IN ORDER TO LIVE WELL ................................................ 26  THE SECOND REFORM ATTEMPT: NATIONAL REVOLUTION................................................................................................................................................................................... 63  ...................................... DEMOCRATIC...................................................................................................................................................................................................................................... VII  ABBREVIATIONS .... 8  CONCLUSION ......................................................................................... 47  BOLIVIA’S RELATIONS WITH LATIN-AMERICA: CHANGES UNDER THE PRESIDENCY OF EVO MORALES....................................... Alexandra Contreras Ochoa & T.................. 33  MORALES’ NATIONALISATION POLITICS AND INTERNATIONAL CONCERNS ...................................................................................................................................................................................................... 15  BIBLIOGRAPHY ..................................................................................v Table of Contents TABLE OF CONTENTS................................................................................................................................................. Maalderink BOLIVIA AT THE TURN OF THE CENTURY ......................................................................................................................................................................................................... 17  BOLIVIA'S RESOURCE POLICY 1880-1964 ... 1  THE HISTORY OF HYDROCARBONS IN BOLIVIA AND ITS POWER STRUCTURES .. 29  CONCLUSION ......................................................................................................................................................................... 2  THE POWER OF THE YPFB AND THE UPRISING OF SOCIAL MOVEMENTS ..... 31  BIBLIOGRAPHY .......................................................................... 1 M...................................................................................................................................................................................................................... 46  BIBLIOGRAPHY ........................................................................................................................... 62  BIBLIOGRAPHY ................................................ 6  EVO’S NATIONAL DEVELOPMENT PLAN: A WORTHY.. 24  THE FIRST REFORM ATTEMPT: MILITARY SOCIALISM ........ 21  THE REPUBLICANS AND THE DOUBLE CRISIS OF THE 1930S .................................................................................................. 60  THE RELATION WITH UNASUR ..................................................................... 61  CONCLUSION ............................... 54  THE RELATIONS WITH CAN ................................................................................................................................... 21 Jos M................................................................................................................................................................................................................................................................. 53 Jetske Hylkema THE RELATIONS WITH CHILE ............................................. IX  THE PATH TO THE NEW HYDROCARBONS POLICY OF BOLIVIA ............. Marijke Renzema A PATH TO TRANSFORMATION?.............................................

........................vi THE LEGACY OF THE WATER WAR IN COCHABAMBA........................................................................................ 124  BIBLIOGRAPHY ............................................................................................ 77  CONCLUSION ....................................................................................................................................................................................................................................................................................................... 122  CONCLUSION ........................................................................................................................................ 87  THE ENVIRONMENTAL BALANCE OF THREE YEARS OF INDIGENOUS CAPITALISM ................................................................................................................................................................................................................. 117  THE PROTESTS OF THE NINETIES ............................. 115  A BRIEF HISTORY OF INDIGENOUS UPRISING .................... 83  ENVIRONMENTAL LAW IN BOLIVIA ...................................................... 108  CONCLUSION ............................................................................................... 111  BIBLIOGRAPHY ............. 119  POLITICAL SYSTEM............................................................. 78  NATURAL WEALTH IN BOLIVIA: FORTUNE OR MISFORTUNE?................................ 98  SANTA CRUZ' POLITICAL POSITION ......................... 69 Janine Strijdonck AN INTERNATIONAL SYMBOL OF POPULAR RESISTANCE ................................................................................................................................................................................... 91  CONCLUSION ............................. 97 Jose Alice Diemel THE RISE OF THE SANTA CRUZ AUTONOMY DEMAND: A RESPONSE TO INDIGENOUS MOBILISATION ................................................................................................... Fokkelman HOW DOES MINING AFFECT PEOPLE AND THE ENVIRONMENT? ..................................................................................................................................................................................................................................................................................................................................................................................................................................... 93  BIBLIOGRAPHY ...................................................... 129  ................................................... 81 Emilie Ph............................................................................................................................................... 75  THE CREATION OF AN ALTERNATIVE POLITICAL SPACE ........................ 112  PACHA MAMA'S BELLY: AN ANALYSIS OF INDIGENOUS DISCOURSE IN MODERN BOLIVIA .............................................................................................................................................................................................................................................................. 93  DEMANDS FROM THE EAST: A DESTABILISED BOLIVIA.................................................... 69  A NEW FORM OF ORGANISATION AROUND WATER ................................ 115 Julia McCall BOLIVIA’S INDIGENOUS MOVEMENT ......................................................................................................................................................................................... 70  THE DEEPER SIGNIFICANCE OF THE WATER WAR ................................................................................................... 100  SANTA CRUZ' ECONOMIC POSITION IN COMPARISON TO THE REST OF BOLIVIA .............. 126  GENERAL CONCLUSION .......................................... 78  BIBLIOGRAPHY ....... 72  PUBLIC-POPULAR WATER MANAGEMENT AND WATER AS A HUMAN RIGHT .......... 102  SOCIAL DIFFERENCES WITHIN SANTA CRUZ ....................................................................................................................................................

It is for these reasons that social movements have been involved in the matter of natural resources. nationalisation of hydrocarbons has been part of his government policy. farmers. environmental and cultural perspective.1964 that examines the history of Bolivia's resource policy from 1880 to 1964. The aim of the master project is to make an analysis of the developments in the control and the distribution of natural resources in Bolivia. political. The so-called water war was followed by another water war in 2005 and two gas wars. A multitude of segments of Bolivian society supported the decree. Therefore we believe it is interesting and important to discuss all the events. natural resources are vital in the daily lives of many Bolivians. From the mid 1980s onwards Bolivia’s governments implemented neo-liberal policies. master students of different disciplines and universities in The Netherlands came together to present the result of a semester of research. the reformist military regime from 1936 to 1939. In the twenty first century popular movements resisted against the neo-liberal policies and the exploitation of Bolivia’s natural resources. People use gas. oil. This document has eight chapters. the process of changes in this aspect until reaching the present hydrocarbon policy. subsidiary of British Petroleum (BP). focusing mainly on social groups that were marginalised in previous governments. and the Bolivian national revolution of 1952-1956. analysis and conclusions on the interesting topic of the new Policy on Natural Resources in Bolivia.vii Preface As culmination of the master-subject De Politiek van Grondstoffen (Natural Resources Politics) at the Centre for Latin American Research and Documentation (CEDLA) in Amsterdam. what is the meaning of the new natural resource policy of Bolivia in the light of present internal and external perspectives? Due to the nature of the subject. regional and international. new elections were called. in 2003 and 2005. MAS). The levels of study are local. locals. this document has been created from a multidisciplinary point of view. After a long period of social protests that caused the resignation of President Carlos Mesa. COB). economic. One of the political parties supporting the protest was the Movimiento al Socialismo (Movement towards Socialism. oil workers and members of the cabinet. created and stimulated by the Washington Consensus. The execution of the policy has depended entirely on the income the government has received from the nationalisation of the hydrocarbon sectors. It focuses on the problems caused by Bolivia's position as a raw resource exporting country in the context of two main projects that tried to alter this situation. The fact that transnational companies paid low taxes to the Bolivian government for the winning of gas was one of the motives for resistance in the gas war. which is still in place. social. such as members of Central Obrera Boliviana (Workers Union of Bolivia. starting with The Path to a Hydrocarbon Policy in Bolivia. Hydrocarbons have become the source of income on which president Morales’ economic plan is based. and . The people successfully resisted the privatisation of the water supply system of the city. in order to confront economic problems such as hyperinflation. The analysis has been conducted from a historical. The president’s National Development Plan has become the country’s internal policy. The first popular resistance took place in 2000 in Cochabamba. The aim of the decree was to recuperate the total shares of the company. water and other natural resources on a daily basis. Since the presidency of Evo Morales. Also. The third chapter Changing International Relations: Bolivia’s Call for Self-Determination discusses the long tradition of Western international influence on Bolivia and its policy-making. actors and factors that made possible this policy as well as the consequences of the new resource policy. an introduction chapter which touches all the topics in the book. Bolivia witnessed in 2005 the election of the first indigenous President Evo Morales. In January 2009 President Morales signed the Decreto Supremo 29888 (Supreme Decree) for the nationalisation of the Chaco Company. starting with a brief history of the hydrocarbons in Bolivia. The research question of the project is. The export of natural resources is an important source of income for Bolivia. led by president Morales. These structural adjustment programmes can be seen in a region-wide hegemonic ideology of neo-liberalism. indigenous communities. Then the book continues with the chapter Bolivia’s Resource Policy 1880 .

Mercosur and ALBA. and how they have reacted to Morales’ (hydrocarbons) policies. and the relevant environmental laws to mitigate these problems. It looks at the changes in these relations under the presidency of Evo Morales and the nationalisation of hydrocarbons. It discusses a few major problems with mining for both humans and nature. it analyses the possibilities for change that have been brought by Morales' new government. Demands from the East: A Destabilised Bolivia. Indigenous issues are a large aspect of the recent calls for change and are intertwined with other political. Lastly. The chapter discusses three subjects in which indigenous discourse has played a major role in Bolivia and examines the way in which the discourse is used. discusses the role of indigenous discourse in the recent political protests of Bolivia. The main focus of this essay will be on what the role of the key foreign actors in Bolivia has been. The sixth chapter. During the writing of this book. We would like to thank her for her thorough comments. discusses the significance of the water war of Cochabamba in 2000 as the first successful popular resistance against neo-liberal policies. The fourth chapter Bolivia's Relation with Latin-America: Changes under the Presidency of Evo Morales investigates and examines the bilateral and multilateral relations Bolivia has with other Latin-American countries and institutions like CAN. Pacha Mama's Belly: An Analysis of Indigenous Discourse in Modern Bolivia. we were fortunate to have discussed the content with our lecturer of the CEDLA course in Amsterdam.viii the consequences of Morales’ nationalisation politics to these international relations. ‘pacted democracy’ and the marginalisation of indigenous people in Bolivia. The seventh chapter. called Natural Wealth in Bolivia: Fortune or Misfortune?. The Legacy of the Water War in Cochabamba. . on what ground this autonomy demand in Santa Cruz is based and whether the autonomy quest turns out to be primarily important for cruceño elites or whether it is also wished for by the non-elite cruceño population. for what purposes and by whom. ideas and enthusiastic supervision. will focus on socio-environmental aspects of hydrocarbon mining in Bolivia. The eighth chapter. The fifth chapter. which provides an answer to the research question that is central to this volume. Furthermore this chapter analyses whether the water war also represents a turning point for Bolivia in the long term. but also in the political programme of MAS. The book ends with a general conclusion. economic and social issues. Barbara Hogenboom. focuses on the interests of the lowland department of Santa Cruz and their demand for autonomy.

Eastern Agricultural Chamber Comunidad Andina de Naciones. Nacional Chamber of Customs Brokers of Bolivia COB COMIBOL CPSC CSUTCB Central Obrera Boliviana. Bolician Hydrocarbons Strategy Environmental Impact Assessment . Bolivarian Alternative of the Americas ARI ATPDEA BIT BMI BDP BPRS CAO CAN CAINCO Andean Regional Initiative Andean Trade Promotion and Drug Eradication Act Bilateral Investment Treaty Business Monitor Index Barriles de Petróleo por Día. Andean Community of Nations Cámara de Industria. Nationalist Democratic Action Ashmore Energy International Alternativa Bolivariana de las Américas. Bolivian Mining Corporation Comité Pro Santa Cruz Confederación Sindical Única de Trabajadores Campesinos de Bolivia. Bolivian Workers' Center Corporación Minera Boliviana. Confederation of Private Entrepreneurs of Bolivia CIA CIDOB Central Intelligence Agency Confederación de Indígenas del Oriente de Bolivia. Logistic Hydrocarbons Company of Bolivia CNDA Cámara Nacional de Despachantes de Aduana de Bolivia. Barrels of Petrol per Day Bolivian Poverty Reduction Strategy Cámara Agropecuaria del Oriente. Hydrocarbons Chamber of Bolivia Compañía Logística de Hidrocarburos de Bolivia.ix Abbreviations ACI ADN AEI ALBA Andean Counterdrug Initiative Acción Democrática Nacionalista. Comercio. Chamber of Industry and Commerce CEPB Confederación de Empresarios Privados de Bolivia. International Tin Committee Cámara de Hidrocarburos de Bolivia. Confederation of Indigenous of Eastern Bolivia CIE CHB CLHB Comité Intencional del Estaño. Servicios y Turismo de Santa Cruz. Unitary Labour Conferedation of Agricultural Wokers of Bolivia DEA EBH EIA Drug Enforcement Agency  Estratégia Boliviana de Hidrocarburos.

Bolivian Institute of Foreign Trade International Centre for the Settlement of Investment Disputes International Development Association Inter-American Development Bank Impuesto Directo a los Hydrocarburos. National Telecommunications Enterprise of Bolivia ETI EU FDI FEPB-SC Euro Telecom International European Union Foreign Direct Investment Federación de Empresarios Privados de Bolivia–Santa Cruz. Bolivian Socialist Phalange Free Trade Agreement Free Trade Area of the Americas Group of Seven Industrialised Nations Greenberg Carville Shrum Gross Domestic Product Instituto Boliviano de Comercio Exterior. Movement Towards Socialism Millennium Challenge Account Millennium Challenge Corporation . Special Tax on Hydrocarbons and Derived Products IFAD IFC IFI ILO IMF IPS LAB LIL LNG LPP MAS MCA MCC International Fund for Agricultural Development International Finance Corporation International Financial Institution International Labour Organisation International Monetary Fund Inter Press Service Lloyd Aéreo Boliviano Learning and Innovation Loan Liquified Natural Gas Law of Popular Participation Movimiento al Socialismo. Direct Tax to Hydrocarbons International Energy Agency Impuesto Especial a los Hidrocarburos y sus Derivados.x EJ ECLAC ENDE ENTEL Environmental Justice Economic Commission on Latin America and the Caribbean Empresa Nacional de Electricidad. Federation of Private Entrepreneurs of Bolivia–Santa Cruz FSB FTA FTAA G-7 GCS GDP IBCE ICSID IDA IDB IDH IEA IEHD Falange Socialista Boliviana. National Electricity Enterprise Empresa Nacional de Telecomunicaciones de Bolivia.

Bolivian Communist Party Partido Obrero Revolucionario. Environment Unity United Nations Permanent Forum on Indigenous Issues United States United States Agency for International Development . Genuine Radical Party Poverty Reduction Strategy Paper Structural Adjustment Program Servicio Municipal de Agua Potable y Alcanterillado. Millions of cubic metres per day Movimiento Nación Camba de Liberación. Peoples’ Commercial Treaty Union Suramericana de Naciones. Ministry for Sustainable Development and Environment MERCOSUR MHE MIR Mercado Común del Sur. Hydrocarbons and Enegery Ministery Movimiento de la Izquierda Revolucionaria. South American Community of Nations Unidad del Medio Ambiente. Territorial Grassroots Organisation Office of Transition Initiatives Partido Comunista Boliviano. Movement of the Revolutionary Left MMmcd MNCL Millones de metros cúbicos por día. Communitary native reserves Tratado Comercial de los Pueblos. Revolutionary Workers' Party Partido Radical Genuino. Movement for the Liberation of the Camba Nation MNR MST NDI NDP NED NEP NGO NHP OPIC OTB OTI PCM POR PRG PRSP SAP SEMAPA Movimiento Nacionalista Revolucionario.xi MDG MDRI MDSMA Millennium Development Goal Multilateral Debt Relief Initiative Ministerio de Desarrollo Sustentable y Medio Ambiente. National Revolutionary Movement Movimiento Sin Tierra. Common Market of the South Ministerio de Hidrocarburos y Energia. Municipal Potable Water and Sewerage Service SOE TCO TCP UNASUR UMA UNPFII US USAID State Owned Enterprise Territorio Comunitarios de Origen. Landless Peasant Movement National Democratic Institute National Development Plan National Endowment for Democracy New Economic Policy Non-Governmental Organisation Net Hydrocarbon Production Overseas Private Investment Corporation Organización Territorial de Base.

Bolivian Fiscal Petroleum Fields Yacimientos Petrolíferos Fiscales Bolivianos. Bolivian Fiscal Hydrocarbon Deposits .xii USD WTO YPFB YPHB United States Dollars World Trade Organisation Yacimientos Petrolíferos Fiscales de Bolivia.

the only logical thing to do was to include them into politics. Because Evo Morales. the authors have focused. legitimate questions are being raised about this transformation and specifically about the inclusion and effectiveness of social movements and indigenous groups on politics in Bolivia. Nevertheless. Further changes set in motion by Evo Morales seem to be a repetition of steps previously undertaken by preceding Bolivian governments. . Transnational Companies. By looking at the history of the oil and gas industry in Bolivia and the nationalisations that took place in the hydrocarbons sector. their inclusion into politics does not guarantee effective and clear policies for all Bolivians. The chapter has two parts. Whether this process of change thus really marks the beginning of a transformation or whether it is a repetition of events in old structures will be further examined in this chapter. investigated and examined the process of transformation that Bolivia has faced in its history of Hydrocarbons until reaching the current Hydrocarbons Policy. Nationalisation. Neo-liberal policies. movements and actors that brought us to the current Hydrocarbons Policy. Capitalisation. A discussion of the new hydrocarbons law and its strategies coupled with the new foreign policies of Evo Morales will provide further insight into the effect of the inclusion of the social movements in politics and power structures in Bolivia. The position of the hydrocarbon state company and the uprising of social movements as defying the old structures will conclude the first part of this chapter. Hydrocarbons Policy A path to transformation? The political history of Bolivia can best be described as cyclic periods in which nationalist or liberal forces were reigning over Bolivia. The reformation of Bolivian society appears to be an indicator for this change and appears to be more than just a mere change of direction within the old structures of Bolivian politics. the power structures in Bolivia and powers involved from the exterior will be discussed. With the ascent of Evo Morales as new leader of Bolivia it appears that not just these traditional dichotomies in Bolivian politics are readjusting themselves to the new situation but also that the traditional structures and institutions of politics might be changing. Hydrocarbons. The last part of this chapter will further analyse and discuss these findings and conclude with final remarks. Social movements. If all parties active in this process of change succeed an inclusive Bolivian society might emerge. However. Marijke Renzema Abstract: As the title of the chapter indicates. Alexandra Contreras Ochoa & T. The inclusion of marginalised indigenous sectors of the Bolivian society and their cosmo-vision into politics might point to this potentially profound change happening in Bolivia. The first reviews the history. National Plan of Development. Keywords: Yacimientos Petrolíferos Fiscales Bolivianos. which is the subject assessed in the second part.1 The Path to the New Hydrocarbons Policy of Bolivia M. like his two predecessors could no longer ignore the social movements.

By the above stated. For the Latin American countries the gain in the activities and the development of the oil business lay more ahead in the future once the international companies had explored and developed the fields. taxes to be paid to the countries were low compared to for example rubber. As innovative developments in the oil industry were being made the prospective profits increased. And if there would be a significant oil discovery the transportation of the oil would confront them with a next problem. However the first companies to enter Bolivia prospecting for oil often left the country empty handed. Therefore even despite the high risks and even though in several Latin American countries much of the earnings went to local elites and regional governments. prospecting and drilling for oil in Latin America had been regarded as being too risky and oil companies were more interested in marketing their own oil to Latin America. the region of el Chaco (Paz Patino 2005. This part will end with discussing most recent developments within these political and economical structures. The Bolivian State itself also did not have access to the investments and skilled personnel needed in the oil industry and was dependent on international companies to develop the sector in Bolivia. The domestic market for oil in Bolivia was too small to generate enough income for the Bolivian State to make investments possible. During the 1920's the oil industry in Latin America was expanding at a high rate. Subsequently Bolivian companies were founded to engage in the industry and in 1921 the Bolivian State issued the first Ley Organica de Petróleo (Ministerio de Hidrocarburos y Energia 2008. 98). 495). profitable opportunities for the companies were seemingly unlimited as production and exploration techniques developed. In the decades that followed oil became the prime commodity for generating income for the Bolivian state and the country had high hopes for a successful trade and export of this product. A more descriptive historical account of their influence on the position and development of the hydrocarbon industry of Bolivia will be further given below. in the Pozo Bj – 2 in Bermejo. for this would put them in a much better bargaining position. The local elite in Bolivia neither had enough funds to invest in the industry nor did they want to take . 193). did not make its first extractive activities until the year 1924. There was such a high technological risk at that time that companies could not find fields profitable enough to extract. The Richmond Levering company later sold these concessions to Standard Oil of New Jersey also a North American company. many small and large North American and also British companies went on to pursue concessions in potential oil fields and areas in countries in Latin America. one can say that since its beginning the oil and gas industry and its development in Bolivia have been of interest and were influenced by foreign political and economic powers and structures. these risks of high costs were also considered as being part of and a characteristic of the business. Bolivia in 1875 (Philip 1982. Before that time. Due to the growing worldwide demand of oil the Bolivian State highly preferred the development of the oil industry whereas gas at that time was seen as a by-product of the oil extraction and would not gain significant importance until the 1980's. But by the 1920's the oil prices had risen.2 The history of hydrocarbons in Bolivia and its power structures The history of the hydrocarbons industry in Bolivia starts at the end of the nineteenth century when the first petition to an oil concession was made to the government of Jose Maria Acha in the year 1865. In 1927 Standard Jersey Oil for example reported having invested $ 11. Also more deep information regarding Bolivia’s history will be analyzed in the chapter Bolivia’s resource policy 1880 – 1964. The first oil discovery in Latin America took place in Santa Cruz. The Standard Oil company however. a North American company received large concessions to oil fields in the south of Bolivia in Bermejo and Sanandita and this marked the further expansion of the oil industry in Bolivia. gold and diamonds and oil demand was growing. 87 ) On the other hand. In this period in the 1920’s many local landowners in Latin America became very willing to sell their land to foreign companies prospecting for oil. The development of the hydrocarbon industry in Latin America Due to the increasing demand for oil in the United States of America and the world economy in the years following the First World War.4m in the oil industry in Bolivia but not having made any money (Philip 1982. At that time Richmond Levering.

which had been fighting in the war. With the positioning of the hydrocarbon industry by the Bolivian state as an issue of national interest. By the year 1928 all activities in the oil industry in Latin America were in the hands of transnational companies or state companies. With the installation of the YPFB. This tendency however could be observed in many Latin American countries. the US government did not take harsh measures against the Nationalisation of Standard Oil out of fear that Bolivia would develop close relations with fascist regimes like Nazi Germany. In return for concessions given to the Argentine oil state company Yacimientos Petrolíferas Fiscales (YPF) Paraguay guaranteed it would not again go to war with Bolivia. since the company smuggled oil to Paraguay during the Chaco war. The fact that the Bolivian State had lacked its own State oil company prior to the Chaco war is important in the sense that when it founded the YPFB it immediately became a very important national institution of political and economical power. Moreover the US government persuaded the country with extra aid to open up its economy for foreign direct investment. Argentina later on. Political structures of power and the hydrocarbons industry in Bolivia At the time the Bolivian State nationalised the Standard Oil Company in 1937. In the 1930's the focus of oil companies had shifted from exploration to management due to the worldwide depression and the prospect of an upcoming war. Lastly Argentina built a rail road for the transportation of oil connecting the Chaco fields to Argentina. the YPFB became an important issue in Bolivian politics. became involved as mediator in the peace talks between Paraguay and Bolivia. The YPFB has from that moment on been of great importance to succeeding political parties and powers in Bolivia.3 excessive risks. Bolivia had despite the war strengthened its position in the national oil industry by founding a State oil company and had managed to secure the oilfields in the Chaco area. For many Bolivians the YPFB became a symbol of nationalism and nationalistic pride. Either in suppressing its importance by favouring foreign control over the hydrocarbons or by emphasizing its importance and nationalising hydrocarbons. . In 1936 Bolivia founded the Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) named after the Argentine state company. the hydrocarbons were made to appeal to all different classes and groups living in Bolivia. In the years following the Chaco war the interest demonstrated by Argentina and later on by Brazil in the Bolivian oil and potential gas fields and its export. The Bolivian army was defeated by Paraguay in 1936 which had received help from Argentina to fight Bolivia. Argentina first refused to permit the building of a pipeline to transport the oil from the Chaco area in the South of Bolivia and then raised taxes on import of Bolivian oil thus limiting the growth of the industry in Bolivia. Their support was ensured by the plan of the Bolivian government to pay their war pensions with the revenue of the national oil industry now in the hands of the YPFB. In a mixed enterprise both companies were to discover and develop the new oil fields in the Santa Cruz. Chaco area. In 1933 Bolivia started the war with Paraguay to obtain a port on the Paraguay river for the transportation of oil and recruited many of its indigenous people to go to war in the Chaco area. made Bolivia seek for closer US cooperation in the exploration and exploitation of the oil and gas fields to counter the perceived threat coming from its neighbouring countries. The Bolivian State had nationalised the Standard Oil Company. due to its perceived symbolic and economic significance. This often did have a negative effect on the relations with their national oil companies as will be discussed below. In these years the governments of the United States of America and Britain directed much of their power to maintain good relations with the Latin American countries. 30). By furthermore stating that all natural resources of the country belonged to all Bolivians the hydrocarbons became an issue of national importance. The events that led to the Chaco war between Bolivia and Paraguay and events which took place afterwards show the influence of national and regional powers and their interests in the hydrocarbons industry in Bolivia. The investments made by international investors furthermore inhibited the development of local capital in Latin American countries (Philip 1982. These events and the position taken by the Bolivian state on the matter of hydrocarbons led to the nationalisation of the Standard Oil Company in 1937 right after the Chaco war. The nationalisation was supported by the large indigenous population.

While these same men never questioned the introduction of foreign capital in every other economic activity of the nation. Even despite the fact that by the 40's there were already nationalisation movements and opposition to foreign investment in this industry. The relationship of the Bolivian state with the international companies involved in its hydrocarbon industry was one of mutual interest but not of mutual benefit. by for example building rail roads and ports or otherwise the governments would refuse giving concessions. This can be seen as an indication for the global economic interest in the sector in Latin America. according to Philip. This being a modernisation according to their structures of power in a post-colonial way and representing their view on modernisation. The government wanted the gas to be distributed through the YPFB to emphasize its role in the national economy and politics and as a symbol of national sovereignty and power. In 1952 the Movimiento Nacionalista Revolucionario (National Revolutionary Movement. 31). The interest of the MNR in cooperating with the US was stemming from fear of domination by Argentina and from the potential benefit the cooperation could hold for the development of the Bolivian economy. Near the end of the Second World War the USA decided to stop granting loans to State companies in conflict with oil companies and changed their strategy in Latin America due to the new oil fields discovered in the Middle East. In Bolivia President Saavedra in the 1920's used the oil contracts to attract further loans necessary for his new public policies to win over parts of the urban population.. Several Latin American governments at that time requested oil companies to participate in public works. By refusing the direct supply to the Santa Cruz area the Bolivian State was also able 1 An agreement made by the Bolivian State and the USA after the Nationalisation of Standard Oil in 1937 to open the country again for foreign direct investment . Furthermore the nationalist movements were seen as representing in large part an assertion of the rights of the central government over those of provincial authorities and landowners (Philip 1982. The World Bank's strategy since 1949 was aimed at promoting increased private enterprise. This indicates that both parties intended to strengthen and expand their powerbase with economical and political power. In 1957 the right-wing Pro-Santa-Cruz Committee was founded in the province of Santa Cruz and launched a campaign against the pro-MNR political leadership of the province on the issue of regalias from the oil and gas export.. The government led by this party sought a closer relationship with the US government. The North American company Gulf Oil who had been able to enter the country in the 1940's as part of the agreements under the Davenport code 1 and the leaders of the Committee sought an alliance. Thereby also underscoring the importance of natural resources as propriety of the State and maintaining its control over the region. was arguing that: Bolivia's petroleum potential should be developed by native capitalist rather than foreign interests. to them petroleum represented a kind of mystique of national sovereignty. MNR) came to power after the revolution in Bolivia. The Inter-American Development Bank in the 1950's financed state companies handling the distribution of natural gas as the consumption of natural gas increased. Corruption also played a role in this relationship either used to strengthen the position of governments with backing of international companies and their money or for personal enrichment. The opposition to foreign involvement in the Bolivian hydrocarbon industry.4 Economic power structures and the hydrocarbon industry in Bolivia Until 1945 taxes to be paid to Latin American countries were nominal and differed per company and per country and could best be described as favouring the international companies disproportionally. In 1945 Bolivia agreed to let foreign direct investment in again for the first time since the Nationalisation of Standard Oil in order to obtain a loan from the Import-Export bank. When Gulf Oil proposed to supply natural gas directly to the Santa Cruz area the Bolivian government refused despite protests of the Santa Cruz leaders. many governments and elites in the Latin American countries perceived the companies as a way to modernise their economies.

In the 1970's the Bolivian governments' strategy was based on changing the Bolivian pattern of growth. As prices of oil and gas started to rise the producing countries were given a much better bargaining position and this reinforced the position of the YPFB in the national economic and political structures. This development plan was known as Plan Boha and was initiated by the Bolivian government to further consolidate the province of Santa Cruz. This offer eventually led to the nationalisation of the Gulf Oil company in 1969. For the indigenous population living in the area this has had severe effects. Barrientos himself was personally involved with Gulf Oil by accepting personal funds from the North American company. Prior to these events Gulf Oil had obtained international political protection by involving the World Bank in the construction of a natural gas pipeline that was going to transport natural gas to Argentina. The oil industry was in need of this natural . Chaco area in the southeastern part of the country. In 1969 then Bolivian President Siles nationalised natural gas and expropriated large concession fields of Gulf Oil. The Bolivian government declared the offer made by Gulf Oil to the Santa Cruz province as an intervention in the affairs of the country which would cause the other provinces requesting for free gas. The economic power of Gulf Oil combined with the political alliances it had forged. This would eventually lead to the second Nationalisation made by the Bolivian State. When evidence of deep North American Central Intelligence Agency (CIA) penetration in Bolivia came out. By developing an agricultural sector in the area which would attract migrants from all over the country to the Santa Cruz area the assimilation process of the indigenous peoples was started and control over the area was secured. 478). In order to strengthen its power in the area and over its population the Bolivian government started the war of Curuyuqui in the year 1892. The president of Bolivia. The indigenous population was defeated and this marked the beginning of several agricultural development projects in the area.5 to maintain a high price for gas which would generate higher revenues destined for the development of the national economy. These events give an indication of foreign economical interests in the hydrocarbons sector and their position in Bolivia. More detailed information about the history of hydrocarbons in Bolivia can be found in the chapter Bolivia’s resource policy 1880 – 1964. The company retaliated by offering the Santa Cruz province free natural gas for 20 years. Due to the agricultural sector that had been developed in the Santa Cruz province water had become another significant natural resource in the area. had made it a powerful and potential political danger to the Bolivian State. The Santa Cruz area since then has been of special interest for development by Bolivian governments. Santa Cruz will be analyzed deeply in the chapter Demands from the East: A destabilised Bolivia. These strategies still prevail in the current government of Evo Morales who in a similar way positions the YPFB in the major economic sector in Bolivia. Until 1970 most of the gas found in the Latin American countries was destined for domestic consumption only. The official reason for nationalising Gulf Oil was the smuggling of hydrocarbons to Argentina (Ministerio de Hidrocárburos y Energía 2008. Through these events the YPFB became once again a symbol of national sovereignty and was to operate successfully in the industry especially with prices of oil and gas increasing at the beginning of the 1970's. The position of the YPFB as a political and economic power in the national hydrocarbon industry at that time was seriously eroded by these economic powers. As soon as the first concessions in this part of the country had been given in 1875 subsequent governments had sought to consolidate the area because of its potential profits from the oil fields and its strategic position. This was especially the case since the 1940's due to the rising world prices for oil with the Second World War on its way. Alternative power structures in Bolivia Most of the natural gas and oil found in Bolivia comes from the Santa Cruz. the industrialisation and the development of the domestic market for gas. the situation for the Gulf Oil company became critical for the North American company had become a symbol of USA interference. With this strategy the Bolivian government planned to position the national hydrocarbon industry in the economic structure in the country as a major tool for the development of the Bolivian economy. The above indicates the importance of the area for the Bolivian State.

This position. telecommunications and national airlines (Ministerio de Hidrocárburos y Energía 2008. When the exploration and exploitation of oil and gas especially in the 1950's became more profitable. 156). The power of the YPFB and the uprising of social movements During the last years of the 1980's and the mid 1990's the political party MNR introduced a neo-liberal approach to fight the huge external debt that Bolivia had accumulated. The indigenous population in Bolivia has since the beginning of the hydrocarbon industry been involved in its development. The politics of that time labelled them as campesinos instead of referring to their ethnicity to distinguish differences in class as this was seen as a means through which their emancipation should be reached. through the war of Curuyuqui and the Chaco war in order to obtain and secure potentially natural resource rich areas. The recognition of the indigenous peoples culture and rights are the indication of the emerging of an alternative power in Bolivia. once a symbol of political and economical sovereignty. By doing so they eventually were able to position themselves as an alternative power in the Bolivia of today. 496). Land was bought. cosmovisions. With the capitalización all of the activities of the YPFB were transferred to international companies. 100). was formed. Furthermore it provided the indigenous communities with a possibility to gain control over the natural resources in Bolivia.6 resource and for the indigenous peoples living in the area water was needed for self-subsistence activities. rail roads. this law however had not changed the isolated. The legally recognised communal indigenous territories have been given a better position against the interests of landowners and the hydrocarbon industry. Although the Agrarian Law of 1952 had brought some improvements to the rural areas by ending the oligarchic system and the hacienda structures. electricity. These companies as an economic power sought political power and alliances to secure their position as were discussed above. the economy in this area flourished. The control over water in el Chaco meant to have power over the whole area (Paz Patino 2005. Under influence of the International Monetary Fund (IMF) presidents Sanchez de Losada and Mesa put the neo-liberal approach into full force and further expanded and implemented neo-liberal policies. This process had been started in March 1994 when the Bolivian government had decided on the capitalización and later privatisation of the 5 main State companies: hydrocarbons. This form of privatisation according to some was meant to prevent a situation in which one single company or small group of companies would be able to obtain all the assets and activities of the YPFB State Company (Paz Patino 2005. The YPFB with the capitalización was subsequently divided into three different companies: Chaco. The activities of YPFB were reduced to administrative and small operational activities. The main stakeholders were Enron. In time many indigenous people left their communities and places of origin and migrated to urban centres due to the poor economic situation in the rural areas of Bolivia. The capitalización indicates that traditional power within the Bolivian government and in the exterior were imposing their modernisation on the Bolivian people. The . The elites of the province became more demanding and vocal with backing of the oil companies active in the area. discriminated and marginalised position of the indigenous peoples of Bolivia. They did not however form part of the traditional power in the Bolivia of that time to exert control over them. In the year 2003 this had risen to US$ 5 billion despite debt relief programmes and the privatisation of the oil and gas industry.A. This gives an indication of the power of the elite in the province of Santa Cruz. Andina and Transredes. In this light the land reforms made possible by the Agrarian Law after the revolution in 1952 are important in the sense that they did not include the lowlands in the province of Santa Cruz (Crabtree 2005. culture and vision would have its appeal to large parts of Bolivia's society as will be discussed below. The indigenous people protested against these policies emphasizing their own culture. In the year 1997 the transport of hydrocarbons was sold to private companies and Transredes S. sold and invaded to gain access to water. codes and ethnicity. Shell and TR Holdings which held a 50% interest in the company and an additional portion through other companies involved (Ministerio de Hidrocárburos y Energía 2008. 499). At the start of the neo-liberal policies in the 1990's the country had an external debt of US$ 4 billion. 61). In 1996 the neo-liberal policies of the MNR introduced the capitalización of the YPFB.

This action changed the discourse of the indigenous people against exclusion. the company Logistica de Hidrocarburos Boliviana S. These neo-liberal politics aimed at attracting more foreign direct investment and cutting back on public spending while serving the traditional economic powers marked the ending of once powerful position of the YPFB. Since the capitalización seven years before the prices of gasoline and gas for household consumption in Bolivia had increased despite the privatisation of the YPFB. these feelings were expressed. Strijdonck.A. The Pacha mama and the Pacha Kuti are two important aspects of their cosmovision. The decline of the YPFB gives evidence of the erosion of not just the economic but also the political structures of power in Bolivia at that time. thereby referring to their cosmovision. These concepts can also be found in the rotation scheme used in the indigenous pueblos. The growing dissatisfaction over the corruption of subsequent Bolivian governments. The refineries were sold to Petrobras Bolivia S. The coalitions were inspired by the organisational structure of the indigenous people and the principle of consensus and harmony. After the capitalización the Bolivian states' sole responsibility in the hydrocarbon industry was supply to the domestic market. The events there saw alliances being made between a varied. At the elections of 2002 two pro-indigenous parties: MAS and Movimiento Indigena Pachakuti (Pachakuti Indigenous Movement. By that time the traditional institutional social movements had been weakened by the declining population working in the formal sector due to the worsening economic situation in Bolivia. To the indigenous the earth. In the year 1994 President Sanchez de Losado recognised the multicultural Bolivian society in its constitution. in that same year. the pueblos originarios raised their voice about the conservation of natural resources in Bolivia. During this time the Movimiento al Socialismo (Movement to Socialism. In 2000 the activities of transport through Poliductos and warehousing that formerly were handled by YPFB were sold. the rising costs of gas for household-consumption and the structural adjustment and reform plans that had been implemented in Bolivia provoked deep resentment against the MNR's neo-liberal approach. The YPFB was still by many Bolivians perceived as a symbol of State sovereignty and national pride.7 capitalización had made some major companies in the oil and gas industry combine forces and interests. MAS) also became an important movement. the Pacha mama.A. is to be conserved and managed in a sustainable way. MIP) led by Felipe Quispe joined the elections. The uprising of the social movements and the defiance of traditional power structures At the time in the 1980's and 1990's as President Sanchez de Losado expanded his neo-liberal policies in Bolivia. Its decline. The cultural traditions and cosmovision of the indigenous . The concept of Pacha Kuti refers to how time in their cosmos is shaped in an non-linear way and how the management of the earth should rightfully again be the turn of the Bolivian people. which had spent excessively and had delegitimised its own democracy were other aspects that gave rise to this social unrest. Whereas MAS was able to appeal to various parts of Bolivia’s population whereas the MIP has had a more radical and indigenous focus. this was in part a political party and in part a social movement. In addition. the Pacha Mama and the Pacha Kuti structures and their ethnicity.A (Ministerio de Hidrocárburos y Energía 2008. 499). was founded by a German-Peruvian group made up by Oil Tanking GMBH and Grana y Montero S. The sale of the YPFB in 1996 was the primary event that had led to the mobilisations during the gas war in October 2003. Many of these new social movements were founded in the context of the Water war in Cochabamba in 2000. most notably in the city of El Alto. discrimination and racism. These alliances cut across different interest groups and formed a coalition of movements protesting against the implemented neo-liberal policies and their disastrous effects on the people and the natural resources in Bolivia. This event will be discussed into detail in the Chapter of J. Around the year 2000 new social movements started to take on importance and challenging the old power structures. The term pueblos originarios gained importance and the indigenous people demanded their rightful place in Bolivia and the world. A large part of the population by then was employed in the informal sector where the labour unions did not reach. Detailed information on the indigenous movements can be found in the chapter Pacha Mama’s Belly: An analysis of Indigenous Discourse in Modern Bolivia. heterogeneous field of movements. In the context of the mass mobilisations that occurred in 2003.

a Worthy Bolivia. Productiva para vivir Bien (The National Development Plan: A Worthy. the term “to live well” is explained as: the access to. A Democratic Bolivia. 2006). and living in a society.600 million dollars in 2011 (Vaca. is focused towards the construction of a pluri2 Plan Nacional de Desarrollo: Bolivia Digna. 29272. social security. since that sector will provide most of the financing of the NDP. the plan will raise the Gross Domestic Product (GDP) from 4. Therefore. The inclusion of previously marginalised and discriminated groups with their different cosmovisions into politics might indicate a serious attempt to let these groups in on politics. housing. So far events which have taken place under the government of Evo Morales seem to be keeping the old power structures firmly in place. sovereign and productive Bolivia in order to live well Five months after Evo Morales assumed the presidency. health or community services. indigenous and peasant communities to mobilise great parts of the population to reclaim the hydrocarbons as State property.8 people of Bolivia functioned as a factor that inspired and bound the protests together on an issue that appealed to all Bolivians for its historical nationalistic symbolism. the NDP indicated a necessity to transition from a liberal laissez-faire policy to nationalisation of the hydrocarbon industry. This alternative power that had emerged in Bolivia led to the victory of Evo Morales and MAS in the 2005 elections as they saw the potential of this alternative power and realised they could not govern Bolivia without their support. the main focus is the elimination of poverty and inequality.1 per cent within 5 years. It seems that the second pillar. By taking the indigenous point of view on the matter of hydrocarbons the demand to again nationalise all natural resources was given a tone made to appeal to all but not only Bolivians. These events challenging the traditional power structures in an unprecedented way would ultimately lead to the resignation of presidents Sanchez de Losado and Mesa. The NDP criticizes the liberal policies of previous governments that did not modernise the country and brought inequality among social classes and regions. labour unions. . mainly the policy on the hydrocarbons industry. Democratic. These four pillars are: A Worthy Bolivia. According to the Inter Press Service (IPS). It intends to create opportunities for those who don’t have access to education. 2006). Democractica. a Democratic Bolivia. These are intended to take Bolivia out of its crisis. social protection and communitarian development. According to president Morales. It seems that the foundation under Morales’ NDP has four pillars. democratic.3 per cent in 2006 to 7.5 to 27. means to communicate. One of the objectives of the plan is to create one hundred thousand jobs per year by 2011 (Los Tiempos. This position made it possible for social organisations. Sovereign and Productive Bolivia in order to live well). economics and hydrocarbons control of the country but neither had there been another option for they had become a force to reckon with. justice. Evo’s National Development Plan: A worthy. health. It seems that the government positions itself as a pluri-national statewide promoter of development. which is in harmony with other human beings and nature in general. and enjoyment of material goods. Regarding the first pillar. A Sovereign Bolivia and a Productive Bolivia. The NDP also has a social aspect. culture. Sorberana. Fears that the inclusion of the marginalised indigenous sectors into government would inhibit real changes in the traditional power structures in Bolivia were legitimate. It appears that the areas that will benefit from this pillar are education. What the effect has been of the incorporation of this power into the policy of the hydrocarbons of Bolivia under Evo Morales will be further discussed in the next part of this chapter by looking at the new hydrocarbons law. In the Decreto Supremo no.6 per cent in 2011 and the public investment from 783 million dollars in 2006 to 1. The main focus in this chapter is on a Productive Bolivia. The investment for creating these jobs comes from nationalisation of the hydrocarbons industry. the plan intends to reduce the population living in abject poverty from 34. What follows first is a brief discussion of the other three pillars. his government presented the new National Development Plan (NDP) 2 . The goal is to reach equality through the redistribution of income and opportunities. When looking at the nationalisation of the hydrocarbons industry and the strategy for the hydrocarbons' sector of the 1970's they appear to be a repetition of steps.

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national society. The intent is to make the people co-responsible in the decision making process. This is a fundamental change from the old model where social sectors were excluded, and a small elite group was privileged. It clearly shows that decentralisation is a central theme. The municipalities will be held responsible for planning and developing the area on behalf of the state. By doing so, municipalities get to serve as a bridge between the government and its electorate. A Sovereign Bolivia, the third pillar, appears to centralise around justice, equality and the improvement of cultural dialogue between its people. These three elements are used for the new message that Bolivia wants to present to the world. A message that is clear in the new foreign policy. The foreign policy will promulgate the participation of the pueblos and the sustainability of the natural resources and biodiversity. A Productive Bolivia is the pillar on which the entire NDP rests. It is clear to see that the main goal is transforming the hydrocarbons industry into a strategic sector. Another goal is modernisation of the transport and telecom infrastructure. Lastly, part of this pillar is the development of the agricultural sector, the manufacturing industry and tourism. Regarding investments, the government estimates that Foreign Direct Investment (FDI) will increase up to 9 per cent by 2011 which, during the period 1990 -2005, had an annual average of 4.5 per cent. To achieve this objective, it is clear that the plan depends on the Ley de Tratamiento y Fomento a la Inversión Extranjera (Law for Creating and Processing Foreign Investment). The law is based on principles of sovereignty and honorability in a context where fair payment of taxes and loyalties to the state, especially on non-sustainable natural resources, are common ground. According to the Morales’ administration, the access to, and distribution of hydrocarbons within Bolivia is limited due to the absence of modern infrastructure (Tsolaski 2007, p18). This made Bolivia dependent on diesel imports. It is evident that the government not only assumes control of production surplus, but also on the supply chain (exploitation, exploration, transportation, commercialisation and distribution). With this panorama, the Bolivian government is set to gain control of the hydrocarbons industry and to set the volumes and prices, set up new rules for contracts between the transnational companies and YPFB. The details and main aspects of the hydrocarbons industry in Bolivia during the Morales’ administration are discussed in the next section.

The hydrocarbons policy
The policy of hydrocarbons is part of the National Development Plan and has become a state policy. The policy of hydrocarbons sustained the surplus created at the generic sector. It is clear that this surplus will not only be re-invested in the sector, but will also be invested in sectors producing income and employment, in order to promulgate the social development and diversify the economy. According to the Estrategia Boliviana de Hidrocárburos (Bolivian Hydrocarbons Strategy, EBH), the country’s policy on hydrocarbons has the following goals: to consolidate the ownership of the hydrocarbons by the State; to guarantee the sovereignty of the energy sector; to produce surpluses; to make Bolivia the Regional Center of Gas (Centro Gasífero Regional); to achieve an efficient development of the supply chain; to bring the gas to the Bolivian people and end-users, and lastly to reduce damages to the environment (La Primerisima, 2008). More on the relations of Bolivia with the rest of the world and the region since the presidency of Morales can be found in the chapters Changing international relations: Bolivia’s call for self determintation and Bolivia’s relation with Latin-America: changes under the presidency of Evo Morales. Within the hydrocarbons policy, the exploration of traditional and non-traditional areas will create high opportunities for the hydrocarbons production. This will allow the increase of national reservoirs, exploitation, commercialisation and sustainable industrialisation of the hydrocarbons. It appears that there are two important aspects within the exploration policy: 33 reserved areas for the YPFB and 44 contracts between YPFB and the petroleras (Estrategia Boliviana de Hidrocárburos 2008, 67). Within the frame of the 44 contracts, YPFB will take permanent control of hydrocarbon activities of the petroleras. It needs to monitor that petroleras execute their planned activities, of course authorised by the YPFB. It should also study protected areas to prevent environmental damage and develop alternative ways of exploration. Regarding the 33 reserved areas, the YPFB will develop

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activities for exploration and exploitation by itself or in association with third parties. The policy mentions that YPFB should form a Sociedad Anonima Mixta (Public Limited Mixed Corporation) with 50 per cent shares plus one share in the new company as well as in the decision-making and control (Medinaceli, 2007). Depending on the area, an agreement between YPFB and the petrolera will be signed where the company partner will be responsible for the technology and capacitation of the personnel. It is clear that the company partner will incur most of the cost and will have to make significant investments, while the benefit lies mostly with the YPFB. Within the exploration activity, it seems that YPFB will act as promoter for national and international investments. Based on previous studies and technical support, the area suitable for hydrocarbons will be valued in a clear and fair way. Also, a database will be created to provide an evaluation of the areas for exploration. Furthermore, YPFB will be responsible for the control of the reservoirs For the internal market, the policy has the use of natural gas at the different sectors of the economy as priority, which will allow the reduction on consumption of combustible liquids. It is clear that this will only be possible with a high investment in infrastructure, which is what Bolivia lacks in (DeShazo 2006, 2). It appears that the principal aspect of industrialisation of natural gas is the transformation from being a Bolivian exporter of raw material to a Bolivian exporter of petrochemical products (Aramayo 2006, 2). The institution responsible for the process of industrialisation will be the Empresa Boliviana de Industrialización de Hidrocárburos (The Bolivian Institution for the Industrialisation of the Hydrocarbons) which in association with petroleras or by itself, will start with the production of urea –fertilizer, polythene and the construction of Gas to Liquid (GTL) plants with the respective infrastructure for its transportation and for having access to the market (Estrategia Boliviana de Hidrocárburos 2008, 511). Another important aspect within the hydrocarbons policy is the production of combustible liquid. It seems that the goal is to create surpluses that will supply the international demand. It will avoid the import of combustible liquid. Transportation of gas will supply more geographic areas to suite demand in the internal and external market. Different oil and gas pipelines will be built. It seems that there are concrete plans for different projects for pipelines such as the Carrasco-Cochabamba gas pipeline that covers the demand of western Bolivia (El Mundo, 2008). It seems that Bolivia wants to become the Gas Center of the Region (Diario Critico, 2008). According to the Hydrocarbons Policy, Bolivia is the biggest producer of Natural Gas and it has neighbouring countries like Brazil and Argentina, which have high demand for energy. There are bilateral conversations with Uruguay and Paraguay to find the best way to supply gas to them. (Estrategia Boliviana de Hidrocarburos 2008, 523). The environmental aspect of the policy emphasizes that the native communities and farmers have the right to a fair share of the pacha mama during the hydrocarbon activities of the petroleras. Therefore the sense of respect for the territory, the participation of the communities in the decisionmaking process and the enjoyment of the benefits generated from the hydrocarbon activities will be fundamental aspects of the policy. The environmental aspect will be explored in more detail in the chapter Natural wealth in Bolivia: fortunre or misfortune?. It seems that in order to accomplish the goals established in the NDP and the Hydrocarbon Policy of Bolivia an institutional re-structuring is necessary. Within this frame the Ministerio de Hidrocárburos y Energia will start a planning effort. YPFB will act as investor, administrator of productive and commercial operations and responsible for the economical and financial yield. A third institution called el Ente Regulador (The Regulator Entity) will act as regulator and supervisor in the downstream and upstream activities (Estrategia Boliviana de Hidrocárburos 2008, 199).

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Figure 1: Supply Chain of Hydrocarbons before Evo's Nationalisation Source: Estrategia Boliviana de Hidrocárburos Superintendencia OPERATOR Activity Hidrocárburos YPFB Mixed Exploration Control Exploitation Control Transport pipeline Regulate tariff Transport others Refinery Regulation Storage & Sending Control X Exportation NG & LG Authorization Aggregator Importation Authorization Trade wholesaler Control X Trade retailer Control X Distribution per network Control X x Industrialization Figure 2: Supply Chain of Hydrocarbons after Evo's Nationalisation Source: Estrategia Boliviana de Hidrocárburos Superintendencia Activity Hidrocárburos YPFB Exploration X Exploitation X Transport pipeline Regulate tariff Transport others Refinery Regulation X Storage & Sending Control X Exportation NG & LG Authorization X Importation Authorization X Trade wholesaler Control X Trade retailer Control X Distribution per network Control X Industrialization X

Privado X X X X X X X X X X X

OPERATOR

Mixed x x x x x

Privado Service Service X X X X

x

X X X

The three nationalisations of hydrocarbons
Nationalisation is the action of taking over an industry or asset into public ownership of the state or national government. This action has occurred in Bolivia’s history on four occasions, three out of these four occasions have been in the hydrocarbons industry. What is interesting to point out about this hydrocarbon industry is the fact that the ownership of assets has passed from private hands to the state and vice versa on several occasions, therefore we can also consider this process of transferring ownership as a re-nationalisation. Nationalisation or re-nationalisation is mostly a policy of a socialist state, which considers production, distribution and exchange should be owned by the government on behalf of the people for a better control of the economy (Bolton, 1985). This policy has been part of the government programme of president Evo Morales with his political party MAS Movimiento al Socialismo (Movement to Socialism). The following lines will present a brief overview of the two previous nationalisations before the last one in 2006 pursued by president Morales. As mentioned in the first part of this chapter, during the history of the hydrocarbons, Bolivia had three nationalisations. The First Nationalisation occurred in 1937 during the government of the General Toro. While Standard Oil was present in Bolivia, the government of Salamanca declared war

the costs of extraction were 80 cents per hectare and the payment of 11 per cent on regalias (privileges) and 19 per cent on taxes to YPFB. studies. These were the reasons for the third nationalisation. the Minister of Hydrocarbons. Evo’s Nationalisation of the Hydrocarbons Evo Morales. the government declared Standard Oil to be disloyal. The second nationalisation was also a consequence of an abuse of power by another American transnational: Gulf Oil (Camacho. 2007). The president announced its line of political campaigning again: “Bolivia quiere socios. In 1956 a contract was signed between YPFB and Gulf Oil for the exploration of one and a half million hectares. contact the military and to arrange everything for that day. while Bolivia received the remaining quarter that bordered the Paraguay's River Puerto Busch. With this decree the military took over the offices of the company in La Paz and the army took over the reservoirs of Colpa. 138). the territories kept by Bolivia demonstrated to be rich in oil and gas resources.12 on Paraguay. Teran. 1). 1996. For Gulf Oil. Palacios. Bruce W. the military would occupy the installations of the transnational oil and gas companies. President Morales called for a meeting with the Minister of Presidency Juan Ramon Quintana. Thousands of soldiers from the army and air force mobilised in silence and occupied 56 gas installations at the same time. Palacios. The reasons were that the company did not support the Bolivian troops. Caranda and Rio Grande. planes. the company rejected the proposal of the government to produce fuel for the aircrafts of the air force due to a shortage of technical resources. With this decree. which lost its Pacific Ocean coast to Chile in the War of the Pacific in 1883. the quality of the oil found and the investments made (Camacho. Teran. while announcing that the initiative would not be an expropriation. In other words of the whole extraction by Gulf Oil. which seems to be incorrectly thought rich in natural sources such as gas and oil. This state company aimed to control the national resources as state ownership. 1936. According to the government. Troops were also sent to the two Petrobras-owned refineries in Bolivia. YPFB received only 30 per cent. It seems that he was fulfilling one of his popular campaign promises to the electorate (Martinez 2007. vehicles and other goods of Gulf Oil were nationalised. The Chaco War (1932–1935) was about the control of part of the Gran Chaco region. Later. According to the book La nacionalización del gas by Mirko Orgaz (2005). During the war. of which the State only received 39 million dollars. With this antecedent. however. He also argued that Bolivia has the right to achieve a higher income by getting a better price for its natural resources. Another reason for the war was the access to the Atlantic Ocean through the Paraguay River. With these antecedents the government of Toro nationalised the hydrocarbons and created Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) on December 20th. Andres Soliz and the vice-president Alvaro García Linera on April 26. Due to the war. the installations. The president told his cabinet that the process of nationalisation would start on Labour Day (May 1. it was discovered that there were no oil or gas resources in the Chaco kept by Paraguay. The new government of General Alfredo Ovando Candia prepared a decree where the Bolivian State would get back all the concessions given to Gulf Oil. no patrones” (Bolivia wants partners. . The military was ordered to prepare an operative plan that during the day of the announcement. the government sent the order to take over the installations of the company and put Bolivian engineers to produce the fuel. 2007). in a speech to the nation on his first month as president. The transnational company owned 90 per cent of the reservoirs of gas due to bribes to government agents. The cabinet received the order of the president to prepare the logistics. 2006). It seems that the company had also presented false information to the Bolivian authorities regarding volume of production. Paraguay was awarded three-quarters of the Chaco Boreal. By 1965 Gulf Oil had already extracted 220 million barrels for an amount of 360 million dollar. The coup d'etat of 1936 by military veterans of the Chaco war was the beginning of the first Nationalisation (Farcau. 2006. not bosses). announced that the next step regarding national resources was the Nationalisation of the hydrocarbons industry. This was important to Bolivia. Gulf Oil used bribery and bought representatives of the State.

becoming a compromise with the population. In other words. the Minister of Labour announced that president Morales would make an important announcement to the Bolivian people. propiedad de los Bolivianos” (Nationalised. we will make them respect us with force. promoting the national development and creating better conditions for the population. Two important reasons for the national decree can be found in the Guerra del Gas. 2005. In no case can the resources be retained while not given to the people as livelihoods. 32 per cent for Impuesto Directo a los Hidrocárburos (IDH: Direct Tax on Hydrocarbons) and a 32 per cent for additional participation for YPFB. in the gas installations a big board was set with the text: “Nacionalizado. The following aspect of the Decree signalled that by sentence of the Tribunal Constitucional No. Furthermore. therefore it was necessary for the State to participate in the chain of production. On the morning of the international Labour Day in 2006.”). YPFB would take over the production activity. the Government announced that they could “Irse de Bolivia” (Get out of Bolivia). Furthermore. property of the . the contracts for exploitation of the national resources should be authorised and approved by the Legislative power. A Fokker F-27 and members of the Special Forces transported the president to el Chaco from where he would make the announcement. 0019/2005 of March 7. The economical aspect had to do with the increase of national income helping to get Bolivia out of a crisis. the State was the owner of the hydrocarbons. According to the Ministry of Hydrocarbons and Energy. the decree based its legality on the Pacto Internacional de los Derechos Civiles y Políticos and the Pacto de los Derechos Económicos y Culturales (1966) where it noted that: Todos los pueblos pueden disponer libremente de sus riquezas y recursos naturales. 2006). this is. nos haremos respetar por la fuerza” (If the transnational companies do not respect us. En ningun caso podra privarse a un pueblo de sus propios medios de subsistencia. announcing that if any of the petroleras would refuse to accept the decree. 4). The national TV channel broadcasted the presidents’ speech on all the TV channels. which has been operated by Petrobras. asi como del derecho internacional. taking into account the international prices. At noon. It seems that for these reason hydrocarbons are public property. The political aspect was due to the MAS. the nationalisation would not affect the physical properties of the petroleras (La Razon. the party of Morales during the elections that received the majority of support by the Bolivian people. sin perjuicio de las obligaciones que derivan de la cooperacion economica internacional basada en el principio del beneficio reciproco. The national decree in its legal part argued that the hydrocarbons are national resources and the Bolivian State has inalienable rights to it. In case the companies would not agree. 2006. as written in international law. In other words. Morales invited the transnational oil-gas company to obey the new national decree otherwise they would need to leave the country: “…Si las empresas no nos respetan. These aspects were political and economical. 3). Behind the president. all countries can make use of its richness and natural sources without damaging the obligations derived from the economic international cooperation based on the principle of reciprocal benefit. The petroleras had 180 days to negotiate their contracts with the YPFB. the petroleras would voluntarily renounce all kind of negotiations. 2006). During the speech of May 1. the nationalisation decree also guaranteed the continuity of the hydrocarbons production. the companies should pay 18 per cent for regalias. Another point of the decree refers to the fact that the State would be the entity setting the prices of the hydrocarbons in the internal market. indemnification or appellation of the national decisions in front of the International Tribunals (Zissis 2006. The decree of the president was to first take over San Alberto in Carapari. the troops received the president and its committee and transported them to the San Albert reservoirs. possession and control of the hydrocarbons by the State. 82 per cent of income for hydrocarbon activities was for the State and 18 per cent for the petroleras (Medinaceli 2007. one of the biggest reservoirs of gas (Zona Económica.13 which provide over 90% of Bolivia's refining-capacity. With this argument. one of the reasons for the decree was to pass the production of hydrocarbons from the petroleras to the YPFB for its commercialisation and industrialisation. The president read the Decreto Supremo de Nacionalización (National Decree of Nationalisation) that contained three main goals: To recover the property. Article 4 of the Decree established that until new negotiations of the contracts with the transnational gas-oil companies. For the government of Morales.

With the presidency of Evo Morales. social changes have occurred in the minds of Bolivians regarding social classes. what is also important to note is that in this nationalisation there was not an expropriation of the installations. However. which is the pedestal of support of the Bolivian economy. . 3). Chamber of Hydrocarbons of Bolivia) the only achievements that can be seen are the Bono Juancito Pinto (Juancito Pinto Gift) and the Renta Dignidad (Rent Dignity). Those people who are proud of Bolivia and feel a connection with their Bolivian ground (Pacha Mama) and identity. From this have come political projects. This old recipe for rallying popular support of a doubtful policy is no secret. After this historical event. The nationalisation of hydrocarbons in Bolivia has been accepted positively by those previously marginalised in society. Other than these achievements. 2006). Economists find it difficult to fulfil the above programmes due to the decline of the price of oil. however the government will give the next government the strenuous assignment to deal with the companies affected by the nationalisation and future investors (Jova 2006. Now. instead a negotiation regarding production with changes in the percentage of profits for the petrolera and for YPFB. The Ley de Renta Universal y Vitalicia de Vejez consists of 2400 bolivarianos (340 USD) per year for elderly people. Additionally a new social programme is running. Although the goal of having a new hydrocarbon policy and the change of the national constitution has been achieved. In the two previous cases. to be called indigenous or Aymara was considered an insult. Sociologist Pablo Mamani signals a change in the identity attitude: Before. nationalisation can be a way to reach the masses but it might not be the panacea for solving Bolivia’s problems. The indigenous culture has become more an issue of pride than an issue of shame (Eviatar. as Jova signals: Nationalisation is an easy sell to the masses of a country eager to recover its national sovereignty and pride. benefits have not been seen. the group of officials returned to La Paz where the president would talk to the people at Plaza Murillo (Weber. right after a nationalisation.14 Bolivians). and certainly not a strategy that Bolivian President Evo Morales has failed to enthusiastically exploit. The bono is a subsidy that the government gives to the parents of children that are assisting and finishing the first five years of primary school. the pursuers of the process were people traditionally in government and supported by the upper and middle class of society. local leadership. Furthermore. Next to the board was a soldier holding the Bolivian flag. According to the Bolivian specialist Eduardo Gamarra in an interview with the Latin American and Caribbean Center. The amount that they receive is 200 Bolivarianos (28. and concrete demands for people’s lives—for things like water and electricity. It is clear that what is different about this nationalisation to the others before is that the people behind the process of nationalisation where indigenous people and the farmers who traditionally did not belong to the high layer of society. According to the Camara de Hidrocárburos de Bolivia (CHB.000 elderly above the age of 60.44 USD) and it is given in two parts: at the beginning of the study and the other part when the child has finished it (Decreto Supremo 28899: 2006). This law will benefit 676. strategic actions. Electricidad para vivir con Dignidad (Electricity to live worthy). which has as goal the access of the rural and urban population to electricity by 2025. The Presupuesto General de la Nación (National Budget) was based on an oil barrel of 73. 2005). The different events have been the “path” that the country needed to cross. changes and outlook There have been a series of events until reaching the Hydrocarbon policy. The pro-nationalist arguments can be nicely packaged into inspiring and patriotic speeches that will surely stir up the masses and secure an electoral victory. it’s a sign of strength and pride. Achievements. a difference of more than 45 per cent (La razón.5 USD and the actual price is of 40 USD. with a populist coca farmer as president. creating in this way a nationalist feeling among the people. some people have questioned the achievements reached. The committee continued to other gas and oil reservoirs such as the refineries of Entre Rios in El Chapre. 2009). the government has capital to invest in public works. no mystery.

In many cases however Latin American governments have been more interested in a quick pay-off than in providing long-term advantages to the country (Philip 1982. The States' interests are as likely to be in conflict with external interests as with internal interests. For both approaches can envision different leaders controlling a country’s hydrocarbon industry. 161). (Own translation. 3 The Ministerio de Hidrocarburos y Energia in Estrategia Boliviana de Hidrocárburos states that: “The nationalisation is fundamentally a political act which originates from the firm decision made by the Bolivian people to reclaim control over its hydrocarbons which have systematically and arbitrarily been given over to transnational interests”. A further distinction between these two approaches can be made by looking at the leaders it envisions in charge. When for example during a successful investment renegotiations take place the advantage for the government will increase over time as risks have decreased and the ratio of sunk capital and new investments increase and the country learns more about the industry. One approach corresponds to the assumptions made by theoretical economists which have been applied to the question of foreign investment by means of a bargaining model and sees governments and companies involved in hydrocarbons as maximisers in a situation where there are interests in common but also interests in conflict that hold each other in balance. The other approach is more focussed on sociological factors and states that a State will pursue political and economic strategies in cooperating with foreign companies and will not 'maximise'. Since the domestic demand is still not very much developed in Bolivia and if production levels can be maintained or increased more surpluses can be exported. In this light it is interesting to read in the new hydrocarbons law of Bolivia that the act of nationalising the oil and gas industry in 2006 in Bolivia was clearly a political act by the State 3 while it simultaneously sought to increase its production levels. But as Philip states 'technocratic bargaining' has mostly been subordinate to the overall ideological orientation of the governments and both approaches can somehow best be regarded as complementary to each other in a mix of economic interests and political ideologies as not to dismiss important factors external to either one of the two approaches (Philip 1982. These facts give evidence of a mix of economic and political interests as stated above.15 So far. The confirmation of it will have an impact on Bolivia that would be interesting to monitor in the future. This bargaining model is helpful to identify the analytical relationships of shared or conflicting interests during an investment. for governments are not usually seen as maximisers. The big incognita is how the winning of the ‘yes’ in the referendum in January 2009 is going to change Bolivia socially. In the end both still benefit from the situation. The current production capacity could have been even higher if the State Decree of October 2001 would not have resigned foreign companies from their obligation to invest in the development of oil and gas fields according to the Ministry of Energy and Hydrocarbons of Bolivia. economically and politically. Conclusion Two theoretical approaches are sometimes used to consider the issue of politics and oil and might also be considered applicable to the issue of all hydrocarbons. 160) by for example not learning about the nature of the industry. One approach envisions a country where technocrats are seeking to maximise economical gains and one where political leaders follow their ideology and believes to develop a country with for example the revenues of the hydrocarbon industry.) . there have been proposals by the government that have been positively accepted by the majority of the population.

925 31. The nationalisation of 2006 is therefore known as a nationalisation without expropriation.71 2000 15.51 30. By 'making themselves present' and by expressing their different cosmovisions and daily lives they have found a way ''.137 41.046 43.45 2002 19. The new hydrocarbon law was made after mass mobilisations by the Bolivian people.762 49. Because the inclusion of these articles in the new hydrocarbon law are indeed indicating at a serious attempt to open up political and economic structures for control by this alternative power of previously marginalised indigenous people and indicate to a change in structures of power.78 2004 33.28 39.74 Grow 1997 – 2007: 186% Processed *MM mcd Year 7.46 31. because of the drop of the price of gas.962 33. .613 37. the country’s income is presumed to increase. This improved position is used to pursue political and ideological goals designed to benefit all Bolivians like the National Development Plan.302 Processed **BPD 13.01 2004 34.904 48. to affirm.845 48. to expand.799 32.5 2006 37.69% Oil Production **BPD 32. Evo Morales who was also a protagonist of the protest could not disappoint the social groups and forget his campaign’s promises of: Bolivia quiere socios.04 2005 35. However. 37) and they made themselves be heard.67 2005 40. social and economic structures of power and that it appears to be an expression of the ideology and beliefs held by its leader Evo Morales to benefit all Bolivians.59 1997 7.61 1998 14..238 * MMmcd = Millones de metros cúbicos por día (Million Cubic Meters per Day) ** BDP = Barriles de petróleo por dia ( Oil barrels per day) The current Hydrocarbon Policy of Bolivia also indicates a mix of economic and political interests due to it being the result of a process of changes in political.42 2001 16. The new hydrocarbons policy of Bolivia was then reached and the petroleras were to re-negotiate their contracts with the state. The new hydrocarbon law has indeed incorporated some articles expressing more rights for the previously marginalised indigenous sectors of Bolivian society.415 35.84 49. Apart from this.758 48. In fact it was more a change on percentage of payments on volume of production.92 2000 13.06 2003 26. Because the export of the hydrocarbons represent an important source of income to support the country’s economy and the payment of taxes on hydrocarbons by the petroleras to the Bolivian State were low the social movements started to protest.935 37. the social movements had become a force of power that could not be ignored. the budget for the National Plan of Development will be affected. how this is unfolding in the future and what effects it will have on Bolivia's society is an interesting process worth following. no patrones and the third nationalisation of hydrocarbons became a fact.794 36.16 Figure 3: History Volume of Production and Processed Gas & Oil Source: Bolivian Hydrocarbons Strategy Natural Gas Production Year *MM mcd 1997 14.6 2002 24.86 1998 6.24 2007 41.58 2001 19..39 1999 8.24 2006 40.93 2007 Grow 1997 – 2007: 49.4 2003 28. A close monitoring of the achievements or failures of the plan should take place. The mobilisations took place due to the fact that all activities in the hydrocarbons sector were in the hands of powerful international petroleras operating in the country. At the same time evidence has been given that traditional economic and political powers have remained in place in Bolivia albeit under different circumstances and weakened.71 1999 13.547 46. The result of the protests was the resignation of president Mesa and the election of Evo Morales as new leader of Bolivia. With the rise on the payment of taxes.442 50. This gives evidence of the mutual interest of the Bolivian State and the international companies involved in the hydrocarbons in Bolivia and an improved bargaining position for the Bolivian State. to shine a light on the new world that already lives within the world of the oppressed' (Zibechi 2005.073 36.

online report. La Paz Chávez. C.pdf . (2006) Nationalisation in Bolivia: Curse or Blessing? Latin American and Caribbean Center Mariaca. J. http://www.org. G. La Paz. DeShazo.17 Bibliography Aramayo. (2006) El orden del decir.uk/documents/774917411_774914599_Bolivia%20oil%20an d%20gas%20investment%20report%20final. Cockroft. a Road to Socialism: the Case of Tanzania: Zed Books Camacho. J. (2005) Patterns of protest: Politics and social movements in Bolivia. Auza Aramayo.60. (2008) Indigenous people rising in Bolivia and Ecuador. F (2006) BOLIVIA: Ambitious Development Plan Bound by Status Quo. organización comunal y politicas públicas: Cedla. Dictionary of the Social Sciences (2002) Nationalisation definition: Oxford University Press. P. no 6. (2007) Bolivia’s Nationalization:Understanding the Process and Gauging the Results. Diane (1985) Nationalisation. Crabtree. Jova. maltratos y usos: Coloquios Economicos no. J (2004) Porque se debe industrializar la industria petroquímica: Centro de Documentacion e Informacion Bolivia. Christian Aid & Centro de estudios para el desarollo laboral y agrario (CEDLA) (2007). J (2007) Nacionalizacion del Siglo XXI: Editorial Multimac S. Palacios. E. Inter Press Service. S. R. Teran. W. (accessed 16 January 2009). (2006) Nationalism and Hydrocarbons in Bolivia: Center for Strategic and International Studies. D. (1944) Reseña sobre la industria petrolera: Editorial Norte. Monthly review. V. 9 Fundacion Milenio . La Paz Martinez. The benefits of FDI: is foreign investment in Bolivia's oil and gas really delivering?. M. (2007) Impuesto Directo a los Hidrocárburos (IDH): Origen. (1996) The Chaco War: Bolivia and Paraguay 1932-1935: Greenwood Publishing Group Inc. L. Vol. Voces de Omasuyos y Aroma sobre recursos naturales. Bolton. Latin American Bureau..boliviainfoforum. Institute for Policy Studies (IPS) Medinaceli . Farcau.

Estado y poscolonialidad. online report. 13-39. Inc. (2005) Introduction Latin America today: the revolt against neoliberalism.htm (accessed 16 January 2009). Zissis. (ed. identitades territoriales y autonomias en la region amazonica de Bolivia. . nationalist movements and state companies. (2006) Bolivia. (1982) Oil and Politics in Latin America. K. no. R. W. Orgaz. Royuela. Zibechi. G. (2008) Estado. bajo el signo del nacionalismo indigena. (2006). 1-11. Socialism and democracy. Bolivia’s Historic May Day. C. Petroleumworld.com/SF07112501. Cambridge University Press.3. (2005) La nacionalización del gas: economia.petroleumworld. (2007) Bolivia's gas nationalization opportunities and challenges – Part III Increased gas and oil revenues from nationalization benefit various projects. 19. (2006) Bolivia’s Nationalisation of Oil and Gas. pp. no. La Paz. Reinventando la nación en Bolivia. La Paz. CEIDIS.18 Molina Argandona. http://www. Morales. November 2005. The Council on Foreign Relations. Vol. Seis preguntas y seis respuestas sobre el gobierno de Evo Morales. Reinventando la nación en Bolivia. C. (2003) A brief history of Bolivia. M. Renique. Tsolakis A. New York. CLACSO. (2007) Una perspectiva histórica sobre la nueva nacionalizción de los hidrocárburos en Bolivia. Facts on File. (2005) Territorios indígenas y empresas petroleras. (1996) Cien anos de hidrocárburos en Bolivia (1896-1996): Editorial Los Amigos del Libro. politica y geopolítica de la tercera nacionalización de los hidrocarburos en Bolivia. P. G. K.. Cambridge. J. S.). (2005) Subterranean echos: resistance and politics “desde el Sotano”. Socialism and democracy. Philip. Stefanoni. 19. Estado y poscolonialidad. Monasterios. Vol. Weber.3. movimientos sociales. Nationalisation of Gas. Editorial La Paz Paz Patiño. CLACSO. pp. movimientos sociales. W. November 2005. Fundacion PIEB. in Monasterios.

Financial Times (2 May 2006) La Paz intent on reversing 'unconstitutional' privatisation. Los Tiempos (26 August 2006) Hay 500mil personas en Bolivia sin empleo y 480 migran a diario. Decreto Supremo 29635. La Primerisima (9 September 2008) Bolivia busca consolidarse como centro energético del Cono Sur. Productiva y Democratica para vivir bien. La Razon (24 March 2006) Petroleras aceptan la nacionalizacion sin expropiacion.19 Newspapers BBC Mundo (12 June 2006) Bolivia: Morales presentó su plan. 29272. Financial Times (2 May 2006) Presidents to meet over gas crisis. Zona Economica (5 May 2006) Nacionalización del Petróleo Boliviano. Los Tiempos (16 Junio 2006) Evo apuesta a los hidrocárburos para cumplir su plan de desarrollo. International Herald Tribune (8 May 2006) Bitter past at the root of Bolivia's gas gamble. Ministerio de Hidrocárburos y Energía . Soberana. Bolivia Digna. Juancito Pinto. Programa para vivir con Dignidad. Official Documents Decreto Supremo 28899. The Nation (21 December 2005) Economic Globalization. Decreto Supremo no. Plan Nacional de Desarrollo. La Razon (2009) El gobierno ajusta el crudo a 40USD para el PGN 2009. The New York Times (3 February 2009) Backgrounder: Bolivia's nationalization of oil and gas. Ley de Tratamiento y Fomento a la Inversion Extranjera Estrategia Boliviana de Hidrocárburos. Gaceta Oficial de Bolivia.

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about the region around Antofagasta. If it can’t teach us what to do. Maalderink Abstract: This chapter will give a historical description of Bolivia's dependent situation as a raw resource exporter. Liberals and conservatives In 1879 the conflict with Chile.21 Bolivia's Resource Policy 1880-1964 Jos M. I will try to find out if those attempts were successful. Coups. and the Bolivian national revolution of 1952-1956. known as military socialism. is a good example of this. military socialism. History does not teach us unambiguously what to do. nationalisation Bolivia has since long been one of the poorest countries of Latin America. although since the output was carried off to Spain Bolivia profited very little from its enormous mineral wealth. It will provide an overview of the two main reformist projects of the twentieth century. The region had belonged to Bolivia in . dependency. The exploitation of these riches has never really benefited Bolivia. but that does not mean it is not relevant to look at successes and failures from the past. national revolution. In this essay I will therefore discuss the history of Bolivia's resource policy from 1880 to 1964. The turmoil of the 19th century greatly hurt the Bolivian economy. and at times different Bolivian governments have tried various projects to put an end to this situation. In the colonial era the country had become one of the main sources of silver for the Spanish empire and indeed for the entire world. despite having a large quantity of natural resources. Keywords: Economic history. finally erupted into a war. Several of these projects have tried to change Bolivia’s dependence as a raw resource exporter on the world market and usually this was attempted by increasing state control over the extraction and export of the republic’s subsoil resources one way or another. and especially deal with the two main projects mentioned above. and any form of consistent economic policy was absent. military socialism and the national revolution. The current administration of Evo Morales. Bolivia's Pacific littoral. and it fell into the hands of military strongmen and caudillos. and will argue that both projects were not successful because they ignored more fundamental causes of Bolivia's dependent position. which had been lingering for several decades. but it is by no means the first attempt. The most notable historical projects that tried to put an end to Bolivia’s dependent and impoverished situation have been projects that tried to alter this situation have been the reformist military regime from 1936 to 1939. Bolivia at the turn of the century Bolivia achieved its independence in 1825. what caused their failure. Within a few years after the consummation of independence the country started to disintegrate. who partially nationalized the country’s gas production. at least it can give insights in what not to do. and if not. rebellions and civil wars were commonplace. The country's chronic underdevelopment despite being such a large resource exporter has been one of the most tragic aspects of Bolivia's tumultuous history. I will focus on the problems caused by Bolivia's position as a raw resource exporting country.

The conservatives were associated with silver interests and the city of Sucre. Silver and tin Both in the conservative silver and the liberal tin eras Bolivia was ruled by an almost omnipotent oligarchy. The labour circumstances in his mines where somewhat better than in those owned by the other barons. The political differences between both groups were negligible. only a small percentage of the population was allowed to vote and most elections were decided by fraud rather than by the will of the voters. while the liberals were mostly involved in the tin market and lived in La Paz. but died in 1882. whose wealth and influence dwarfed that of the rest of the elite. Firstly Chile lost much of its importance as a major trading partner for Bolivia to the United States. Aniceto Arce and Gregorio Pacheco (Morales 2003. and it was usually agreed upon that the Spanish internal borders should be used as borders for the newly independent republics as the various parts of the Spanish colonial empire declared themselves independent. from 1915 onwards (Hermosa 1979.22 the colonial era. The only major controversial issue at the time was separation between church and state. 84). Not much changed in the economic structure of the country. his empire being inherited by his son Félix Avelino Aramayo. The war proved to be a catalyst for change. When silver prices plummeted in the 1890s the conservatives lost most of their political and economic power. although the “revolution” did have two indirect effects. It was also on this occasion that the seat of government was moved from Sucre to La Paz. and like Aramayo he was member of the constituent assembly. Pacheco was known for his humanitarianism. There were two groups competing for power. 127). especially so in the conservative era. In both eras there were eventually three persons. In 1898 the “federal revolution” erupted over a minor controversy related to departmental rights and after a brief civil war the liberals took over from the conservatives. The third and most important silver baron was Aniceto Acre. When a famine threatened during the War of the Pacific he donated food to the poorest Bolivians and he campaigned for the abolishment of corporal punishment in the military (Capriles 1977. Of president Mariano Baptista for example it was said that 'when he wasn't giving speeches he was working for the mining companies' (Luján & Antezana 2005. Aramayo was born in 1809 in Bolivia but was raised and educated in France and the United Kingdom. At a young age he participated in a mission to Paraguay and became the first . Gregorio Pacheco was also born in Bolivia and educated in Europe. related to the shift from silver to tin. 91). 104). 83). 94) Economic and political interests were strongly intertwined. Eventually the struggle for control of the region pitted Chile against Bolivia and Peru in the War of the Pacific. In the conservative era those three names were José Avelino Aramayo. Although the country had a stable constitutionalist political system and was formally a democracy. Thus the country started a period of relative stability that lasted four decades. supported by liberals and opposed by conservatives. popularly known as La Rosca. 51). 99). the conservatives and the liberals (Morales 2003. There was however an important difference in the backgrounds of both groups. He also was elected deputy to the national congress and served as president from 1884 to 1888. which will be discussed later. It was even said that the only difference between conservatives and liberals was that conservatives were Catholics and liberals Freemasons (Capriles 1977. The country ousted the military charlatans and established constitutional government in 1880 (Morales 2003. This was especially true after the rise of the Republican Party. both groups supported laissez faire economic policy and free trade. Chile however proved to be much more stable and prosperous in the nineteenth century. Furthermore the liberal tin barons were less inclined to govern in person. with the people in political power often being the same persons as those who controlled the mines or industry. and was able to open up the region and exploit its rich saltpetre resources before Bolivia was able to do so. He served as member of the constituent assembly of 1880 and was ambassador to various countries. (Morales 2003. and chose to rule by political organisations and intermediaries rather than assume governmental power themselves. Chile was an importer of silver but not of tin while the United States was a big importer of tin. three barons. in which Chile inflicted a smashing defeat on both countries. like the conservative tin barons did.

Nevertheless the economic policies the liberals and conservatives carried out ensured that Bolivia could profit only minimally from its rich mineral wealth. As said before. The conservatives were generally very pro-Chilean and pro-British. Although he was initially being obstructed by the country's oligarchy. with the exception of the younger Aramayos. 133). From the government of president Linares in the 1850s. 128). of the big six if one includes the silver barons). one of the few civilian rulers before the defeat by Chile. creating a dependent relationship. a share that rose to a staggering 73 per cent in 1913 (Hermosa 1979. In Patiño's case one could even say that imperialism was a tool to him rather than the other way around (Capriles 1977. Furthermore. He had inherited most of his fortune and position from his father. in the first three decades of the twentieth century the national budget saw a deficit twenty-six times and a surplus only four times (Capriles 1977. One of the clauses of the peace treaty with Chile of 1884 was guaranteeing free trade between Chile and Bolivia. The most notable and by far the most powerful tin baron however was Simón Iturri Patiño. he inherited his initial fortune. 12). managing to profit from the crisis of the twenties and thirties by buying unprofitable mines at low prices and making them profitable again (Capriles 1977. 123). Carlos Víctor Aramayo was a son of Félix Aramayo. At the time of the tin nationalisation in 1952 Patiño's share of the country's tin production was 46 per cent. And although it is true that they were xenophile (most of them were educated in Europe) and the production of the mines they owned was almost fully directed at export to foreign countries. the government had slowly started to open up Bolivia's economy. He later became deputy. He grew to become one of the world's richest people. Patiño. Even though the country had a trade surplus from 1908 to 1929 (Morales 2003. silver prices collapsed in the 1890s and the silver barons had to make place for the tin barons. Patiño was born in Cochabamba in 1862. Even though he claimed to be of pure European descent. Until the rise of the republicans alternatives were not even considered in government circles. 116). considering him a parvenu. and believed free trade was the best way to develop the countries. He married a Spanish noblewoman but eventually divorced. tax rates on mining exports were so low that less than three per cent of the wealth produced by the country's mines ended up in the national treasury. making Bolivia heavily dependent on Chile and by extension the United Kingdom (Luján & Antezana 2005. becoming finance secretary in 1939 and launching his (unsuccessful) presidential candidacy on the ticket of his own Centrist Party 1951. In 1888 he was elected president of Bolivia. He began his career in the administration of a silver mine. for a four year term. When the ailing silver industry entered into a crisis in 1894 the government's reaction was to lower taxes even further (Capriles 1977. Eventually his mines produced almost half the country's tin. was a foreigner. Nonetheless he was the least powerful of the three tin barons (Capriles 1977.23 Bolivian ambassador to that country. Just like with silver however. in reality he probably was of mixed Quechua and Spanish heritage. and was nicknamed 'the tin king' (el rey del estaño) and 'the Bolivian Rockerfeller'. 46). three main tin barons arose: Carlos Víctor Aramayo. prefect of Potosí and finance secretary. Unlike the two other tin barons he was personally involved in politics. 125). In 1895 he acquired a concession of the silver mine 'La Salvadora'. Hochschild. Mauricio (Moritz) Hochschild was an Argentine of German-Jewish descent. Mauricio Hochschild and Simon I. By 1904 tin already accounted for half of Bolivia's total export value. In 1925 Bolivia counted no less than 112 tin mining enterprises (Capriles 1977. they did have enough space to make their own decisions and were not subordinated to foreign imperialists. Unlike the rest of the big three (or rather. 128). by 1905 he already had become Bolivia's most important tin baron. and had to import processed goods from Chile. He also was very influential in Bolivian politics. and the other five were Bolivian. On top of the unfavourable international trade position came the fact that exporting raw resources proved such . It is worth noting that of the big three of silver and the big three of tin only one. which in reality happened to contain the world's richest tin vein. It has often been claimed they were mere puppets of imperialism. 120). for both the tin and the silver barons is true that they were not born especially rich nor very poor. disappointed with the prevalence of sympathy for Nazi Germany amongst many of the continent's political leaders. The country exported raw resources to Chile. 108) and policies under the liberals were not different. During the Second World War he left South America. The Bolivian government was chronically cash-starved. for which he managed to amend Bolivian family law (Capriles 1977. the United Kingdom and the United States. as his support was necessary for the survival of any government. He was the last of the big three to establish his mining enterprise. being the successor of Pacheco.

Although this was actually illegal. the leader of the PRG and a protégé of Patiño. The republican governments were also noted for their modernising programme. bringing railways. 127). Nonetheless labour unrest was in reality usually repressed. of which Bolivia produced 46. The economic crisis After having reached a high point in the First World War. leading to a massacre in Uncía in 1923. The first social legislation was introduced. in 1920. The first large scale oil concession was awarded to the Richard Levering co. At this time Salamanca. Quickly a division emerged in the Republican Party. The republicans and the double crisis of the 1930s The republicans It was for political rather than economic reasons however that the first opposition movement was founded. Elections were held and in 1921 Saavedra assumed presidency.000 tonnes. Subsequently Saavedra had most genuine republicans exiled. Four years later this number had more than halved to 80. so in reality not much changed (Capriles 1977. 511). putting limitations on female and child labour amongst others and the right to strike was recognised (Mesa 1999. In 1929 the total world tin production was 200. 537). their opposition against the liberals was caused by liberal corruption and authoritarianism. they organised a party in 1915. In 1923 Saavedra had a tax law enacted that would put a tax on mining utilities (Capriles 1977. this caused the Bolivian state to indebt itself heavily. had taken over the presidency. a more robust separation of powers and fair elections (Mesa 1999. Meanwhile Bolivia had started to become an oil producing country. 13).000 tonnes. 133) and two years later a new mining law was proclaimed that gave the nation the 'original domain' over the country's resources. Their political programme was not very distinct from that of the liberal party. It was Patiño . Saavedra decided to approve the transfer retroactively. and gave Standard Oil a concession for 55 years. and Bolivia's production fell to 14. Republican dissidents. the last liberal president. supported by a large part of the population that had become increasingly opposed to the liberals because of their corruption and authoritarian tactics. the results of which were felt during the great depression. PRG). meaning that the total revenue gained from tin mining in 1934 was less than one sixth of that of 1929 (Hermosa 1979. caused by Saavedra's uncompromising and populist style of governing. 131). In 1920 the republicans. In these four years tin had lost half its value on the market. including the eight hour working day. 143). left the party and founded the Partido Republicano Genuino (Genuine Republican Party. There was no real investment in things other than cheap labour. and nobody cared to diversify Bolivia's exports to make sure the country would remain economically viable in case of a collapse of the resource markets (Morales 2003. Levering's concession was ceded to Standard Oil in 1921. Nevertheless. In the 1920s there had been a world overproduction of tin. Calling themselves Republicans. The most important republican leaders were Daniel Salamanca and Bautista Saavedra. that the country's development was neglected. The republicans promised respect for the constitution. considering the fact that tax revenues were still very low. air planes and the radio to Bolivia. demanding the company to pay the Bolivian government eleven per cent in royalties (Mesa 1999. Still. led by Salamanca.24 an easy way to make money. managed to topple José Gutierrez Guerra. The first oil well was discovered in 1897 and in 1902 the first concession to extract oil was given.000 tonnes. Instead.700 tonnes per year. tin prices started to decline from 1921 onwards (Hermosa 1979. Though Saavedra broke most of his democratic promises. private enterprises were given the right to extract the country's national resources. 527). The crash of 1929 and the abandonment of the gold standard in 1931 caused an even stronger collapse of resource prices. he was the first president to try to improve state control over the economy.

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himself however, rather than the government, who sought a solution to the country's economic hardship. In 1931 he organised the Comité Internacional del Estaño (International Tin Committee, CIE), inviting the world's most important tin producing territories: the Netherlands East Indies, British Malaya, French Indochina, Siam, Nigeria and the Belgian Congo. The participants agreed to establish fixed prices and quota, turning the CIE into a kind of tin-OPEC avant la lettre. Bolivia was allowed to produce 46,338 tonnes, the second largest share after Malaya (Capriles 1977, 138). The Bolivian government gave its assent to the CIE and the plan proved to be reasonably successful. From 1934 onwards tin revenues started to rise again, albeit slowly.

The Chaco crisis
On top of the economic crisis came a second crisis that would arguably even leave an even bigger impact on Bolivia. The situation was similar to the conflict with Chile, but this time Paraguay was the opponent. According to the colonial territorial divisions the Chaco Boreal, the northern part of the enormous and inhospitable Gran Chaco plain of South America's heartland, had belonged to Bolivia, but it was Paraguay that first managed to penetrate and develop the area. In the 1920s already both countries started to militarise the region, building forts and military outposts, and occasionally skirmishes erupted between soldiers of both countries. In 1932 eventually a full-scale war broke out. It is often said that the Chaco War was in reality a war between Standard Oil, on the Bolivian Side, and Royal Dutch shell, on the Paraguayan side, and the war erupted after it had been reported that the Chaco was rich in oil reserves. Standard and Shell would have incited the respective countries where they had concession to wage war on each other, because the Chaco Boreal would contain large oil reserves. If Bolivia would win the war Standard Oil would see it's potential number of oil fields greatly expand, and the same goes for Shell and Paraguay. In reality however there was very little oil. After the war it appeared that the rumoured oil reserves were mostly non-existent, but also before the war both oil companies were aware that even if there would be oil in the Chaco it would be very little, not enough to wage a war for. Also the shares of both countries in the production of the respective oil companies were very small, again not big enough to take such great risks (Mesa 1999, 544). But what is even more important to note is that Standard Oil did not actually support Bolivia actively during the war. It did not comply with its contractual obligations, pumping up less oil than it promised to. Standard clandestinely pumped away oil to Argentina, a country known to be supportive of Paraguay, and refused to charge lower petrol prises for the Bolivian military (Almaraz 1958, 110). As will be seen later, after the war Standard Oil was even tried for sabotaging the war effort. If oil and natural resources played a role in the Chaco conflict, it was indirectly rather than directly. Having become a landlocked country since the loss of the littoral to Chile, it was imperative for Bolivia to have at least a navigable river to connect the country with the ocean. Paraguayan encroachment into the Chaco Boreal threatened just that, since the only rivers Bolivia could use for transport towards the Atlantic flow through that region (Mesa 1999, 545). Although Bolivia initially managed to defeat Paraguay in several battles, soon the Paraguayans recuperated and started a successful offensive into the Chaco Boreal. Bolivia's army consisted for a large part of Quechua and Aymara Indians, people from the highlands, not used to the climatological and geographical conditions of the Chaco Boreal, dry and hot during the dry season, a swamp during the rainy season, while the Paraguayan soldiers were used to the kind of terrain they were fighting on. Furthermore the Paraguayans were fighting for the very existence of their country, the Bolivian claim extending almost up to the suburbs of the Paraguayan capital of Asunción, while most Bolivians did not see any reason to fight for a plain they had no direct interests in. The Paraguayan advance was not stopped until February 1935 at Villamontes, already at the foothills of the Andes. Four months later the warring nations signed an armistice, and in 1938 eventually agreed to a peace treaty, awarding most of the Chaco Boreal to Paraguay, while Bolivia retained the northern part including a port on the Paraguay River (Morales 2003, 105). Ironically the part retained by Bolivia turned out to be the only part that did in fact contain oil reserves.

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The first reform attempt: Military socialism
As with the War of the Pacific, the Chaco War had a profound effect on Bolivia's political life. Again an entire generation of politicians was completely discredited by a war that had a disastrous outcome for Bolivia. Salamanca, whose relationship with the military had always been difficult, was deposed in a military coup d'etat in 1934, already before the end of the war, and was replaced by his liberal vice president José Luis Tejada. The new government, supported by the Bolivian population, blamed Standard Oil for the war, and Tejada accused Standard of having illegally siphoned off oil to Argentina during the war. Public opinion however rather wanted the civil and military leadership tried first, Tejada being considered just a continuation of the old elite that had led the country to ruin (Mesa 1999, 554).

The military socialists
On May 1936 eventually Tejada was deposed as well in a coup organised by young officers, veterans of the Chaco War. General David Toro was installed as president but it was the flamboyant lieutenant colonel Germán Busch, a war hero from the war against Paraguay, who was the leader of the group and the one who orchestrated the putsch against Tejada. As Busch did not consider himself to be enough of a politician, for the time being he decided to let Toro govern the country. Toro, Busch and their supporters organised themselves in the Legion of Ex-Combatants (Legión de Excombatientes) and their ideology was named military socialism (socialismo militar). Military socialism was not a pre-conceived ideology, although it drew part of its support and inspiration from the many moderate socialist opposition movements that had arisen in the 1920s, but rather it was developed as the military socialists governed (Gallego 1993, 214). In many ways military socialism was nationalist rather than socialist. Fundamental to the movement was the concept of national sovereignty. The military socialists liked to compare the loss of the territorial integrity of Bolivia after the Chaco War to the loss of economic sovereignty caused by the country's dependent relationship on foreign countries (Morales 2003, 110). Inept government by Salamanca, and indeed all his republican, liberal and conservative predecessors, had led to the loss of both Bolivia's economic and territorial sovereignty. Just as it was the task of the military to the country's territorial sovereignty, so should it also be their task to defend the country's economic sovereignty. By controlling the nation's own resources, so they thought, Bolivia would finally be able to take its future into its own hands. In the political atmosphere of the 1930s there was a lack of alternatives and the Bolivian army was considered the only body capable of actually reforming the country. However, military socialism did lack practical solutions to the problems it formulated, which where therefore formed on the go (Gallego 1993, 213, 215).

Toro and Busch in power
Although opposed to foreign oil companies, Toro initially governed with a conciliatory attitude towards them, not declaring his disapproval of Saavedra's dubious recognition of Standard Oil's concession of 1921 and acquitting the company of paying its outstanding debts (Mesa 1999, 559). Then suddenly on 17 March 1937 Toro nationalised Standard Oil, finally giving in to popular pressure. The concessions and properties of Standard Oil were taken over by the new state oil company Yacimientos Petrolíferos Fiscales Bolivianos (Bolivian Fiscal Petroleum Fields, YPFB). The importance of this nationalisation is not to be underestimated. It was the first time a Latin American country expropriated the properties of a big American company, a full year before Mexico would nationalise its oil. Toro did not introduce any new legislation to make the expropriation possible. According to the existing petroleum laws, although it was not necessarily responsible for its extraction, the state already had the original domain over the country's national resources, so from a legal point of view in reverting Standard's concession the state was only re-appropriating to itself

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something it already owned. The expropriation of Standard's infrastructure was justified by pointing at the company's alleged illegal acts committed during the war. After the nationalisation however Toro introduced a new petroleum law in which speculating with oil concessions became legally restricted and founded the Secretariat of Mining and Petrol (Gallego 1993, 221). Furthermore Toro decreed that mining companies were to hand in forty two per cent of their foreign currency to the Central Bank, which would then exchange it to Bolivian currency at an official rate. This measure had only limited success. Although tin prices were on the rise again, Bolivia's tin production continued to drop, meaning decreasing revenue for both mining companies and the Bolivian treasury (Gallego 1993, 219). The oil nationalisation would be Toro's most notable act as president, because on July 13 Busch, supported by the Legion of Ex-Warriors, finally decided to take over the presidency himself. Initially the country's elite, fearing the tin mines were next on the nationalisation list, supported Busch' takeover, hoping things would return to the old order with Busch in power. Patiño was even one of Busch' most important supporters during the early months of his presidency (Capriles 1977, 144). It soon became clear however that they were mistaken, as Busch proved to be more radical than Toro. He called elections for a constituent assembly in 1938 to replace the 1880 constitution, and on October 1938 the new constitution was promulgated. The constitution was inspired by the Mexican constitution of 1917, limiting the liberal notions of the right to property as laid down in the constitution of 1880. Property was henceforth considered a 'social right', that should function only if it would contain a certain utility for society (Mesa 1999, 564). The constitution named the state owner of Bolivia's subsoil resources and this time the state was also responsible for the extraction of oil. The possibilities for expropriations were expanded and the government was granted the right to direct the country's commercial and economic activities (Gallego 1993, 229). After the constitution was enacted, Busch was proclaimed constitutional president by the assembly. Despite the constitution, promises and rhetoric, Busch never managed to do something against the big three mining companies. Busch could not afford losing the support and money of the tin barons, especially Patiño and his influence in the ITC, if he wanted to push through his modernisation programme, expanding infrastructure and diversifying the economy. Busch did manage to appoint the big three a fixed share of the country's tin export, granting Patiño 50.34 per cent, brought back to 46 per cent after protests from Hochschild (Gallego 1993, 222, 225). Hochschild and Busch shared a strong mutual antipathy, not in the least because of the latter's suspected Nazi sympathies. Busch at one point had Hochschild arrested for allegedly forging Bolivian passports for Jewish refugees, but eventually let him go after he paid a fine. Believing his reform attempts were being sabotaged from all sides, in April 1939 Busch suspended his own constitution and proclaimed himself dictator. This allowed him to finally take measures against the tin oligarchy. His finance secretary Santiago Schulze initially suggested only to raise taxes. Busch however discovered that Schulze was on the payroll of the mining corporations, who had suggested the measure hoping to avoid anything more radical. Having discovered this, he had Schulze fired and decreed, on 7 June 1939, that the mining companies hand in 100 per cent of their foreign currency to the Central Bank, which was nationalised shortly thereafter. Furthermore a twenty five per cent tax was levied on the profits of the mining corporations. These measures meant that, even though the big three continued to exist as private corporations, the Bolivian government finally controlled the country's resource export, and that the state would for the first time seriously benefit from the country's mineral exports (Gallego 1993, 232).

The legacy of Military Socialism
The stage of military socialism ended abruptly in the morning of 23 August 1939 when Busch shot himself through his head, without having implemented any instruments that could ensure the continuity of his regime after his death (Gallego 1993, 233). A combination of opposition by his enemies and his own flamboyant character had forced him to resort to extraconstitutional means to make his political survival possible.

and tin was still by far the most important economic sector in the 1930s. General Carlos Quintanilla. What is more important however. another Chaco War veteran. is that the military socialists had not been able to change the country's economic position in the world. During the Second World War tin prices soared again. thus. especially labour. it's geography and it's infrastructure. A very notorious incident occurred in Catavi in 1942. the political and ideological climate as yet unready for an economic paradigm shift. and was greatly hindered by its landlocked situation. they could not let the era before the Chaco War and the Great Depression return. conservatives and both republican parties. founded in 1941 by Víctor Paz Estenssoro. 141). Peñaranda was supported by a concordancia of the old parties: liberals. The MNR was not necessarily a continuation of military socialism. In line of the dependencia thought of the era. the most notable examples being the Trotskyist Partido Obrero Revolucionario (Revolutionary Workers' Party.8 per cent of all tin production (Hermosa 1979. The period between the death of Busch and the national revolution was also marked by a growing political.28 After Busch's dramatic death the old elite managed to get back into power. The MNR on the other hand started as an opposition movement and had the time to come up with a well developed ideology. Quintanilla called for elections. as well as wolfram. unrest. only to the United States. paying 1. 572). was the Falange Socialista Boliviano (Bolivian Socialist Phalange. 218. PSB). but new opposition groups were soon founded. the MNR criticised Bolivia's dependence on the rest of the world. The military socialists achieved government power almost at the same time the movement was formed and that way had to change their ideas according to the political and economic circumstances before they were thoroughly formulated in the first place. The massacre greatly hurt the government's popularity. though right wing and conservative rather than revolutionary. with 42. and led to a rise in MNR ranks (Mesa 1999. PCB). A large part of this was caused by internal opposition. 77). By 1945 Bolivia had grown to become the world's top tin exporter. Even with oil in government hands and tin nearly so. After the end of the war both prices and production fell . MNR). Military socialism. demanding wage increases. the MNR was distrusted internationally because of its alleged ties with the fascist regimes of Europe. lack of good infrastructure and lack of processing industries. 219. accounting for 66. Peñaranda had several military socialists exiled and agreed to compensate Standard Oil for its expropriation. Aramayo was named Quintanilla's finance secretary and at the end of September 1939 most of the economic reforms of military socialism had been reverted. Nevertheless it had become clear that the tide had changed. a former legal employee of one of Patiño's mines and member of Busch' constituent assembly. succeeded him. inspired by Spain's Francisco Franco. To the left of the MNR Trotskyte and communist groups started to gain popularity. the same person who had overthrown Salamanca in 1934. This lack of power. combined with a simple lack of money. the country was still dependent on international market prices.12 per cent of Bolivia's total export value in 1936 . the world's largest tin producing region. 568). prevented Busch and Toro from implementing any extensive modernisation programme (Gallego 1993. Another notable opposition group. and had managed to revert back to the old situation after Busch's demise. Thus World War II marked the definite positioning of the United States as Bolivia's most important trading partner (Capriles 1977.7 million American dollars in indemnification (Mesa 1999. The Peñaranda government signed an agreement with the United States in which Bolivia promised to export tin. 215). caused by the fact that its economy was almost completely based on the export of raw resources (Luján & Antezana 2005. meaning that the country still needed to import processed products. As with Busch. in large part because of the Japanese occupation of the British. and even though the oligarchy didn't like it. or arguably Busch being 'ahead of his time'. leaving at least twenty death and fifty wounded. Military socialism was over. Soldiers opened fire on a crowd of striking miners. at least until the decree of 7 June. The most notable of these was the Movimiento Nacional Revolucionario (National Revolutionary Movement. POB) and the pro-Moscow Partido Comunista Boliviano (Bolivian Communist Party. It is definitely true that the tin oligarchy . it owed a large part of its economic though to it. and Hernán Siles Zuazo. 140).had successfully managed to keep the damage to their interest limited. Dutch and French possessions in South East Asia. which were won by Enrique Peñaranda. and their families. son of a former republican president. had not been successful in changing Bolivia's economic life – except for the nationalisation of Standard and the existence of YPFB.

151). 625). and on 31 October 1952 mining secretary Juan Lechín nationalised the mining corporations of Patiño (who had died by then). the old oligarchy took over again. although the risk of diseases and accidents in Bolivia's mines still was amongst the highest in the world (Historia de la Mineria 168). Lechín signed the decree in Catavi. in 1946 an angry mob entered the presidential palace. into a powerful organ and its leader Lechín into one of the most powerful people in the country. Increasingly dependent on political repression. yet another Chaco War veteran.000 three years later (Mesa 1999. in spite of the high inflation rates (Capriles 1977. COMIBOL). COMIBOL became the world's largest mining company at the very moment it was founded (Capriles 1977. He was burnt to death and hung from a La Paz lamppost. not directly engaged in mining mineral deposits grew steadily. recuperating a final time during the Korean War. and in reality the mines were in the hands of the bureaucracy rather than the nation or the workers (Capriles 1977. land reform. By now the socio-political situation had reached its boiling point. COMIBOL suffered from bad management. The corporation was put under worker control (at least nominally). In another round of musical chairs. This second option was chosen. 142). requiring mining corporations to hand in hundred per cent of their foreign currency at the Central Bank and rising taxes on exports. The MNR considered two options to fulfil the third of these targets. little transparent business practices of the era of the big barons (Capriles 1977. 151). 145). but was forced to resign after the United States demanded Villarroel purge his government of Nazi sympathisers in return for diplomatic recognition. Although with the nationalisation of the mines something long wished for by many Bolivians had finally been achieved. In April 1952 an MNR-led popular revolution finally managed to overthrow the elite.29 again. The second reform attempt: National Revolution In 1943 general Gualberto Villarroel. site of the 1942 massacre (Mesa 1999. The other option was to nationalise the big mining corporations altogether (Capriles 1977. from 28. this time (seemingly) for good. Furthermore the number of employees 'exterior mina'. it did not turn out to be the success many hoped for. COB). and national control over the country's natural resources (Morales 2003. 161). COMIBOL was used as a cash cow. With this decree about eighty five per cent of Bolivia's tin production was now in hands of the government. Paz Estenssoro was finance secretary in the Villarroel government. Villarroel reintroduced many of the social reforms of the military socialists. in 1953. After the end of that war. by now archconservative. this time for good (Hermosa 1979. Villarroel's regime was supported by the MNR and the Radepa.000. a secret Buschist military-political organisation. it had to hand in its profits at the central bank at a fixed rate. COMIBOL was also responsible for social services like hospital and education as well as infrastructure of mining towns. the country was ruled by presidents Enrique Hertzog and Mamerto Urriolagoitia. 158). Nationalising mines. Paz Estenssoro returned from his Argentine exile and was inaugurated as president on 15 April 1952. Supported by a reunited republican party. prices plummeted again. the official MNR-tied labour union founded in the wake of the national revolution. putting an end to the secretive. Working and health circumstances in Bolivia's mines improved under COMIBOL control. 626).900 in 1952 to 35. Urriolagoitia decided to support a military coup rather than to recognise a MNR victory and handed over power to the military.000 dollar which the company had to pay in indemnification to the three expropriated companies placed another . staged a coup against Peñaranda and installed a reformist military regime. The nationalised mines were put under control of the Corporación Minera de Bolivia (Bolivian Mining Corporation. Hochschild (who had left the country) and Aramayo. The first option was to reintroduce Busch's decree of 7 June 1939. but nonetheless could not count on enough popular support to ensure his regimes survival. liberalising oil The Bolivian National Revolution had three main targets: universal suffrage. In 1951 the tide finally turned against the oligarchy when Víctor Paz Estenssoro and the MNR where triumphant in the elections. Worker control of the mines turned the Bolivian Workers' Center (Central Obrera Boliviana. The $21. 172).

in part because of COMIBOL mismanagement. his oil policy was much less statist than his mining policies. 188). and during the decade after the revolution the only party of any importance in Bolivian politics.30 drain on the company's financial situation (Mesa 1999. 4 These plans included bringing back the deficit on the national budget. lifting price fixes. and became the largest private oil company (Mesa 1999. Oil production boomed.230 in 1960 (Capriles 1977. but apart from this foreign companies were mostly left alone. went mostly into private hands after 1952. The MNR was a multi-sectoral party. and firing redundant COMIBOL employees (Kofas 1995. with actual mineral veins unused (Capriles 1977. 231). Juan Lechín. The triangular operation was somewhat successful in boosting tin production. 219). rising from 15. 625). and in 1964 even for a third term. was considered the most likely candidate for the 1960 elections. going from 2. Paradoxically the oil policy of the revolution was almost a mirror of the mining policy. 628). controlled by the Bolivian government. known as he 'triangular operation'. a franchise of Gulf Oil. So even with an increased output of raw material the output of pure tin was shrinking. sections of the MNR leadership as well as the United States did rather not want to see a left wing president in Bolivia. for which it was mostly dependent on foreign countries. Around this time Bolivia also started to extract and export natural gas (Mesa 1999. and Bolivia still was dependent on exporting raw materials and importing processed ones (Mesa 1999.000 barrels a day in 1964. Bolivia lacked foundries and blast furnaces for processing its minerals. dominated by the MNR. All this led to decreasing output of minerals. The revolution loses steam The governments of the MNR were continuously plagued by rising inflation rates and fluctuating commodity prices.4 per cent from 1955 to 1961 (Kofas 1995.034 in 1953 to 15. The equipment used by the company was outdated and little money was invested in new equipment.260 tonne pure tin in 1962 to 17. for help. The cost of living in La Paz rose spectacularly by 791. All this. before 1952. Mining was controlled by private companies and went into state hands after 1952. This implied that most of the value added was lost. 170). so COMIBOL occasionally mined for resources where there weren't any. The new law was approved by the Bolivian Congress. in 1961. It also raised discontent about the MNR revolution. from 26. 219). already influential during the early stages of the revolution. while most oil production was in hands of YPFB. 221). It demanded that oil firms pay eleven per cent in royalties to the government and levied a thirty per cent utility tax. meaning that the more conservative Hernán Siles Zuazo was named the MNR candidate in the 1956. 157).713 tonne in 1964 but was less successful in other terrains. but considering the troubled economy and the recent Cuban Revolution. It was agreed to let the presidency rotate amongst various factions of the party. in 1956. Research after subsoil mineral deposits were inadequate. The MNR turned to the United States. Realising he needed the know-how and capital of the United States. the lack of a processing industry. Public opinion and the government blamed 'lazy miners' for this (Kofas 1995. which he won without any difficulties. This third term would last 4 Discussed in more detail in the next chapter (Verbeek). In reality however the production of raw material grew in the years after 1952 but the purity of the mined material was decreasing. The government accepted a stabilisation plan from the United States and the Federal Republic of Germany in 1956 and another one from the International Monetary Fund (IMF).500 barrels a day in 1952 to 10. and by extension less revenue for COMIBOL and the Bolivian government. Therefore the tacit succession rules were broken and Paz Estenssoro was elected president for a second term. In his first term as president Paz Estenssoro also approved a new petroleum law. and raised Bolivia's foreign debt (Capriles 1977. in part because of Bolivia's tin deposits getting depleted. who was notably more authoritarian than during his first term. ironically in foundries usually owned by Patiño's companies. It was above all Bolivian Gulf Oil. 626). that benefited from this. combined with the continuing fall of tin prices made the tin nationalisation much less successful than was anticipated. still. Another major problem was. representing the left wing of the MNR. . leaving some on the left to believe that the revolution was being frittered away (Kofas 1995. 628).

Both projects had their own specific faults. in which Bolivia was under the yoke of different military dictators. and the country was still exporting raw resources and importing processed goods. The MNR leadership however never intended to put an end to the market economy altogether. 626). The national revolution failed because of mismanagement in the nationalised mining sector and petroleum policy that was inconsistent with the revolution's official doctrines. when he was overthrown by his vice president. This makes clear the paradoxical nature of the MNR revolution: even though it considered economic nationalism necessary for the country's economic development and emancipation. Finally Bolivia's infrastructure and geography . oil was still of relatively minor economic importance in the 1930's. If resource exports are in state or private hands. are mostly the same as they are today. The money gained by the nationalisation of the tin companies was intended to diversify the country's economy and to make sure that the country would no longer be as dependent on a single export product as it used to be (Mesa 1999. The coup is generally considered the end of the revolution. the former nationalising Gulf Oil in 1969. The strange national revolution The Bolivian national revolution of 1952 was a paradoxical one. With Barrientos' coup d'etat started a period lasting almost twenty years. Secondly both programmes were unable to address Bolivia's dependent situation in general. which where fourfold. mono-export. The most notable measure to achieve this was the nationalisation of the big mining companies. opening it for foreign investors. Although subsequently most governments continued to refer to the revolution. The national revolution did manage to put the mining sector under state control. or to severe economic ties with the United States or the rest of the world (Kofas 1995. economically liberal. apart from the two short lived reformist military dictatorships of Alfredo Ovando and Juan José Torres. in both situations the country is dependent on international market prices. but the sector was already moribund. 216). and the state's expanded control of the mining sector was too short lived to garner enough resources to enable the government to embark on a development programme that could diversify Bolivia's export. and wanted to change this by expanding state control of the economy. most of the value added was lost due to the fact that they had to be processed in foreign countries. it was exactly the sector which was of importance for the country's future where very opposite. 220). Although under military socialism Standard Oil was nationalised. This is however exactly the sector the MNR liberalised.31 only for two months however. so the investment in the (liberalised) hydrocarbons sector was a switch to another main export product rather than a diversification. What happened in reality however was not so much a diversification of Bolivia's export but rather a switch to another export product. The twentieth century saw two big projects to put an end to this situation: military socialism and the national revolution. Firstly neither programme managed to address Bolivia's dependence on one export product. air force general René Barrientos. More important however are the faults both projects had in common. foreign dependence and sensitivity for international resource market prices. If military socialism came too early. The world tin market was moribund after the end of the Korean War and the MNR realised that the Bolivia's future lay in oil and gas export. the period of nationalist reforms was over. Nationalisation of resource exports is ineffective if resource prices are collapsing. measures were undertaken (Kofas 1995. The natural resource-related economic problems Bolivia suffered at the turn of the twentieth century. Military socialism failed because of a lack of institutionalisation and inability to break the power of the old oligarchy. Even with nationalised resource production. The revolutionary leadership criticised Bolivia's dependent situation in the world economy. Conclusion Bolivia's economic history has definitely not been a rosy story. Thirdly Bolivia still lacked adequate processing capacity to make profit out of its nationalised resource sector. the national revolution came too late.

the MNR government nationalized an already moribund sector and Bolivia never managed to reap the profits from its nationalized tin mines. New York: Facts on File. José de. Peñaloza Cordero. Lacking a coastline and having a relatively poor internal infrastructure. Anuario de estudios americanos 50 (1): 213-234. But whatever the future will bring.even in case resource prices recuperate .the nationalisation of Bolivia's gas deposits under the current MAS government will not work miracles.32 are a great obstacle to the development of the country. 1956-1964'. (1995) 'The politics of austerity: The IMF and US foreign policy in Bolivia. Jon V. one should keep in mind that . Nationalisation or otherwise increasing government control over subsoil resources will not guarantee an eternal inflow of riches and without good management. . La Paz: Fondo Editorial de los Diputados. La Paz: Biblioteca “Bamin”. Considering that the resource prices have been falling significantly during the last few months. it is very hard not to compare this situation with the tin market at the time of the National Revolution. Gallego. (2003) A Luján & Antezana of Bolivia. can be really successful. or in fact to be able to finance any programme. Bolivia en el siglo XX. Luis (1987) Nueva historia económica de Bolivia. Ferrán (1993) 'La política económica del “socialismo militar” boliviano'. Kofas. Eloy & Luis Antezana Ergueta (2005) Proteccionismo y librecomercio en Bolivia. These are four problems that have to be addressed first before any Bolivian development programme. And although history rarely teaches us unambiguous lessons. Bibliography Almaraz. Waltraud Q. improved infrastructure and processing industry it will definitely not be successful. liberal or nationalist. Capriles Villazón. it is costly for Bolivia to get its resources on the world market. Walter (1979) Breve historia de la minería en Bolivia. La Paz: Editorial Juventud. it is important to understand that both previous nationalist reform attempts have failed in part due to declining resource prices. Hermosa Virreira. La Paz: Editorial Gisbert. Morales. If gas and oil prices continue falling. La Paz: Editorial “Los Amigos del Libro”. Morales will have to look for other sources of income to be able finance his programme. La Paz: Editorial “Los Amigos del Libro”. Mesa. Orlando (1977) Historia de la mineria boliviana. Journal of developing areas (2): 213-236. Sergio (1958) Petróleo en Bolivia. Teresa Gisbert & Carlos Mesa Gisbert (1999) Historia de Bolivia. Luján Cruz.

certain sub-questions will have to be answered first to clearly comprehend the main theme of the essay. which must be seen as a . IDB. Periods of intensive foreign interference The following section will explore the long tradition of Western pro-active attitudes toward Bolivia throughout the second half of the twentieth century. United States. With the rise of President Evo Morales in 2005 and the nationalisation of the hydrocarbons sector in 2006. the second part will focus on the concerns and reactions of these key actors to Morales’ policies. these foreign actors have become anxious about the sustainability of their investments. the United States and especially the major international financial institutions have played an important role in shaping and developing the national hydrocarbons sector. This period will be divided into two separate periods of time. hydrocarbons. as certain Western governments are concerned about the spread of resource nationalism and democratic breakdown throughout the region. and the consequences of Morales’ nationalisation politics to these international relations. but still lacks the full capacity to distribute these riches equally. Keywords: neo-liberalism. World Bank. FDI Already since the Monroe Doctrine in the first half of the nineteenth century.33 Changing International Relations: Bolivia’s call for selfdetermination Bart-Jaap Verbeek Abstract: This essay will demonstrate how Bolivia has been influenced by Western actors in its policy-making and control of the hydrocarbons sector throughout the last two decades. Foreign companies have brought investments. The first part will describe and explain the different periods of Western influence in Bolivia until the coming of Evo Morales. This essay will focus on the long tradition of Western international influence on Bolivia and its policy-making. In Bolivia. based on the division made by Roncallo. Bolivia is rich in natural resources. In what way did Western institutions penetrate and influence the Bolivian hydrocarbons sector and with what consequences? What are the effects of Morales’ policies on these foreign relations? To what extent does the United States play a role in this? The outset of the essay will be based on these sub-questions. and how have they reacted to Morales (hydrocarbons) policies? In order to answer this question. with the following research question: What has been the role of the key foreign actors in Bolivia. Latin America has been the target of active US policy and interference. who recognises two phases of capitalist accumulation during the “Pax Americana” under US world leadership. technology and knowledge under terms set by the IMF and World Bank in order to open Bolivia’s economy to save the country from hyperinflation and economic malaise. It will explain what their current position toward Bolivia is and what their biggest concerns are regarding the rise of President Evo Morales and his nationalist and anti-imperialist discourse. nationalisation. IMF.

lifting of restrictions on foreign trade. carried out by Víctor Paz Estenssoro and the Movimiento Nacionalista Revolucionario (Nationalist Revolutionary Movement. The IMF’s insistence on foreign exchange and trade restrictions as the remedy for Bolivia’s balance-of-payments deficit failed to recognise that these measures were subject to manipulation for political favouritism and personal gain when implemented. In 1956. there was never any intention to undermine the market economy or break the dependency relationship with the United States as Paz opted for closer integration of the Bolivian economy with that of the United States while advocating a strong anticommunist policy (Kofas 1995). These states were to a certain extent tied to external financial resources and depended upon the United States in containing the spread of communism (Roncallo 2006). agrarian reforms and modernisation of the economy. COMIBOL) as a state corporation led to certain problems in Bolivia. The nationalist revolution of 1952. Bonsal admitted that the IMF stabilisation plan had failed because it focused only on controlling monetary inflation (Kofas 1995. a unitary exchange rate and fluctuating currency. and the Inter-American Development Bank (IDB) were increasingly channelled to the eastern region to subsidise other sectors of the economy such as petroleum and agro-export. both the IMF and the US State Department refused granting loans before implementing austerity measures to stabilise the Bolivian economy (Kofas 1995). 221-223). the tension between the highly organised mine workers and the state became more problematic when the public support and foreign loans from the United States. The creation of the Corporación Minera de Bolivia (Bolivian Mining Corporation. With the Cuban Revolution in mind. 219-221). With national development programmes by these institutions. Falling tin prices resulted in hyperinflation and state revenues dropped significantly. President Siles had been resisting IMF pressure to further devalue the boliviano and US Ambassador Bonsal promised $26 million of US aid for special assistance. Washington refused to modify the stabilisation plan and Bolivia went into the worst depression crisis in its history. which led to a nationwide trade union strike. Within the MNR. which led to social unrest and major strikes. Although the MNR regime was anxious to secure loans from the United States and the World Bank. decontrol of prices. the International Monetary Fund (IMF) and the World Bank became in the first place key regulators of containment politics. while wealth was increasingly redistributed to the upper income groups (Kofas 1995. Anxious about popular resistance to stabilisation. Washington continued to look toward private foreign investment as the solution. President Siles offered to re-examine the stabilisation plan since the direct impacts were disastrous. and reduction of the surplus COMIBOL workers. dominated by local elites and eventually foreign capital (Roncallo 2006). MNR). serious reservations about these measures were expressed. The US embassy feared a political crisis and recommended more aid in order to prevent that miners would form an alliance with communists and Trotskyists. strongly nationalist and developmental states in Latin America could carry out new reforms and policies like economic modernisation and industrialisation. Although the State Department . In 1959 Undersecretary of State for Economic Affairs C. the programme was extended for one year in 1958 after Siles implemented three labour decrees. As the emerging world force after the Second World War. the administration of the new president Hernán Siles Zuazo accepted a stabilisation plan set up by the IMF. In Bolivia. the United States dominated the IMF and used the fund’s influence as an integral part of larger US foreign policy goals. The US State Department concluded that it was merely impossible to combine US economic aid with the IMF stabilisation plan in order to establish public confidence to save the MNR regime. the IMF and the United States became key actors in policy-making after 1952. Douglas Dillon stated that “both the IMF and the World Bank had been catalytic institutions to our foreign relations and in particular to the achievement of the objectives of our overall foreign economic policy” (Kofas 1995). The politics of austerity during the postwar settlement: 1952 . led to the nationalisation of tin mines. the World Bank. which consisted of austerity measures such as the sharp reduction of budgetary deficits by the government and its agencies. However.1964 With the creation of the Bretton Woods institutions in 1944.34 context of changes in the structures of the international order: the postwar settlement (1940s – 1970s) and disciplinary neo-liberalism (since the 1980s) (Roncallo 2006). Meanwhile.

Horowitz 1964). The role of the Alliance for Progress as an instrument promoting democracy through social and economic development. a new hegemonic ideology becomes the main catalyst behind international involvement. 227-228. The consequences of these various austerity measures made Bolivia experience major economic crises and political instability. it did not abandon the IMF plan (Kofas 1995. In 1960.5 per cent in per capita income. The coup d’état in 1964 and the following military regime were a result of harsh austerity measures under the stabilisation programme by the IMF and the failure of the US politically motivated aid programme to promote economic development which was. Paz remained extremely reluctant to move against the miners and twice cancelled plan for military action. In fear of Soviet advance. it aimed to establish economic cooperation between North and South America by calling for an annual increase of 2. land reform. Neither the development loan under the Triangular Plan nor the US aid under the Alliance for Progress was sufficient to prevent social and political instability. . Further US assistance in restoring efficient production of tin and diversifying the Bolivian economy through industrial and agricultural reforms and development. This shows clearly from a CIA intelligence memorandum: From the beginning of the Triangular Plan it was recognised that the most serious obstacle to the rehabilitation program was the inability of COMIBOL to make management decisions stick in the face of labour obstruction. The Paz government was informed. 229. by taking hostage COMIBOL administrators and foreign technicians. in some cases. Roncallo 2006. It initiated de-nationalisation of the mining industry by allowing for the penetration of foreign capital and the possibility of massive layoffs (Kofas 1995. 231). Washington made an offer. the United States attempted to push the Paz administration to adopt a more stringent policy towards the miners and their mobilisation. 5 See previous chapter (Maalderink) for further insight in the period 1952-1964. Through the Triangular Plan. West Germany and the United States and consisted of a $38 million loan in order to modernise the mines and bring the cost of producing tin lower than the sale price. 227). 228). In recognition of this. that no further financial assistance would be forthcoming until civil authority was established in the mines.35 cut economic aid and provided maximum assistance for the military and police. 224-226). 67). Major riots and strikes were the consequence of the Plan’s initiatives and led to an increased US aid to the military for stability to “contain the spread of Castroism” (Kofas 1995. The miners reacted to any government intervention by striking and. the establishment of democratic governments. Paz became president again and stated that he would continue with the stabilisation programme. Political pressure would then force President Paz to back down. eventually leading to a military dictatorship that would last until 1982 5 . and economic and social planning (Smith 1999. known as the Triangular Plan. No further progress was made on the matter and on 4 November 1964 the Paz government was overthrown (CIA 1965. This first period of intensive interference demonstrates that different interests from the involved parties. During the summer of 1964 the rehabilitation program ground to a halt when Triangular consultants were unable to visit the mines without danger of incurring physical violence. The Plan was set up with the IDB. have led to the implosion of the MNR regime. From this point on. The decree was never effectively implemented despite pressure from the Triangular partners. 5-6). in fact. 150-152. raised questions about the two-tier foreign policy in Latin America. Kennedy in 1961. designed to keep the MNR in power and to contain communism (Kofas 1995. which the Paz administration accepted (Kofas 1995. was channelled through the Alliance for Progress. the Paz Estenssoro government issued a decree in August 1961 clearly limiting labour prerogatives vis-à-vis management. to avoid inflation or deflation more equitable income distribution. the elimination of adult illiteracy by 1970 price stability. Initiated by US President John F. on 25 September.

rationalising the bureaucracy (through mass dismissals). and reforming the tax system (Salman 2007. who would later become president of Bolivia. Their stabilisation and structural adjustment programmes imposed on the national governments consisted of debt payments. 121. Neo-liberalism has provided ideological justification for capitalist restructuring and in the Washington Consensus this ideology was adopted by the international financial institutions (IFIs) and the US governments whose headquarters are in Washington. The shock therapy led to the control of hyperinflation and Goni was credited with having the Bolivian state restructured. This group of creditors was influential in creating the Washington Consensus (Weisbrot 2006). most of the governments were forced to devalue their currencies. reduce government expenditures. Veltmeyer argues that through electoral support for neo-liberal regimes in Latin America. and restructure their economies according to the terms set by the IMF. cheap imported goods overloaded the Bolivian market due to trade liberalisation. 369). and sometime from the private sector. This led to the debt crisis of the 1980s. de la Torre & Menezes 2008. 368). Such a sudden implementation of newly designed governmental policies is also known as “shock therapy”. Robinson describes the political domination under disciplinary neo-liberalism as capitalist polyarchy. liberalisation of local financial markets and opening of economies to foreign investment. most of the Latin American countries were unable to finance the huge foreign debt payments they were encouraged to assume by the international financial institutions. Harris sees this process in a larger context of “increasing globalisation or integration of national and regional economies into the global capitalist economic system” (Harris 2003. . It is in this context that in August 1985. in 1988 it was already 12 per cent. These measures were harshly implemented by the planning minister Gonzalo “Goni” Sánchez de Lozado. Harris 2003. 371). Governments were required to reach an agreement with the IMF in order to obtain possible loans from the World Bank. 366). “This measure was suggested by the World Bank. They are dominated by transnationalised factions of the local elites in Latin America and have the structural power of the global economy supporting them. With insistence of the World Bank and the IMF.36 Shock therapy and disciplinary neo-liberalism During the early 1980s. Petras & Vieu 1997. the Bolivian government designed a package of measures existing from reducing fiscal deficit. Urban employment in 1985 was less than 6 per cent. However. 116). price stabilisation. The resulting growth would eventually trickle down as economies become more competitive and efficient (Birdsall. opening up of the economies to transnational capital. and the IDB. 1). promoting exports. leading to the closure of many factories and to an increase of urban employment 8 . due to the World Bank’s suggestion of withdrawing 6 7 8 See Williamson (1990) for further analysis of the Washington Consensus. President Víctor Paz Estenssoro introduced the administration’s New Economic Policy (NEP). Eventually. To avoid a complete collapse of their highly inflated and indebted economies. after the return to civilian rule in Bolivia in 1982. DC. 2007: 116-117). IDB. even influencing leftist political parties and intellectuals (Veltmeyer. liberalising markets. refinance their foreign debts. together with the Harvard economist Jeffrey Sachs. who had lost their electoral support. even if the economic activities were of strategic interest or great social importance” (Salman. and integrate their economies into the global market (Harris 2003. These regimes consist of a small group that rules on behalf of capital. convinced as it was of the detrimental effects of state involvement in the economy. which turned out to be a popular instrument later in other Latin American countries and former planned economies to reform their economies. reforming the monetary system. “They have enabled the transnational elites to reorganise state institutions and create a more favourable institutional framework for a deepening of neo-liberal adjustment” (Robinson 1998/1999. direct effects of these drastic measures were the dismissal of 23. Harris 2003. reduction of import tariffs. 213. the World Bank. During the political transition from military to civilian rule they gained control to neutralise the democratisation process in the region. The Washington Consensus 6 is often referred to as a package of policies emphasising on privatisation. G-7 government loans and grants. It was possible to implement such reforms due to the failing preceding populist regimes. neo-liberalism has become the hegemonic ideology in the region.000 miners 7 .

rooted in the petroleum and natural gas industry based in the Department of Santa Cruz. the administration of among others the neo-liberal technocrats of the MNR set up a neo-liberal social reformism. Brazilian state-owned Petrobras. represented by an institutional investor. The deal was regarded as disadvantageous for Bolivia (Assies 2004. five working in pipeline transportation. Already under the presidency of Hugo Banzer Suárez (1997 – 2001) a deal to export gas through a Chilean or Peruvian port to northern Mexico and the west coast of the United States was initiated with Pacific LNG (Liquefied Natural Gas). Servicios y Turismo de Santa Cruz (Chamber of Commerce. drug trade flourished and the coca economy had a relative importance to the gross domestic product of Bolivia which was fiercely resisted by the United States (Salman 2007. The state company Yacimientos Petrolíferos Fiscales de Bolivia (YPFB). Under Goni’s presidency. In 1999. The penetration of foreign multinationals in the Bolivian economy and politics becomes clearly visible in the political organisation of the internationalised bourgeoisie.5 per cent increase in income tax for every salary above 880 bolivianos (approximately US$115) per month (Salman. Even though such reforms were strongly questioned by the population. and others were privatised. 28). called Comité pro Santa Cruz. Spronk & Webber 2007. a consortium controlled by the San Francisco based construction giant 9 The tax bill of 2003 proposed a 12.37 state control. 37). increasing Bolivia’s budget borrowing. 29. In 1996. consisted from key organisations including the Cámara de Industria. the national oil company (YPFB). This organisation. Privatisation of the hydrocarbons sector was regarded as a key component in the World Bank’s and IMF’s country strategy for Bolivia. 34-35). 35-36). Instead. Service. . British Gas and Repsol formed a consortium with Sempra Energy in the Margarita gas field in the Department of Tarija which would take charge of the distribution of the liquefied gas. Comercio. Theoretically. In 2002. was about to sign a contract to build a pipeline to Brazil which would increase its profits significantly. the British Gas. the multilateral agencies viewed them as an example of “best practice” (Assies 2004. the hydrocarbons sector became capitalised. and US Pan-American Energy. The companies were sold mainly to foreign buyers and most transfers were unpopular with the workforce (Crabtree 2006). British Petrol. the Cochabamba municipal water utility was sold to Aguas del Tunari. the national telecommunication company (ENTEL). five in charge of natural gas distribution pipe systems. By the end of 2004 there were twelve international companies in Bolivia involved in the exploration and exploitation of hydrocarbons. CAINCO) where Repsol-YPF.5 million loan in the mid-1990s. This consortium existed of the Spanish oil giant Repsol-YPF. Capitalisation differs from traditional privatisation in that ownership is not transferred entirely to the strategic private investor. Industry. This allowed private investors to obtain fifty per cent ownership of an enterprise. with the Law of Capitalisation and the Hydrocarbons Law. 2007: 120-121). 117). Furthermore. owns a significant part of the shares. He believed he could use privatisation as a tool to achieve social benefits and employment. Goni attempted to close the gas deal which initiated a massive opposition despite a World Bank funded campaign to promote the project and eventually led to the Gas War of 2003. These measures were essential to maintain credit with the international financial institutions and for investor confidence in its economy (Salman 2007. while the private investor owns a controlling share of the enterprise. and Enron are members of its board of directors (Spronk & Webber 2007. and approximately 600 involved in marketing petroleum by-products (Mayorga & Tapia 2006. 119). the Bolivian population. meaning fifty per cent of the companies would be privatised and fifty per cent would be administered by private pension funds. intended to improve the efficiency of the public water and sanitation utilities and make them more attractive to private investors. the electricity company (ENDE). the World Bank supported the privatisation of water with a US$4. The IMF stressed on the necessity of cuts in social spending in order to made up the budget shortfall. The system was called “capitalisation”. prior to the capitalisation in which the State only held thirty per cent of its ownership and only under Mesa’s administration up to fifty per cent. 165). after Goni’s election as president. three devoted to refining activities (particularly Petrobras). the airline (LAB). these earnings were largely transferred to private firms that borrowed capital from the same international institutions that had previously offered loans to YPFB. In 1993. and Tourism of Santa Cruz. and increases in regressive taxes that hit poor Bolivians the hardest 9 (Spronk & Webber 2007. the State held the other fifty per cent. This led to an outflow of money.

open new markets and create jobs. it increased operating efficiency. reduced employment at the firm level. Size of the firms is an important variable in explaining the improvement in operating efficiency. create demand for equipment. . 39. IDB and IMF that the Latin American governments should complement their neo-liberal structural adjustment and austerity programmes with poverty alleviation or poverty reduction programmes. Crabtree 2006) 10 . This led to large-scale privatisations and capitalisations and multinationals have become powerful and even influential in policy-making. This result is not surprising. Results suggest that the privatisation of the former State Owned Enterprises (SOEs) is significant in explaining the improvement in the firms’ operating efficiency. the Washington Consensus has been augmented. 398). there has been a common strategy by the World Bank. but this was strongly rejected by the neo-liberal agencies (Harris 2003. Under the regulation by and dependence on the main IFIs. even though its results were often disastrous. or CEPAL as its Spanish acronym) advocated for a structuralist approach to economic and social development based on state-supported strategies of import-substitution industrialisation together with income redistribution measures. which resulted in the Hydrocarbons Law in 1996. 396). goes beyond liberalisation and privatisation and emphasises the need to create what are considered the necessary institutional infrastructure for effective market economies” (Harris 2003. policies and strategies by the IFIs changed its character. Through these laws and loans. effectively making state employees dependent on World Bank funding. In particular. An IDB study sought to measure the change in performance of the privatised firms in Bolivia by comparing certain ratios before and after the transfers. Strategic country policies In recent years. social tensions and dissatisfaction grew. However. The US economic interest was also a significant motive for this process. The World Bank also strongly recommended that public money was not to be involved in the construction of Misicuni. a costly dam and tunnel project (Spronk & Webber 2007. Under the current revision of neo-liberalism approach with neo-structuralist elements. CORE International Inc. The World Bank sponsored the creation of an environmental office. Already in the 1960s. and loans were granted under strong preconditions. The emphasis now lies on poverty alleviation by creating social safety nets and poverty reduction programmes. In La Paz and El Alto. This has added a neostructuralist element to the neo-liberal package of programmes and policies. the World Bank shaped “virtually every major state institution in Bolivia. a consortium controlled by the French multinational Suez. and decreased fixed assets (Garrón. the private investors to whom the larger SOEs were transferred made the most significant investments and brought in specific know-how in the form of management and management systems. which targets the social investment at those sectors hardest hit by the structural adjustment programmes. The World Bank itself pressured the Bolivian congress to approve certain laws.38 Bechtel. Bolivia has opened up its economy in order to obtain loans and attract foreign direct investment. foreign involvement and privatisations led to little social and political opposition. The World Bank was in strong favour of capitalising the hydrocarbons sector. Since neo-liberalism was the hegemonic ideology. As the next section will show. which assessed the funding prospects for the US Trade and Development Agency. the US government promoted the capitalisation (Hindery 2004. the Bank found that while privatisation did not have a significant impact on profitability.” As a consequence. Together with the IDB. This becomes visible in the certain country policies of the major IFI’s. as Hindery argues.. the United Nations’ Economic Commission on Latin America and the Caribbean (ECLAC. 288). As Harris recognises: “The new approach of the IFI’s and the Group of 7. led by the US government. Machicado & Capra 2003). This second period of international involvement clearly has a different character than the first (1952 – 1964). conflicts of interest in monitoring the World Bank’s economic reforms in the hydrocarbons sector by state institutions arose. Unidad del Medio Ambiente (UMA) to prevent 10 See chapter about the water movement (Strijdonck) for extensive analysis of the Water War and popular resistance to neo-liberal policy. stated that privatisation would benefit US investors. Aguas del Illimani became the municipal water utility.

These facilitated the entrance of transnational companies to the region and the expected economic growth would indirectly address poverty (Roncallo 2006. the Free Trade Area of the Americas (FTAA). Expanding opportunities for employment and income for the poor population. To better articulate its interests the Bank will assist Bolivia to improve its strategy formulation. health. the environment. Institutional development is a basic requirement for the implementation of these strategies where decentralisation and anti-corruption are high on the agenda (World Bank 2001). municipal strengthening. 68). 2. the World Bank was aware that the Bank supported the project because of its high return. A key facet of this action focus is market access and preparation of Bolivia for trade talks. gender equity and cultural relevance. Increasing security and protection for the poor. . Enhance efficiency and equity of basic social services delivery. Improve management and transparency of the State. support for the National Transparency Programme. However. It is understood that the opening of markets and free trade agreements constitute one of the more solid responses for alternative development specifically and for the BPRS in general. The PRSP for Bolivia has the following strategic actions: 1. particularly in the more developed countries. 295). rather than preventing the negative impacts and addressing sustainable development and poverty alleviation (Hindery 2004. 4. relating to ethnicity. for if does not pretend to encourage a return to State paternalism” (World Bank 2001. by reducing inequities and providing training on participation. 3. Increasing societal participation and integration. This approach has already begun to be suggested as a Bolivian initiative in terms of the scope of the alternative development programs that are being analyzed to confront the effects of the fight against drugtrafficking and the eradication of coca crops. These companies were developing the Cuiabá pipeline and in 1999 they were granted a US$200 million loan from the US government’s Overseas Private Investment Corporation (OPIC) (Hindery 2004. which was merely fully financed by the World Bank (Hindery 2004. the Strategy Paper ends with: One of the structural solutions to the problem of the sustainability of Bolivia’s development process is to open markets. by focusing on education and health. 291). Developing the productive capabilities of the poor. Support competitiveness and sustainable development of the private sector. urban development challenges. Earlier PRSPs for Bolivia aimed to encourage foreign investment by reforming legal and investment regimes and institutions that would enforce the new policies. It calls for scaledup Bank involvement in competitiveness issues. There is no suggestion in the BPRS that the State alone should be responsible for fighting poverty. The Bank can influence sector outcomes by way of the distribution of cooperation assistance and resources in its active projects. 293). 48-54). the IDB expresses its concerns about the polarisation due to political tensions that are slowing the country’s progress toward the poverty reduction targets. Mercosur. 3. and new multilateral negotiating round. The Bank’s activities are structured around three actions focuses: 1. gender. by developing the rural area. decentralisation and community-based justice. by setting up social protection and child care programmes. as the country is engaged in negotiations with on Andean integration. 213-214). and natural resources. 2. The supported LIL project and the creation of UMA meant developing a state agency heavily influenced by multinational oil corporations such as Enron and Shell (Hindery 2004. Nevertheless. 289). sanitation. The Millennium Development Goals are considered a key target (IDB 2004. The learning and innovation loan (LIL) was an additional project to strengthen the implementation of UMA. This implies support for Bolivia’s fiscal institutions. rural development and corporate restructuring.39 negative social and environmental impacts of the reforms in the hydrocarbons sector. The World Bank’s Poverty Reduction Strategy Paper (PRSP) is an important element in neostructuralist neo-liberalism. The Strategy Paper recognises the need to incorporate cross-cutting issues in the four strategic components. In the IDB’s Country Strategy with Bolivia for the period 2004 – 2007. helping Bolivia rise to its education.

strong anti-imperialist language and his alliance with Venezuela’s Hugo Chávez. the newly elected indigenous president Evo Morales announced the nationalisation of the natural hydrocarbons resources and declared that the state recovers the property. these would transfer revenues drastically to YPFB. inequality. It is remarkable that programmes aiming at alleviating poverty still emphasise on the necessity of opening markets and attracting foreign direct investment instead on focussing on social programmes. 40). and total and absolute control of these resources. Bolivia was still a highly unequal and a poor. though. Hydrocarbons companies. a reply from these actors to Morales’ measures was to be expected. A rise to the challenge? The World Bank states in its Interim Strategy Note for Bolivia that the private sector is worried about the nationalisation process and the raise of minimum wages and restrictions on hiring and firing labour services. The election of Evo Morales could therefore be regarded as an expression of accumulated frustration by ousting the discourse of the last twenty years and regaining Bolivian control of its resources as a call for self-determination. Renzema) for extensive analysis of the nationalisation decree. With the increasing participation of the public sector. targeting and decentralisation which help to legitimate themselves and make them more effective as a strategic measure for controlling popular resistance and opposition to neo-liberal regimes (Harris 2003. had to renegotiate their contracts in order to comply with the new preconditions set up in the Hydrocarbons Law. 6). which have led to low foreign direct investment. and especially in the hydrocarbons sector. such as Repsol YPF. The discovery of gas reserves raises the possibility of easing constraints on private capital flows and stimulating foreign direct investments (FDI). as we have seen: privatisation. . 399). the IDB sees new opportunities for Bolivian export growth within the FTAA and the WTO (IDB 2004. Fiscal constraints are a serious threat to the continuity and the Bank implies to help identify the fiscal commitment in agreements with the IMF (IDB 2004. the volatility of its programming process due to breaking the continuity that is needed for projects to have a real impact. It predicts a decline in investment will likely constrain the government’s ability to create employment and infrastructure investment.40 In 2004. The social policies of the structural adjustment programmes carried out by the IFIs were not very effective at alleviating poverty. Morales’ nationalisation politics and international concerns On May 1 2006. Total and Petrobras. YPFB was placed in control of all aspects of the natural gas industry and forcing the private companies into the role of service providers who receive a shrinking share of profits. Preventing this hydrocarbon wealth from becoming a source of macroeconomic instability. 6). government corruption. increasing the overall Bolivian state incomes 11 . On the other hand. the Bank foresees challenges and risks considering the non-market nature of the programme. After two decades of neo-liberal hegemony and active foreign involvement. Despite Morales’ socialist ideology. possession. the Bank already foresees problems and challenges concerning the hydrocarbons sector. and poverty is a stiff challenge concerning the weak fiscal institutions and thin management capacity in the public sector” (IDB 2004. especially the financial and technical capacity of the government 11 See first and second chapter (Contreras. most of the concerns are about the deteriorating foreign investment climate. They emphasise three returning basic elements. Concerning the long and deep tradition of foreign involvement in the Bolivian economy and policy-making. It acknowledges. indebted nation.

Therefore. and multilaterals. Moreover. the measures taken by Morales may create discord with the interests of European and US governments. Cerutti & Mansilla 2008). a recent IDB study concludes that most of the privatisations made during the nineties have had positive results mainly for the middle and higher incomes in Bolivia. and volatility. Total. This shows a slight support for centralising hydrocarbons revenues. World Bank (2006). 12 13 Law 3058.A. However. 27). British Petroleum. Chaco S. Bolivia needs to attract a large amount of FDI. 29-30). In its new Country Strategy for 2008 – 2010. Law 3058 does not provide a legal framework contributing to attracting investment and flexibility to facilitate investment. Pluspetrol and Vintage to made major successful investments. Repsol YPF. Extending nationalisation could further weaken Bolivia’s investment climate and opportunities for World Bank support (World Bank 2006a. 4). The first is associated with the reallocation of factors from various sectors of the economy to the natural resources and export boom sector. . Bolivia’s natural gas needs international markets that have absorption capacity and that are stable over time.2 million cubic meters a day. Arbitration processes can undermine Bolivia’s credibility toward the international investor community and the World Bank’s ability to provide financing. The second is associated with the impact on the economy of the booming sector’s extra income (IMF 2007a. The Bank opts for a national fund for hydrocarbon rent stabilisation which could reduce government income volatility even more (World Bank 2006b. Bolivia: Towards a New Social Contract. business owners. it could become an important policy issue for Bolivia. It is therefore essential to exercise prudent fiscal and monetary policies. In order to reduce poverty and inequality and to keep its economy growing. and ensure openness of the exchange rate system.. whereas normally the World Bank is in strong favour of decentralisation. it rejects the Hydrocarbon Act of 2005 12 . To attract private investment. It could diminish Bolivia’s capacity to deliver liquefied and condensed gas. nearly 20 per cent of the expected demand. The Dutch Disease operates through two channels. in particular to fulfil its contracts with Brazil and Argentine. The large rents should belong to the central government for two reasons: equity. However. which enabled the state in deeper control of the hydrocarbons and changed the favourable investment framework that allowed companies like Andina S.41 to implement the announced reforms (World Bank 2006a. where the central government has more stable sources of revenues than municipalities and departments. 32-33). Challenges are lying in technological and institutional risks: natural resource rents restrain the development of the tax system and the mechanisms of oversight and discipline which leads to political patronage and clientelism (IDB 2008a). 180-181). Furthermore. The government will need to control its overall fiscal balance excluding revenues from hydrocarbons (IMF 2007a. which is already in process in Bolivia under the Hydrocarbons Law of 2005. selling the gas demands major investments in exploitation and in infrastructure for getting it to market. the concerns of oil companies and other investors about the Hydrocarbons Law need to be addressed. A drop in investment to expand oil and gas exploration and production capacities means a potential delivery shortfall of 8. since oil and gas resources are concentrated in only certain departments. the World Bank argues in its decentralisation strategy for Bolivia 13 . It lacks a clear plan and might place YPFB in charge of problems that are beyond its technical and financial capacity (Mayorga & Tapia 2006. foreign hydrocarbon companies.. Nationalising the gas industry could have harmful effects. delay investments and restrain the development of the gas industry. British Gas.A. The IMF analysis shows that although there are no Dutch Disease symptoms visible. namely the resource movement effect and the spending effect. the IMF fully pays attention to the risk of the Dutch Disease which describes the subsequent adverse effects on other economic sectors after the discovery of natural gas. It recognises. that hydrocarbons revenues play a crucial role. 7-8). efficiency and profitability changes of the companies after privatisation are significantly higher. the government needs to establish a stable investment environment so the World Bank can seek to support both foreign and domestic investment in Bolivia in sectors where the country has opportunities and the World Bank has comparative advantages (World Bank 2006a. landowners. Petrobras. the IDB emphasises that Bolivia must restore international investor confidence to attract more foreign capital. the social effects of these privatisations which not always have been positive (Chong 2008). thus. Where the IDB already mentioned it. Options for the Constituent Assembly.

much as it has taken greater control of the hydrocarbons sector. which decreased the external public debt from 52 per cent of the GDP in 2005 to 16 per cent in 2007. Morales’ increase of mining and hydrocarbon taxes would further reduce the attractiveness of the Bolivian business environment and may lead to more strike action. Furthermore. Nevertheless. International business relations under pressure The Business Monitor International – which comments and gives interpretation of key financial and economic developments across emerging markets – warns in its influential Business Monitor Online Global Country Risk & Industry Analysis of Bolivia that there is little potential for significant improvement in the investment climate in Bolivia over the next few years. due to the high hydrocarbon prices which have led to higher budgetary fiscal revenue (BMI 2007a). . but to control the system (BMI 2007b). who have filed lawsuits to block his reforms. The IMF stresses the need to use this money on poverty reduction and on reaching the Millennium Development Goals. Representation of its members should be revised to strengthen its character as a multilateral surveillance institution and more awareness of dominant private capital flows and regional and global linkages are recommended (Cabezas 2008). giving more clarity on supporting developing countries. an IMF spokesman. Under the framework of the Interim Strategy Note the number of projects increased from five in 2007 to eleven in 2008. Mahsood Ahmed. however. which does not bode well for foreign business interests” (BMI 2007a). advances toward poverty alleviation and improved public expenditure management (World Bank 2006a). The country would be hurt by raising the royalty rates as part of the risky nationalisation process due to the increasing lack of foreign investment (IMF 2005). Cabezas pleads for more diversification in the sources of funding. With this debt cancellation and Morales’ announcement not the re-sign the last standby agreement between the Bolivian government and the IMF which expired March 31. Bolivia qualified for debt relief because of its satisfactory recent macroeconomic performance.5 billion. Bolivia and Ecuador) has led to greater state involvement in the economy. It could lose access to foreign capital when it doesn’t compensate companies affected by the nationalisation. the overall drift toward populist policy within South America’s informal leftist alliance (Venezuela. Opposition of Morales. the IDB also granted debt relief to Bolivia making it a total of US$2. recognises the importance of hydrocarbons in the Bolivian economy and the need of domestic and foreign private capital (The Industry Week 2006).42 Under the Multilateral Debt Relief Initiative (MDRI). it is necessary to reform the IMF’s policies in order not to become irrelevant. the BMI acknowledges the strong macroeconomic results in 2006. Negative information on Morales’ politics by the BMI continues with reports on striking miners and his problems with judges who are being accused by the president of aligning themselves with rightwing politicians. while building a relationship with the new administration (World Bank 2008). Anoop Singh. responded to the threat of the diminishing free market and nationalisation that although the IMF is not ideological in its approach to investment. public or private investment needs to be increased and more productive in the energy sector (IMF 2007b).8 billion. Bolivia is no longer bounded by the IMF. however. Given these new and changing relations between the IMF and Latin American countries. The IMF. The government remains keen to nationalise the mining industry. Bolivia was granted in 2005 a hundred per cent debt relief from the IMF that remained outstanding – about US$0. remains critical of Morales’ measures and pressured him to guarantee that the results of the implemented IMF policies will not be interfered with by the masses (Uco 2006). has accused him of wanting not only to reform. In 2007.23 billion – and the World Bank cancelled the International Development Association (IDA) debt amounted to about US$1. The by then Director of the Western Hemisphere Department of the IMF. 2006. Morales has shown his gratitude regarding the debt forgiveness by acknowledging the World Bank’s intentions.

It is therefore important to retain better relations with multinationals in order to settle these disputes that could seriously harm the Bolivian government. Repsol YPF possessed fifty per cent of the shares and the company’s administration. Ever since Andina became privatised in the nineties. whose shares were confiscated during the nationalisation of the Hydrocarbons Logistic Company of Bolivia (Compañía Logística de Hidrocarburos de Bolivia. Van Dijk 2008). which belongs to the World Bank Group. aimed to expand its delivery capacity of the gas from Bolivia for export to Brazil (IDB 2008b). Bolivia scores only 35. and could count on a participation of fifty per cent in the mega fields of San 14 See next chapter (Hylkema) for an extensive analysis of Bolivian’s relationship with Brazil and Argentina. up to US$500 million. It is therefore that in May 2007. who requested arbitration from the Stockholm Chamber of Commerce in its reclamation for the confiscation of twenty five per cent of the shares in the hydrocarbons transport company Transredes. Bolivia scores only 37. Discontent among foreign companies could become serious. ETI reclaims US$350 million as compensation for nationalising the Italian shares in the Empresa Nacional de Telecomunicaciones (National Telecommunication Company. Its role has been highly criticised since it lacks transparency although its findings are binding and is accused of having conflict of interests in Bolivia. which is set up under international trade and investment agreements.43 According to BMI’s proprietary ratings. These disputes could cost the Bolivian government millions of dollars. The ousted US water company Bechtel. it turned out that the International Finance Corporation (IFC). It is used by mainly US and European corporations to hinder the efforts to nationalise natural resources by developing countries. Despite Morales’ attempts to improve the country’s infrastructure with World Bank funded US$30 million Urban Infrastructure Project in 2006. Anderson & Grusky 2007. after Cochabamba’s Water War in 2000. 18). Bolivia withdrew from the ICSID with Morales calling on a global campaign against this type of investor rule (James & Benjamin 2007. ENTEL) (El País 16 July 2008.2 and contract issues and property rights may continue to constrain investment in Bolivia’s rich hydrocarbons sector as Morales’ nationalisation drive will go on. CLHB) (El País 16 July 2008). labour. were in favour of Bolivia’s sovereign right to control its natural resources.4 out of 100 on infrastructure. despite the fact that it retreated from the ICSID. controlled by the French company Suez. 2008 a new agreement with Morales’ administration that allows the Bolivian state fifty one per cent of its branch Andina. On market orientation. Bolivia scores poorly on institutions with 40. Morales has inflicted on foreign investors by taking over US-based Ashmore Energy’s remaining stake in the Transredes gas pipeline company after it failed to reach a share buyback agreement (BMI 2008). as well as with other Latin American countries . corresponds to the firm Ashmore Energy International (AEI). However Presidents Lula and Kirchner of Brazil and Argentina 14 .6 just after Venezuela. which were transferred to the Bolivian state in June 2008. The most important demand. In the case of Aguas de Illimani. since multinationals are able to sue national governments through the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID). High levels of bureaucracy and a weak legal framework will continue to undermine the country’s attractiveness to foreign and domestic investors. and Italian company Euro Telecom International (ETI) stepped to the ICSID by using the Dutch-Bolivian BIT which was accepted by the ICSID Tribunal. as well as Prime Minister Zapatero of Spain. market and financial infrastructure are also in need of development. Uco reports that “the Spanish Minister of Economy. the Bolivian government is reaching agreements with Swiss Glencore. called Bolivia’s demand that Banco Bilbao-Vizcaya (BBVA) and the Swiss insurer Zurich turn over shares held by the pension funds they manage without compensation unacceptable” (Uco 2006). Pedro Solbes. was a shareholder in Aguas de Illimani. This project. Bolivia’s business environment suffers from the ongoing political malaise and Morales’ nationalisation drive and is considered the second most hostile in Latin America with an overall score of 36. The Spanish-Argentine company Repsol YPF signed on May 1.1 due to the government’s nationalist policies. Furthermore. the nationalisation process has led to some problems. which exploited eighteen minor oil fields. with a US$75 million private sector loan from the IDB. especially concerning the enterprises of these countries operating in Bolivia. whose administration and management will be shared. who administrated the metal foundry Vinto and who was included in the nationalisation process by Morales. and with the firms Graña y Montero from Peru and the German Oil Tanking GMBH.

claimed that the populist Evo Morales is a menace to democracy. the United States has expressed several times its discontent with the undertaken measures by the new Bolivian government. due to the advantages of liquefied natural gas (LNG) processing and transportation. The Centre for Global Development sees an opportunity for further US assistance in cooperation with the World Bank and the IDB to fight crime by police reforms and signing on to the United Nations’ protocol on small arms trafficking (Birdsall et al 2008. and democratic institutions-building in order to protect them from spill-over of drug trafficking and guerrilla activity into other countries. There are actually some greater concerns about the development of the hydrocarbons sector in Bolivia. President Bush stated that he was concerned about the erosion of democracy and former republican candidate for the US presidency. 2007: 28). This programme attempts to strengthen Andean governments by economic development. In 1999. speaks of a new stage in which a model operation will be developed what can be an example of synergy and work between a state-company and a private company (El País 1 May 2008. In cooperation with the Drug Enforcement Agency (DEA). Research pointed out that in the period of 2002-2006. Tomás García Blanco. it will affect the export prospects and hinder Bolivia’s ability to diversify the economy (World Bank 2006a). Roberto Pérez Llanes 2005. 2021). 52).4 billion in 2006. The eradication of the coca plants is not considered effective when small coca farmers cannot find alternative employment. Washington has been deeply concerned with this resistance and keeps on threatening with putting foreign assistance on hold (Kryzanek 2008). Bolivia became excluded from the ATPDEA on 15 December 2008 with the argument that La Paz failed in cooperating with the United States in the war on drugs. agents are acting as frontline troops actively implementing US policy by providing technical advice and training. Hill & O’Neill 2008. Governments need to adjust the regulatory frameworks and provide opportunities for private and public investment from the United States and other countries. State ownership and political unrest will constrain international and private sector involvement (Barshefsky et al 2008.3 trillion in overall investment in the energy sector between 2001 and 2030. eventually leading to the suspension of DEA activities in Bolivia after accusing it of the violation of human rights. US President Bush expanded Plan Colombia with new additional funds through ACI with his own modernising programme Andean Regional Initiative (ARI). Morales openly criticises the US drug policy. McCain promised to give free trade between the US and Latin America a new impulse in order to confront the increasing antiAmericanism (El País 6 June 2008). the CIA and the DEA.44 Antonio and San Alberto which were operated by the Brazilian state-company Petrobras. in which the United States lifted the barriers for goods in exchange for drug control measures. The antidrug campaign in the Andean region makes up more than half of all US aid to Latin America 15 . therefore. trade enhancement. The Andean Counterdrug Initiative (ACI) provided additional funding. The US Embassy in La Paz estimated that approximately 150. sees this as a direct consequence of the expulsion of the Ambassador Philip Goldberg. . According to the World Bank. The emerging of resource nationalism. 168). US companies have investments in Bolivia. 53). The United States has recently cut off Bolivia’s preferential access to the US market under the Andean Trade Promotion and Drug Eradication (ATPDEA). especially the emphasis on crop fumigation and aerial spraying. fifty-five per cent of the total export was 15 About $750 million of $1. can be considered as problematic for the United States. Gary Rodríguez. John McCain.000 jobs could be lost due the suspension of ATPDEA (Gamarra. will probably increase according to the Energy International Administration’s International Energy Outlook 2007 (Barshefsky. but not at the same scale as Brazil or Spain. The Bolivian president has resisted cooperating with the US and the DEA agents and decriminalised coca growing. However. Relations with the United States under pressure With Morales coming to power. the US Council on Foreign Relations emphasises that the US demand. The Director of Exploration and Production of Repsol YPF in Argentina. The president of the Bolivian Institute of Foreign Trade. The International Energy Agency (IEA) calculated that Latin America needs US$1. Bolivia became part of Plan Colombia in order to combat drug trafficking and guerrilla activity with US assistance.

social and civil issues resolved (Cuenta del Desafio del Milenio 2008). The United States must prevent conflict and promote to strengthen democratic institutions (Gamarra 2007). However. where many of the NED-sponsored projects show a political bias. has announced that it will import US$30 million on Bolivian products in 2009 as a response to Bolivia’s exclusion from the ATPDEA (China View 2008). Mercosur. the Common Market of the South. Rather than be linked to drug eradication programmes.S. The Council on Foreign Relations advises that the US government should work with Bolivia bilaterally. The U. It should also seek for compensation for the loss of the Colombian soybean market that resulted from the US – Colombia Free Trade Agreement (FTA) 17 . 11 November 2008). USAID has to expand its public profile in Bolivia by branding and marketing its initiatives carried out by the USAID mission in La Paz. El País.500-man paramilitary group created in 2001 under the State Department’s International Narcotics Control Programme. American military commanders had an active role in the brutal repression by the Bolivian army. During the elections of 2002. was already at Washington’s disposal in order to direct a coup if Morales would win. Increasing military funding to establish three US military bases in Bolivia led to the sending of 350 troops to the Chaco region. 2006). These men were under direct control of the US Embassy in La Paz and have been involved in assaults against protesters and coca farmers. since evidence is scarce. a 1. the United States operates an Office of Transition Initiatives (OTI) in Bolivia. although it has just been closed by Bolivia (Gamarra 2007. Through USAID. Unconventional US interference in Bolivia remains a delicate subject. where Bolivia’s demand to hand over Goni. ex-Minister of Defence Carlos Sánchez Berzaín and ex-Minister of Hydrocarbons Jorge Berindoague. USAID has worked also together with the National Endowment for Democracy (NED) and the National Democratic Institute (NDI) in order to finance and support the Santa Cruz opposition. The US Expeditionary Task Force. which would cost Bolivia US$170 million in soybean export to Colombia (Weisbrot. Goni himself. and former US 16 17 The suspension could jeopardise tens of thousands manufacturing jobs and US$150 up million up to US$210 million in trade. became only last November official (Andean Information Netwerk. 2007). 44). Vann 2003). During the 2003 uprisings that tackled Goni’s administration. 2007. channelled through the United States Agency for International Development (USAID) and it should provide trade adjustment assistance for bilateral trade agreements with the Andean countries. was heavily influenced by American political campaign marketing tactics of Greenberg Carville Shrum (GCS). where US company Enron as part of Transredes was involved in the construction of a gas-pipeline. . this means “a system of government where minority parties and organisations are not subjected to unrestricted majority rule”. MCC has paused its engagement with the government of Bolivia until 2009 after Bolivia will have certain environmental. – Colombia FTA was signed in April 2006. It is clear that this action will have its consequences for the Bolivian economy 16 and Morales is hoping to renegotiate on the beneficiary tariffs of ATPDEA with the new Obama administration (El País 27 November 2008). Bolivia had been declared eligible for funding by the US Millennium Challenge Corporation (MCC) for nearly US$600 million for infrastructure and development projects (DeShazo 2006). to put them on trial for the massacres during the Gas War. according to the Council of Foreign Relations. pro-democracy political parties that can serve as a counterweight to the radical MAS or its successors” (James & Benjamin. This refers to the anxiety for Morales’ intent to reform the constitution by a simple majority vote that “technically excludes the opposition” (Gamarra 2007. the Millennium Challenge Account (MCA) should be dedicated to the continuity of a pluralist democracy. Goni eventually fled to the United States. USAID sponsored a political “party reform project” to “help build moderate.45 destined to the United States and ninety-five per cent of the export to the United States was free of tariffs. the US Ambassador Manuel Rocha openly warned that a victory for Morales would lead to a cut off of all US aid to Bolivia. 41). while the Bush administration fully supported the democratically and constitutionally elected government (Saavedra 2003. USAID already spent US$95 million in 2004 and US$85 million in 2005 and 2006 in Bolivia which aimed at improving the poorest sectors by interacting with community leaders. Hence. which is being accused by the Bolivian government of building opposition to the new government and its political party. who would win the 2002 elections.

The consequences of Western involvement at first looked disastrous. the World Bank and IDB clearly shift their policies together with the changing economic and political situation in Bolivia. foreign direct investment is necessary and the world demand for LNG keeps on rising. The first part of the essay showed that the many harsh measures taken by the Bolivian governments led to mass dismissals. Where the first period of intensive influencing and involvement in Bolivia failed mainly because of the two-tier foreign policy of the United States. tax increases for the poor. the country simply had to take these measures. a scenario where Bolivia will need new loans from the IMF and World Bank is possible. that widened the gap between the government and the people. The United States have been more active in its reaction to Morales’ politics than the IFIs. Bolivia certainly has some serious challenges to meet in the nearby future. the expropriation of multinationals and nationalisation policies by Morales are not favoured by the United States and the IFIs. Neo-liberalism in Bolivia led to privatisations of the hydrocarbons sector. Conclusion Western influences by the United States and the major international financial institutions have been playing an important role in Bolivia throughout the last fifty years. the possibility for multinationals to put the Bolivian government on trial in order to obtain compensations for the losses due to the nationalisation could harm Morales’ administration. Moreover. IMF. In order to restore macro-economic stability and growth. Regarding the third sub-question – to what extent does the United States play a role – the United States has always played an important role in catalysing IMF and World Bank policies. As an answer the first sub-question – in what way did Western institutions penetrate and influence the Bolivian hydrocarbons sector and with what consequences – one could say that through various loans. eventually more attention was given at the reduction of poverty and the creation of social safety nets.46 Ambassador Philip Goldberg had a close relationship with indigenous leader of the opposition regions to create a front against Morales (Bigwood 2008). it helped that many of the presidents and members of the governments had been educated in the United States and formed a group of capitalist polyarchs. Furthermore. which is also known as the Washington Consensus 18 . Concerns about lack of capacity. but are visible that also the characters of these IFIs do change. Bolivia adopted structural adjustment policies according to the set terms by the IMF and the World Bank. but during recent years it has used its influence more on the background. As for the second sub-question – what are the effects of Morales’ policies on these foreign relations – it becomes clear that after decades of involvement. IDB and the United States have penetrated and influenced the Bolivian hydrocarbons sector heavily. the second period was characterised by the importance of multinationals. The outcomes of these strategies are questionable. or technocrats. since there was hardly any consensus on the austerity measures to be taken. more power to multinationals among other social problems. It has indeed been able to pay its debt to the major IFIs – it was also granted debt relief – but if hydrocarbons prices will fall. It has cut off Bolivia’s preferential trade access to the US market recently. economic losses due to the cancelled trade preferences to the United States could become an issue for Bolivia. Also cooperation in the field of drug eradication has been stopped and US involvement in supporting Bolivian opposition to Morales led to the ousting of both the Ambassadors. grants and technical assistance. Opening up the economy and market to foreign investment would eventually lead to equal growth. Morales has expressed his hope on the possibility of new negotiations with the newly elected US 18 The term Washington Agenda is often preferred. . as well as many other sectors and state companies. the World Bank. The economy is highly volatile and dependent on the current hydrocarbons prices. which could damage the Bolivian economy. Obviously. Since Bolivia was not in the position to oppose the strategy of the IFIs that attach policy regulations to the granted loans. The risk of the Dutch Disease is imaginable. When looking at the specific country reports and strategies on Bolivia. technology and deteriorating investment climate are expressed in various IFI reports. Bolivia will face some serious troubles according to these institutions.

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52 .

The nationalisation of the hydrocarbons has also influenced the diplomatic relations of Bolivia with Latin-American countries as the Brazilian state petrolera Petrobras was one of the transnational companies present in Bolivia. It will look at the changes in these relations under the presidency of Evo Morales and the nationalisation of the hydrocarbons.mi nombre lo lleva un estado que tiene en su seno hombres amantes de la libertad. Evo Morales became president being the first indigenous president of the continent. It is not about distributing poverty but about redistributing the richness. Bolivia has signed different agreements of economic complementation with Latin-American countries and is involved in three Latin-American organisations focusing on regional integration. Bolivia is full member of the Comunidad Andina de Naciones (Andean Community of Nations. Mercosur). Can .. Keywords: CAN. namely LatinAmerica. to improve the destination of our people. In 2006. 158).53 Bolivia’s Relations with Latin-America: Changes under the presidency of Evo Morales Jetske Hylkema Abstract: This paper will investigate and examine Bolivia’s bilateral and multilateral relations with other Latin American countries. Bilateral relations. This paper looks closer to home. It investigates the changes in these relations and how these changes are manifested. Verbeek investigated the influence of Western actors on Bolivia in its policy-making and control of the hydrocarbons sector throughout the last two decades. It will mainly focus on economic and political relations. His election programme focused on the nationalisation of the hydrocarbons and the redistribution of land. Chile and Peru. but also with such poverty. The republic of Bolivia is a landlocked South American country sharing borders with Brazil. nationalisation. although very rich in natural resources. ALBA) and associated member at the Mercado Común del Sur (Southern Common Market. to nationalise it’ (Evo Morales cited in Pineda 2007. The economic relation of Bolivia with other Latin-American countries has grown enormously starting from the mid-nineties. y entrañas de oro y plata – Simón Bolívar ‘Bolivia with such richness. the imports have grown from thirty nine per cent in 1995 to fifty five per cent in 2008 and the exports from thirty six per cent in 1995 to sixty five per cent in 2008 (ALADI – SICOEX). CAN) and the Alternativa Bolivariana para las Américas (Bolivarian Alternative for the Americas. Mercosur. the poorest country of South-America. Mercosur.. Unasur. CAN. To answer this question I will look at the economic and diplomatic relation of Bolivia with Chile. to change the neo-liberal model for a dignified and sovereign Bolivia. Argentina. ALBA and Unasur. neo-liberalism has not given the economic development to Bolivia as it hoped for. 33). As seen in Verbeek his paper. ALBA. There are different sounds that Latin-America is searching for a way to be self providing and less dependent on Western actors than it was during the glory days of neo-liberalism: “I want to learn to eliminate the inequalities. hydrocarbons . In ‘Changing international relations: Bolivia’s call for self-determination’. hoping that this would decrease the gap between poor and rich in one of the most polarized countries of the world and to contribute to the development of his country that is.’ And to redistribute this richness we have the obligation to win it back. The neo-liberal system is not the solution” (Evo Morales cited in Pineda 2007. This paper looks at Bolivia’s bilateral and multilateral relations with LatinAmerica and the national resource policy under the presidency of Evo Morales. Paraguay.

there is representation at consul-general level.CE. However. The bi-national working agenda consists of thirteen points in which the maritime sovereignty is not included although the Chilean government expressed that it was willing to facilitate the Bolivian access to the Pacific Ocean (Pineda 2007. Both the improvement of the relationship between Chile and Peru 19 20 See chapter of Maalderink for more information about the War of the Pacific Hugo Chávez said in 2003 that he desired bathing in the Bolivian sea . expressed that the maritime demand should be solved first (Bolpress. Chile wanted to improve its relation with Peru as well after the election of Alán García as president in February 2006. the conversations between the Bolivian and Chilean consuls to agree on the work agenda between the two countries initiated. the sea has divided us and the sea has to unite us. 98). ‘The sea has distanced us from Chile. Uruguay and Argentina (CEDIB. 108). the OAS received its request but declared that it could only mediate because it was a conflict between two legitimate nations. something that was confirmed with the formation of the Treaty of Peace and Friendship in 1904. For Chile putting sovereignty over the disputed area into question was not an option either because this would mean a modification of the 1904 Treaty and it would go against the principle of territorial integrity (Pineda 2007. Chile has a serious energy problem and is interested in Bolivia’s gas but so far no deals have been closed. Bachelet manifested that she wanted to solve this ancient problem but she left clear that she would not allow any type of political blackmailing from the side of Bolivia. representing 1. the planning minister. Carlos Villegas. During the celebration of the IV summit meeting of the European Union (EU) and Latin America in Vienna in May 2006. The maritime reintegration of Bolivia is supported by Venezuela 20 . In April 2006 the OAS announced that it would not act as a mediator. 98. 21 November 2006). For decades the fundamental objective of the Bolivian exterior politics was the maritime reintegration through a sovereign and useful access to the Pacific. 95. Today. Cuba.23 per cent of the total Bolivian exports and 0. The formal relations between Chile and Bolivia reached a minimum after the War of the Pacific of 1879 19 (Pineda 2007. on 23 March. 103). In January 2008.35 per cent of the total Bolivian imports while the Bolivian exports to Chile were fifty five million dollar. 12 January 2009).SICOEX). During this war Bolivia lost its coastal provinces. In 2007 the Chilean exports to Bolivia represented 6.No 22] with Chile on 6 April 1993. It seems that the expression ‘gas in return for the sea’ is becoming a real option for both countries. referring to the referendum that was announced by the former Bolivian president Carlos Mesa who saw the utilisation of gas as a strategic resource to reach an access to the sea. Bachelet and Morales agreed to define a work programme to continue advancing towards an agreement of economic complementation in the frame of a bilateral dialogue without any exclusion. something supported by eighty seven per cent of the Bolivian people but not by Evo Morales (Pineda 2007. Bolivia memorizes the loss of its access to the sea in el Día del Mar.54 Latin-America give Bolivia what it economically hopes for and is Evo Morales able to improve both the economical and political relations? The relations with Chile The commercial relation with Chile has always been unprofitable for Bolivia although Bolivia subscribed a partial tax agreement of economic complementation [AAP. This expression of good will was returned by Evo Morales who was present in Santiago when Michelle Bachelet took possession on 11 March 2006.99. the sea has to bring us together to find solutions’ (Evo Morales cited in Pineda 2007. Evo Morales requested the Organisation of American States (OAS) to help solving this problem. 104). Bolivia is more interested than ever to sell natural gas to Chile because of a possible reduction of the purchase of Bolivian gas by Argentina and Brazil. This support is rejected by Chile claiming that the issue is bilateral. Peru challenged the International Court of Justice over their maritime border with Chile. The first step towards an improvement of the diplomatic relation was made with the presence of former Chilean president Ricardo Lagos at the inauguration of Evo Morales.13 per cent of the Chilean imports (ALADI . Every year. Starting from 17 July 2006. 105).

Like Bolivia. and also to Toledo and Uribe so that they stop their negotiation about a FTA with the United States. All CAN member states. During the first months of his presidency.SICOEX). This project included the building of a pipeline to connect the Tarija department with the Pacific coast of Peru. Peru. Peruvian president Alán García expressed his wish to improve the relations with Chile which further complicates the Bolivian relation with both Chile and Peru (Bolivia Info Forum). Ecuador. Peru signed a bilateral Free Trade Agreement (FTA) with the United States (US) that was implemented on 1 February 2009 (US Federal Register).000 direct and indirect jobs in the sector (Pineda 2007. Colombia. Peru was involved in the War of the Pacific and lost it. In 2004. Peru offered Bolivia an alternative route for its gas exports but this project has been put on hold. The principal Bolivian products exported to Colombia in 2007 were different types of soy products. because the FTA is destroying the CAN’ (Evo Morales cited in El País.57 per cent of the total Bolivian imports of 2007 and the exports less than five per cent (ALADI . The relations with CAN ‘I sent a letter to president Chávez in which I asked him not to withdraw. this meant a perceptual participation of Bolivia in the Colombian market of 0.47 per cent. the exportations of the Bolivian products destined to the Colombian market. Ecuador has negotiated a FTA with the US but so far without any result. 12 May 2006).55 and the Peruvian challenge has complicated the maritime dispute between Bolivia and Chile (Bolivia Info Forum). were little less than 154 million dollars. In November 2006. especially soy products. Colombia signed a FTA with the US This agreement has been renegotiated by the US government and has not yet been ratified.SICOEX). . are rich in natural resources and the trade between these countries focuses mainly on agricultural products. The Colombian government has not emitted a revoking regulation yet (Riva Arena 2008. a general treaty of integration and social economic cooperation for the conformation of a common market between Bolivia and Peru was signed (IBCE –Tratado Bolivia Peru). This Protocol formed also a free trade space. In 2007. On 12 April 2006. The trade of Bolivia with Ecuador is insignificant because it was less than one per cent in 2007 (ALADI . More information about the relation between Bolivia and Peru can be found in the following paragraph. Peru has plans to export natural gas to Chile and Argentina and to build a pipeline to Chile. 16). also because of popular resistance.700 million dollars annually and some 200 million dollars being supplied to the country. The CAN was created through the Trujillo Protocol of 1997 that reformed the Cartagena Agreement of 1969 and giving more importance to economic integration. the Andean Custom Union and the Andean system of price volumes (IBCE – CAN). and Bolivia. different types of oil and different types of beans. although the import of Peruvian products was only 6. as well putting in danger some 200. 15). Peru and Bolivia are also rivals in the sale of natural gas. The tribunal of the CAN announced a judgement in which it found Colombia guilty of breach of contract and to abstain of emitting new restrictive measures. Peru is one of Bolivia’s most important commercial partners. It could endanger some 1. This FTA puts Bolivian exports in danger. (IBCE 005/2008 2008. In 2002. but the Peruvian unwillingness to concede Bolivia access to the Pacific Ocean hinders the relationship. It authorized the member countries to internally repair the occasioned damages and losses. 52).

SICOEX). It is necessary to forge a comprehensive integration movement in which social. The Bolivian imports from the CAN have only slightly increased between 1995 and 2008 (ALADI . environmental and trade aspects are in better balance (CAN – brief history). the CAN used to be the main economic bloc for the Bolivian exports between 1995 and 2001 and from that year on. the CAN is currently living a political crisis between its members after the withdrawal of Venezuela in 2006 and the FTAs of Peru and Colombia with the US At the IV summit meeting between the EU and Latin-America in Vienna in May 2006. the Bolivian exports to the CAN member states have only decreased. A social face was given to the CAN in 2003 by the establishment of the Plan Integral de Desarrollo Social (Integral Social Development Plan) that resulted in the project Acción con la Sociedad Civil para la Integración Regional Andina (Action with Civil Society for Regional Andean Integration. Mercosur and Latin-America from 1995 to 2008 (ALADISICOEX) As table 1 and 2 show. SOCICAN) that started in July 2008 (CAN – Cronologia por fechas). In 2007 the member states declared in Tarija. the possibility of an association agreement of the CAN with the EU was negotiated but the EU decided to take a step back . Mercosur and Latin-American imports of Bolivia from 1995 to 2008 (ALADISICOEX) Table 2: total Bolivian exports to CAN. economic.56 Table 1: total CAN. Bolivia that: it is necessary to develop and deepen the Andean Community integration process by taking more effective account of the visions and approaches of the Member Countries. cultural. Despite this positive intention. in order to achieve unity within our diversity to serve our people’s wellbeing and our harmony with nature.

000 million dollars Imports: 141. 14 October 2008). population. this contract had a duration of twenty years and established 21 More extent information on the Chaco war can be found in the chapter of Maalderink . exports and imports is very small in comparison to Mercosur. the imports have increased with almost 1. Table 3: dimension of Mercosur in contrast with Bolivia (ALADI-SICOEX) Mercosur 2006 GNP: 1 billion dollars Population: 236 million inhabitants Exports: 190. 7).00 Table 3 clearly shows that the size of Bolivia in GNP. In 1992. Japan and India (Menacho Ardaya 2007. Mercosur is the principal economic trade bloc of Bolivia representing fifty per cent of the Bolivian exports and forty per cent of its imports as table 1 and 2 clearly show. Especially the export of Bolivian products to Brazil has grown enormously from less than three per cent in 1995 to little more than forty two per cent in 2008 (ALADI . the EU has left the CAN in a coma (El País.2 million dollars 9.500 per cent and the exports with 400 per cent. the EU. the Andean Community presidents held a summit in which they agreed to ask the EU for a new meeting in order to salvage the negotiations between the two blocs (CAN. 7). After signing the ACE 36. China. 15 November 2008).079 million dollars 2.821 million dollars % 1.000 million dollars Bolivia 2006 GNP: Population: Exports: Imports: 10. according to the Bolivian vice minister on trade. Bolivia opposed to the inclusion of themes like the intellectual property. which would go against the Andean decision number 667 to maintain the bloc for an associative and commercial agreement with the EU Ecuador has also requested the EU to negotiate a bilateral agreement.06 2. The commercial relations with Paraguay and Uruguay is insignificant. Brazil. Benita Ferreo Waldnef.15 2. On 14 October 2008. The commercial relation between Bolivia and Brazil has been growing starting from 1995. 12 November 2008) and not a bloc-to-bloc negotiation. This growth is mainly due to the export of gas. 15 November 2008). Although it has not been the intention of the EU to ruin the CAN. In 1996. the use of basic services and to some of the demands of the EU to enter the Andean markets (El País.57 and to wait for a better opportunity in the future (El País 12 May 2006). Pablo Gúzman. the EU commissioner for external relations. the Chaco war of 1932-1935 between Bolivia and Paraguay has had its influence on the diplomatic relation between these countries 21 . the bloc is the sixth economy in the world after the US. As a result of this. Paraguay and Uruguay with the purpose of increasing regional economic cooperation. According to the International Monetary Fund (IMF). decided that it would only negotiate a FTA with Peru and Colombia (ABI. In February 1997. Petrobras and YPFB signed a contract for the sale of natural gas from Bolivia to Brazil.02 4. the Brazilian state petrol company Petrobras signed a preliminary contract with the Bolivian petrol company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB). Nonetheless.SICOEX). the Bolivian relation with these countries will be extensively described below. to participate in the exploration and exploitation of hydrocarbons. Bolivia became an associate member of Mercosur when it subscribed an agreement of partial tax and economic complementation with Mercosur [ACE 36]. in 2007 Brazil imported seventy five per cent of the total Bolivian gas production (IMF 2008. or to divide it. The relations with Mercosur Mercosur was established on 26 March 1991 by Argentina. Brazil Brazil occupies the status of most important commercial partner of Bolivia in both import and export. Bolivia’s most important export partners of Mercosur are Brazil and Argentina.6 million inhabitants 4.

4 May 2006).. In 1997. the new contracts between Bolivia and the petrol companies were signed. Brazil decided to decrease the import to twenty four million cubic meters/day (Bolpress.SICOEX). but the decision of Evo Morales to send military troops to the installations of Petrobras caused tension between the two countries. This pipeline is the longest in the region with a total length of more than 3000 kilometres (Cerutti & Mansilla 2008. Bolivia. equivalent to eighteen per cent of the Bolivian GNP. Repsol YPF and Total announced that they wanted international arbitrage. A few days later. Lula da Silva announced on 16 January 2009 that Petrobras would invest around 1. Morales guaranteed the deliverance of gas to Argentina and Brazil while Argentina. At the end of October 2006.Evo has been honest to his word that Brazil would never lack gas and therefore I [Lula da Silva] say that this richness of the Bolivian people will never lack Brazilian investments’ (Lula da Silva cited in YPFB. Whether the information about a decrease in the Brazilian import of Bolivian gas is true or not. this meeting created better conditions for a more technical and business negotiation (El País. Argentina Argentina is the second most important Latin-American partner of Bolivia in both exports and imports. 15 June 2006). Petrobras has invested more than 1. 22 For further information see previous chapter of Verbeek . 122). was a ‘unilateral’ and ‘unfriendly’ decision that could lead to ‘dramatic situations’ (El País 3 May 2006). There are various rumours that Lula da Silva’s diplomacy and willingness was the key factor to the success of these negotiations. 8 January 2009). According to the Spanish newspaper El País and the Bolivian press agency Bolpress. The contract between Petrobras and YPFB included a price fixation every three months (YPFB 2008. said that the nationalisation of the hydrocarbons.100 million dollars in the Bolivian gas production and that the big differences between the two countries during the nationalisation process was ‘consolidating in a very positive form. The commercial relation between Bolivia and Argentina is given in the context of Mercosur through the agreement of economic complementation of 1996. 16 January 2009). According to Petrobras. he feels connected to Evo Morales because they both have been union leaders before they became president. Venezuela and Brazil agreed to invest together in the development of Bolivia (El País. because Brazil did not need that much gas anymore and also because of the financial crisis that is affecting the country (El País. the negotiations between the Bolivian and Brazilian government started but with no immediate result. Together with his partners. according to YPFB. 7 May 2006). The president of Petrobras. The Bolivian army responded by saying that it would expel the companies appealing but that it would refine the nationalisation decree (El País.600 million dollars in Bolivia between 1996 and 2006.58 a maximum of thirty millions of cubic meters/day. the Brazilian government decided half January 2009 to reduce the Bolivian gas imports to the minimum amount possible of nineteen million cubic meters/day instead of the thirty one million cubic meters/day that it imported earlier. Brazil and Venezuela met on 5 May 2006 to discuss the nationalisation of hydrocarbons. the Bolivian exports to Argentina represented almost nine per cent of the total Bolivian exports in 2007 while the Bolivian import from Argentinean products was seventeen per cent of the total Bolivian exports (ALADI . Sergio Gabrielli. it shows the Bolivian dependence from Brazil and its vulnerability. The Brazilian president Luiz Inácio ‘Lula’ da Silva publicly manifested that Bolivia had the sovereign right to be in charge of their resources and he was willing to negotiate about the gas prices and a compensation for Petrobras. which was announced on 1 May 2006. He also announced that Petrobras was willing to go to the international arbitrage in New York to defend the Brazilian interests. Argentina. YPFB was capitalised 22 .. 14 January 2009). These investments included the construction of a pipeline to transport gas from Santa Cruz to Sao Paulo. After negotiation between the two governments. 7). on 15 June 2006 Petrobras. However.

not the volume of the products. YPFB signed an agreement with the Argentinean energy company Energía Argentina S.6 28. starting from 2010 this volume would increase to 27. However. Juan Carlos Vilaseca Gonzáles.7 Total exports of Bolivia to Argentina Million US$ 138.. Argentina announced also that it wanted to reduce its daily demand from six million cubic meters/day to 1. The sales of non-traditional Bolivian products with zero tax towards Mercosur have decreased while in the contrary the entry of products with zero or partially benefits of products coming from Mercosur to the Bolivian market has been constantly growing (Vilaseca Gonzáles 2007. and has been growing at both sides although this commercial expansion is mainly due to the augmentation of the prices.8 million cubic meters/day (Bolpress. fears a full membership of Bolivia at Mercosur: ‘. given its closeness.7 79.3 75. 1. 6 January 2009).7 million cubic meters/day (YPFB 2008. On 10 August 2007.(ENARSA) with a duration of twenty years starting from 1 January 2007 and an initial volume of 7.6 243. Argentina pays more for the Bolivian gas than Brazil (YPFB 2008. 4). 9). When applying for its adhesion to Mercosur.6 269. 8). Because a different formula is used to calculate the gas price.4 71. Bolivia believes that full membership of Mercosur would benefit the country because in December 2006.3 33. Mercosur The examples of Argentina and Bolivia show that if there would have been no gas.0 100. Natural gas accounts over seventy per cent of the Bolivian imports to Argentina (González 2008. 8). 127).59 Table 4: The commercial relation of Bolivia with Argentina (ALADI-IBCE) Amount of gas Million US$ 68.000 million dollars. 8). Venezuela and Bolivia signed the act of Tarija that consolidates the sub regional energy integration through subscribing different agreements that guarantee an inversion of 1. Unlike Venezuela.4 69. nor the Cartagena Agreement has any restriction to the participation of countries that already belong to another bloc of regional integration or to participate in other blocs (Menacho Ardaya 2007. as table 4 clearly shows.6 % 49.2 82. In 2006. different from the agreement granted to the smaller member countries Paraguay and Uruguay because Mercosur did not give these countries what they commercially had hoped for. 129).A. 7). The president of the Cámara Nacional de Despachantes de Aduana de Bolivia (CNDA).we should also consider that Mercosur.0 100.120 million dollars for projects focusing on the exploration and industrialisation of hydrocarbons (YPFB 2008. they have openly manifested their discontent towards Mercosur (Menacho Ardaya 2007.3 83.500 billion dollars on both sides of the border.. most of it in Argentina (Cerutti & Mansilla 2008. Bolivia does not intend leaving the CAN.6 30. This seems very strange because the contract guarantees a minimum of sixty per cent of the initial volume during the first two years and hundred per cent of the initial volume during the third year which would be 2009 (YPFB 2008. A major investment as a consequence of this agreement includes the construction of the North-eastern pipeline which will cost around 2. Information about the Argentinean decision to decrease the Bolivian gas import can neither be found at YPFB nor at ENARSA. Bolivia applied formally for admission to Mercosur as a full member. 22).0 100.2 % 100. Neither the Treaty of Asunción.0 2004 2005 2006 January-June 2007 The commerce between Argentina and Bolivia duplicated between 2004 and 2007. as a huge authority in the field of agriculture and agro industry. is a threat to the Bolivian agricultural sector that is the .983 million was natural gas (Menacho Ardaya 2008. the commercial relation of Bolivia with Mercosur would have been unprofitable because of the 2. one year after Venezuela.7 million cubic meters/day for the first two years.4 186. the constitutive agreement of Mercosur. According to Bolpress.7 24. 128). This contract will provide Bolivia to receive around 17.6 117.2 322. Argentina.4 Amount of other goods Million US$ 70. Bolivia requested a special treatment.6 % 50.203 million dollars exported by Bolivia to Mercosur.

from the other side it should be considered that although there are no restrictions for Bolivia to be a full member in both blocs [Mercosur and CAN]. Venezuela In the year 2007. which was free of illiteracy.60 fundamental pillar of our non-traditional products. Bolivia contributed to only 0. Venezuela was obligated to maintain the derivate preferences of the zone of the Andean free commerce for a period of five years although it negotiated a less long period (IBCE 004/2008 2008. The relations with ALBA Cuba There have been several agreements between Bolivia and Cuba focused on commerce and economic integration. Bolivia announced that it was the third Latin-American country. 113-114). to Bolivia in .. Both countries signed a cooperation agreement in January 2006 focused on education and health. practices solidarity. teaching materials and technical facilities for a literacy programme that covers the entire population. The adhesion of Bolivia in Mercosur is still in the negotiation phase.58 per cent of the Venezuelan market. one of the poorest and most exploited in the hemisphere. the people of Cuba recognized that ‘both he [Evo Morales] and his people. As a consequence.0 per cent of the total Bolivian imports and exports between 1995 and 2008 (ALADI – SICOEX). Nevertheless the commercial balance between Bolivia and Cuba has only been unprofitable and could be defined as insignificant as it has been little more than 0. are facing new and enormous challenges which call for the greatest possible solidarity from both Latin America and the world’. The diplomatic relation between the two countries seems good because Cuba was the first country visited by Evo Morales when elected president. 14)... This agreement expresses as well that ‘both nations are resolved to fight for the unity and integration of the brotherly peoples of Latin America and the Caribbean and for peace and friendship among all peoples of the world’ (CUBAMINREX). and not only with Bolivia…’ (Evo Morales cited in Pineda 2007.CE. this derived in the necessity of renegotiating the agreed preferences between both countries which resulted in the signing of the partial taxation agreement of economic complementation of 22 August 2001 [AAP. The diplomatic relation between Bolivia and Venezuela is very good and from the first moment Evo Morales feels very close with both Hugo Chávez and Fidel Castro as both countries manifested their immediate support.. One of the agreements was that Cuba would provide Bolivia with know-how. the possible integration of Bolivia as a full member of Mercosur. thirty months after it started the literacy programme. after Cuba and Venezuela. could leave her to lose its full membership at CAN except if the common external tax of both blocs would be similar or compatible. According to this agreement. On 20 December 2008. especially in the field of health and education. 15 January 2009). 4-5). Venezuela retired the Cartagena Agreement before the Commission of the Andean community adducing that the free trade zones of Colombia and Peru with the US were killing the CAN. However. Mercosur decided to purchase Bolivian products in preferential conditions as some kind of substitution of the Andean Trade Promotion and Drug Eradication Act (ATPDEA) from which Bolivia was suspended on 15 December 2008 (Presidencia de la República de Bolivia. ‘…I am impressed to see how a country [Cuba] that is economically blocked by the empire. When Cuba became a member again of the Asociacion Latinoamericana de Integración (ALADI) in August 1999. the exports of the Bolivian products destined to the Venezuelan market were little more than 242 million dollars. On 22 April 2006. 1-7). the first was the agreement of partial taxation number 34 that was celebrated in the protection of the treaty of Montevideo between Bolivia and Cuba.’ (Vilaseca Gonzáles 2007.47] (Menacho Ardaya 2008.

Menacho Ardaya... Bolivia and Venezuela have signed various agreements of cooperation.. memorandum of understanding between the Ministry of Basic Industries and Mining of Venezuela and the Ministry of Mining and Metallurgy of Bolivia (IBCE 004/2008 2008. Because of tensions between member states. 15). 23 April 2008).]what can be observed after almost two years of the enforcement of the TCP is that the hoped commercial benefits have not been reported except in interconnected aspects of cooperation. the promised resources to this country [Bolivia] like cooperation have had a modest application [.] above that the Cuban state is a natural importer. engineer Limberg A. a regional body focusing on economic and political integration. something heavily denied by the Venezuelan government because Evo Morales was chosen democratically as a result of the rise of popular movements claiming the sovereignty over the natural resources (El País.. On 22 April 2008. Suriname and Guyana as well. 20 May 2006). Venezuela and Cuba signed ALBA as an alternative to the Free Trade Area of the Americas (FTAA). The relation with Unasur The Unión Suramericana de Naciones (Union of South American Nations. followed by Nicaragua in January 2007 and Honduras in August 2008. 11 May 2006).. The technical director of the Instituto Boliviano de Comercio Exterior (IBCE).]Venezuela imposes obstructions to the Bolivian exports that are contradictory with the objectives pursued by the TCP’ (Menacho Ardaya 2008. With regard to Venezuela. Bolivia signed the Tratado Commercial de los Pueblos (TCP) to improve the commercial relation with Cuba and Venezuela introducing aspects in the commercial integration like solidarity. With the occasion of the adhesion of Bolivia to the ALBA. Bolivia joined the ALBA on 29 April 2006... 8). conventions and declarations including the agreement on energetic cooperation. In 2008. reciprocity. The Spanish Popular Party also accused Venezuela to have urged Bolivia to nationalise its hydrocarbons.]this has been a special occasion to ratify our unconditional support to the president Evo Morales Ayma and his government in the efforts that they realize to overcome the fluid plans and to continue guiding the process of historic transformation of Bolivia in peace and democracy’ (El País. a community set up by Mercosur and CAN in order to establish a free trade zone that involved Chile. It should be mentioned that Cuba has a very reduced market with little power of purchasing [. said the following about the TCP: ‘[.5 million dollars (IBCE. 24 December 2008).. The TCP limits and regulates the rights of foreign and transnational investors under the motto ‘socios y no dueños’.. Cuba and Venezuela also guaranteed to purchase Bolivian products that it cannot sell anymore to its commercial partners due to a FTA with the US or European governments (IBCE – TCP). Unasur) originates from the Comunidad Sudamericana de Naciones.] Above that [. the ALBA member states came together in an extraordinary summit in which an agreement was signed to fight the alimentary crisis in Bolivia and a document in which they expressed their support to Evo Morales: ‘[. The involvement of Venezuela in Bolivia’s nationalisation process has been criticized by different persons including Petrobras president Sergio Gabrielli and Brazilian minister of mines and energy Silas Rondeau (El País.. it is difficult to create . All twelve countries signed a treaty during a summit in Brazil that created the Unasur. prosperity and respect to the sovereignty of the countries. 111). the commercial relation of Bolivia with the ALBA members resulted in a positive balance of 8.61 defence of the change in the country (Pineda 2007. ALBA On 14 December 2004. In the years 2006 and 2007.

a work agenda to develop the economic relations started in 2006 and has also opened a dialogue on the Bolivian access to the Pacific Ocean. both countries immediately supported him and his country especially in the field of education and health and have given Morales the opportunity to declare his country free of illiteracy in December 2008. This negative balance is unexpected because Bolivia has subscribed various agreements of economic complementation with these countries. due to its deliverance of natural gas. . Peru is also interested in exporting natural gas to Chile and Argentine. Also. Bolivia has strong commercial relations with Argentina and Brazil. Due to Chile’s hunger for energy and a possible loss of the Argentinean and Brazilian imports of Bolivian gas. by the relationship its neighbouring country Peru has with Chile. CAN. The ALBA claims to be an alternative to the FTAA with a focus on solidarity and cooperation but has not given yet to Bolivia what it commercially hoped for. Therefore it could be said that they do not only represent change but they are change itself. it does not intend to leave the CAN. Mercosur and ALBA. The commercial relations with Argentina and Brazil would be deficit if there would not be natural gas because most of the Bolivian exports to these countries consist of gas. The CAN is really important to Bolivia because the trade between its members focuses on agricultural products and although Bolivia has applied for full membership at Mercosur. On 15 September 2008. This special relation has been formalised with the subscription of the TCP and Bolivia’s adhesion to the ALBA. Evo Morales’ closest allies are Cuba and Venezuela. The Mercosur means a real threat to the production of agricultural products because of its size in comparison to Bolivia. Bolivia’s diplomatic relations with most Latin-American countries are good and have improved during his presidency. Unasur declared unanimously that it fully and decisively supported the constitutional government of Evo Morales after the massacre that occurred in the department of Pando (ABN. The relationship with Chile has improved under the presidency of Morales and Bachelet. This relationship is threatened however. the expression ‘gas in turn of the sea’ is becoming a real option for both countries.62 a strong institution (BBC. Bolivia has negotiated the gas prices with Brazil and Argentina and receives more money for its gas than it did before the nationalisation of its hydrocarbons. the examples of Paraguay and Uruguay have shown that smaller countries do not profit that much from one of the most important economic blocs of the world. The election of Evo Morales has opened doors that used to be closed but during his presidency doors were also closed that used to be open. The negotiations of the CAN with the EU have ended of being a bloc-to-bloc negotiation and resulted in bilateral negotiations of the EU with Colombia and Peru. something desired by Bolivia for decades and which would give the South-American country the possibility to better access to other markets. The economic relations of Bolivia with the above mentioned countries and institutions are historically deficit and this has not improved during the presidency of Morales. The diplomacy and willingness of Lula da Silva has been a key factor in the negotiations of Bolivia with the Brazilian state petrolera Petrobras. Conclusion Evo Morales’ election is in some way comparable to the election of Obama because both persons represent a change from old politics. mostly in the diplomatic field although the commercial relations are improving as well. This relationship is interdependent but this essay has also shown Bolivia’s dependence of the Argentinean and Brazilian gas market and its vulnerability in this field. Evo for being the first indigenous president of Latin-America and Obama for being the first black president of the United States. 23 May 2008). The CAN seems nearly dead after the withdrawal of Venezuela in 2006 and the FTA’s of Peru and Colombia with the United States. Only the commercial relation with ALBA resulted in a slightly positive balance in 2008. 15 September 2008). This essay has investigated and examined the bilateral and multilateral economic and political relations of Bolivia with Latin-American countries and institutions with a focus on Chile.

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bo/ibcemail/379/acceso_brasil.bo/documentos/acceso_peru.bo/asistenciatecnica/aap_ce36.org.elpais.pdf (accessed 17 December 2008) Instituto Boliviano de Comercio Exterior (IBCE) AAP.ibce.No 47 Suscrito entre Bolivia y Cuba http://www. Perfil del mercado colombiano para productos bolivianos http://www.No 36 Suscrito entre Bolivia y el MERCOSUR http://www.ibce.CE.bo/asistenciatecnica/aap_ce47.bo/ComExt/comext162.org. Perfil del mercado chileno para productos bolivianos http://www.pdf (accessed 17 December 2008) Instituto Boliviano de Comercio Exterior (IBCE) .pdf (accessed 17 December 2008) Instituto Boliviano de Comercio Exterior (IBCE) (2008) Boletin 001/2008 Acceso a mercados.ibce.pdf (accessed 17 December 2008) Instituto Boliviano de Comercio Exterior (IBCE) (2008) Boletin 003/2008.ibce.ibce.pdf (accessed 17 December 2008) Instituto Boliviano de Comercio Exterior (IBCE) (2008) Boletin 004/2008.CE. Acceso a mercados. Perfil del mercado venezolano para productos bolivianos http://www.bo/documentos/acceso_ven2008.bo/documentos/acceso_colombia2008. Acceso a mercados.65 Bolivia denuncia que la UE ha dejado “en coma” a la Comunidad Andina http://www. Perfil del mercado peruano para productos bolivianos http://www.com/articulo/internacional/Bolivia/denuncia/UE/ha/dejado/coma/Comunida d/Andina/elpepuintlat/20081115elpepuint_1/Tes (accessed 30 January 2009) El País (21 December 2008) Bolivia vence al analfabetismo http://www.ibce.elpais.com/articulo/internacional/Brasil/pone/firme/Bolivia/elpepuint/20090114elp epuint_2/Tes (accessed 30 January 2009) González. Acceso a mercados.No 22 Suscrito entre Bolivia y Chile http://www.org.org.org.pdf (accessed 17 December 2008) Instituto Boliviano de Comercio Exterior (IBCE) (2008) Boletin 005/2008. Acceso a mercados.ibce.org. Ariel (2008) Pasado y presente de la Integración Sudamericana y su Proyección sobre la Relación Bilateral Argentino-Boliviana IBCE Comercio Exterior no 162 Comercio y Integración: de Amércia del Sur: Una Visión desde las Relaciones Internacionales p.CE.org.pdf (accessed 17 December 2008) Instituto Boliviano de Comercio Exterior (IBCE) AAP.bo/documentos/acceso_chile.pdf (accessed 17 December 2008) Instituto Boliviano de Comercio Exterior (IBCE) AAP.bo/ComExt/comext162.pdf (accessed 17 December 2008) Instituto Boliviano de Comercio Exterior (IBCE) (2008) Boletin 002/2008.com/articulo/internacional/Bolivia/vence/analfabetismo/elpepuint/20081221 elpepuint_1/Tes (accessed 30 January 2009) El País (14 January 2009) Brasil pone firme a Bolivia http://www.ibce.org. 6-10 http://www.org.elpais. Perfil del mercado brasilero para productos bolivianos http://www.ibce.

bo/ComExt/comext162. Limberg (2008) Mercados Externos preferenciales de Bolivia IBCE Comercio Exterior no 162 Comercio y Integración: de Amércia del Sur: Una Visión desde las Relaciones Internacionales p. Executive order 13488 http://edocket.gpo. Limberg (2007) Presentación: Antecedentes.ibce.ibce.org.pdf (accessed 17 December 2008) Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) (2008) .presidencia.L.ibce.pdf (accessed 17 December 2008) Instituto Boliviano de Comercio Exterior (IBCE) Tratado general de integración y cooperación económica social para la conformación de un mercado común entre la república de Bolivia y la república de Perú http://www.pdf Vilaseca Gonzáles. 157 “Bolivia-Mercosur: oportunidades y desafíos” p.org. 11-15 http://www.gob.pdf (accessed 17 December 2008) Menacho Ardaya.asp?id=200901152&p=5 (accessed 30 January 2009) Pineda.pdf (accessed 17 December 2008) United States National Archives and Records Administration Federal Register Proclamation 8341.htm (accessed 19 December 2008) Presidencia de la República de Bolivia Noticias (15 January 2009) Brasil ratifica apoyo a exportaciones bolivianas para sustituir ATPDEA http://www.ibce.access. Francisco (2008) Evo Morales.bo/ComExt/comext162. Bolivia perdió 12 mercados en el 2008 (accessed 30 January 2009) Menacho Ardaya. 15-16 http://www.66 Comunidad Andina (CAN) http://www.gov/2009/pdf/E9-1573.bo/ComExt/comext157.cubaminrex.org.cu/English/currentissues/2006/CubaBolivia%20Cooperation%20Agreement. Riva Arena.MERCOSUR IBCE Comercio Exterior no.pdf (accessed 17 December 2008) Ministry of Foreign Affairs of Cuba (CUBAMINREX) Cuba-Bolivia Cooperation Agreement http://www. 4-5 http://www.pdf (accessed 17 December 2008) Instituto Boliviano de Comercio Exterior (IBCE) (24 December 2008) Además del ATPDEA. Juan Carlos (2007) “Bolivia-Mercosur: Grave riesgo ante inminente apartura hacia Mercosur” IBCE Comercio Exterior no 157 “Bolivia-Mercosur: oportunidades y desafíos”p. Rafael (2008) Perspectiva del Sector Exportador de la Política de Integración Comercial Boliviana IBCE Comercio Exterior no 162 Comercio y Integración: de Amércia del Sur: Una Visión desde las Relaciones Internacionales p.ibce.bo/prensa/Noticias. Desarrollo y Consecuencias del Acuerdo de Libre Comercio Bolivia .bo/ComExt/comext157.ibce.bo/asistencia-tecnica/zlc_can.org.org. El cambio comenzó en Bolivia.org.bo/asistencia-tecnica/zlc_tcp. 7-11 http://www.org.bo/asistencia-tecnica/ac_bol_peru.ibce. Córdoba: Editorial Almuzara S.pdf (accessed 17 December 2008) Instituto Boliviano de Comercio Exterior (IBCE) Tratado de Comercio de los Pueblos (TCP) http://www.

ypfb.67 Estrategía Boliviana de Hidrocarburos http://www.bo/documentos/Estrategia_Boliviana_Hidrocarburos.100M en Bolivia http://www.html (accessed 30 January 2009) .gov.gov.ypfb.pdf (accessed 9 January 2009) Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) (16 January 2009) Petrobras invertirá US$ 1.bo/internacional_petrobrasinvertira-us-1-100m-en-bolivia_103.

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a coalition of diverse social movements.69 The Legacy of the Water War in Cochabamba Janine Strijdonck Abstract: This chapter demonstrates that the direct outcome of the water war of Cochabamba in 2000 can be called a turning point for Bolivia in three different ways. and not only urban population but also people from rural towns joined the march (Shultz. He held speeches in the United States and Canada about the water war. 4 February 2000). Olivera even received awards. were sent into shock and into action” (Shultz. named Aguas del Tunari. the leader of the Coordinadora. In September 1999 the city’s public water supply system had been sold by the Bolivian government to a private company. among which 23 The Democracy Center is located in Cochabamba. Schultz lived and worked in Cochabamba at that time and was able to report the events he witnessed with his own eyes. He stresses that a diverse range of people took part in the march. Keywords: water war. Coordinadora. executive director of the Democracy Center 23 . Or as Shultz stresses “The Bolivian water revolt had become an international symbol of popular resistance to global economic rules imposed from above” (Shultz 2003. Poor people. Cochabamba. but also people who can be counted to the middle class participated. 35). The water war received ample international attention in newspapers and when the water war ended with the withdrawal of Aguas del Tunari it became the first victory against privatisation in Bolivia and an international symbol for anti-globalisation activism (Albro 2005. became the international representative of the popular resistance. Although the direct outcome of the water war was indeed a major national achievement. SEMAPA An international symbol of popular resistance In February 2000 Jim Shultz. and how it is an example of resistance by ordinary people against globalisation and the policies of the World Bank and the International Monetary Fund (IMF). On February 4 a peaceful march was organised in the city centre which was countered with teargas by the police. popular resistance. 252-253). . published his first news item about the popular resistance against the rise of water prices in Cochabamba. but it can also be seen as resistance against and a victory over the neoliberal policies that the government promoted. The water war is not only a revolt against the privatisation of the water supply system. Shultz was one of the many reporters who placed the water war in an international spotlight. ‘pacted democracy’. 257). Bolivia and has as goal to advance social justice. 4 February 2000). When in January 2000 the first water bills reached the population of Cochabamba Schultz pointed out that “Cochabambinos. who had paid scant attention to the deal when it was being worked out behind closed doors. and the marginalisation of the indigenous inhabitants of Bolivia. After the water war Oscar Olivera. Shultz made it his goal to inform the world about the so-called ‘water war’ and his news items were published in newspapers in the United States and Canada and even circulated around the world through internet (Albro 2005. this chapter will furthermore analyse whether the water war also represents a turning point for the population of Cochabamba and Bolivia in the long term. young and old.

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the Letelier-Moffit prize from the Institute for Policy Studies in Washington, DC, for the ‘grassroots hero’ of the year because of his resistance against the neo-liberal policies of the World Bank and the IMF (Albro 2005, 259). The short presentation of the water war presented above indicates that the water war was not just another ordinary public resistance, but that it was the first successful resistance against privatisation in Bolivia and represents an important victory in the international resistance against the policies of the World Bank and the IMF. The purpose of this chapter is to analyse the actual meaning of the water war for the population of Cochabamba and Bolivia. This analysis is important because it presents a study of the way in which the water war has led to changes in society and power relations within Bolivia and in Bolivia’s new natural resource politics. It thus discusses the meaning of the new natural resource politics in Bolivia from a specific perspective. The main question that will be answered in this chapter is: to what extent is the water war a significant turning point for the population of Cochabamba and the population of Bolivia in general, and to what extent did the water war influence the new natural resource policy of Bolivia? I will discuss the significance of the direct outcome of the water war, but to give a thorough answer to the main question, it is also necessary to analyse the significance of the water war in the long term. Therefore the evaluation of the functioning of the water supply system of Cochabamba after the water war and an evaluation of Bolivia’s constitution with regard to national water policies are important. Also, the extent to which the water war had meaning with regard to other issues then water management and water policy are important within this context. By not only analysing the direct outcome of the water war, but also discussing the long term influence of the water war, I believe this chapter gives a more complete view on changes in society and power relations in Bolivia, and more specifically with regard to Bolivia’s natural resource politics. The first paragraph of the chapter gives a description of the main actors and main events of the water war. The second paragraph analyses the way in which the water war represents a turning point and can be seen as an act of resistance against and a victory over firstly the neo-liberal policies of the government, secondly ‘pacted democracy’ and thirdly, the marginalisation of the indigenous peoples of Bolivia. In the third paragraph the functioning of an alternative water supply service, which has managed the water facilities in Cochabamba after the water war, is discussed. Furthermore an analysis of Bolivia’s new constitution gives insight into the question whether the vision on water and water management in Bolivia has changed. In paragraph four the influence of the water war on issues that are not about water, are discussed. First this section pays attention to the meaning of the water war for popular resistance against the export of gas in Bolivia. Secondly the meaning of the water war in relation to social change and changes of power relations in Bolivia in general is discussed. The conclusion is a final discussion of what the legacy of the water war is and to what extent this is a significant turning point for Bolivia.

A new form of organisation around water
The most important actor in the water war in Cochabamba is the Coordinadora por la Defensa del Agua y de la Vida (the coalition for the defence of water and life, the Coordinadora), which can be said to be a new form of organisation of citizens in the public space. It was founded in December 1999 by various organisations and social movements. The two most significant organisations were the Federación Departamental Cochabambina de Organizaciones de Regantes (Cochabamba Department Federation of Irrigators’ Organisations, FEDECOR), which was founded in 1996 and is the organisation that defends the interests of the irrigators of Cochabamba (Albro 2005, 250) and the local trade union, the Federación Departamental de Trabajadores Fabriles de Cochabamba (Departmental Federation of Factory Workers of Cochabamba, FDTFC). Phillipp Terhorst, PhD candidate at the Water Engineering Development Centre in the United Kingdom, calls the Coordinadora a “social movement coalition”, because various organisations and social movements are part of it. The Coordinadora was no legal organisation, because the organisation was not recognised by law. Furthermore it was not connected to a political party or a particular ideology. It functioned through open assemblies (cabildos) and general assemblies (Terhorst 2003, 61).

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The water war started in January 2000, when after the privatization of the municipal water supply system Servicio Municipal de Agua Potable y Alcanterillado (Municipal Potable Water and Sewerage Service, SEMAPA) in 1999, the water bills of the urban population started to rise. In September 1999 the company Aguas del Tunari, a subsidiary of Bechtel Corporation, an American construction company, became the owner of the water supply system in Cochabamba after the Bolivian government signed a contract with the company (Albro 2005, 250). The Coordinadora organised a meeting about the privatisation and the rate increases, which was attended by the above mentioned organisations, but also by citizens and academics. This meeting led to the agreement to block the main roads leading to the city, thus making all economic activity impossible (Assies 2003, 24). According to Shultz the blockades lasted for three days and the whole city was shut down. Not only the main roads were made impassable, but also the airport was closed (Shultz 2003, 34). The Andean expert John Crabtree explains that roadblocks are an important method of protest in Bolivia, “because of the country’s geography of relatively few major roads and the long distances between cities, a few strategically situated roadblocks can bring transport and commerce to a standstill” (Crabtree 2005, 12). Negotiations between representatives of the government, the Coordinadora and the Civic Committee, which can be regarded as a representative of the business sector and notables (Assies & Salman 2003, 27), started in January and led to an agreement that the government would review the water rates. But the government did not review the water rates and negotiations continued on 4 February. A new proposal of the government gave the private water company the permission to carry through a rate increase of 20 per cent. This proposal was not accepted by the people and initiated a second wave of street protests which was repressed with violence by special police force. On 5 February a new agreement was signed by representatives of the government, the Coordinadora and Civic Committee. Besides the agreement, the results of one and a half day of protest were 70 wounded civilians, 51 wounded policemen and 172 arrests (Assies 2003, 25-26). The absence of street protests and blockades lasted for a month. The agreement of February included further negotiations between the various parties about modifications to the law which had made the privatisation of the water supply system in Cochabamba legal and about the appointment of a commission of representatives from the various parties, which would revise the contract of the private water company. Because the parties could not work together properly and accused each other of delaying the process and not co-operating, tensions increased. Since the end of February the Coordinadora stopped attending the meetings about the revision of the technical aspects of the contract with the private company and in March the Coordinadora announced a third round of street protests which would start in April if the government did not came up with a solid proposal before 3 March (Assies 2003, 27-28). By this time the demands of the Coordinadora did not focus anymore on limitation of the rate increases but demanded the cancellation of the contract with Agua del Tunari and demanded a new water law (Shultz 2003, 34). This third period of protests and violence began on 4 April. This time people mobilised not only within the city, but also in other parts of the country people went on the streets to protest. Important to highlight is the heterogeneity of the mobilisation. People and organisations united around the water issue, but had different motivations. The urban population resisted the price hikes, while farmers resisted the contract with the private water company, because the farmers would lose the ownership over their own wells. In this third period of protest even more people joined the crowds. Also the urban middle class joined, stimulated by the amount of violence used by the government (Crabtree 2005, 24-28). At the outbreak of the third mobilisation, the government declared a state of siege and the military was sent to get the situation under control (Crabtree 2005, 24). The government tried to downplay the situation, but the people did not back off because of the repression. Then the government agreed to new negotiations which would be led by Cochabamba’s Catholic archbishop (Shultz 20003, 35). The outcome was the withdrawal of the contract with Aguas del Tunari. The water supply service came back in the hands of the municipality, but its users received influence on the management of the service. Furthermore the national water law which had made the contract with Aguas del Tunari possible was amended. The new law included the recognition of indigenous collective water rights (Postero 2006, 196). This description has explained the course of the water war

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and the success of the popular resistance. This information is significant for the analysis of the meaning of the water war for the population of Cochabamba and Bolivia.

The deeper significance of the water war
Now I will analyse whether the direct outcome of the water war might be called a turning point for the population of Bolivia. First of all I will discuss the resistance against the privatisation of the water supply system into depth and analyse the meaning of the antipathy with regard to privatisation. The privatisation of the water supply system in the city of Cochabamba was made possible through Ley 2029 de Servicios de Agua Potable y Alcantarillado Sanitario (Law 2029 of Potable Water and Sewerage Services) which was introduced in October 1999. The law had been passed through Congress without any consultation of the Bolivian people (Laurie, Andolina & Radcliffe 2002, 258). The anthropologist Willem Assies argues that the law was not in the best interest of the citizens of Cochabamba. In this law it was stated that institutions could get the concessions to supply the drinking water in an area if the area had more than 10,000 inhabitants and the water system would be financially self-sustaining. Although it did not state what kind of institution could apply for the concession rights, the requirements favoured large private enterprises. Also, the institution would acquire the right to supply the water in the whole area and would be the owner of all water in the area. This means that also the water in the self-made wells of the farmers surrounding the city of Cochabamba, would be property of the institution and that every drop of rain belonged to the company which had the concessions (Assies 2003, 17). Robert Albro stresses that not only the farmers had private wells, but that also rural and peripheral communities often had their own community-based water resources which the participating families paid, constructed and maintained themselves. All water resources would belong, in the case of Cochabamba, to Aguas del Tunari and the company would have a “monopoly over all the water resources” (Albro 2005, 250). Also important is that the law legalised price increases, without a maximum percentage increase of the price of water. According to the law, the company had to comply with a range of criteria, such as transparency and redistribution, but the law also stated that financial sufficiency had to be given priority over all other criteria when there would be conflict between the criteria. In this way the law guaranteed that the institution could not have a negative account. A last point made by Assies is that users, communities, local organisations and municipalities could not have any influence on the institution, because its functioning would be judged by a superintendency, which is a national institute, existing of representatives chosen by the Senate and the President (Assies 2003, 18). Although Assies agues that the new law was not in the best interest of the citizens of Cochabamba, the World Bank pronounced her support for this new law and specifically praised the decision that the water tariffs be adapted to the costs of the services. Furthermore the World Bank supported the law because concessions could not only be rewarded to municipal water utilities but also to cooperatives and private companies. This meant that a municipal water utility had to comply with the standards set in the law, otherwise it would be replaced by a cooperative or a private company. The decision to award the concession rights did now longer depend on local politics, but on the standards set out in the new law (World Bank 1999, 141-142). The World Bank report paid special attention to the privatisation of the water supply services in Cochabamba. The World Bank summed up the costs Aguas del Tunari would have and recognised that the company had to make a huge investment. Furthermore the report predicted that the farmers probably did not want to pay for their irrigation water and that the rates for water would increase sharply. Still the World Bank concluded its analysis by stating that the consumers just had to comply even if political pressure was necessary. It fully supported the decision of the Bolivian government to give no subsidies (World Bank 1999, 152). The support of the World Bank for law 2029 and the privatisation of the water facilities in Cochabamba can be explained by the policies the World Bank promoted. Since the early 1980s, privatisation has been one of the neo-liberal policies the World Bank promotes together with the IMF in developing countries such as Bolivia. Privatisation was part of the ‘Structural Adjustment Programs’, programmes that a government had to follow to acquire loans to pay of their debts (Barlow

This coalition “made it possible to carry out increasingly unpopular and often anti-popular economic policies at the cost of excluding most of the population from having any real influence on political decision-making” (Assies & Salman 2003. education and social services and privatise state enterprises such as water facilities (Barlow & Clarke 2002. 156). the World Bank notified the Bolivian government that it would refuse to guarantee a US$25 million loan to refinance water services in the city of Cochabamba unless the local government sold its public water utility to the private sector and passed on the costs to the consumers” (Barlow & Clarke 2002. The fourth and fifth argument show that a large part of the population. The outcome of the water war thus does not only represent a victory over privatisation.J. Each election one of these parties received the largest number of votes which made it possible for these three parties to govern in a coalition or ‘pact’. The fourth point that Assies and Salman make is that a diverse range of people participated in the water war. This indicates that by praising the Bolivian government for their new law and the privatisation of the water utility in Cochabamba in the report of 1999. Therefore Assies refers to Bolivia as a ‘pacted democracy’ (Assies 2004. 175) (Consult the chapter of B. Since the mid-eighties of the twentieth century the formation of Bolivian governments were based on ‘pacts’ among the party leaders of three political parties. while the Coordinadora did have legitimacy among a large part of the population. Secondly the government did not want to recognise the Coordinadora as a legitimate intermediate. the Movimiento de la Izquierda Revolucionario (Movement of the Revolutionary Left. Important is that none of these parties has ever received the absolute majority of the votes of the people. This indicates that the government is not willing to listen to the demands of the people. First of all the Bolivian government instructed special police forces to repress the protests if necessary with violence. 27-28). Maude Barlow and Tony Clarke even state that “in 1998. Governments were obliged to take part in global free trade and reduce their public spending on health. Thirdly. MIR) and the Acción Democrática Nacionalista (National Democratic Action. The way in which the government responded to the popular movement in the water war reveals the nature of the Bolivian government. Verbeek for more general information about neo-liberal policies of Bolivia’s governments. Because privatisation is part of a neo-liberal ideology. MNR). These parties were the Movimiento Nacionalista Revolucionario (Revolutionary Nationalist Movement. Resistance against ‘pacted democracy’ The success of the popular resistance in the water war has been made possible. therefore to form a coalition was the only option to create a new government (Crabtree 2008. the World Bank and the IMF). the water war also symbolises a victory over ‘pacted democracy’. was praising its own compelling recommendations. political parties did not play a role in the formation of the final agreements. while normally political parties should have no problems representing the demands of the population. The anthropologists Willem Assies and Ton Salman stress five important features of the water war which indicate that the government did not pay any attention to the demands of the Bolivian people and tried to exclude them from having any political influence. but also about the fact that the population was not informed about the negotiations with Aguas del Tunari. the outcome might be regarded as a victory over neo-liberal policies. This argumentation leads to the conclusion that because the popular resistance endured the violent repression of the government. because the people endured the violent repression of Bolivia’s government during the water war. 1). 7). The fifth argument is that the protests were not only about the tariff hike. 154). and not just one population group distrusted the government which indicates that they did not feel represented by the government (Assies & Salman 2003. 32).73 & Clarke 2002. what the World Bank really did. Archbishop Tito Solari and the national Ombudsman played the role of mediators because there was no political party which could represent the wishes of the people. The government was forced to reverse the privatisation of the water supply system of . Therefore I will now analyse the meaning of the fact that the people did not back off. ADN). It was not only one population group that protested against the government policies. Instead it tried to negotiate with the Civic Committee and ignore the Coordinadora.

Postero emphasises that the LPP “was not a new system of participation designed by indigenous people in a bottom-up process to gain political power or control over the state” (Postero 2006. 257-258). now recognising Bolivia as a state with different ethnicities and cultures. Each community has its own water supply system which is financed by the members of the community and managed by a special water committee. the Law of Popular Participation (LPP) which recognises rural as well as urban traditional organisations. Furthermore the Constitution explicitly stated that the rights of indigenous people should be recognised and respected (Postero 2004. 89-90). With this money local development. In these areas neighbours set up a collective water system. Contrary to the top-down implementation of the LPP. The marginalisation of the indigenous population in Bolivia has been present since the intrusion of Europeans in America. The traditional organisations could become organizaciónes territoriales de base (territorial grassroots organisations. 79). local councils and neighbourhood councils. The OTBs were given the opportunity to present a proposal about how the budget should be spent (Postero 2006. Furthermore organisations lost instead of gained influence when they had no support from governmental or other institutions. they share the costs. the water war represented a bottom-up process which achieved the protection of the usos y costumbres (existing uses en customs) before the Bolivian law. 193-194). Resistance against the marginalisation of indigenous rights Under law 2029 and with the privatisation of the water supply system the customs from the indigenous population were not respected. 196-197). Also in 1994 a new law was passed. such as education and infrastructure was to be financed. and a water committee is set up to manage the water supply (Laurie. such as unions. This form of water management is also established in peripheral-urban areas which are not connected to the municipal water services. Article One of Bolivia’s Constitution was changed. Also. I will now discuss whether the success of the popular resistance also indicates a turning point with regard to these indigenous customs. Bolivian governments did make efforts to counter the marginalisation of Indians and developed policies which acknowledge ethnical difference (Postero 2004. The attempt of President Gonzalo Sánchez de Lozada (1993-1997) and the MNR to increase the rights of the indigenous people. They have received the authority to allocate the regional development budget apportioned to the municipalities. The Spanish rulers clearly differentiated Indians and Spaniard under the law. 129) and choose the members of the vigilance committee which checked the budget implementation (Albó 2002. Albó stresses that a lack of resources and training limit the effective functioning of the vigilance committee. When Bolivia became an independent country in 1825 these standards remained in existence. In 1994. not all indigenous people understood how the law functioned and although information meetings were organised not everybody spoke Spanish (Postero 2006. There were dual standards which benefited the colonial powers. was the last effort of the Bolivian government to counter the marginalisation of the indigenous people before the popular resistance in Cochabamba. . The LPP was designed by the state without the participation of civil society. Although the marginalisation has a long history. Therefore popular resistance made use of specific indigenous argumentation against the privatisation of the water supply system. Furthermore the law has given more responsibility to the municipalities. OTBs). One of these existing customs is the collective management of water which is an element of the collective labour system in traditional communities. Andolina & Radcliffe 2002.74 Cochabamba and had to answer to the demands of the people which indicates another turning point in Bolivia. Members of the community are automatically regarded as participants of this system and the committee will allocate the water among them. 129). 139). Rights with regard to water are part of the indigenous customary law which reflects the existing uses and customs. because the municipal governments control the allocation of resources and the organisations did not (Albó 2002. as legitimate organisations (Albó 2002. 79).

these movements can also come up with alternatives for privatisation. An outcome of the water war was the amendment of law 2029 which included the recognition of the existing uses and customs before the law. Andolina and Radcliffe describe the water war as “a call for the defence of cultural heritage by a diverse set of interest groups. Theoretically the popular resistance in Cochabamba had the potential to become a movement which develops an alternative water management facility. Rural as well as urban and indigenous as well as non-indigenous population united around the idea that the existing uses and customs should be protected. united by a seemingly common idea of how cultural practices are threatened by market forces” (Laurie. “A change in ownership of water and sanitation towards collective public property that brings responsibility and empowerment to citizens. The slogan ‘the water is ours’ was often used in the protest marches and the Coordinadora designed posters on which “respect was demanded for the rights of drinking water committees and cooperatives with their ‘uses and customs’” (Laurie. because it countered the privatisation of the water facilities in Cochabamba. which is distributed in public and in this public space the participation of popular groups is possible (Terhorst 2003. This was the first time in this period of neo-liberal reforms that indigenous collective water rights were recognised in Bolivia before the law (Laurie. This is usually done by local or national campaigning against privatisation plans. The term ‘public-popular’ indicates that water was regarded as a non-exclusive and non-rival good. in April 2002 . which undermined the functioning of the water committees.75 The protection of the existing indigenous uses and customs was used as argument in the water war against law 2029 and the privatisation of the water supply system. Thus they do not only want to stop privatisation. who are consumers and take on the parts of ‘running’ the water provision in tandem with the workforce” (Terhorst 2003. The popular resistance in Cochabamba indeed demanded for the water supply system to be managed by the people themselves. After two years. 265) (For more information about indigenous history and indigenous movements consult the chapter by McCall). is the core of this arrangement. Andolina & Radcliffe 2002. This change of ownership has been implemented in several ways. The water war in Cochabamba can best be described as the second type of movement Terhorst discusses. Besides the defence of water facilities against privatisation. 265) which leads to the conclusion that the outcome of the water war also symbolises a victory for the indigenous population of Bolivia and represents a turning point. It argues water is a public good and people have the right to water. The Coordinadora made use of the rural-indigenous ideas of water as a collective right. but also think ahead and sometimes propose public alternatives. The second type of movement opposes the privatisation of water facilities. Andolina & Radcliffe 2002. 105-106). Law 2029 stated that the concession holder had the right to supply water in the whole area. Consequently Laurie. Immediate after the water war leaders of the Coordinadora joined the interim board of directors. The third type of movement Terhorst distinguishes aims at finding alternatives for public institutions that provide water facilities but fail in doing this properly. This type of water movement proposes improvements of the publicly run water facility (Terhorst 2008. Andolina & Radcliffe 2002. After the water war the management was restored to SEMAPA and it turned into a public-popular arrangement. This indicates that the popular resistance in Cochabamba had the potential to become a movement which develops an alternative water management facility. The first type of movement tries to change the way water is valued in the world. as an autonomous company led by citizens. 155). In this section I outlined three ways in which the direct outcome of the water war represents a turning point for Bolivia. In the next section I will discusses whether the water war also represents a turning point for the population of Cochabamba and Bolivia in the long term. 153). According to the classification of water movements by Terhorst there exist three types of water movements. Public-popular water management and water as a human right As stated above this section will analyse the meaning of the outcome of the water war in the long term. On the local level this asks for an investigation of what happened to the water supply system of Cochabamba after the water war. 267).

The population of Cochabamba could participate by electing representatives onto the board of directors of the company (Shultz. The constitution has a decisive power with regard to national policies on water and water management. It is difficult for citizens to understand the technical side of water supply. which minimizes their control over the functioning of the company. The Coordinadora has also created a support group which has to debate how to change the administration of the company to enlarge the participation of citizens. only half of this number actually is connected to the water supply system (Shultz 2007. the realisation of the participation of citizens in the publicpopular management of SEMAPA can also be questioned. the public-popular management will in some form always be an ideal situation that can never be completely realised. In the first election. This indicates that the actual service level of the water supply system has not increased significantly (Crabtree 2005. 29). This indicates that participation of the population is implemented on the level of policymaking. The constitution was drafted by a Constituent Assembly of which the delegates were chosen in national elections in 2006 (Olivera. 3) for the first election of board members of the water facility. 2007. This also indicates a victory for the Coordinadora. 29). Now privatisation is even banned by the law (Van Schaick 2009). Because the employees probably have more knowledge of the water supply system then ordinary citizens. The company is of course bound to national regulations (Terhorst 2003. Besides this first critical remark. Although there has been progress in connecting poor neighbourhoods to the water system. there are still a lot of households in Cochabamba without access to running water. 151). Although I do not want to deny that the management of SEMAPA changed and the company. because not literally everyone can participate. as Terhorst emphasises. This takes place with regard to the shaping of the plans to expand the water supply of SEMAPA to parts of the city that are not yet connected to the water utility (Terhorst 2003. Orellana & Whitesell 2007. Important to note however is that the water shortage which was already a problem in Cochabamba in the seventies of the twentieth century. And a structural barrier to substantially changing the water supply system is the lack of local autonomy. 4-8) and was approved by Bolivia’s Congress in October 2008 and in a nation-wide referendum on 25 January 2009. they could have an important influence. This description of the functioning of the management reveals that SEMAPA has indeed become an alternative water supply system and it indicates that the Coordinadora played a significant role in this process.This indicates that the content of the constitution and more specifically its sections about water. Terhorst points to the lack of socio-technical interaction. 144-154). was not resolved with the installation of the public-popular management. The preamble of the new constitution refers to the water war as one of the elements which led the population of Bolivia to the decision to construct a new constitution (Nueva Constitución política del Estado 2008. The slogan of the Coordinadora in the water war was ‘The water is ours’. Furthermore the privatisation of water supply systems is explicitly banned in Article twenty. On the national level an analysis of Bolivia’s new 2009 constitution might give insight into the meaning of the water war in the long term. are probably also influenced by the water war and its outcome. Furthermore the employees of SEMAPA did not make use of their opportunity to participate in the discussions about the functioning of the company according to the research of Terhorst. However as van Schaick . because the constitution is the highest order of law in a democracy. users for example chose a pastor to be on the board (Crabtree 2005. 4). I would like to add that the organisations and citizens who do participate may have their own agenda or just have different ideas than other organisations or citizens who do not participate. Schultz even states that of the 50. Public participation in the control of the water supply can be said to have increased through the cooperation with local water committees.76 the first election for the board members was held. “operates on the assumption that participation of the citizen users is important and is looking for ways to implement this participation” (Terhorst 2003. 151). With this constitution the water indeed became of the people. 2). Schultz stresses that “less than 4 per cent of eligible voters went to the polls” (Shultz 2007.000 people who should have access to running water. The constitution states that water is a human right and that the government is responsible for the access to water. 3). Through a constitution the people of a country lay down on paper which power they give to the government and which rules a government should follow. because the coalition turned against the privatisation of water facilities and demanded that the privatisation of the water facility in Cochabamba be withdrawn. because it is recognised as a basic right.

This Coordinadora was again led by Oscar Olivera and again functioned as an umbrella organisation that structured popular mobilisation (Crabtree 2005. Fourthly just like during the water war. but they also became involved in the struggle of people in Bolivia with other natural resource issues. evaluate changes and present alternatives. 166). This power develops when actors are not satisfied with the existing order and try to change it (Tapia 2008. it also wants to defend life itself. Because the Coordinadora provided a place for people where they could debate political issues it helped building a constituent power.77 stresses “while Bolivia’s new constitution undoubtedly represents a major advantage for the country’s social movements. One example that Terhorst mentions is that the Coordinadora supported the coca farmers (Terhorst 2003. the events and the processes that create a certain political order. The representatives of a particular group attended meetings of the Coordinadora on rotational basis and represented the ideas and interests of their community or organisation. The development of the gas war also shows resemblance with the water war in Cochabamba. the Coordinadora del Gas was created in El Alto in 2003. The population of Cochabamba have gained influence on the management of the city’s water facility. Contreras Ochoa). Furthermore Luis Tapia stresses that “the coordinadora helped promote the campaign for a constituent assembly” (Tapia 2008. The analysis of the public-popular management of the water facility in Cochabamba and the new constitution of Bolivia point to important social changes and changes in power relations in the long run. water has become a basic right and privatisation of water facilities is illegal. Renzema and A. but also that the protest of diverse population groups together in the water war served as an example for the gas war. With the term ‘constituent power’ he refers to the actors. 62). The Coordinadora not only had the aim of making water facilities public ownership. Still. Secondly. 3536). The creation of an alternative political space In this section I will continue the analysis of the meaning of the water war in the long term. 162). the government again reacted by allowing police forces to use force to end the protests. 165). Coordinadora por la Defensa del Agua y de la Vida. the . when people protested against the plan of the government to export Bolivian gas to Mexico and the United States through Chili (For more information about the causes of the gas war consult the chapter of M. It can be said that the Coordinadora. 166). had a widespread influence. This indicates that the Coordinadora itself worked as a kind of assembly and according to Tapia it “became a form of constituent power because it opened up political spaces far broader and more dynamic than anything organized by the state or envisaged in the constitution” (Tapia 2008. the governments’ reaction only led to more people going onto the streets and joining the protests. It can for example be questioned what kind of access to water the government is responsible for. The conclusion can be drawn that besides protesting against the privatisation of the water supply system of Cochabamba and besides promoting an alternative kind of water management. the real test will come when its often-vague and unclear language is actually legislated” (Van Schaick 2009). First of all road blockades played a major role in the protests. because delegates of communities or social organisations were given the opportunity to debate the water supply system. The Coordinadora functioned as a direct democracy. under the new constitution: whether it implies a connection to the water supply system or access to water in bottles. the participants of the gas war consisted of diverse population groups (Spronk & Webber 2007. These resemblances make it possible not only to argue that the Coordinadora por la Defensa del Agua y de la Vida had an important influence on the manner in which civilians organise. these social changes and changes in power relations should not be overestimated. 23). which was a new form of popular organisation. as has been argued above. The Coordinadora not only became involved in the management of SEMAPA. but as its name says. And thirdly. Furthermore a new Coordinadora. However the emphasis will now be on whether the water war had any significance for other discontents of Bolivia’s population with regard to natural resources and whether it had any influence on the social relations and power relations in Bolivia in general. it helped to create actors which were not satisfied with the existing order (Tapia 2008.

On a national level the impact of the water war seems to have a more positive result. The population of Cochabamba and the population of Bolivia have indeed gained political power. Nash (ed). Houndmills: Palgrave MacMillan. R. Secondly the success of the resistance symbolises a victory over ‘pacted democracy’ because the popular resistance endured the violent repression of the government. in J. An important critical remark however is that it still remains to be seen how this will work in practice. Conclusion This chapter has analysed the meaning of the water war for the inhabitants of Cochabamba and the population of Bolivia. because the demands of the popular resistance were fulfilled by the government. An Anthropoligical Reader. in R. this power should not be overestimated. (2005) ‘The Water is Ours. The outcome of the water war thus symbolises changing social relations. because the indigenous peoples gained recognition and changing power relations.78 Coordinadora also helped to construct an alternative political space. From this analysis it can be concluded that the water war in Cochabamba is more than a national and international symbol of successful popular resistance. The popular resistance in the water war has had an important influence on popular mobilisation in Bolivia through its functioning as an example for citizens how to organise and speak up. X. (2002) ‘Bolivia: From Indian and Campesino Leaders to Councillors and Parliamentary Deputies’. Diversity and Democracy. It can even be concluded that the water war has led to general social changes and changes in power relations because the Coordinadora was a form of direct democracy which can be regarded as an alternative political space which helped to develop the popular demand for a new constitution. . Carajo!”. because the indigenous collective water rights were recognised by law. 74-102. but. such as a lack of technical knowledge. Bibliography Albó. Thirdly. pp. because the Coordinadora has been an important form of organisation during the gas war. Multiculturalism in Latin America.). as argued. The successful popular resistance against the water rate increases and the privatisation of the water supply system of Cochabamba represents a turning point in Bolivian history in three different ways. the outcome of the water war symbolises a turning point for the marginalisation of indigenous peoples in Bolivia. Also there are structural barriers with regard to this public participation. Albro. Deep Citizenship in Bolivia’ water war’. From the analysis of the meaning of the popular resistance in the long term with regard to the water management in Cochabamba a less positive conclusion can be drawn. Oxford: Blackwell Publishing Ltd. Although public participation is possible since the water supply system of Cochabamba is a public-popular organisation. 249-271. Furthermore the structure of the gas war shows much resemblance with the water war. Firstly the withdrawal of the contract with Aguas del Tunari might be seen as the first victory over neo-liberal policies implemented since 1985 by Bolivia’s governments and the promotion of these policies by the World Bank and the IMF. Sieder (ed. Social Movements. Indigenous Rights. the actual participation by the population is low. In Bolivia’s new constitution water has been recognised as a human right and privatisation of water facilities is not allowed. The water war has also influenced Bolivia’s natural resource politics. which might indicate that the successful popular resistance in the water war has been an example for the popular resistance in the gas war. pp. The citizens of Cochabamba have influence on the functioning of the water facility and the Bolivian population have a right to water. Furthermore still half of all citizens of the city do not have access to running water.

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pp.uk/projects/new_projects3. No. pp. Bolivia. L. 34. 1. the case of Cochabamba. (2008) ‘Reclaiming public water’: changing sector policy through globalization from below’. http://wedc.80 Shultz. & J. No. J. DC. Crabtree & L. Pittsburgh. 4. A Legend With Mixed Results. Terhorst. P. (2003) ‘Bolivia: The Water War Widens’. World Bank (1999) Bolivia: Public Expenditure Review. Vol. 2.).php?id=26/ (accessed 10 November 2008). (2007) Water in Cochabamba After the Water Revolt. PA: University of Pittsburgh Press. Washington. online briefing paper from the Democracy Center. Progress in Development Studies. 34-35.pdf (accessed 27 January 2009). pp. P. (2008) ‘Constitution and Constitutional Reform in Bolivia’. Whitehead (eds. 103-114. J. Report No. Unresolved tensions: Bolivia past and present. MSc thesis WEDC. Spronk.org/bolivia/investigations/water/documents/SEMAPA_brief. 31-47. Webber (2007) ‘Struggles against Accumulation by dispossession in Bolivia: The Political Economy of Natural Resource Contention’.R.democracyctr. pp.ac. 160-171. in J. http://www. Latin American Perspectives. No. 8. Shultz. S. Vol. Tapia. Vol. (2003) Public-popular organisations. NACLA Report on the Americas. Terhorst. 19232-BO. . 36.lboro.

indigenous peoples. an analysis of the interaction between the mining sector and the natural environment it exploits. two deaths have been reported in 2005. There have been numerous cases of communities and natural reserves being affected by the contamination and destruction caused by mining of various resources. on top of being rich in all kinds of natural resources. Therefore. for example. 2007). I will evaluate the efforts taken to mitigate the negative effects of petrochemical companies on the environment. Keywords: Environmental Justice. but progress is slow (D. Due to activism by transnational social movements. Although the media have not recently paid as much attention to it as to cases in Peru. in this article I will focus upon environmental consequences of oil and gas mining in Bolivia. environmental damage from mining is an important issue. I will also investigate the social aspects of these environmental costs. the mining industry is now much more aware and cautious of the problems they may cause. The main argument of protest of the farming communities in Rio Blanco is the enormous environmental damage the project is expected to bring. as well as recent policy developments since the inauguration of the Morales administration. it has also led to violent protests and deep social conflicts. environmental policy The previous chapters have pointed out the major controversies related to policies of natural resources in Bolivia. in the debate not much attention has been paid to the consequences of natural resource exploitation for people and nature. The cost of degradation of the Bolivian environment 24 See Mining Watch. North 2006. is very relevant to the topic of this book.81 Natural Wealth in Bolivia: fortune or misfortune? Emilie Ph. from hydrocarbons and minerals to forests. Observatorio de Conflictos Mineros de America Latina . Keeping this natural wealth can be very important for current and future social and economic welfare in Bolivia. The concept of Environmental Justice will be used to analyse the link between environmental damage such as oil spills. Relevant Bolivian environmental policy regulating the hydrocarbon sector will be evaluated. such as the problems facing communities. Szablowski. mining. even though this has not often been highlighted like the water war described above. for example threatening rare wildlife in the area with extinction (Pype. created by degradation of their living environment. the politics of resources. These have had a major influence on the social and political stability of the country in the last few decades and even the last two centuries. and investigate to what extent environmental considerations are taken into account by the mining companies of Bolivia. 41). although with mixed results. In contrast to previous decades. Bolivia is endowed with an extremely high degree of biodiversity. Fokkelman Abstract: This paper will outline the major socioenvironmental problems associated with hydrocarbon mining in Bolivia in recent decades. In some cases. A case illustrating this is Peru: in the repression of community protest against a copper mine pressed by the national government. hydrocarbons. In many parts of Latin America. and social injustices facing indigenous and peasant communities. Brazil and Ecuador 24 . communities increasingly take the opportunity to prevent such destruction. in L. However.

The US Environmental Protection Agency. focusing more on the equal involvement of stakeholders in the decision making process has a more positive view. 3). Costs of substituting polluted waterways for drinking water from somewhere else is also included in this figure (Slunge and Jaldin 2007.’ (EPA 2009) This definition places more attention on the effective prevention of environmental problems for communities and individuals.. I will use the concept and theory of environmental justice (EJ) and its antonym. such as through ecotourism projects and sustainable forestry. and when access to information. have to be consulted and have influence on the decision making process (McLean 2007. including damage from El Niño phenomenon for example. once they have been started. who divides the concept into 3 circles of concern: the recognitional. participation in decision making. From these definitions it follows that the theory of environmental justice is made up from a few interacting elements.] It will be achieved when everyone enjoys the same degree of protection from environmental and health hazards and equal access to the decision-making process to have a healthy environment in which to live. learn. one of the founders of the Environmental Justice movement in the US (2009). in Latin America this is definitely not the case (Carruthers. 25). according to Robert Bullard. One interesting theory of environmental justice that combines these elements. at any jurisdictional level. and natural resources are equally distributed. Recognition of difference. implementation. of living habits and traditional knowledge. colour. regulations. meaning equality of distribution of environmental risks and benefits. even without consideration of revenue flowing from other ways of using it. and enforcement of environmental laws. there is a wide gap in practice between North and South America. such as women. [. where it was used in relation to specific cases of dumping of toxic waste near black or poor neighbourhoods. is the one from David Schlosberg. 2008. and the possibility of ever reaching this situation. The most important thing in this dimension is equity of participation: all parties that have a stake in an area. but less easy to work with. and when access to environmental investments. whether direct or indirect.’ (Central European University 2009) It can be questioned whether this condition of EJ. national origin. a definition by the Central European University in Hungary is the following: ‘A condition of environmental justice exists when environmental risks and hazards and investments and benefits are equally distributed with a lack of discrimination. There have been two cases of oil companies (Texaco) being brought to trial for 'intentionally' polluting by spilling . This makes the European definition an interesting goal for the future. The concept of this type of injustice first came up in the US in the 1970s. and access to justice in environment-related matters are enjoyed by all. racial groups. 1). While in the US there have been numerous cases of companies brought to trial for the environmental degradation they caused (the most well-known is the case presented in the 'Erin Brockovich' movie). The third refers to the procedure of deciding on how and where to begin a (petrochemical) industrial project. It can therefore be beneficial and even profitable to preserve the natural environment. distributional and the procedural justice (McLean 2007. is a first step to reaching environmental justice. The second circle has to do with fair and equitable distribution of problems and benefits of economic activities. which can be aggravated by already existing erosion of soil and absence of forests. There is still some discussion about the exact definition of environmental justice. and work.82 has been estimated to exceed 6 per cent of Gross Domestic Product (GDP). To shape my research on this topic. For example.. is ever attainable. Nowadays. less educated groups and even developing countries as a whole have to bear. the number of cases of corporations and institutions indicted for environmental damage that make it to court is very small in comparison. but not necessarily: its basis is mutual respect. it refers to the inequitable burden of various environmental problems that minority groups. This can be done through legal entitlements to own territory. stating that: ‘Environmental Justice is the fair treatment and meaningful involvement of all people regardless of race. Even after the rather long history of about 40 years of environmental justice theory and practice. and policies. benefits. or income with respect to the development. changing the way it is going and possibly ending it. First of all. 27-8). environmental injustice. and is therefore more workable.

How does mining affect people and the environment? Bolivia has a long mining history dating back to the Spanish Colonial era. tin. cadmium. The main hydrocarbon fields such as San Antonio. In this paragraph a number of environmental problems associated with mining will be explored. although negligence might have been easier to prove in court. IMF) in the 1980s. The main question to be answered in this article will be: to what extent is environmental injustice a problem with petrochemical industry in Bolivia. 7). Like in many other countries around the world. something the concept of environmental justice also highlights however. not in the US. broad-based economy with the proceedings (Slunge and Jaldin 2007. The most important natural resources found in Bolivian soil are metals such as gold. 2007). lead and antimony. although fluctuating world prices have made it difficult for Bolivians to build a stable. In areas where population is already poor. have to be able to live free from negative consequences. 2009). Foreign companies such as Repsol (Spain) and Texaco (USA) were asked to invest in technologies in return for a major share of the revenues. mining has resulted in significant environmental damage. Apart from actual jurisdiction in courts. CIA 2009). where environmental concerns cross with older forms of social activism. If the place they live on is not in their possession. Margarita (oil) and Vuelta Grande (gas) started to be exploited heavily (Energy Information Administration. Together. I will outline the most common controversies between hydrocarbon mining and the environment in the first paragraph. Large and medium scale mining activities were intensively developed in several regions of the country (Salvarredy-Aranguren 2008. govern the behaviour of petrochemical companies in Bolivia. In these cases. so it will not be further elaborated here. because of the American origin of the companies (Corp Watch. 2008). a destructive mine can put increasing pressure on people. in paragraph three the question will be how international agreements. 2). these resources make up a sizable share of the GDP. 2007 and Economist Intelligence Unit. both found that the appeal was invalid: the judges stated that the lawsuits should be filed in Ecuador and Peru. Along with this. the struggle against a polluting mine will generally add to the social struggle for land rights (Carruthers 2008. Mining for oil and gas specifically began in the 19th century but intensified heavily as a result of the Structural Adjustment Programs (SAP) promoted by the International Financing Institutions (World Bank. indigenous tribes filed cases against the company in a US court. How did it evolve over the years and what are its main characteristics? Next. as well as the communities involved. In the second paragraph the Bolivian environmental policy will be discussed.83 oil in Peru and Ecuador. Sabalo (both oil and gas). between governments and industry sectors. aside from the oil and gas discussed here (World Factbook. The cases have proceeded for more than a decade now because the US courts. such as with communities living in Bolivia's forests. The procedure of exploration and exploitation will be described. and then a summary of the most well-known cases of pollution and damage will be given. Schlosberg (2003) calls this the procedural dimension of EJ. and at least be able to have a say in the decision making process whether and how extraction will take place. the connection to the livelihood of communities will be explained. and this is especially true in Latin America. silver. . it can be argued that mining in general can be an environmentally sustainable economic activity. when it is kept at a small scale. is the idea that communities living on or next to a site of commercially viable gas or oil. In this regard. such as claims for land. tungsten. iron. in Texas and New York. Environmental impacts from mining In comparison to other sources of income. and does the nationalization of the industry change this situation? In order to give an answer to this question. does not contaminate and benefits both industry and communities nearby by providing jobs for example (Auty. The last section will be dedicated to the new environmental policy of the Morales government and will try to find out how it differs from the old policy. 1300). This has also been outlined in the first chapter about the history of oil and gas mining. EJ has a lot to do with social justice.

Levels of flaring vary by month but have been as high as six hundred million tons of CO2 in the year 1997 in the Chaco region alone. the emission rate would likely increase significantly (Slunge and Jaldin 2007. Moreover. is not a large producer of greenhouse gases and the emission of one ton CO2 on average per capita places Bolivia well below the Latin American average of two and a half tons per capita. A common activity at the head of a gas field is flaring of gas. 2007: 6). This also involves temporary settlement of workers and building of roads. In the Chaco oil field. pollute the air and contribute to global warming. Heavy seasonal rainfall flowing from El Niño contributes to spreading contaminating substances. flaring has been monitored and reduced to a quarter of that figure 10 years later (Chaco. spills averaged between 5077 liters annually in 1997 and 311 liters in 2007.84 Hydrocarbon mining in its current state however. which. in which they bury explosives at a depth of about 10 meters. and so if these were included in the figure. such as hunting and logging of special species of trees. The next stage is its transport to the location of its use or treatment into secondary products. the greenhouse gases its products release when burned or used. CO2-emissions from deforestation should not be overlooked either. This became an obligation only after . the blasts will give an underground 'echo'. in order to build the pipeline. 2007: 3). oil and gas extraction is limited in time and not renewable. Once the oil or gas field has been discovered. Any possible new leaking of oil has to be prevented by building walls around the wells. after an oil field has been exhausted. 8). In the third stage. The second is the actual drilling for oil and pumping it up. The consequences of hydrocarbon mining depend on the methods used for extraction of the oil and gas reserves. The soil that has been polluted with hydrocarbons needs to be taken away to a processing plant. Besides the obvious destructive consequences of the explosions for the forest and soil. and new trees planted (Chaco. The first stage is exploration. and therefore unsustainable for the future. a pumping installation will be large or small. Oil and gas spills not only contaminate the surface of land and water but they also pose a high incendiary and explosive risk (Chaco. or looking and probing to find out the exact presence and exact location of the hydrocarbons. for multiple reasons. however. Bolivia. 60). Depending on the size of the field. crossing numerous people's territories (Gavaldá Salacín. By detonating the explosives. Firstly. 62). The need for refinery also influences the size of the installation. especially in wet tropical areas. Secondly and most important for this article is the destruction and contamination of the natural environment these resources cause during extraction and processing. Also. there is often an influx of people doing other exploitative activities. both during exploration activities and during production. helicopter platforms and temporary roads (Gavaldá Salacín 2005: 60). This releases a continuous flow of CO2 into the air. as we will see from a few case studies below. agroindustrial activities are generally set up to make use of the short-lived richness of former forest soil (De los Rios. the pumping installation has to be removed and the area has to be cleaned. 19). That means they will open paths of 2 meters wide and about 20 kilometers long. Effluence of oil or gas into drinking water systems close to a pumping station is a problem that is harder to control (Chaco. 7). After the opening of a road in a dense tropical forest. All these activities have an invasive effect on the environment. This causes invasion of hundreds of kilometers of land for the length of the pipeline. Corrosion is a major problem with iron pipes. the location of hydrocarbons can be detected. there will be a need for construction of mobile camps for employees. forest and farmland areas along its paths have to be cleared. After a section of tropical forest has been cleared. secondly the companies will start to dig various holes at different depths to pump it up. threatening the health of people not even close to the mines (Gavaldá Salacín. The last stage is the eventual closing down of the concession when the resources are depleted or when it becomes too expensive to operate. and with use of seismic detection systems. contributing to the problem of global warming and causing acid rain that degrades tropical rain forests. a mining company will execute a series of seismic exploration projects in a given territory. As a last stage. unsustainable business. Since then. In the initial exploratory stage. just like in the exploratory stage of hydrocarbon mining. but also a costly activity for mining companies. the transportation of hydrocarbons through pipelines. Regular checkups and maintenance of the pipes are therefore essential. 7). is essentially a dirty. has invasive consequences for the area's residents. the main risks are ruptures of pipes or seepage. There are four stages in this type of mining.

Figure 1: Native reserves and forest concessions in Bolivia (source: Slunge and Jaldin. the most important issues of environmental justice will be highlighted. 30) . This is an example of how a people's right to its own different lifestyle is being overlooked. there are many native reserves (Territorios Comunitarios de Origen. In the past this has often led to intrusions by oil companies. They disturbed the culture of these people by offering them toothbrushes and buying up the animals hunted by the Chimán. Some of the cases which have received international attention for their influence on neighboring communities. When outlining the cases. Repsol has intervened in most reserves: about seventeen TCOs in the Amazon and Chaco regions have been affected more or less by its activities. 61) and how this forms a problem for equal recognition as theorized by the Environmental Justice movement. when new environmental legislation was enacted in Bolivia. TCO) in Bolivia. because of the importance of the hydrocarbon industry to national politics. Of these. there have been numerous reports of environmental problems in Bolivia associated with this type of mining in Bolivia. Most of them involve problems with the locations of oil and gas fields or pipelines. there is enough information to conclude that the stakes are high for the people affected by mining. will be touched upon here. As shown in the first figure. A case of social impact during explorative activities is that of Repsol in the Chimán territory Amazonian region since 1999. This will be discussed in more depth in the next paragraph. the locals stopped hunting for subsistence. even by good intentions (Gavaldá Palacín. As a result of this. Even though there has not always been a thorough scientific study of specific problems. instead focusing on the sale of hunted animals to the company workers and using the money to buy alcohol. The overlap between legal indigenous territory and the oil concessions is shown in the figures below.85 1995. most of which have potential for hydrocarbon mining (figure two). Examples of environmental injustice As a result of the described process of hydrocarbon mining.

With regard to the construction phase of pipelines. 31) Most often. ultimately. who live in the Chaco national park. In relation to Schlosberg's dimensions of environmental justice. each plays a part in the conflicts. east from Santa Cruz. as will be elaborated in the second section of the article. which makes it harder to meet the dimension of equal distribution of cost and benefits. 62) so that the process would not be stalled. the pipeline has been in operation since 1999. in only a few cases the communities can benefit economically from provision of jobs. as a result of which the village was left without water and electricity for two months. Apart from the deforestation of thousands of hectares. Carmen Rivero Torres. Especially since oil and gas mining nowadays require much more technology than man power. . Owned by Enron and Shell in the Bolivian section. crossing a number of sensitive ecosystems and seriously threatening the livelihoods of indigenous Guaraní. 62). A small village.000 kilometers. 284). after much problems with its financing because of protests from affected municipalities. the social impacts were huge. was flooded by 2000 workers.86 Figure 2: Native reserves and mining concessions in Bolivia (source: Slunge and Jaldin. through San José de Chiquitos to Puerto Suarez and. This shows how intense the debate became and stresses the importance of environmental justice. The pipeline runs for about 3. the building area had to be protected by the military (Gavaldá Palacín. the forest communities involved are small and do not have much contact with other people (Gavaldá Palacín. Chiquitano and Ayoreo communities. Local people were confronted with harassment and violence. because of the wide influence it has. the fragmentation of ecosystems and the necessity to build additional feeding pipelines (Hindery 2008. one problem case is that of the BoliviaBrazil pipeline and its impact on the Kaa-Iya people. At some point. both in Bolivia and Brazil. Porto Alegre in southern Brazil.

These were polluted heavily. pastures and crops in an area of about 18. the participatory dimension of environmental justice was not fulfilled well enough. In conclusion to this paragraph. the trajectory of the pipeline cut right through the last dry tropical forest of Chiquitano. Environmental law is defined as the law that concerns the natural or physical environment. and regulating the interaction of humans with this environment. especially in the Pantanal. A major shortcoming in the hydrocarbon sector has been the participation of neighboring communities in the decision making process of projects. They also had to pay about thirty-five million dollars for cleaning up the spill (Hindery. gives them and the rural communities certain rights and obligations and makes them legally enforceable. The cases mentioned involve all three aspects of environmental justice: people's different ways of living were not taken into full consideration. As to oil spills in Bolivia.000 barrels of crude oil spilled from the OSSA II pipeline into the Desaguadero river and lake Poopó. because it can force companies to pay attention to the consequences of their activities. This can be law at national and subnational level. 19) including 400 kilometers of river banks. As soon as US-based bank Overseas Private Investment Corporation (OPIC) found out about this. the revenues of the activities did not reach to the communities and their opinion of the projects was not always taken into account. Enron recieved a fine of $5. they withdrew financing of the project because its statutes prohibit investments in projects that affect primary forests. which resulted in a case of biopiracy. Environmental law in Bolivia In this paragraph the history and current state of environmental policy and law in Bolivia will be reviewed. Communities in the construction area were hindered by the destruction of their roads and fields. Although all aspects of environmental justice are important in the case of Bolivia. It forms the basis for environmental justice. The next major pipeline project in which Enron was involved. Under the forest conservation programme. with a budget of only two million dollars. 62). It affected some 127 communities in eighteen municipalities within an area of almost 500 square kilometers of lowlands (Slunge and Jaldin. This contaminated patches of native prairies. Just like in the case mentioned above. as well as the main drinking water provision (Hindery. depend on livestock and irrigated cultivation of crops. The goals of equal participation and recognition proved difficult to attain in this project. 63-64). Part of this money went to the indigenous groups as compensation.9 million for the oil spill from the Superintendencia de Hidrocarburos (Hydrocarbons Superintendency) because it had failed to do proper maintenance on the pipelines. Here. and international agreements. in the rural Bolivian altiplano region. participation seems to be the most fundamental and politically sensitive aspect in relation to the situation of indigenous people there. who saw their only source of freshwater taken away from them (Gavaldá Palacín.87 there was increased delinquency and six underage girls ended up pregnant (Gavaldá Palacín. This of course contributed to an improvement of their situation but it does not make the balance equal. The environmental consequences of each stage of the petrochemical industry have been outlined and a few exemplary cases of environmental injustice were described. after two years of negotiations a plan of development for the 37 affected indigenous groups was launched. also proved to be problematic: the Cuiabá gas pipeline. 286). in February 2000. containing a large wealth of rare species. This affected for example the community of Entreríos. The international and . promising a forest conservation programme of twenty million dollars. the main outcome is that the threats of hydrocarbon mining are specifically large in natural areas. the best known case is that of the Desaguadero spill near the border with Peru. Therefore.000 hectares. As an example of distributional environmental justice. especially the Uru community. The spill occurred near the town of Sica Sica. and the contamination of water bodies. both for the environment itself (meaning for example reduced biodiversity) and for communities depending on this environment for their livelihood. the challenges and possibilities of environmental law in Bolivia to mitigate environmental problems with mining beforehand will be outlined. part of it went to nature conservation programmes. In this case. a license was granted to a US company to extract maní plants. In contrast. 29. and received the loan. in the next paragraph. The 7000 Quechua and Aymara people that live here. Enron and Shell then redrew the project proposal. 286).

2001: 21). National institutions for ecological preservation were only established after the return of democracy in 1982 and general attention for the environment started to grow (Steinberg. which was signed by Bolivia after a relatively short period of two years of consideration in 1991. This is a result of the large amount of international environmental conventions the country has signed. Non-national sources of environmental attention As mentioned before. The country led the international campaign for the ban on mahogany wood and generally has a very high level of support for environmental causes among its population. however. Before the 1980s. but a few remarks will be made on it throughout the analysis of environmental law. History and state of Bolivian environmental law Nowadays. there is an international dimension to environmental policy in Bolivia as well. in order to be able to really enforce environmental justice. There are now twenty-one protected nature reserves (amounting to some fifteen per cent of the national territory). 13-5). . In 1988 an Underdirectorate for Renewable Natural Resources and the Environment was formed. In the 1990s. Some also argue that Western countries were less inclined to help the environmental movement in this period because of their disapproval with dictator rule (Steinberg. This Indigenous and Tribal People Convention. This environmental activism is reinforced by the indigenous movement. for example. Some native communities have successfully claimed a level of autonomy over their own territory. because of the superior international concerns with poverty. regarding the protection of the habitat of communities. 20). Convention 169 of the International Labor Organisation. 20). The national park system rapidly expanded. became Director of the National Biodiversity Conservation Directorate in 1993. she was able to enforce management authority to several native groups in the national parks. eleven of which have been affected by oil and gas companies for exploratory activities at least (Gavaldá Palacín. beginning with the approval of Environmental Law number 1333 in 1992. gives them the right to an undisturbed living area (ILO 2009). for example with fines. and give national institutions the instruments to enforce the rules. 61). especially after the daughter of president Sanchez de Lozada. there was hardly any attention for ecological issues in national politics or the media. to which Bolivia has subscribed. which for example made possible the establishment of a large dry forest protection area in the Chaco national park in Tarija. The situation has not always been like this. the country became well known for its early ratification of various international agreements for environmental protection such as the Biodiversity Treaty and Kyoto Protocol (Slunge and Jaldin. 28) . gives a particularly strong backing to indigenous communities and their claims for environmental justice. an environmentalist. arguing that they are better at ecological preservation than the national government. 2003: 14). This shows how environmental law has to comprehend more than just the institution of national parks. 33). These still constitute a major commitment to environmental issues for the Bolivian government. Bolivia became one of the first countries to implement a debt-for-nature swap and has developed the largest forest-based climate mitigation project in the world (Steinberg 2001. From this time on. 2003. It needs to delineate what is allowed within these territories. because of its national struggle for land rights (Steinberg. The most important change in Bolivian environmental policy that resulted from the Sustainable Development Conference in Rio de Janeiro in 1992 was the creation of the Ministry for Sustainable Development and Environment (MDSMA) that same year (Slunge and Jaldin. Bolivia is internationally recognized for being a leader in the protection of its natural environment.88 company law applicable to mining in Bolivia will not be outlined in detail in this paper. With help of the strengthened movement for indigenous territorial rights. environmental law started to develop. and evolved into the General Secretariat for the Environment in 1990. which mentioned the concept of sustainable development as introduced by the international Brandt report in 1987 (Slunge and Jaldin. such as the early ratification of the Biodiversity Treaty. Similarly.

Unlike in the US for example. good results were achieved but in other policy areas that are even more related to poverty. it is ‘significant that the institutions have imposed relatively minimal sanctions. 63) is the clearest case of corporate influence on a project. did not press criminal charges nor suspended construction or operation of the pipelines. which involved pipeline construction (Hindery. which have been sharpened recently after much criticism (Szablowski in L. Szablowski. Because previous cases against foreign companies on other accounts (incorrect disposal of waste from sugar refineries) had always been ruled in favour of the companies. many companies have started to draw up their own environmental and social guidelines. Recursos Naturales y Desarrollo Forestal). in the case of the Cuiabá pipeline in 2000. and the priority given therein to hydrocarbon mining. 287). the vice minister of Environment.89 Another international source of attention for socio-environmental issues of mining comes from the sector itself. the experience with environmental policy in Bolivia has shown mixed results. The requirements are to identify and control the environmental impact of activities. The ISO 14001 for example is the generic certification standard for Environmental Management Systems (EMS) that also applies to the petrochemical sector. Most foreign banks and financial institutions also require project managers to show the project's proposed impact. such as horizontal drilling and accessing more wells from drilling in one place (Natural Gas 2009). About sixty major financial institutions have agreed to consider social and environmental risks in project financing (Equator Principles. In 1996. outlining the obligations for companies. in L. possibilities exist for cleaner exploitation of gas reserves. They only imposed the financial compensation on the company that was mentioned earlier. As Hindery (2004: 288) points out. Chaco SA is one of the companies that has received certification. She did not impose a fine. such as obtaining an environmental license from the Ministry for Sustainable Development. is also reflected in the actions of Neisa Roca. although this was a possibility under the ministry's natural conservation guidelines. called the Equator Principles. which are all possible actions that were supported by existing legislation’. 33). as will be further analysed in the next section. The difficult trade-off between national development on the one hand and conservation of nature and social diversity on the other. the private banking sector drew up its own set of environmental benchmarks. and to improve its environmental performance continually. 2004). 2009). Aside from the sector's guidelines. since its first implementation in the 1990s. Taking into account some of the positive international influences. In 2003. This license has proved to be relatively easy for the companies to obtain. North. The challenge of legally enforcing these obligations on companies by Bolivian state institutions is another big problem. The case of the OPIC refusing the investment in the pipeline (Gavalda Palacin. by pledging precautionary measures and compensation in case of failure. In reaction to this. All major projects of the World Bank and the International Monetary Fund have to comply with the institutions' own socio-environmental standards. minority groups in Bolivia have . products or services. the vice minister only issued a formal warning against the company. Natural Resources and Forest Development (Vice Ministerio de Medio Ambiente. In Bolivia. In forestry and biodiversity conservation. This argument also goes for contamination from oil spills. less progress was made. For the gas sector. in many cases projects need to use foreign capital to be able to make investments in the capital-intensive technologies required for hydrocarbon mining. the ministers decided not to press criminal charges against Transredes for the Desaguadero spill. Canadian research (D. a set of Environmental Regulations for the hydrocarbon sector was issued. In order to get one. they were obliged to show the efforts made to protect water and soil resources from pollution by extraction activities (Slunge and Jaldin. The possibilities for reaching environmental justice in Bolivia are limited by the lack of legal actions by state institutions in the past. After it became clear from public protest that the constructors of the pipeline had not fulfilled the social obligations outlined in the project's proposal. to achieving these and to demonstrating that they have been achieved (ISO. Preference was given to the ministry's portfolio of Forest Development. 42). North 2006: 39) has demonstrated that multinational mining companies have been confronted with increasing opposition against the damage their activities inflict on communities and the natural environment. This has been touched upon in the chapter by Verbeek. Companies also oblige themselves to implement a systematic approach to setting environmental objectives.

Shell and their Bolivian consortia (Transporte de Hidrocarburos S. There is ongoing debate on the degree to which Enron. it may happen that a project is automatically approved as it was proposed by the developer. This was illustrated by the Desaguadero oil spill mentioned before. Pre-project mitigation In 1993 the government decided to actively promote the enforcement of environmental legislation. The World Bank project. as company representatives have declared (Hindery. The main source of conflict between the mining sector and environmental policy however. initially implemented by the Bolivian government in 1996. Shell and their local counterparts can be held accountable for impacts of the pre-existing infrastructure inherited from YPFB which was in extremely poor condition. may help to increase the attention for socio-environmental impacts during the discussion of national economic strategy. 1999: 195-196). A developer is free to hire any politically benevolent consulting firm. Apart from the time pressure. obtaining an environmental permit. instead of at project-level). There have been reports of corruption in the hiring of consultants as well. Not only the vice ministry of Biodiversity. 286). from the state to Enron and Shell. This judicial aspect of environmental justice is an important point that has to be addressed by the government.. Although there is a considerable degree of decentralization (meaning that provinces and municipalities have the power to enforce the environmental standards). but this has never been reported. consultation venues in places far-away from those affected. thereby gaining considerable influence on the outcomes of the reports (Petts. GasOriente Boliviano and GasTransboliviano) became responsible for impacts generated from new hydrocarbons activities (such as construction of pipelines. The lack of detail of the EIA reports combines with the difficulty of public access (illiteracy. public participation is a requirement but without specific conditions in the law. and provisions regarding transboundary implications. it can be concluded that the process of environmental assessment in Bolivia is not very well implemented or executed. or Transredes. such as the Cuiabá pipeline. wells and plants). shifted control over oil and gas pipelines. in practice however it has not proved to be effective often. the subsequent hydrocarbon laws all prevailed over the set of environmental regulations. Therefore. as illustrated by the introductory chapter by Contreras and Renzema. With this shift. Because of that and because of the limited timetable (twenty to thirty days) for environmental review of a project proposal. making the review of the checklist into a superficial bureaucratic process. lack of specific technical knowledge). Forestry and Environment but also the vice ministry of Hydrocarbons have recently requested assistance in the improvement of EIA regulation. strategic level of policymaking. the attribution of accountability for damages is sometimes difficult because of the frequent shift of ownership of oil and gas installations in Bolivia. in 1995 national regulations on the Environmental Impact Assessment (EIA) process were approved. These rules of procedure contain requirements such as public participation. Especially the project's focus on introducing strategic environmental assessment (which takes place at the national. As mentioned above. which is a constraint on the participatory dimension of environmental justice in particular. other shortcomings of the EIA law are the lack of projectspecific terms of reference. the central ministry for sustainable development is still the only institution with the capacity and authority to review the EIAs. Enron. this sometimes interferes with the fact that the soil surface (suelo) is often in private or community hands. hydrocarbon mining was given a status of national priority because of the Strategic Adjustment Programs. As demonstrated by the list of conflicts in the first paragraph. the developer and the government agency are liable when environmental damage occurs. facilitated by the easy access to the Consultant Register. 2009). In general. In 2004 the ministry began to improve the EIA process as a result of a five-year World Bank project. The status . with help of the Dutch Commission for Environmental Assessment (NCEA. resulting in a limitation of meaningful public participation. Also. In such a case. Even with this rather limited set of environmental regulations in place. was the fact that after its privatisation in 1996. This situation is further enhanced by the fact that the first article of the hydrocarbons law declared all subsoil (subsuelo in Spanish) oil and gas reserves the inalienable property of the State.90 little legal standing based on previous court cases.A.

Environmental justice concerns in the resistance movement before 2006 First of all. Indigenous environmental politics In 2006. The most important argument of the protesters was the right to sovereignty over the country's natural resources. so the focus will be on the role of environmental justice in the changing politics on natural resources. as promoted by the IFIs. 2007).91 of the petrochemical sector during the neo-liberal period made the national interest more important than the interests of private groups (McDowell. the role they played was not direct. In the last section of this paper. It was a part of the basis of antipathy towards the foreign countries. On top of that. redistribute revenues more evenly geographically and create more jobs for the local population (Hindery. Opposition groups demanded that the foreign companies receive a much smaller share of the royalties. Most of the causes and developments leading up to and during the nationalization have been analysed in other chapters of this book. The lack of openness and participation increasingly became an issue of protests. However. especially during the neo-liberal period. which gives life. the status of the hydrocarbons sector in neo-liberal policymaking and in jurisprudence has made it difficult for affected groups to protest against their actions. However. will reflect the position of indigenas towards the environment and its use. it is possible to argue that environmental concerns have contributed to the decision to nationalise the oil and gas sector in 2006. The environmental balance of three years of indigenous capitalism In this paragraph I will shortly discuss the changes in environmental regulations of the hydrocarbons sector. just as in the water sector privatisation conflict described in the chapter about the water war by Strijdonck. the environmental policies targeting the mining sector in particular have been relatively weak. because of the connection between the environment and social justice. the strategy of the new Morales government towards the protection of the environment and towards social justice will be further explored. It can be argued that the environmental policies issued by the new government. This complicated the fulfillment of any dimension of environmental justice. one can conclude that the protests were mainly economical. the demand for more equal distribution of benefits combined with a general attitude of apprehension against the foreign companies operating the production plants. An important concept in their world view is the Pacha Mama or mother Earth. after the change of government and the subsequent nationalization of the industry. Concluding the analysis of Bolivian environmental law. can also be analysed as a concern with the distributional dimension of environmental justice. there have also been positive developments such as international environmental policy and corporate social responsibility by the mining sector. the Morales administration came to power. in which Morales himself grew up. human wellbeing does not depend on mass consumption products and . 284). the opposition against foreign exploitation of Bolivian resources evolved into violent resistance when the plan for a pipeline to Chile (Pacific Liquefied Natural Gas project) was proposed. However. After the multitude of cases of environmental damage in native reserves. According to the indigenous people. As described by the first chapter. the growing resistance against the exploitation of Bolivian oil and gas reserves. Although concerns for the environment certainly played a role in the protests and subsequent policy change. there seems to have been a certain progress in the general environmental law of the country. who mostly adhered to the strategy of privatisation and dependence on foreign oil companies for investments. interacts continuously with human life and has to be protected. representing a takeover of state power by the indigenous population of Bolivia. The period until 2004 had seen a succession of coalitions by mainly white-led political parties. From this.

Responsibilities related to environmental protection and natural resources management are now divided between principally three different ministries: the Ministry of Development Planning. 20). living well means harmony between the material and spiritual world. which. Ministry of Rural and Farming Development and Environment and the Ministry of Water Resources (Slunge and Jaldin. no distribution and no recognition of difference. just like many of the other ambitious reform processes initiated by the Bolivian government. as was concluded from the previous section. the PND does not outline any measures in relation to the abatement of damage from mining. by focusing on education and creation of jobs. If these new institutions do not make an effort to towards cooperation. There is a particular emphasis on developing renewable natural resources. Therefore. The new Bolivian Constitution. but the ambitious plan for public investments in large scale projects the PND outlines may also pose a risk to the natural wealth of Bolivia. This situation may be further aggravated by the fact that the MDSMA has been divided into several ministries. 14). The protection of nature and communities from damaging industries is therefore dependent on pre-project mitigation and prevention as regulated by environmental law. It states that ‘all forms of economic organization have the obligation to protect the environment’. that guides the new government's strategy to a large extent. which was recently adopted in January 2009.org 2009). but the practical enactment of these ideas appears to be falling short of those ideas. In such a situation. PND) of June 2006. the strategy of president Morales seems to be the best option available. no changes have been made to the hierarchy between suelo and subsuelo: natural resources are still collective propriety of the Bolivian people while the surface of the land is in private or communitarian possession and the potential for conflict remains. The state takes up the task of ‘conserving natural resources and protecting biodiversity. These include big investments in refineries. independent ministry of Environment (Business News Americas. 2009). a distribution network for natural gas. Instead. There seems to be a much larger commitment to the protection of natural resources and communities' livelihoods. If not managed properly. However. social recognition. no participation. mining in Bolivia is already taking on a more sustainable form. As such. the success of this new institution will depend on the powers and institutional resources assigned to it. programmes and policies contributes to the problems (Slunge and Jaldin. Morales is considering the creation of a separate. Based on the previous analysis. self-esteem and self-confidence are the main goals in life (Bilaterals. there would be no projects. However. However. very much opposed to neo-liberal ideas. the latest promising development is that with the new Constitution in place. Only on a general level a commitment to balancing the use of natural resources for development purposes with the needs for environmental conservation is recognized. according to the Movimiento Al Socialismo (Movement towards socialism. the economic position of Bolivia is such that the country can not afford to leave all its natural resources in the soil without using them. contains some interesting amendments focusing on environmental protection. In view of the experiences in the past that were outlined in the third paragraph. which would in theory amount to a situation of almost perfect environmental justice. appreciation. Affection. is still weak in Bolivia. MAS). . these planned investments can potentially have big negative environmental impacts. This was explained in the first chapter discussing the Plan Nacional de Desarrollo (National Development Plan. The weakness of the system for environmental impact assessments of projects and strategic environmental assessment of plans. This is a radically new paradigm of civilisation. in order to maintain equilibrium with the environment’ (WW4 Report 2009).92 industrialism. His plan is to redistribute the revenues of the nationalized oil and gas sector to all Bolivians. hydroelectric projects and transport infrastructure. then the effect of policymaking on the environment may actually turn out to be negative. This however is an unrealistic scenario in the current international economic system. in line with the distributional dimension of environmental justice. Apart from a focus on natural resources and redistribution of benefits however. the contribution of the change in national policies to environmental justice can be summarized as ambiguous. and between the human being and the environment and the community.

The first option reflects the neo-liberal strategy adopted and promoted by international financing institutions such as the IMF from the 1990s onwards. Bibliography 'Desaguadero Oil spill' (2000) Trade Environment Database case studies (http://www. In the end. The new government of president Morales is trying to apply this alternative strategy. As follows from the above analysis. there can be little doubt that this industry has major implications for the natural environment and the people depending both directly and indirectly on it. It gives a better outlook for reaching a situation of environmental justice because the new policies pay more attention to social equality and environmental concerns. creating integrated corridors of transport. to society and to private companies. their implementation has so far brought mixed results. a trade-off has to be settled between using the country's natural resources for economic benefit by means of mining. attention has to be paid to keeping that wealth intact at a local level. but it is also forced to meet the demands of the national and international market. The second option would be the choice of indigenous and peasant communities living in or close to areas of great natural value. telecommunications and electricity. The cases outlined in the second paragraph show that environmental issues are very close to social issues. After reviewing some general environmental consequences of hydrocarbon mining. accessed 19 January 2009) .htm. They have shown that concern for environmental justice was limited during the time of capitalización. indigenous views of natural exploitation as represented by the Morales government and Bolivian environmental regulations could be an interesting new research topic for the future. and make profit out of it through ecotourism or small-scale mining. As could be concluded from the second paragraph. but the developments in environmental law and the new policies of Morales' government have brought some improvements. A new challenge is underway for the country's developing environmental law system: the construction of new pipelines as part of the Initiative for the Regional Infrastructure of South America (Iniciativa para la Infraestructura de Sudamerica. The question remains whether the policies of the new government can make a significant contribution towards reaching a situation of environmental justice. and keeping them intact. In 2000. and especially for Bolivia. By reducing environment-related health problems for example. Especially in a country like Bolivia that possesses an extraordinary degree of biodiversity and tropical forest. the preservation of the natural wealth is a key element in the reduction of their poverty and economic development. for example. IIRSA). which is seen as vital for the region's economic development. The dilemma of combining economic progress with environmental conservation and social equity will however remain relevant to most developing countries in the future. the situation of environmental justice in the country in relation to the petrochemical industry can be summarized as follows. the problems the communities have faced during construction and exploitation of petrochemical installations have been quite substantial. Environmental justice presents a major challenge to the political system.edu/TED/bolpipes. while meeting national economic goals. such as forest and lakes. Especially for indigenous and peasant groups that can not easily benefit from the international economic system. they will have a better position to work and develop. What is important to note from the concept of environmental justice is that it is not only about conserving natural resources such as a diversity of trees and clean water springs but also the value these have for people's livelihood and economic situation. The focus of the programme seems to be on the export of natural resources such as hydrocarbons and foodstuffs to Western countries. the twelve countries of South America decided to cooperate to improve the infrastructure of transport.american. They might rather make use of the environment in their own way. although it is still a bit too early for full evaluation. The confrontation between this neo-liberal investment scheme.93 Conclusion With regard to Bolivia.

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the second part of this chapter will describe the social differences within Santa Cruz. 1). the majority of the white and richer Media Luna population derives a substantial proportion of its wealth from foreign involvement in the Bolivian (gas) economy and for that reason favours this foreign exploitation. Though. and therefore strongly favoured the nationalisation of Bolivia’s hydrocarbon sector of 2006. namely: Pando. It was only at the end of the twentieth century that the political party Movimiento Al Socialismo 25 (MAS) managed to bind various indigenous interests together and MAS candidate Evo Morales won a landslide victory of 54 per cent in the presidential elections of December 2005 (Eaton 2008. In the first part of this chapter the question on what ground this autonomy demand in the Santa Cruz lowland department is based will be central. Well into the twentieth century. . indicate that Morales’ political struggle is also focussed on ending social inequality by redistributing the country’s resources (Hylton and Thomson 2007. Beni. The rewinding of neo-liberal policies and reform policies favourable to the indigenous population. To the established interests of the Media Luna 26 departments in Eastern Bolivia. autonomy. taking a better inside look into Morales constituency and his main policy. Keywords: Santa Cruz. this enormous group of Bolivian citizens has not been able to change 500 years of suppression by ruling colonial powers and their descendants. When looking into more depth at the autonomy demand in Santa Cruz one may wonder whether autonomy is equally wished for throughout the entire Santa Cruz population. in order to investigate whether the autonomy quest turns out to be primarily important for cruceño elites or whether it is also wished for by the non-elite cruceño population. Morales’ presidential election represents an enormous challenge. land. Therefore. 25 26 Movement Towards Socialism The Media Luna provinces entail the four eastern provinces of Bolivia. suggests more is going on in Bolivia than a struggle between ethnic groups. Santa Cruz. Central in Morales’ policy is a pledge to reverse the institutionalised injustice committed against Bolivia’s indigenous majority (DeShazo 2008. the majority of the Bolivian population has effectively been deprived of economic opportunities and a political voice. Morales’ election as president and with it his reforming policies widens the gap between what is recently called the two Bolivias.97 Demands from the East: A destabilised Bolivia Jose Alice Diemel Abstract: This chapter descibes the rise of the autonomy demand in Santa Cruz as a response to the indigenous mobilisation and political power gain at the end of the 20th century. Tarija (and Chuquisaca). gas revenues. resource distribution Although more than 60 per cent (World Bank) of Bolivia’s population constitutes of indigenous people. 134-138). Many in the MAS for example consider the country's poverty a direct result of exploitation by foreign gas companies. Conversely. 19). This electoral victory of the first indigenous leader would form a breach with the past of white/mestizo dominance in Bolivian politics.

the highland provinces are geared towards domestic markets. However. Economically. namely on the interests of the Eastern departments of Bolivia. imposed by the IMF and WB and connected to the loans. Although probably entirely against the IMF’s objective. aggravated Bolivia’s economic situation even more. It changed politics dramatically as well as the internal and external relations of the country. Morales’ Land Reform Act as well as the Eastern elite’s loss of power in the national government has led the Eastern provinces to protest centralist politics and to demand greater political. 14).0 per cent a year and actually became negative during the 1990’s (Lehoucq 2008. fiscal and economic autonomy for the Media Luna departments. in this section a background of the rise of the autonomy demand is discussed. such as privatisation of state enterprises and a restriction of government spending. as well as in the media the focus is laid on the indigenous perspective in the analysis of Bolivia’s current internal developments. and today still does live. The earlier mentioned power transition in the resource politics of Bolivia has had an enormous impact on the country. Firstly the political history of Santa Cruz will be described as well as its changing political position in comparison to the rest of Bolivia. Therefore. in order to investigate whether the autonomy quest turns out to be primarily important for cruceño elites or whether it is also wished for by the non-elite cruceño population. it would be too narrow minded to perceive Bolivia’s nowadays conflict as a dispute between the impoverished Western highlands and richer Eastern lowlands only. the economy’s average growth remained less than 1. The rise of the Santa Cruz autonomy demand: A response to indigenous mobilisation In order to get a better understanding on what grounds and in what circumstances the autonomy demand came in to being. the imposed reforms. in poverty. The first section of this chapter will be dedicated to a short overview of the occurrences during the end of the 1990’s and the first years of the 21st century. Remarkably. in the midst of a worldwide economic recession the International Monetary Fund (IMF) and the World Bank (WB) granted Bolivia enormous loans in order to eradicate Bolivia’s high inflation rate and stimulate its economic growth. Santa Cruz.98 Nevertheless. Between 1985 and 2000. in this chapter the spotlight will be on the Santa Cruz department. In order to comprehend the tensions in Bolivia between the pro-MAS highlands and the autonomy seeking Santa Cruz department. an analysis of the highly changed domestic situation is very relevant to the topic of this book. the economic perspective will extensively be discussed in section three. In addition. whereas the resource-rich Media Luna is export-oriented. During the 1980’s and 1990’s. The wide-ranging structural neo-liberal reforms. one of the Media Luna departments. For instance. whilst providing 42 per cent of its tax revenues (Eaton 2008. the next two sections will elaborate on the regional differences at play within the country. since the economic regional differences between Santa Cruz and the rest of Bolivia are crucial in understanding the power struggle over natural resources. 115). Although opposition against Morales and his political party MAS are visible throughout all five Media Luna provinces. Hence. In those days over 60 per cent of Bolivians citizens lived. In addition. since protest and demands for autonomy are strongest in this Bolivian province. Fundamental to this chapter will be the question on what ground this autonomy demand in the Santa Cruz lowland department is based. In much academic work. counts for less than a quarter of Bolivia’s population. When looking into more depth at the autonomy demand in Santa Cruz one may wonder whether autonomy is equally wished for throughout the entire Santa Cruz population. the cleavage between the indigenous highland provinces and the white/mestizo lowland departments runs deeper than the gas controversy. The reality apears to be more complicated. Unfortunately. widened even further the gigantic income inequalities the country had already suffered for decades. this financial injection did not appear to improve Bolivia’s economic situation. poverty mainly existed among . In order to counterbalance this bias towards the indigenous viewpoint this chapter will focus on the other party in the conflict. the last section of this chapter will describe the social differences within Santa Cruz.

(Crabtree 2007. the MAS government decides to extend indigenous social-economic rights by initiating redistributive programmes. 1. Many Bolivians came to believe that the terms offered to foreign gas extraction companies had been overly generous. Secondly. 2) Santa Cruz' response The indigenous popular demands of 2003 and consequently Morales' total victory in the December 2005 presidential elections represent a challenge to the established interests of Santa Cruz. a lawsuit against President Gonzalo Sanchez de Lozada for the use of violence against civilian population during the protest marches earlier that year (Quack 2006. becomes the position of Bolivia’s indigenous population. President Mesa resigned as well and by December of the same year presidential elections were organised (Lehoucq 2008. Morales and his political party MAS have reintroduced the earlier Land Reform Act of 1952 that incites the lowland departments to break up large landholdings that are considered unproductive. introduced by MAS have a very negative impact on the economically export-oriented Eastern departments. In addition. Large parts of the population consequently felt deprived of their rightful share of revenues from this valuable resource. 2007). mainly indigenous Bolivians against the new neo-liberal economic policy that seemed to widen the gap between poor and rich Bolivians even further. Nationalisation of Bolivia’s gas resources. in the area of control over natural resource exploitation President Morales nationalised the natural gas industry in order to redistribute the nation’s wealth and to stimulate less developed sectors. accepted the October Agenda and planned a referendum on the nationalisation of Bolivia’s gas resources. to be refound on new lines by granting the country’s indigenous majority participation in political decision-making mechanisms. gas in particular. the strongly disappointing economic growth of the 1990’s turned large numbers of poor. Although President Mesa. No more than 18 per cent of all revenues from Bolivian gas production was returned to the country by the foreign companies (Velasquez-Donaldson 2007). the redistribution 27 28 World Bank’s indication for extreme poverty Constituent Assembly . In a country with such high levels of rural poverty as Bolivia and such extreme concentration of large landholdings. Firstly. the establishment of an Asemblea Constituyente 28 in order to give the indigenous more political and cultural rights. 2. being the first indigenous president of Bolivia (Crabtree. Morales’ policy involves the extension of respect for indigenous cultures and traditions. Social unrest started to escalate by the late 1990s and became violent in February of 2003 when the citizens started claiming the resignation of President Gonzalo Sanchez de Lozada. 27 Origin of the October Agenda 2003 Not surprisingly. 2). 117).99 Bolivia’s indigenous population of which 74 per cent lived in poverty and 53 per cent even had to get by on less than one dollar a day (World Bank). The protests from Bolivia’s indigenous population from the poorer Western highlands found political expression in the October Agenda of 2003. it is understandable that land reform is a priority in Morales’ policy. the reversion of market-friendly and pro-export economic policies. The Republic of Bolivia needs. Morales' landslide election victory in December 2005 In December 2005 Evo Morales wins the presidential elections with a landslide victory of 54 per cent. Concerning the unequal distribution of wealth within the country. and 3. In short this Agenda consisted of. Additionally. By early June 2005. The central point in MAS’ election campaign and later in the MAS government policy. Lozada’s successor. in Morales vision. The social protests were primarily focussed on the exploitation of natural resources. he proved no more capable than Lozada had been of coping with the soaring protests and popular demands.

In addition. The policy of dividing up large landed estates in Santa Cruz to the benefit of landless indigenous peasants in the department. In the next month. clearly showing how the polarisation of Bolivia’s society had only grown since the beginning of social unrest in the late 1990’s (Lehoucq 2008. to demonstrate on behalf of autonomy for the Santa Cruz department. leading the autonomy demand. A revolution taking place in 1952 even further accentuated the dependence of the regional departments on the centre. President Mesa agrees in June 2005 to hold a nation-wide referendum on departmental autonomy. more than half a million movement participants sign a petition demanding a referendum on autonomy for the Eastern departments. a period of regional protest emerged in which a regional civic society was created. According to Kent Eaton. 3). 71. Santa Cruz was the first department to start a civic 29 Federal war . In addition. which was the leading actor in the tin boom. he and his party failed to include significant autonomy measures in the new Bolivian constitution (Eaton 2008. natural resources and political influence. The political factors underlying the autonomy demand will be discussed in this section in order to provide the reader with a better idea of Santa Cruz’s political position vis-à-vis the rest of Bolivia’s departments. Santa Cruz' political position With the purpose of comprehending the tensions in Bolivia between the pro-MAS highlands and the autonomy seeking Santa Cruz department. over 350. In June 2004. While 56 per cent of Bolivia’s citizens reject regional autonomy in this referendum held on July 2. In response. When economic elites from La Paz eventually won the war in 1899. President Morales pledged his MAS party would respect the autonomy referendum results. and Chuquisaca which was then losing power due to its collapsing silver economy. only diminish the cruceño elites’ economic means. Hundreds of thousands of Santa Cruz residents answer the call from the Comité Pro Santa Cruz (CPSC). (Eaton 2008. three other Eastern Bolivian departments (Beni. the opposition-dominated Eastern departments organised an unofficial autonomy-seeking referendum in May 2008 which in Santa Cruz was overwhelmingly approved by 82 per cent of the voters. Political history Throughout Bolivia’s history the power struggle between central and regional power bases has been a recurrent source for unrest and tensions. recent large scale changes within Bolivia’s politics and economy have stimulated Santa Cruz’s demand for autonomy (Eaton 2008. But when later in the 1950’s municipal elections were prohibited by the central powers. 6) Precisely a year after the Santa Cruz petition for autonomy was offered to Bolivia’s government. negatively affect Santa Cruz elites who for decades have been the leading actors in all three areas. The Guerra Federal 29 indicates that even as early as the late 19th century power struggles between the core and periphery played a significant role in Bolivia’s politics.1 per cent of voters from the Santa Cruz department vote in favour of autonomy (Corte National Electoral). Pando and Tarija) followed suit. Finally. creating Bolivia’s largest-ever public demonstration. one must understand the regional differences at play within the country. Faced with La Paz’ opposition to holding a referendum. The war took place between La Paz. 7). the strong and well developed private sector of Santa Cruz that benefited from the continued exportation of gas by multinational corporations will be negatively affected by the nationalisation of Bolivia’s gas industry.100 in the areas of landholding. in the eyes of many Santa Cruz residents. Although. Facing the overthrow of President Gonzalo Sánchez de Lozada in 2003 and MAS’ reform policies which only favour the indigenous highland population in 2005. Santa Cruz’ movement for autonomy is brought alive. the resource rich department does not have to shoulder the economic burden of an overly dependent country (Ballvé 2004.000 people participate in a second rally in Santa Cruz in January 2005. an associate professor at the University of California and a Bolivia specialist. 120). 75). 2). 2006. the country was both politically and economically highly centralised around the powers of La Paz (Eaton 2007. in short a description will be given of the content of the autonomy demand.

101 committee. 80). to Santa Cruz threatening. After a military coop in the seventies for example. This decentralisation law infuriated Santa Cruz elites since they saw the departments and not the municipalities as the true sub-national unit. Between 1938 and 1948. . a native of Santa Cruz as president (Eaton 2008. 76). the emergence of the MAS as a majority party after 2005 meant Morales did not need to negotiate with any of the traditional parties” (Eaton 2007. Democratisation occurring in the 1990’s favoured Santa Cruz’ decentralisation politics through opening up space for all kinds of demands while at the same time sidelining the military from politics. The emergence of many new parties together with the inferior performance of Bolivia’s traditional political parties 30 in which the elites still had great influence. indigenous parties in municipal elections in the late 1990’s. 16). Morales victory of the presidency also marked the definitive end of the consensus-oriented multiparty system that had been so vivid in earlier decades. A collapse of the tin industry in the Western department of La Paz. in the past Santa Cruz elite knew how to influence the highly centralised institutions in such ways that it promoted regional economic development in their department. “Whereas the fragmentation of Bolivia’s party system forced previous political leaders to negotiate inter-party coalitions. 78). 81). On the one hand Santa Cruz elites exercised substantial influence on the national government or provided critical support in the overthrow and replacement of politically and economically less favourable regimes. Santa Cruz’ uneasiness with the political centralistic developments is nowadays expressed through a demand for decentralisation of power. preluded a decline of La Paz’s power relative to the power of the Eastern departments of the Media Luna (Eaton 2007. Moreover the democratisation process provided the departments with an increase in fiscal powers and greater administrative powers. Thanks to the bulk of subsidies. just as the collapse of the silver industry in Chuquisaca several decades earlier. The presidential elections that took place in June 2002 generated additional concern among the Santa Cruz elites. Not just due to Morales’ introduction of major redistribution programmes and policies favouring mainly Bolivia’s indigenous population. the department could easily overtake the growth rate of the rest of the country. aggravated fears within the cruceño elite that they could no longer account on sufficient representation in the central government. The election of Evo Morales for President with a landslide victory of 54 per cent was the zenith of Santa Cruz’s decline of influence in national power. Recent political situation 1990-today Democratisation is one of the recent large scale changes within Bolivia’s politics that has stimulated Santa Cruz’s demand for autonomy as indicated above (Eaton 2008. Nevertheless. They were left with little alternatives for re-establishing their power in the national government than the road to autonomy. for instance. the new law transferred sizable revenues from the capital to the municipalities. 83). adding political significance to the success of new. On the other hand. 3). loans and aid money Santa Cruz received from the national government. the Comité Pro-Santa Cruz (CPSC) and quickly became an example for the creation of similar committees in other departments. Santa Cruz elites played the leading role in selecting Hugo Banzer. 30 Traditional political parties such as Acción Democrática Nacionalista (ADN) of Banzer and the Movimiento Nacionalista Revolucionario (MNR). such as the MAS party of Evo Morales (Eaton 2007. At the end of 2005 it became clear to the cruceño elite they could no longer use their political influence in order to secure their economic privileged position. Another more specific factor that facilitated Santa Cruz’s road to autonomy was a series of major transformations at the municipal and national levels that directly threatened economic elites in Santa Cruz. One of the major threats to Santa Cruz in the 1990’s was the municipal decentralising law of 1994 initiated by President Lozada who feared a decentralisation at the departmental level would lead to the disintegration of the country (Eaton 2007. the department did also derive noteworthy economic and fiscal benefits from the central power in La Paz. Moreover. almost all of Bolivia’s external debt was invested into development projects in Santa Cruz (Eaton 2007.

Therefore. both agree on the idea that legislative authority to set policies on all policies other than defence. it is important to note there are differences in opinion over how and with what speed the autonomy demand should be worked out. Pando. proposing the breakaway of the departments of Beni. The remainder can be shared with other departments. Although at the very least it is clear the autonomy demand revolves mainly around increased levels of self-government and greater autonomy in policy concerning natural resources. Santa Cruz was an underdeveloped department. 88). gas and oil). 3). For decennia. the economic factors underlying the autonomy demand will be described in this part in order to provide the reader with a better idea of Santa Cruz’s economic position vis-à-vis the rest of Bolivia’s departments. Firstly both currents agree Santa Cruz should get regional control over its natural resources (e. And finally. they believe Santa Cruz has the right to retain control over the largest part of the gas tax revenues. Even though these currents see a different future for Santa Cruz. Secondly. Roughly it can be said the autonomy movement in Santa Cruz consists of two main trends. Thirdly. The emergence of Santa Cruz as Bolivia’s wealthiest and most productive region is a fairly new phenomenon. generating the highest percentage of GDP as is illustrated by table 1. land. Chuquisaca and Tarija (together the so called Nación Camba) (Ballvé 2004. On the one hand. On the other hand is the more moderate CPSC that supports far reaching regional independence (Crabtree 2007). 31 Movement for the Liberation of the Camba Nation . From these years on Santa Cruz developed itself into one of the most prosperous and rich parts of the country. 9. these parties demand the right to endorse their own economic development model at the sub-national level that might differ from the national model. Santa Cruz. currency and foreign relations. explains the demand for departmental control over police institutions (Eaton 2007.g. the radical Movimiento Nación Camba de Liberacion 31 (MNCL). the movement’s perception of negligent law enforcement by the national government during tense situations. isolated from central rule from La Paz. Its position changed however at the beginning of the sixties when the government decided to integrate Santa Cruz and connected the Eastern department to the rest of Bolivia by roads and railways (Quack 2007). 74. Santa Cruz' economic position in comparison to the rest of Bolivia A second explanation for Santa Cruz wish for autonomy can be found in the changed economic position of Santa Cruz in comparison to the rest the country.102 What does autonomy demand consists of? It is still very unclear what exactly the Santa Cruz autonomy demand consists of. there are common ideas both groups stand for. column 5. Not only do both movements want to pursue their own policy in this area. should be transferred to departmental assemblies.

it is not surprising that land reforms have been the vanguard of Morales’ election campaign and subsequently one of his main policy issues once he became president of Bolivia. the gas and land redistributive programmes introduced by the MAS government served as a substantial stimulating force for the creation of a Santa Cruz’ autonomy movement. Santa Cruz could prosper well during these years of neo-liberal policy. in contrast to the state interfered economy in the rest of Bolivia (Eaton 2007. land redistribution became Morales’ most important instrument in addressing the problems of rural underdevelopment and poverty. Land policy and distribution For a country with a high percentage of rural population. Some scholars indicate the absence and neglect of the central government in the decades before the sixties as the factor that promoted the growth of an independent and free market system in Santa Cruz. became the most important underlying source for the dispute between the impoverished Western highlands and richer Eastern lowlands.103 Table 1: Data on Bolivia’s Departments Source: Weisbrot and Sandoval. In particular because two decades of neo-liberal market reforms had brought Santa Cruz substantial economic advantages. The distribution of Bolivia’s two most profitable natural resources. 78). For this reason. 2008 Moreover. the next two sub-section will extensively discuss this distribution of gas revenues and land and emphasise on Santa Cruz’ special position when it comes to natural resources. Due to the existence of a strong and well developed private sector as well as a great wealth in resources. This apprehensiveness of Santa Cruz land owning elite with the newly introduced land redistribution programme of 2005 can be explained by the following figures. of which 66 per cent lives in extreme poverty (World Bank) and of which the majority is employed in agriculture. disproportionately benefited Bolivia’s Eastern regions. Especially. the radical process of economic stabilisation and liberalisation experienced by Bolivia in the eighties and nineties. under which Santa Cruz. To great inconvenience of the Santa Cruz landholders. . land and gas. Morales’ economic reform politics at the beginning of the 21st century formed a serious threat to the market-oriented economic preference of Santa Cruz.

it is generally agreed upon that Santa Cruz takes up much of the concentration of large landholdings. Beni and above all Santa Cruz (Weisbrot and Sandoval 2008. 3. In the decades following the fifties. However. This presumption is underlined by data from the International Fund for Agricultural Development. is hence reason for large landholders in Santa Cruz to fear for their agricultural interests (Weisbrot and Sandoval 2008. The evaluation of the possibility to eliminate the diesel subsidy by the Finance Ministry in April 2008. 5). . 2). a constitutional clause approved through a referendum on 25 January 2009. even though these subsidies are inefficient and regressive in terms of income distribution.22 per cent of the total number of farm units. this argument does not hold firm when the use of large parts of land in Santa Cruz for speculative means. Meaning that a majority of peasants possess only very small surfaces of land and in addition that many rural families have to live without owning any land at all. land has been unequally distributed. Moreover. Examples of these state subsidies include subsidies on diesel fuel which is provided to large landholders in Santa Cruz. Table 2 shows that land distribution has not become fairer.8 per cent of the total landowners controls at present 81. 2008 Table 2 illustrates that Bolivia's land ownership is still extremely concentrated. However. 80 per cent of landowning Bolivians have to share just 2. have power over almost half of Bolivia’s agricultural land. or 0. seventies and nineties. Or put differently in order to make today’s situation better comparable to the one in 1950. This land is thus not used for production by these large landholders and is in addition not exploitable by smaller or even landless peasants.104 Already from the 1950’s on.000 hectares if they are not actively being used to produce tax revenue for the state (Bolpress 2009). Although no similar detailed information on land distribution as such for Bolivia as a whole is available for the department of Santa Cruz. In addition. Due to corruption in the central government vast amounts of hectares were given to small groups of elites in the Eastern part of the country during the sixties. when approximately 82 per cent of all surveyed Bolivian land surface was controlled by only 4 per cent of all agricultural units (Weisbrot and Sandoval 2008. requires the expropriation and redistribution of landholdings above 5. which estimated 77 per cent of all cultivated land in Bolivia is in the hands of a small percentage of landholdings situated in the three most Eastern Media Luna provinces of Pando. Turned the other way around.4 per cent of the remaining agricultural land. One of the main arguments used by large landholders in Santa Cruz to extenuate high concentration of land in their department is that larger farm units are able to produce more effectively and productively than smaller farm units. 2). Just 686 farm units. is taken into account. Table 2: Distribution of farm units by size (2006) Source: Weisbrot and Sandoval. there has been some redistribution of land from large landholders to indigenous peasants. the efficiency argument is undermined by the fact that these large agrobusinesses appear to receive state subsidies.0 per cent of all surveyed Bolivian land surface.

105 Considering this high concentration of landholdings in the Santa Cruz department. Therefore. With the introduction of the new hydrocarbon law in 2005 an Impuesto Directo a los Hydrocarburos (IDH) 32 of 32 per cent was stipulated in addition to the 18 per cent royalties. This discontent of the Santa Cruz population with the new gas policies can be divided into two separate forms of objections. Before 2005 the Bolivian state charged the gas producing companies only 18 per cent royalty. This fear will be described in more detail further on in this section. Nevertheless. the department can ensure that regional governments continue these agricultural subsidies in Santa Cruz even in spite of central government’s decisions. The new Hydrocarbon Law No. The collection of tax from the hydrocarbon sector in Bolivia occurs in two phases. than it currently receives based on the distribution system since 2005. 3058 of 2005 and the Supreme Decree of Nationalisation in 2006. from which the Santa Cruz department benefited as much as any other department (Weisbrot and Sandoval 2008. attention is paid to how this distribution system induces agitation among cruceño elites. In addition. is a logical consequence. The second objection of the Santa Cruz population with the current gas policy is based on the fear that the nationalisation of the Bolivian hydrocarbon sector will severely deteriorate Bolivia’s international trade position. the Santa Cruz department feels it has right to a bigger share of the gas revenues. Over 22 per cent of Bolivia’s total gas production is concentrated in Santa Cruz. A second kind of tax. In the initial phase of gas and oil production the state imposes IDH of 32 per cent and royalties of 18 per cent. Consequently. This feeling of discontent will be described in the next part by means of an elaboration on Bolivia’s current gas revenue distribution system. transport and marketing (Weisbrot and Sandoval 2008. 8). There has been an almost five-fold increase in three years in hydrocarbon revenues since the implementation of the new hydrocarbon law in 2005 and the nationalisation in 2006. it is not surprising that large-scale agro businesses and cattle ranchers from this department feel threatened in their interests by the possible diminishing agricultural subsidies from the state as well as by these constitutional changes on land distribution. The remaining 50 per cent of Net Hydrocarbon Production. which is called Impuesto Especial a los Hidrocarburos y sus Derivados (IEHD) 33 is levied in during the process of refining. Santa Cruz´ push for a higher degree of decentralisation in order to take more advantage of the vast flows of income its gas production sector generates. First of all. 26). Gas policy A second large threat to the Santa Cruz department are the reforms concerning the hydrocarbon revenues distribution. minus the recovery costs are shared by the Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) 34 and the gas producing company. 13). If the Santa Cruz would have more autonomy. The remaining 7 per cent is divided between 6 per cent of the total national production revenues for the 32 33 34 Direct Tax to Hydrocarbons Special Tax on Hydrocarbons and Derived Products Bolivian Fiscal Hydrocarbon Deposits = National hydrocarbon distribution company . This view is based on the department’s claim of local ownership over its natural resources. This new distribution and tax system thus imposed gas companies to remit a minimum of 50 per cent share of hydrocarbon revenues within the Bolivian territory to the state (Velasquez-Donaldson 2007. an 18 per cent royalty and a 32 per cent IDH are levied. 3058 the government passed in 2005 as well as the placement of the Bolivian hydrocarbon sector under state control by passing the Supreme Decree of Nationalisation in 2006 have experienced a lot of protest from the Eastern gas producing department. the country’s second largest natural gas producer (Weisbrot and Sandoval 2008. 11 per cent is allocated to the producing department. 16). which allowed these companies to maintain 82 per cent of the revenues acquired from gas production. Santa Cruz feels under compensated by the newly introduced distribution system for its gas producing activities. the gas revenue distribution system is the only instrument for the department through which it can generate income (VelasquezDonaldson 2007. The system that is currently used to distribute the country’s gas revenues is based on the New Hydrocarbon Law No. Over the Net Hydrocarbon Production (NHP). From the imposed 18 per cent royalty. Over and above this. large landowners have a high interest in promoting more autonomy for the department. 9).

Moreover. Cochabamba and Chuquisaca. Of the remaining IDH revenues 56. producing departments.25 per cent goes to the National Treasury (central government) and 31. Santa Cruz feels under compensated for its work as a gas-producing province. the Natural Gas Mass Use Fund and the Compensation Fund for the three most populated departments in Bolivia.5 per cent share of the IDH revenues according to its own hydrocarbon production. table 3 demonstrates how non-producing departments. Although densely populated departments are compensated in the current distribution system. Each producing department gets 12. Producing departments receive 11 per cent of the royalty and densely populated departments are partly compensated through an extra fund. 15 per cent has to be used for special funds such as Indigenous Fund.106 central government (through the National Treasury) and 1 per cent for the departments of Pando and Beni in the form of a National Compensatory Royalty. Table 3 : IDH’s Departmental distribution system in US dollars Source: Velasquez-Donaldson 2007. 31 12. All three steps in the system are beneficial to an autonomy demanding department such as Santa Cruz. Of the IDH revenues received by the central government.25 % At first sight this distributive system seems quite beneficial for Santa Cruz. municipalities.25 per cent goes to the non-producing departments of which each department receives 6. However. when taking a closer look at the distribution percentages in relation to the department’s population figures. column 1) is allocated only a very small amount of gas revenues per capita in comparison to the rest of Bolivia’s departments (see table 3).25. the departmental distribution systems seems not that beneficial at all. the Compensatory Funds seems not able to compensate Santa Cruz entirely for its enormous population. Pando and Oruro are given a significantly larger share of gas revenues than producing ones. universities. such as Santa Cruz. so as to enhance the readers understanding of the gas revenue distribution system. At the end of all calculations even less than 25 per cent of the total hydrocarbon revenue accrues to the central government. table 1. Santa Cruz’s population (25 per cent of Bolivia’s total population. Consequently. Of the latter fund Santa Cruz receives 36 per cent. the National Treasury and some special funds. The current distribution system of the first phase of royalty and IDH collection is diagrammed in figure 1 on the next page. such as Beni.5 / 6. . The IDH are then distributed at different levels among the non-producing departments.

that it causes the same problems for densely populated departments as mentioned above concerning the IDH/royalty distribution system. 29). This gas revenue is allocated to the various departments in two parts. due to its large population. population or economic characteristic in account (Velasquez-Donaldson 2007. The first part is distributed on the basis of population density of the department and the second part of the IEHD is divided equally between the nine Bolivian departments. . It is noticeable. which was already shortly mentioned earlier. Each department is given a 25 percentage of the total levied IEHD by the central government. Santa Cruz gets. without taking any poverty.107 Figure 1: Bolivia’s Distribution of gas revenues collected at the production phase Source: Weisbrot and Sandoval 2008 Another way of gas revenue distribution against which Santa Cruz expresses its apprehensiveness is the distribution of the Impuesto Especial a los Hidrocarburos y sus Derivados (IEHD). As is shown by table 4. when looking at the structure of the distribution system of the IEHD.

but also have to face opposition to their autonomy agenda from within their own department. Table 4: IEHD Departmental distribution system in US dollars Source: Velasquez-Donaldson 2007. 21). are the stage of tensions between small indigenous landholders and large-scale soy farmers and cattlemen. Consequently. The fear that the gas policy change since 2005 as well as the nationalisation of the Bolivian hydrocarbon sector will severely deteriorate the country’s and department’s international trade position plays a significant role as well. . on average 75 to 85 per cent is taken by the government is worrisome to many elites living in Santa Cruz (VelasquezDonaldson 2007. Social differences within Santa Cruz Throughout this chapter it has become clear that the conflict over Bolivia’s natural resources has motivated certain groups from the resource-rich Santa Cruz to call for more departmental autonomy. In addition. that foreign investors might abstain from new investment in the Bolivian gas sector and other sectors (Stanley 2008. cruceño elites worry that the Bolivian state will not be able to successfully develop and maintain the natural gas sector (Eaton 2008. it is crucial in understanding Bolivia’s present tensions to realise that Santa Cruz is not a unified department. which is very internationally and export oriented. 360). cruceños elites do not only face the threat from the MAS government redistributive reforms. were they established colonies that today are lively trading and farming municipalities. a decrease in foreign investment could have disastrous effects on its economic position. as is indicated by Map 1. The fact that from the gas revenues produced by foreign gas companies. They fear Bolivia’s business environment has deteriorated in such a way by the measures taken by the Bolivian government since 2005. as well as other Santa Cruz regions such as Chiquitanía. It will shed light on both the interests of firstly the nonelites and secondly the interests of Santa Cruz’ elites. (Gustafon 358). Non-elite Santa Cruz Santa Cruz’ growth. 18). 355). This large-scale migration significantly reshaped the social and political landscape of Santa Cruz and changed its society into a multicultural one. For the Santa Cruz department. the Santa Cruz elite is not merely discontent with the new gas revenue distribution system. the Norte Integrado region. In this rich department in comparison to the Bolivian impoverished highlands. 29 As mentioned earlier. over half a million people from Bolivia’s highlands settled as rural smallholders.108 again disproportionally less revenue than departments such as Pando with a significant lower population number. the wealth is spatially and socially concentrated among the middle and upper classes of Santa Cruz (Gustafson 2006. However. Consequently. Many of the Andean migrants settled in the Norte Integrado (integrated North) a region in Santa Cruz. It might even be said that social differences within Santa Cruz are as wide as the social differences between Santa Cruz and the rest of Bolivia. 16). This part of the chapter will elaborate on the social differences at play in Santa Cruz. as well as state-sponsored migration programmes have spurred poor indigenous groups from the Andean regions to settle in Santa Cruz. From the 1960’s until today. urban merchants and labourers in the Eastern lowland department (Gustafon 2006.

as is indicated by Map 2. Which is very problematic to the poorer citizens of Santa Cruz since. Andean settlers in Santa Cruz were part of the electorate that voted for Morales in the 2005 elections. it is likely that autonomy for Santa Cruz will not benefit all parties to the same extent. In addition. the indigenous population of Santa Cruz participated in protests against President Gonzalo Sánchez de Lozada in October 2003 (Gustafon 2006. Autonomy for Santa Cruz would significantly constrain the redistributive capacity of Bolivia’s central government in the department. In response to the strengthening of the MST and the expropriation provisions in the MAS reform politics. concentrates economic wealth and productive activities in the hands of a small upper class group. designed to divide and redistribute economic and political power. An extensive grant of autonomy to Santa Cruz will probably frustrate MAS reforms. 361). 92). 74). such as the municipalities. the present-day departmental political power lies in the hands of right-central conservative parties (Eaton 2007. . there exists a hostility to lower levels of government within the department. the small landholders and landless peasants have united themselves in the Movimiento Sin Tierra (MST. neither of both products generates significant employment in the department nor economic diversification (Gustafon 2006.109 Map 1: Santa Cruz Department Source: Gustafson 2008 The small landholdings of these sindicatos (settlers) feel threatened by the continuous frontier expansion of large-scale agricultural producers. This narrow-based economic structure present in Santa Cruz. Nowadays. cattle ranchers and natural resource extracting companies. land distribution is not the only issue on which large scale landholders and poor peasants/ labourers hold very differing visions. Nevertheless. Moreover. On the part of cruceños elites. Considering the above mentioned prospects for the non-elite population of Santa Cruz in the case of autonomy. it is not surprising this group has offered strong support for the highland indigenous mobilisation against the concentration of wealth in the upper class of Bolivia. gas and soy products comprise over 80 per cent of Santa Cruz’ exports. landowners in Santa Cruz have increasingly organised paramilitary squads to defend their properties against land invasions (Eaton 2007. Therefore. Given the strong concentration of wealth and political power in Santa Cruz. 360). Landless Movement) in order to fight the unequal land distribution in the department. 88). and would therefore disadvantage the non-elite actors in Santa Cruz (Eaton 2007.

The fact that many of the MST members are recent migrants from the Bolivian highlands polarises the two groups in Santa Cruz even more and inflames the (land) conflict with ethnic and regional connotations (Ballvé 2004). were brutally attacked by right-wing youths affiliated with the Santa Cruz autonomy movement (Gustafon 2006. Nevertheless. This FEPB-SC consists of the main business and agro-industrial elite alliances and confederations. As a response Santa Cruz business groups decided to 35 36 37 38 39 40 Invasion. these confederations were each integrated separately into their respective national organisations due to conflicting interests. the Cámara de Hidrocarburos 39 . 361). a term recently used indicating migrants from the Andean highlands. However. such as struggle over land between expanding soy farming and cattle ranging. the Federación de Ganaderos 38 . As previously described. the cruceño elites gathered together in the Federación de Empresarios Privados de Bolivia–Santa Cruz 36 (FEPB-SC). Additionally. such as the Cámara Agropecuaria del Oriente 37 (CAO). indigenous cruceños are frustrated by large landholders in Santa Cruz. These acts of violence demonstrate the highly tense situation in the department as well as how much the gap between indigenous groups and elites in Santa Cruz is widening lately. 86). In the past. Source: Observatorio DDHH Cruceño elite Indigenous cruceños participating in the protest marches in Santa Cruz against the Sánchez de Lozada government in October 2003.110 Map 2: Elections results of 2005 in Santa Cruz. the growing threats to private property in Santa Cruz casted a shadow on the conflicts that had divided the cruceño upper class for decades. In order to sustain the present-day cruceño economic model and to defend its interests against those of the avasallamiento 35 of Andean indigenous peasants. and the Cámara de Industria y Comercio 40 (CAINCO)(Eaton 2007. these cruceño elites are the main victims of the central reform politics and therefore rightly fear losing their rich and privileged positions. as mentioned above. Federation of Private Entrepreneurs of Bolivia–Santa Cruz Eastern Agricultural Chamber Cattle Ranchers’ Federation Hydrocarbons Chamber Chamber of Industry and Commerce . these same large landholders are in their turn restricted in their possibilities of expanding their territories by land-demanding peasants.

Concerning the gas revenue 41 42 Confederation of Private Entrepreneurs of Bolivia Departmental Labour Union . which is financed and directed by Santa Cruz’ business groups has tried to close the gap between elite and non-elite Santa Cruz by integrating non-elites into the CPSC. 89). However. In this line of argumentation it is understandable that Santa Cruz elites have been trying to build alliances with nonelite groups in order to bolster their legitimacy and to claim the autonomy movement represents the department as a whole (Eaton 2007. still the Central Obrera Departmental 42 (COD) and the transport workers’ union are the only non-elite members within the CPSC (Gustafon 2006. whether the autonomy quest turns out to be primarily important for cruceño elites or whether it is also wished for by the non-elite cruceño population. As business confederations in Santa Cruz had closed ranks. the Santa Cruz’ population was no longer assured of central politics favourable to their department. 363). the enormous differences within the department should not be overlooked. this brings us to the second question of this chapter. In the past the crucenõs have always managed to secure their economic interests by influencing the central politics in La Paz. Santa Cruz has for decades been able to guarantee themselves of economic favourable politics. it can be said the conflict over Bolivia’s natural resources as well as the fear of losing their privileged economic position has motivated certain groups from the resource-rich Santa Cruz to call for more departmental autonomy. Fearing that the leftist reform politics would deteriorate Santa Cruz’ business environment and would leave the department under compensated for its work as a gas-producing province. On the one hand. Finally. The cruceño population felt threatened in their interests by the proposed redistributive reforms and the nationalisation politics. Secondly. Concluding. Conclusion From the first part of this chapter it has become clear that the rise of the autonomy demand in Santa Cruz has mostly been a response to the indigenous mobilisation and political power gain at the end of the 20th century. However.111 overlook differences that otherwise divided them and to unify around the demand for autonomy of the department’s natural and productive resources (Eaton 2007. they in addition withdrew from their class counterparts in other parts of the country. Although the CPSC. the Santa Cruz’ population started to fear for their privileged economic position. the Santa Cruz population felt at the end of 2005 they were left with little alternatives for re-establishing their power in the national government than the road to stimulate autonomy. Understandably. appears to demonstrate an exceptionally broad demand for autonomy in the department. Nevertheless. when at the beginning of the 21st century the political power balance changed in favour of the lowland indigenous classes of Bolivia. 91). This fear was even more increased by the radical redistributive discourse used by the newly elected President Evo Morales in 2005. living among cruceños elites that economic elites in other parts of the country did not provide enough effective protest against the political reforms. some say that this strategy of detaching their confederations from the national ones. 90). Throughout this chapter it has become clear this is a complicated question to answer. (Eaton 2007. the respectively 72 per cent and 82 per cent of Santa Cruz’ population voting in favour of autonomy during the 2006 and the 2008 autonomy referenda. This demonstrates Santa Cruz is still strongly divided along the same class. By assuring this control in the central government. Considering the high concentration of landholdings in the Santa Cruz department as well as the presence of over 22 per cent of Bolivia’s total gas reserves makes Santa Cruz one of the richest departments of the country. have helped Santa Cruz’ business elites to reframe their personal and class interests as territorial interests (Eaton 2007. 85).cleavages as the rest of Bolivia. The decision to withdraw from national business associations was firstly based on the perception.and ethnic. For instance the FEPB-SC withdrew from Bolivia’s national business association Confederación de Empresarios Privados de Bolivia 41 (CEPB). Santa Cruz business elites were discontent with the fact that their position within the national business association did not reflect their supramatic position within the national economy.

Journal of Latin American Anthropology. No. Bret (2008) ‘Spectacles of Autonomy and Crisis: Or. (2008) ‘Conservative autonomy movements: Bolivia and Ecuador in comparative perspective”. Vol. but also have to face opposition to their autonomy agenda from within their own department.org. Vol. Kent (2007) ‘Backlash in Bolivia: Regional Autonomy as a Reaction against Indigenous Mobilization’. when turning to the question of land distribution. Autonomy for Santa Cruz would significantly constrain the redistributive capacity of Bolivia’s central government in the department. Eaton. However. and S.com/art. and would consequently disadvantage the non-elite actors in Santa Cruz The fact that the department’s wealth is spatially and socially concentrated among the middle and upper classes of Santa Cruz. pp71-102. Bibliography Assies. No. and therefore autonomy would not benefit all Santa Cruz parties to the same extent. Vol.112 distribution one could argue a larger departmental share. etnia y clase social’. one has to admit the interests of non-elite and elite cruceños are two worlds apart. Kent. Hylton F. 1.cne. 2. No.16. pp 351 – 379. American Political Science Association (APSA) Prepared for delivery at the 2008 Annual Meeting of the APSA Gustafson.and ethnic. . What Bulls and Beauty Queens have to do with Regionalism in Eastern Bolivia’. 35. Bolpress (2 February 2009) Evo promulga el sábado la primera Constitución aprobada en referéndum popular. online report. http://www. the Santa Cruz society remains as strongly divided along class. makes that cruceños elites do not only face the threat from the MAS government redistributive reforms.bo/sirenacomp06/wfrmdepnalref. Thomson (2007) Revolutionary horizons. online data. due to autonomy would be profitable for all segments of Santa Cruz society. región. 11.Santa Cruz (CPSC) has tried to close the gap between elite and non-elite Santa Cruz by integrating non-elites into the CPSC.bolpress. Hemisphere Focus(CSIS) Vol. 43.php?Cod=2009020206 (accessed on 2 February 2009) Corte National Electoral (2006) Resultados Departamentamentales . This great differences in interests within Santa Cruz’ society are illustrated by the significant participation of cruceño indigenous population in the October 2003 protests as well as by the 2005 departmental election results which show a large support for the leftist redistributive politics of MAS within the Santa Cruz population.Referéndum Nacional Vinculante 2006. Past and present in Bolivian politics London and New York. P (2008) ‘The politics of confrontation in Bolivia”.cleavages as the rest of Bolivia. Politics & Society. http://www. Willem (2006) ‘La media luna’ sobre Bolivia: Nación. Eaton. 1.aspx (accessed on January 28 2009) DeShazo.8. América Latina hoy. Although the Comité Pro. pp87-105. No.

http://www. online data.narconews.globalissues. 16. Observatorio DDHH.opendemocracy. ’Elections results in Santa Cruz 2005”.worldbank. Institute for Advanced Development Studies. http://www. Centre for economic and policy research. Christian (2007). 6. No.00.htm (accessed on 27 September 2007).html (accessed on 21 December 2009). 4.contentMDK:21310720~pagePK:1497618~piPK:217854~theSitePK:322279. A tale of two Bolivia’s. Velasquez-Donaldson.bo/publicaciones_detalle_no41_e.php?option=com_wrapper&Itemid=79 (accessed on 26 January 2009). .pnud.bo/webportal/ (accessed on 13 November 2008). online report.com/Issue34/article1056. Narco News (2004) Teo Ballvé. online report. No. a geographic rift between rich and poor. online report. 7.net/index. 19. http://www. (2006) ‘Bolivia in de wurggreep”.inesad. http://www. online data. Working group on development and environment in the Americas No. Working Paper No. online report. ‘Analysis of the Hydrocarbon Sector in Bolivia: How are the Gas and Oil Revenues Distributed?”. online report. pp 111-124.htm (accessed on 27 September 2007).cepr. Journal of democracy Vol. World Bank (2001) Share of Indigenous Peoples to Total Population by Various Indicators. http://www. Mark and Luis Sandoval (2008). online report. Leonardo (2008) ‘Natural resources and foreign investors: A tale of three Andean countries”.edu.113 Lehoucq. Behind the ongoing gas wars. Weisbrot.org/WBSITE/EXTERNAL/COUNTRIES/LACEXT/BOLIVIAEXTN/0.net/article/democracy_power/politics_protest/bolivia_thre e_cities (accessed on 18 December 2008). online data. ‘Distribution of Bolivia’s most important natural resources and the autonomy conflicts”.contentMDK:21310720~pagePK:1497618~piPK:217854~theSitePK:322279. .worldbank. http://www. Proyecto de las Naciones Unidas para el Desarrollo en Bolivia (PNUD). http://ase.00. http://www. Fabrice (2008) ‘Bolivia’s constitutional breakdown”. Evert Jan. World Bank (2006) Incidence of Poverty and Extreme Poverty by Income.edu/gdae/WorkingGroup_FDI.html (accessed on 14 November 2008).org/index. Bolivia: a tale of two (or rather three) cities. online report.observatorioddhh. .nl/index. http://web. http://web.tufts. Open Democracy (2007) John Crabtree.html (accessed on 21 December 2009). Stanley. Quak.org/WBSITE/EXTERNAL/COUNTRIES/LACEXT/BOLIVIAEXTN/0.php/publications/reports/the-distribution-of-bolivia-s-mostimportant-natural-resources-and-the-autonomy-conflicts/ (accessed on 27 September 2007).php?option=com_content&task=view&id=28&Itemi d=42 (accessed on 13 November 2008).

114 .

I will try to demonstrate how indigenous discourse has changed over time. Ecuador. Why have we seen such a growth in indigenous movements and what has made this possible? Yashar (2005. discrimination. Keywords: discourse. and made possible. Bolivia. indigenous discourse in the context of recent political protest on natural resources. helped the indigenous movement to gain strength (Van Cott 2005. and indigenous discourse used by MAS and Morales. This is especially prominent in areas with high indigenous population rates such as Ecuador. Various authors have explored the reasons for this surge in indigenous protest in recent years. political indigenous movement. By looking at the rise of indigenous discourse. Van Cott 2003). Morales stunned the country and the world in 2002 when his newly founded party Movimiento al Socialismo (MAS. is used differently for varying causes and is influenced by external factors. Bolivia is an example of a country where poverty is strongly linked to the indigenous majority and where these struggles interact and are interwoven. Guatamala. MAS protest. Others argue that the weakness of the political left in Latin America and the institutional reforms put through in the form of municipal decentralisation. In 2005 Evo Morales was elected president with a record number of votes. This paper however will not focus on the “why”-question. ethnicity. Nicaragua and Uruguay have all recently elected left-wing governments pushing for change in the socio-economic policy of their countries. This struggle has become very prominent since the election of the first indigenous president in Latin America. 95-97. but on “how” indigenous discourse has been used and is being used within the political battles of the last decades in Bolivia. 29) has argued that the challenge to local indigenous autonomy structures in the second half of the twentieth century and pre-existing social networks has led to. Bolivia and Chiapas in Mexico. These governments tend to take a stand against neo-liberal economic policy. Very much related to this is the question by whom these various discourses are being used. How has indigenous discourse been used within other political. social or economic issues? Are there certain discourses which are used by all . Movement towards Socialism) came second place in the presidential elections. Evo Morales. 190). Most prominent may be the case of Hugo Chavez’s anti-US rhetoric in Venezuela. Bolivia’s indigenous movement Latin America has seen a wave of left-wing movements rise and gain strength in the last decade. A major aspect in the majority of these left-wing movements is the combination of social reform with the struggle for indigenous rights. but all across Latin America left-wing governments have come to power. Argentina. globalisation and especially exploitation of the country’s poor as a result of these policies. Chile.115 Pacha Mama's Belly: An analysis of indigenous discourse in modern Bolivia Julia McCall Abstract: This chapter discusses the development of indigenous discourse in Bolivia over the past decades. just one per cent behind the leading party (Postero 2004. the successful indigenous movements of today. Brazil. The elections were followed by a series of massive protests against the government and its policies in which Morales actively participated.

For example it has been claimed by (western) historians that the concept of Mother Earth (as highlighted in chapter six by Emilie Fokkelman) was in fact an invention of European Americans who used the concept to support a range of social. However this view does not answer the question when and why ethnicity becomes mobilised. yet they will be fighting together for a general cause which is part of a discourse. Yet the interesting thing about discourse is that it exists without officially being created by a single actor for only rational reasons. In the case of Bolivia for example ethnicity did not become politicised in such a way until recently. In this way movements are a complex process played out at different levels within which ethnic discourse can play a part. 10). This does not in any way undermine the importance of the ethnic arguments being given. or are there variations? Have the discourses changed over time? These are important questions to ask in light of the recent policy changes under Morales on natural resources. 436). This theory is for example strongly advocated by Huntington in his famous Clash of Civilization theory. The various different tribes have forged a joint. indigenous identity (Yashar 2005. but simply important. Secondly. economic and social battles. Moreover the political movement led by politicians such as Evo Morales and Félipe Quispe in Bolivia seek political and social rights for all Indians. yet will the nationalisation bring the results the indigenous movement hoped for? Theoretical framework My way of understanding the protest movements is through a post-modern lens. Post-modernist theories dispute the natural state of identities and underline the constructed state of identity. at different times. visualised in statues and street names and remembered through cultural “traditions”. However the process is also seen within minority emancipation movements. yet “Indians” never existed until the arrival of the Spanish in the sixteenth century. This does not necessarily mean identities are chosen for personal gain. First of all I will give a short overview of the rise of indigenous mobilisation in Bolivia. creating a unified state. Ethnicity can be tied up with political. I will look at modern political protest in Bolivia that has focused on natural resources. The reality understood by the protesters is therefore not true or untrue. political or personal reasons can exist for an individual to join a movement or protest. Protesters who are daily fighting for the livelihoods and against discrimination are not solely occupied by the discussion on the indigenous discourse that is being used. These created identities are often part of a nation-state building process. Again. This is contrary to the primordial analysis which argues that identities are fixed and natural. Eric Hobsbawm’s thesis on the invention of tradition (Hobsbawm & Ranger 1983) states that historical and cultural narratives are created in light of the present situation. yet the country has been inhabited by various ethnicities for centuries. Many different economic. The identities remain through time and are the primary forces of mobilisation. economic and political relationships. The power of this image was so strong that it was internalised by indigenous communities and the concept is nowadays used in claims for land rights and access to natural resources (Briggs 1996.116 indigenous members of the political protests. First of all it is important to understand how indigenous discourse played a role in reaching these policies on nationalisation. such as rational choice theory would have it. it is important to understand who has used indigenous arguments and for what motives. Has indigenous discourse influenced this policy making? Secondly. Rather the construction and development of identities is a process. This paper discusses three aspects of the use of indigenous discourse in modern Bolivia. These “histories” become the history as it is taught in school books. The nationalisation of natural resources may partly have been made possible through protests in which indigenous demands were tied to these other issues. by different people. it is important to understand what the impact of these policies will be for the indigenous movement. The point I try to make is to understand how ethnic arguments are used in different ways. Nor do I try do deny the “truth” about certain arguments. It is important to note that this paper is looking at the protests therefore from an abstract level. It will become clear that it has arisen for different reasons and in different groups. External factors also play a role in this . In this paper I will try to argue the dynamics found in the ethnic discourse used within the indigenous movement in Bolivia.

this argument was similarly used in the practice of occupying lands that belonged to indigenous communities. but as something out of the past. 107-8). the indigenous population has been treated as a minority for centuries.117 process. At the beginning of the twentieth century there were a few indigenous uprisings that were crushed. 244). Yet there is still a phase of emancipation to be passed. The difference in Bolivia is of course that the indigenous population has never been a minority in the country but constitutes at least 60 per cent of the population. According to Postero (2004. However culturally. apart from reflecting on the three aspects discussed earlier. However. Whilst indigenous culture is becoming more valued. It is now increasingly being represented as the heart of the nation. which was based on political and cultural objectives of the governing elite. The educational system was used as an instrument to build a unified Bolivian nation. I will ask how the MAS has managed to make use of indigenous arguments without alienating too much of civil society to lose the elections. . After the revolution indigenous culture was respected. not the contemporary world and certainly not the future. Primary education in Spanish was made compulsory for indigenous children and indigenous languages were discouraged. Finally I will turn to the popularity of Morales and the MAS party. socially. skills and languages over the past forty years (Salinas & Núñez 2000. but this was emphasised to be tradition and history not part of the modern state that Bolivia had become. but most of the indigenous population supported the 1952 revolution in which the Movimiento Nacionalista Revolucionario (MNR) came to power. For example indigenous languages have become appreciated in such a sense that it is an advantage for politicians or social workers to speak both Spanish and an indigenous language. There are different social and class levels at which indigenous culture can be lived. The reflection discusses what the effect is of external researchers doing research on social constructivism of other cultures. The main aim of the state was to integrate and assimilate the indigenous population into this modern. As part of national state formation traditional folkloric festivals were sponsored for example. The objective was to erase ethnic differences and this was done through rural education plans. The Spanish established a dual republic. 245). 193-4) the indigenous community has always served as the “other”. politically and economically. Spanish-speaking. In this sense the indigenous activity very much resembles the trajectory often seen in minority emancipation. It was believed that indigenous cultures were weak and needed to adapt to modern society if they were not to become extinct. How has the position of the indigenous population and indigenous identity developed over the past century? Dual republics and forced integration The colonial hierarchy between Bolivia’s indigenous communities and white/mestizo elite put in place by the Spanish continued after Bolivia’s independence in 1825. Finally in the conclusions. 194). separating the indigenous community from the Spanish rulers in an exploitive manner. Indigenous culture may be becoming more popular. As in many nations in the nineteenth century. A brief history of indigenous uprising For centuries indigenous culture in Bolivia has been represented as backward and slowing down modernity. there is still a large distinction in class. whereby certain elements of the culture and individuals reach the top of society before the mass becomes accepted and gains rights. I will offer a reflective vision on this paper. the political elite believed the indigenous communities should be civilised and integrated into modern society. The same goes for other cultural markers such as traditional clothing or the chewing of coca leaves. with the claim that private property was the only legal form of property-holding (Postero 1994. The result has been a loss of traditional knowledge. but it has not become equal in perception of class yet. However rural peasants speaking only the local indigenous language will still be seen as socially inferior compared to an urban businessman who only speaks Spanish (Canessa 2006. Under MNR rule however specific indigenous demands were not addressed. mestizo nation (Canessa 2006.

118 An important aspect of the state’s policy was the replacement of ethnicity with class distinction (Salinas & Núñez 2000. the movement focussed on peasant communities. not ethnic ones (Postero 2004. identity and cosmology. 245). “an indication of the MNR’s attempt to turn Indians into peasants” (Yashar 2005. It was in these regions that an important cultural and political movement arose in the 1970’s and 1980’s. From Kataristas to cocaleros The Katarista movement was initiated by young Aymara men who had migrated to La Paz for their education. but also use it for the contemporary and future Bolivian state. The Kataristas didn’t just want to remember their past. Indigenous communities were reorganised into state-sponsored peasant unions. the Ministry of Indian and Peasant Affairs. They thereby fought to replace the class distinction with a stronger sense of indigenous identity. this is why even today “most indigenous peoples in Bolivia prefer to be known as 'farmers'. The new state was to be a state culturally determined by the mestizo/white culture however. Although the Kataristas focussed on indigenous culture. The syndicalist structure made peasants identify more with campesinos than indigenos. This was something that would change in the next decades as indigenous identity gained more strength. Symbolically. Through words and actions the Kataristas tried to underline the importance of being Aymara. 108). Secondly. The movement started in an area where the government had in fact had less grip on the indigenous communities and where union structures had not displaced community integrity so strongly. 164. 154-155). The mobilisation of the Kataristas was therefore based on both class and ethnicity which they tried to promote from within local unions. not a pluralistic state with many identities. the reforms gave rise to a sense of exclusion. The Bolivian state had first dealt with the indigenous communities by creating a dual nation in which the mestizo/white class had nearly all economic and political power. the land reforms started during the MNR government did not turn out to be as beneficial to small farmers as promised. . In short the Military Peasant Pact decreased the power of the peasant unions as the link between the state and the peasant communities and turned the unions into organisations representing the military more than the local communities. The Pact limited the autonomy of indigenous communities. as large landholders actually profited from many economic policies. Both indigenous communities and peasants had been discriminated against for the past centuries in Bolivia. The ruling elite pushed for class identity over indigenous identity. This was in the area around La Paz. A lot of active students 43 Interview with Jenaro Flores who would later become a leader of the indigenous movement. 154-167). choosing leaders who supported the regime or responded to payments or threats 43 . 193-195. set up to deal with these reforms. (Yashar 2005. Especially in the regions where this system was very different from the traditional collective land-holding system and its institutions. Highland indigenous groups were renamed campesinos (peasants) and their organisations were transformed into sindicatos (peasant unions). 159). The communities were thereby integrated into state society and became full members of the nation. but also limited resources to these communities. The Kataristas were successful in capturing the union networks of the countryside. Class politics did however not have the results the poor had hoped for. 193-195. was soon renamed the Ministry of Peasant Affairs. quoted from Yashar 2005. However distinct indigenous identity claims were not addressed. Labour organisation also thought and worked along class lines. For a large part. The group proclaimed the importance of indigenous culture. The 1952 revolution sought to integrate the indigenous communities into the modern Bolivian nation state through political and educational programmes. According to Salinas & Núñez (2000. (Yashar 2005. Canessa 2006). Canessa 2006. The military imposed union leaders on communities. Postero 2004. Canessa 2006. The organisation of indigenous movements was a reaction to a loss of local autonomy and indigenous authority structures due to new policies taken by the military government from 1964 onwards and the resulting Military-Peasant Pact. the Katarista movement (Postero 2004. It was to these threats of the loss of autonomy and unfavourable economic policy that the Kataristas came into action. they also emphasised the complex reality in which ethnicity and class were mixed up. than as members of a particular group”. 245).

The symbol of the coca leaf would become an important symbol of indigenous strength. The symbolism centred on the historical figure Tupak Katari. Both movements had felt economically disadvantaged by the government. Yet by no means all communities had remembered Katari prior to this modern social movement. This was a definite break with the government’s push to integrate indigenous communities into the modern Bolivian state by accepting only class identity over indigenous identity. The cocaleros particularly focussed on the involvement of international powers trying to undermine their livelihoods. In fact. commemorating indigenous martyrs and playing traditional instruments at public events (Yashar 2005. 182-185). the battle against coca production. Soccer leagues were created and extended to involve the youth in the movement. the mining unions also lost their political influence. 185). The indigenous community in Cochabamba. It is interesting that both movements adopted an ethnic discourse in their battle. the cocaleros developed an anti-imperial ideological orientation. Once the price of tin dropped and the government closed down many mines in accordance with the New Economic Policy (NEP) of 1985. Large numbers of miners moved to the Chapare region to become coca farmers (Yashar 2005. Within this movement the cocaleros played a large role. as noted. The protests of the nineties . reduction of social services and privatisation. autonomy and neoimperialism (Yashar 2005. Secondly. the movement had a profound effect on later political movements. the cocalero movement focused on the legalisation of the production and consumption of the coca leaf. strengthened the coca farmers’ support. to form a new discourse on cultural right. 187). Nevertheless. Kataristas made a lot of use of the radio as medium to transmit their message. 167-170).119 returned from the city to their communities after finishing their education and gained leading positions in their local union organisations. The growers claimed that they were serving the indigenous community as coca is sacred and used for rituals as well as for daily consumption. Due to the US war on drugs that collided with the interests of the coca farmers. The Katari movement made use of various ways to engage people in the movement. the heart of the traditional leftwing movement in Bolivia had been formed by miners and their unions. was less organised and did not join in the Katarista movement. the movement was influenced by the more traditional lifestyle of the peasant farmers (Webber 2005. 173-4). Both movements used symbols and rhetoric to revive the feeling of indigenous identity. The Katarista movement never grew big enough to become a national movement. In this “second-generation movement” (Yashar 2005. In this way various movements and goals were linked together and indigenous arguments became part of this. The Kataristas however had started out by defending a different goal. fought by the government under pressure from the United States. nor was he an accepted symbol of heroism for all indigenous communities (Hurtado 1986. The second-generation movement was fighting the neo-liberal policies in the form of the NEP that had led to unemployment. They criticised the involvement of the US in Bolivian internal politics. By re-telling Aymara history in radio programmes for example. First of all. namely local autonomy. In other words they were trying to move away from local action to create a larger community (Yashar 2005. an indigenous hero from the eighteenth century. The cocaleros in fact partly made use of the earlier discourse created during the Katarista movement a few decennia earlier (Yashar 2005. 181) the left-wing movement and indigenous movement joined forces. Within this process they also created a space to express their indigenous heritage and culture. and with them the frontline of the left movement moved to the cocaleros (coca leaf growers). The cocaleros made use of the ethnic discourse created during the Katarista movement. Since the 1950’s. Yet it was from the lowlands that major mobilisation started in the 80’s and 90’s and it was here that Morales gained popularity. The traditional Marxist-leftist movement of the miners became mixed with other components and their demands changed. Yashar 2005. already by the nineties becoming the undisputed leader of the movement. 185-186). The historical challenge fought by Katari was linked to the struggle these communities faced now. the Kataristas tried to emphasise the broader scope of the issues being fought. They sought to gain greater autonomy for the community and more access to resources. Indigenous culture was expressed in symbolic practices such as the use of the wiphala (the multi-colour flag). 230).

international organisations and press agencies are accustomed to. 242). 246) only a few indigenous peoples identified themselves as Aymaras or Quechuas and most highlanders had an ambivalent identification with lowland indigenous groups. 393). 247). During the protests symbolic language was used about traditional indigenous deities such as Pacha Mama. In the following section I will discuss the role of indigenous discourse in three major protests since the nineties: the March for Territory and Dignity in 1991. what existed was a strong regional and class identity. and that the population had not been completely assimilated into the modern nation state as had been the policy for the last half century (Canessa 2006. Interestingly enough none of these deities was mainly associated . such language also attracted the international press. 242).120 Throughout the eighties and nineties indigenous movements grew. It was a march of lowland indigenous communities protesting to protect their territory against the incursion of loggers and other colonists. However there were not many groups who identified themselves as indigenous (Canssa 2006. On the longer term however the protest sent a signal to the Bolivian elite that the indigenous population was able to mobilise for its demands. Interesting to note is that indigenous discourse is not only an internal matter. One of the first major protests against the neo-liberal policy of the 1980’s and 90’s were the so-called Water Wars in Cochabamba from February to April 2000. Although the region is predominantly Quechua speaking. During the Water War the main rallying point was the defence of the traditional use and distribution of water as a collective cultural right based on usos y costumbres (Albro 2006. many supported by NGO’s and church funding. The outcome of the protest was the adoption of a law on the protection of indigenous lands. Wiracocha and Tata Dios. Secondly. Indigenous identity gained prominence during the next two decades as people became more likely to identify themselves as indigenous. values and identity. Many NGO’s. The success of the protests brought a severe blow to the existing government and governing elite (Webber 2005). In these protest marches it becomes clear that the (inter)national media. be it for different reasons. 195). The protesters presented the issues of cultural rights. especially among the peasants and the coca growers. Protesters made use if indigenous discourse in each of the protests. The protest marches The protest in March 1991 brought indigenous issues onto the political agenda. and interested in. In this way an almost mystical connection between indigenous culture and water was suggested. The political demands were seen as what was best for nature too. In the previous section it was discussed that the US anti-coca policy may have strengthened the indigenous movement among the cocaleros. it influences and is influenced by external factors. whereas only 53 per cent of people over six spoke an indigenous language (World Bank). and indigenous leaders took up important positions in national politics (Canessa 2006. 247). 248-9). Various different interest groups formed a coalition against the government’s decision to privatise the water company which also brought increased water tariffs. and very importantly. Also these political demands were linked to environmental issues. Peasant farmers who needed water for irrigation joined hands with the urban poor and the cities' water committees to successfully turn around the privatisation and oust the international water company. According to the World Bank in 2001 61 per cent of the population identified as indigenous. Confederation of Indigenous Peoples of Eastern Bolivia) (Postero 2004. According to Canessa (2006. First of all the protest leaders hoped to engage other Quechua speakers in Cochabamba valley. The symbiosis of indigenous and environmental issues is something that is used more often and is often supported by international NGO’s. the link between environmental issues and indigenous culture. The use of indigenous language during the protest was however useful for two reasons. In 1982 a regional federation of indigenous groups was founded: CIDOB (Confederación de Indíginas del Oriente de Bolivia. The March for Territory and Dignity received a lot of national and international attention. Indeed NGO’s also played a significant role in organising the protest of 1991 (Canessa 2006. institutions and NGO’s can also play a role in the development of indigenous discourse. CIDOB unified various indigenous communities and in a way symbolised the beginning of what has been called the “indigenous awakening” (Canessa 2006. the Water Wars and the Gas Wars.

The protesters seek recognition and attention from the outside world and adapt their policy towards achieving this attention. This argument is linked to the argument of territorial sovereignty of indigenous people’s land holdings which is promoted by among others politician Felipe Quispe. It is most interesting to see how indigenous discourse has in a way become a tool to mobilise internal cohesion as well as (inter)national attention. 249). than from the indigenous community (Canessa 2006. land rights or natural resources could all be linked to the indigenous cause. 393). The Water War had been primarily a local struggle. 254) 44 . Bolivia again became the scene of widespread protest. Some also see the Gas War as the culmination of indigenous radicalism (Spronk & Webber 2007. External factors What is interesting about these three protests is the fact that indigenous arguments were in all three cases used in combination with political and socio-economic arguments.121 with water as such. fighting for the control over the country’s resources (Canessa 2006. 394). The fact that indigenous communities from North-America. 254. This multi-cultural legislation has however also been criticised for in fact limiting indigenous political participation to the recognised patrimonies only (Albro 2006. For example Pacha Mama was associated with the earth. 242-3) points out the concept of “indigenous peoples” is in itself a product of globalisation. The deities that were mentioned in the protests are the most famous and those most familiar to urban Spanish speakers. Quispe endorses a traditional concept of land use in which there is a relationship between the people and the land (soil. meaning the country as a whole. The Gas War was different to the Water War in that the protest was lead by indigenous political groups who had formed coalitions with other sectors of society. 160). a process that entails underlining people's cultural values as equal to those of the dominant culture. Australia. This time people came to the streets to protest the new government’s plans to export natural gas through a Chilean port. However the impetus for this seemed to stem more from the urban mestizo class. As Andrew Canessa (2006. The fact that the emancipation of indigenous communities. The traditional water gods however were not mentioned prominently at all (Canessa 2006. Scandinavia and East Asia are joined in such organisations as the United Nations Permanent Forum on Indigenous Issues (UNPFII) and meet at many international conferences is a sign of the international context in which the Bolivian indigenous movement is working. not particularly with the bringing of water. 35). 249). Patrimony refers to the inherited legal rights over land. Three and a half years after the Water Wars. During the Gas War the movement spoke however of the recovery of the country’s patrimony. 165). water and subsoil resources) (Albro 2006. This is not the only interesting fact though about the protests. This works both ways round. The discourse of the protest became increasingly indigenous. Often 44 Interview with Felipe Quispe with Andrew Canessa. however the indigenous groups held the chief position. A major demand made during the Gas War was the recuperation of the country’s “national patrimony”. Another example of indigenous discourse in the Gas War was the way Quispe described the gas as coming out of Pacha Mama’s belly (Canessa 2006. The state grants local control over the exploitation of the patrimony. The outside attention however can also influence the local protests. Indigenous discourse was connected to a national cause. The Gas War was by contrast “a more national and nationalistic uprising” (Perreault 2006. The term patrimony is often used by Bolivia’s indigenous community. . the Gas War was a national battle. fighting for a resource that is directly necessary for ones livelihood and survival. The rules of hydrocarbon exploitation were such that international firms were to benefit a lot from the deal. In the case of the Water War especially these indigenous arguments have seemed to be used as a binding factor between the various factions of the otherwise precarious coalition. Perreault 2006). is in fact simultaneously influenced by outside factors is a paradox. What is most remarkable is the influence the outside world has on the protests. Yet in contrast to the Water War. Each protest was in fact about different subjects. yet environment. whereas the national state was to receive just a minute percentage of the royalties (Perreault 2006.

Evo Morales and the MAS party do not shy away from pleading for indigenous causes. must be attributed to his popularity among the broader spectrum of the electorate. How does Morales advocate indigenous rights without alienating the rest of the electorate? It is important to ask this question as the popularity of Morales and MAS is part of the development in the demand for indigenous rights. the local movements have the ability to attract international media attention and NGO support. Political system Evo Morales has stunned the world with his electoral success in Bolivia. In short. The March for Territory and Dignity strongly forged a link between indigenous and environmental issues attracting the support of several NGO’s. the use of indigenous clothing and banners and underlining the historical achievements of the indigenous civilisations. such as international organisations and the media. There are numerous international protests on the immorality of privatising water (2007. Another example is the discourse commonly supported by NGO’s in which ethnic issues are associated and environmental issues. there was a lot of international attention for the Water War. The Water War emphasised the traditional values and customs of indigenous culture in order to retain control over water. Many NGO’s and international organisations promote this link between indigenous culture and environmental protection. In each of the protests covered in this chapter . Furthermore. Finally. can have on the way the discourse is formulated. Modern modes of communication for example have helped movements to gain support. The MAS most definitely makes use of indigenous arguments for various reasons.122 leaders are better linked to these international networks than they are to local ones. 250). These leaders form general ideas on indigenous peoples. The radio was already used by the Kataristas as an instrument to inform people of the indigenous past and values. This can be through international networks in which the leaders of movements meet and share thoughts. Maybe more importantly international ideas and concepts can influence the way discourses are formulated. For example the United Nations Environment Programme reports on indigenous peoples: “Over the course of history. In the Gas War indigenous values were connected to the national battle for managing the country’s natural resources. MAS makes use of various symbolic references to the indigenous heritage of Bolivia. which can lead to a gap in the language used by the global indigenous network and that at the local level (Canessa 2006. 43-44). 242-3). Morales for example describes himself as being of “Aymara nationality” (Canessa 2006. belonging to everyone. Many of the party’s leaders are of indigenous descent. For example as Spronk and Webber point out.The March for Territory and Dignity. MAS also fights for some of the most important traditional demands of the . But also during the Water War and Gas War the protesters were fully aware of the media covering the issue. and as such part of the development of the indigenous discourse in Bolivia. The areas of high biodiversity in which they commonly live are deeply embedded in their productive activities and spiritual lives”(United Nations Environment Programme). such as CIDOB and the main peasant federation CSUTCB (Confederación Sindical Unica de Trabajadores Campesinos de Bolivia). the Water War and the Gas War – an indigenous discourse was developed in some form. The popularity of Evo Morales as an indigenous leader of a party in which indigenous rights play a key role in the programme. It can also be through the fact that by re-affirming the existing international discourse on indigenous culture. it has also in practical ways aided the indigenous movements. there exists an international paradigm on indigenous culture and that has the ability to influence the local indigenous movements. indigenous peoples and their communities have developed lifestyles and cultures that are intricately linked to nature. Also the party has close ties with a number of indigenous organisations. The privatisation of water is seen as something that goes against the idea that water is a human right. Within all of these battles it is important to realise the influence external factors. This is done through speaking indigenous languages at times. Indeed globalisation has not only stimulated indigenous groups to re-embrace their identity as it contrasts with modern way of life.

bilingual education and against coca eradication programmes (Madrid 2006. 250-252). imperialism. The major political parties had failed to bring socio-economic progress and that had undermined their support. Madrid (2006. such as professional associations. Movimiento de la Izquierda Revolucionaria. Most importantly Quispe talks of an indigenous revolution that needs to take place (Canessa 2006. Finally MAS established ties with various organisations which were predominantly run by whites or mestizos. nationalist and is dominated by a charismatic leader for example. Quispe has his base among the Aymara-speaking regions of the La Paz altiplano. Whereas Quispe talks of a revolution. The inclusiveness of MAS therefore has potential in Bolivia. Finally. indigenous and ecological issues. capitalism.123 indigenous movements such as agrarian reform. Also many white and mestizo candidates were recruited for the 2002 elections. both by Aymara-speaking community from the highlands where he grew up and Quechua-speaking communities from the lowlands. 15). Between 1999 and 2002 MAS ceased to be solely peasant and indigenous (interview Dionisio Nuñez with Madrid 2006. By the late 1990’s however Bolivia was facing serious economic problems and poverty and unemployment had grown. Quispe’s electoral support is also based much more strongly in one region. Quispe’s language in contrast to that of Morales is much sharper. The leaders avoided exclusionary rhetoric. Morales’ objective is to protect the state. The focus of Morales is on globalisation and international exploitation of Bolivia’s wealth. The party however changed direction in the last years of the previous decade. Morales therefore has a much more inclusive appeal than Quispe. 7-9) argues. Secondly. This does not only mean he manages to reach out across to non-indigenous social groups. another important and popular indigenous politician of this time.3 per cent of the vote. Acción Democrática Nacionalista. MAS is not an indigenous party with exclusionary policy. By 2002 this figure had dropped to just 39. including the vice presidential candidates. Morales is also supported by a wide range of indigenous groups. It was not only the political elite that was distrusted. Ethnic polarisation in Latin America has traditionally been low and the boundaries between ethnicities relatively fluid. MAS made use of a nationalist sentiment. However Morales does deliberately try to not exclude other groups from his party and the party’s positions. Morales has a much broader base of support. Quispe’s language creates much more alarm to non-supporters than Morales’s words. This attitude is different to that of Felipe Quispe. MAS combines criticism on neo-liberal policies. MAS scored especially high in areas where traditionally there had been low levels of voter turnout. 250251). The MAS in the eyes of Quispe is not an indigenous party because it allows non-indigenous members to join the party. The MAS had consistently protested against the ruling parties and various policies. he tries to make indigenous concerns into national concern. with ethnic and class discourse (Canessa 2006. MAS used the economic situation to gain support. All of the latter concerns fall under one header creating a broad opposition. 13-14). a movement that strongly focused on indigenous rights and the peasantry.0 per cent. but an ethno-populist party. ADN and MIR 45 ) started losing support after 1989. This gave MAS a base outside the rural peasant areas of Cochabamba (Madrid 2006. To gain support from various different social groups MAS has formulated a broad populist appeal by criticising the contemporary political elite and neo-liberal economic policy. Unlike Quispe. indigenous autonomy. 14-15). In this battle he uses indigenous arguments too. the need for mestizos and whites to live as indigenous communities in this state. As such instead of changing the state upside down. rather than the political arena. but also the neo-liberal reforms that had been implemented since the 1980’s. In that sense MAS resembles traditional populist parties. In 1989 together they had still accounted for 65. Apart from anything else most of the MAS candidates came from the union world. globalisation etc. industrial federations and organisations of small businessmen. belong to one group and countering this are social concerns. As Madrid (2006. 19-25) argues that MAS resembles a populist party for three reasons: Firstly. in the way that MAS is also anti-elitist. more focussed on racial issues and very exclusionary. MAS criticised the large political parties of betraying the country and handing over national patrimony to 45 MNR. What occurs is a paradigm in which US. MAS came forth from the cocaleros movement. The three main parties (MNR. MAS used the critical attitude of the population towards the old political parties. The politician speaks of the need to change the state. . namely the Aymara altiplano where Quispe grew up.

the Katarista and the cocalero movement. Indigenous communities have become more likely to identify as ‘indigenous’. which was to be culturally determined by white/mestizo culture. The protest itself was about a territorial issue. MAS also made the national gas issue a large part of its campaign. globalisation. namely the rise of indigenous discourse. Each of the three main protests discussed in this paper was supported by an indigenous discourse. The same happened during the Water War in Cochabamba. Yet. reaffirming the common (international) idea that these issues belong together. Partly MAS has made use of populist strategies to gain support. The water issue received a lot of (international) media attention and again was supported by many NGO’s. Yet in both movements an indigenous discourse was developed that regenerated the indigenous identity over class identity. By looking at three main subjects. I have tried to show how indigenous discourse has changed over time. Conclusion It has become clear that Bolivia has experienced an indigenous awakening in the past two decades. For centuries since the Spanish invasion indigenous culture has had a second rate position in the Bolivian state despite the majority of indigenous peoples. The support given by NGO’s to such causes played a role in the created discourse. unlike for example Quispe. Yet it is something that needs to be . Rather the Gas War focussed more on gas as a national good being ‘stolen’ by international powers. But also recent political protests have used an indigenous discourse in their struggles whilst fighting for a variety of causes. The indigenous discourse developed during the Water War underlined the ancient use of water as a common good which very much related to the global understanding of water. The effect of external factors such as international indigenous forums. neo-liberal policies. by criticising the old elite. as well as opposing the coca eradication plan. Partly this is because globally there is a lot of criticism about water privatisation. From the 1950’s onwards the state in fact tried to assimilate indigenous culture into the new Bolivian nation-state. Both these policies were popular especially among left-of-centre voters (Madrid 2006. From the nineties onwards a string of political protest marches brought people in masses to the streets of Bolivia. The indigenous discourse there seemed to be formulated more by the urban mestizo middle-class than the indigenous peasants. Finally. something belonging to everyone. yet in such a way not to alienate the non-indigenous population. The movements actively made use of symbols and language to underline indigenous identity. The MNR government strived to turn ethnic difference into class distinction. Indigenous discourse has become part of the battle to protect the Bolivian state from neoliberal policy and neo-imperialism. Morales and MAS also use indigenous discourse to a certain extent. This paper has looked at how indigenous discourse has been used over the past decades. even if had not existed previously in that form within certain communities. in the case of the Kataristas this was mainly loss of autonomy. through education and economic programmes. Following this period two separate movements developed. indigenous discourse in the context of recent political protest and indigenous discourse used by MAS and Morales.124 international capital. in the case of the cocaleros this was mainly the harsh neo-liberal reforms and fear of loosing their livelihoods. At least the indigenous aspect did not receive as much attention. NGO’s and media can have on the development of local discourses cannot be underestimated. The March for Territory and Dignity changed the mind sets of the political elite in Bolivia who realised indigenous culture had not fully been assimilated and would play a role in the future. Each movement fought new government policy for their own reasons. also during the Gas War an indigenous discourse was formulated. Importantly. yet for different causes and at different levels. MAS and Morales have turned indigenous issues into national concerns. as water is seen as a human right. is used differently for varying causes and is influenced by external factors. yet not to the same extent as the previous two protests. Although Morales does emphasise indigenous culture he has done this without alienating the whole non-indigenous population. MAS has managed to reach out beyond the radical indigenous groups. neo-imperial behaviour and emphasising nationalist sentiment. 21-25). The protesters made a strong link between environmental issues and indigenous issues.

all over Latin America. Discussing the way in which ethnic discourse can be used in such struggles can be controversial. especially done by an outsider. Finally. indigenous emancipation and unifying rhetoric are always controversial issues to be discussed. By nationalising the country’s resources and pledging to redistribute wealth. He points out that terms such as invention and authenticity can seem critical. globalisation and neo-imperial practices. rather they feel the scholarship undercuts the meaning of lived experience and membership to a certain group (Briggs 1996. Within this criticism indigenous culture has become a symbol of the country. As discussed in the introduction. By making resources a national issue. In what way has the Bolivian indigenous movement been influenced by these parallel movements? Finally Morales’ use of indigenous discourse was discussed. discourse is an abstract subject that maybe does not do justice to the daily struggles thousands of Bolivians face and their reasons to join the protests. He is therefore also a symbol of indigenous unity. This paper has attempted to analyse indigenous discourse within a movement that is fighting centuries of oppression. As mentioned in the introduction. The problem however is not that indigenous scholars and activists do not understand the outside scholars’ implication. . While discourse analysis may provide answers to many questions on the rise of social movement. he is in fact reducing the possibility that the indigenous movement may become more radicalised. Morales has promised a lot. However Morales walks on a thin line as people may become disillusioned by his policies if they do not fulfil the promises he has made. it is important to note that Morales has partly been able to bring indigenous culture to the forefront because Morales is respected by various indigenous communities in Bolivia. and because the changes are a symbol that the indigenous movement has reached something. Morales very much emphasises the national right to resources and their wealth. they do not do this exclusively. rather than an indigenous one. Although Morales and MAS do support indigenous issues. It has been argued that the MAS has formulated a broad populist appeal by criticising the old political elite. Briggs has discussed this problem of outside scholars studying social constructivism in other cultures. the indigenous culture has become a symbol of unity and national pride. Part of the policy is the redistribution of the resources to poorer parts of the population. Yet as stated in the introduction there still exists a class difference that links the overwhelming majority of indigenous people to poverty. especially when these terms are circled outside the academic world. I think this is an important thing to keep in mind when writing on discourse analysis. one must be aware of how far these analyses are from the daily reality of individual members of such movements. What impact do Morales’ policy changes and nationalisation of resources have on the indigenous population and the indigenous issue? As discussed a large part of Morales’ discourse is based on criticism of neo-liberal policy. neo-liberal policy and imperialistic behaviour of international states and institutions. as well as offer a way to analyse these movements critically. Final reflection Ethnic discourses. indigenous movements have arisen in recent years. However the indigenous issue is not just about the symbolic acceptance of having the right to live and practice one’s own culture. it is mainly about fighting against economic and political discrimination. Not only could one ask what the effect is of NGO’s and international organisations on the development of indigenous discourse in Bolivia. 461-462). I believe the policy changes are positive for the indigenous population in the sense that they have the potential to empower indigenous communities politically and economically.125 researched more. From being treated as a second rate culture of the Bolivian state. Thus one could say progress has been made in indigenous emancipation within Bolivia. even by making the radical changes he has done. One can wonder whether Morales will be able to meet the expectations of many impoverished Bolivians. Morales has thereby made indigenous issues national ones.

pp. 38. London: Pluto Press. Grey (2004) ‘Articulation and Fragmentation. 387-410. Zamosc (eds). Andrew (2006) ‘Todos somos indíginas: Towards a New Language of National Political Identity’in Bulletin of Latin American Research Vol. Barrett. Indigenous Politics in Bolivia. Vol. 26 No 4. J. (2006) ‘The Rise of Ethno-Populism in Latin America: The Bolivian Case’. Indian Rights and International Relations in Latin America. Kevin & Susan Paulson (2000) ‘Political Economies of Identity in Bolivia 1952-1998’ in The Journal of Latin American Anthropology. Briggs. Spronk. Culture and Indigenous Rights: The Case of Educational Reform in Bolivia’ in Prospects. Hobsbawm. pp. Brysk. 435-469. Salinas. 189-209. Utopia Reborn?.’ in N. Hurtado. Perreault. 1. Madrid. 2-29. Vol. La Paz: Instituto de Historia Social Boliviana. Brighton: Sussex Academic Press. Sonia Comboni & José Manuel Juárez Núñez (2000) ‘Education. London: Latin America Bureau. Eric & Terence Ranger (1983) The Invention of Tradition. Canessa. Stanford: Stanford University Press. A paper prepared for the 2006 meeting of the American Political Science Association. (1996) ‘The Politics of Discursive Authority in Research on the “Invention of Tradition”’in Cultural Anthropology Vol. N. Crabtree. Webber (2007) . 105-124. Patrick. 2. Healy. pp. The Struggle for Indigenous Rights in Latin America. pp. Susan & Jeffery R. 2. 25 No. Javier (1986) El Katarismo. Thomas (2006) ‘From the Guerra Del Agua to the Guerra Del Gas: Resource Governance. 11 No. 30 No. Daniel Chavez & César Rodríguez-Garavito (2008) The New Latin American Left.126 Bibliography Albro. Politics and social movements in Bolivia. Philadelphia. 241-263. Cambridge: Cambridge University Press. 5 No. pp. Grey Postero & L. 4. 150-172. Alison (2000) From Tribal Village to Global Village. (2005) Patterns of Protest. Postero. pp. Charles L. Robert (2006) ‘The Culture of Democracy and Bolivia’s Indigenous Movements’ in Critique of Anthropology Vol. Raúl L. Neoliberalism and Popular Protest in Bolivia’ in Antipode Vol. pp.

(accessed on 16 February 2009). Deborah J. Cambridge: Cambridge University Press. (2005) Contesting Citizenship in Latin America.htm (accessed 8 February 2009). Vol. 4. The Rise of Indigenous Movements and the Postliberal Challenge. http://www. Yashar. The Evolution of Ethnic Politics.’ in Journal of Latin American Studies Vol. United Nations Environment Programme Indigenous Peoples. 751-775.34 No.org/0905webber. Share of Indigenous Peoples to Total Population by Various Indicators.worldbank. Cambridge: Cambridge University Press. Donna Lee (2005) From Movements to Parties in Latin America.contentMDK:21310720~pagePK:1497618~piPK:217854~theSitePK:322279. 2001. Donna Lee (2003) ‘From Exclusion to Inclusion: Bolivia’s 2002 Elections.org/WBSITE/EXTERNAL/COUNTRIES/LACEXT/BOLIVIAEXTN/0.org/indigenous/.00. Jeffery R. 2. Van Cott.unep. . Webber. 31-47. pp. http://web. World Bank. (2005) ‘Left-Indigenous Struggles in Bolivia: Searching for Revolutionary Democracy’. 57 No.html (accessed 15 February 2009). http://www. Van Cott. . Demographic Data.127 ‘Struggles against Accumulation by Dispossession in Bolivia: The Political Economy of Natural Resource Contention’in Latin American Perspectives. Quick Facts Bolivia.monthlyreview. 35. in Monthly Review Vol. pp.

128 .

The package of neo-liberal measures adopted under the Washington Consensus. especially since the current global crisis has decreased international oil and gas prices by more than two thirds. there seems to be an additional focus on the socioenvironmental side of oil and gas mining. A reflection on the history of mining in Bolivia shows that previous nationalisation projects have not been successful in changing Bolivia's dependent position in the international economy. The ‘water war’ of 2000 in Cochabamba can be seen as the turning point with regard to this renewed popular involvement. The newly announced Ministry for the Environment will surely help to execute this integrated and more environment-friendly strategy. the higher royalties on gas even produced a fiscal surplus. a positive development for Bolivia. However.129 General conclusion This section will provide an answer to the research question that has been central to this volume: what is the meaning of Bolivia's new natural resource policy in the light of present internal and external perspectives? Since each of the chapters studies a specific topic related to the new resource policy. Bolivia regained control over its economy and the hydrocarbons sector. Other research and analyses however also present critical remarks with regard to the new natural resource policy. Even with a nationalised or state controlled mineral and hydrocarbon production.4 per cent of GDP and after years of large deficits. Bolivia’s remarkably advanced system of natural parks and indigenous reserves will thereby be strengthened. This increase in exports pushed the account surplus to 9. The ‘water war’ showed Bolivia’s population that countering these long-existing mechanisms was possible. Therefore. demonstrating both positive and negative sides of MAS’ new resource policies. some fear Bolivia’s business environment has deteriorated in such a way by the measures taken by the Bolivian . ‘pacted democracy’ and the marginalisation of indigenous rights. This is partly due to factors that go beyond economic paradigms that have remained influential. the changes with regard to Bolivia’s economical situation are not the only ones that can be drawn from the analyses in this book. The result is a multi-faceted answer. and perhaps even more important. the country will still be dependent on international market prices. In addition. On top of this. The way in which the new resource policy has come into existence can be regarded as a positive development for Bolivia. The new policies have the potential to bring political and economic empowerment to the indigenous community through redistribution of royalties. has not led to a structural improvement of Bolivia’s economy. after decades of strong foreign involvement. The new natural resource policy has also had various effects on the indigenous population and the indigenous discourse. for example. On a positive note the chapter about indigenous rights shows that the new policy is a symbol of the achievements of the political protest of recent years. Morales’ new government partly bases its policies on the ideas of Pacha Mama: the integrated approach of humans and nature. It is risky for Bolivia’s economy to depend exclusively on its hydrocarbon sector. despite all its good intentions to alleviate poverty and reduce debts. A positive effect of the implementation of the new natural resource policy on Bolivia’s economy. it seems that Bolivia's dependent position will not be resolved by placing resource extraction and exportation under state control. or is expected to become. an answer to the central question of the book is formed by a composition of the multiple conclusions that can be drawn from the separate chapters. which for a large part was tied up with the indigenous movement. Some of the research that has been done in this volume indicates that the new natural resource policy is. such as the lack of both adequate infrastructure and processing capacity as well as the lack of access to the sea. Therefore. The ‘water war’ indicated a victory over neo-liberal policies. it has been argued by some scholars that the popular resistance during the ‘water war’ has been an inspiration for further popular uprisings in Bolivia. Moreover. due to the renewed popular participation in political decision-making it was based on. With Evo Morales’ rise to power. Bolivia now seems to be on its way towards self-determination. the conclusions together provide diverse views on the implications of Bolivia's recent resource politics. Additionally. perhaps even more so now that the state budget has become dependent for a large part on resource income. is for example the augment of earnings from mining and hydrocarbons exports in 2008.

Possibly. . poorer population of Bolivia. Another aspect of concern is that despite the increased attention for socio-environmental issues of hydrocarbon mining. For the indigenous. This decrease in gas import has a negative impact on Bolivia’s national income. have reportedly been decreasing since the nationalisation of Bolivia’s gas sector. Consequently. Looking at these positive aspects of Bolivia’s new resource policy as well as at the critical remarks on this policy. it can be argued that nationalisation should not be regarded as an instant or unique solution for Bolivia's economic problems. Its provisions have not been very effective in binding companies to consider socio-environmental consequences of both exploration and exploitation. The Cochabamba popular management system of the water supply for example has not yet fulfilled its expectations. that foreign investors might abstain from new investment in the Bolivian gas sector and other sectors. it is in Bolivia’s very best interests to maintain good Latin American relationships. the richer white/mestizo population in the Eastern departments has become afraid losing its privileged position due to those same new resource policies and has demanded more autonomy. it can be said that the new resource policy has certainly not improved Bolivia’s internal security situation. we have come to conclude that only time can tell what impact these new resource politics will have on Bolivia’s future. the new resource policies are perceived as a great opportunity for improving their precarious situation. Hence. Moreover. Regarding Bolivia’s economic relations with other Latin American countries.130 government since 2005. due to the fact that Bolivia is landlocked and therefore very much dependent on the cooperation of its neighbouring countries for the export of gas and oil. The limited financial resources of the state oil and gas companies also make it hard to ensure cleaner production. Bolivia’s environmental law is still underdeveloped due to the lack of priority it received during neo-liberalism. However. Bolivia’s society has become more polarised than ever since the reforms of 2005. Hence. disappointing results might turn into an opportunity for the more radical indigenous movements to gain strength. the conclusion may be that Bolivia’s new natural resource politics has had its impact on the country’s international relations as well. A fourth anxiety concerns Bolivia’s society that has been strongly destabilised by the new natural resource policies. Inadequate institutional resources also restrict the controlling agencies such as the current Ministry for Sustainable Development from better enforcement of socio-environmental protection. we can ask ourselves what might happen if MAS’ policies turn out not to have the expected positive results. In addition. Argentinean and Brazilian gas import for example. What will be the effect of declining oil and gas prices on Bolivia’s economy and internal stability? Will Bolivia still be able to attract foreign investment in the future? And above all. the question remains whether the results of MAS’ redistributive programmes will live up to the expectation of Bolivia's poor. will the expectations and hopes of the Bolivian population be fulfilled? The meaning of the new natural resource policy will have to be re-evaluated in the near future.

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