ISR Issue 46, March–April 2006

Hope and challenge in Bolivia
Will Evo Morales end neoliberalism?

TOM LEWIS reporting from Bolivia

WINNING THE presidential election in Bolivia last December with an impressive 54 percent of the vote, Evo Morales joined Luis Inácio “Lula” da Silva (Brazil), Hugo Chávez (Venezuela), Tabaré Vásquez (Uruguay), Alejandro Toledo (Peru), and Néstor Kirchner (Argentina) as part of Latin America’s electoral backlash against neoliberalism.¹ Morales, an Aymara Indian, assumed office January 22 as Bolivia’s first indigenous president. His government immediately symbolized hope for the 60 percent of Bolivians who live in poverty and who, along with the nation’s coca farmers, form the base of support for Morales’s political party and movement, the Movement Toward Socialism (MAS).

The election campaign unfolded as a national referendum on neoliberalism—the policies of privatization, austerity, and trade liberalization that have wreaked havoc on Bolivias poor and oppressed. Former president Jorge “Tuto” Quiroga, the candidate of the neoliberal Poder Democrático Social (PODEMOS), finished a distant second to Morales, receiving only 29 percent of the vote. MAS also won a majority in the lower house of Congress and almost captured a majority in the Senate. Three out of the nine state governorships went to MAS, as did the mayoralties of all of the major cities with the exception of Santa Cruz. The scale of MAS’s victory sent a powerful message from Bolivia’s voters to the captains of international finance, industry, and trade.

Initial steps in power

In the days following the election, Morales announced that he would repeal Supreme Decree 21060, the 1985 law that opened the door to the privatization of state enterprises and to measures imposing “flexibility” on Bolivian labor. Some critics on the Left considered the repeal of 21060 to be a merely symbolic gesture, since it has no retroactive effect of re-nationalizing privatized enterprises. Yet overturning the decree has topped the demands of Bolivia’s social movements since 2000.

This is because 21060’s infamous Article 55, which introduced labor flexibility, has served as the hammer with which the transnational and Bolivian bosses have busted unions, persecuted organizers, fired workers without cause, and spread fear among the rank and file, deterring them from joining in a collective fight for workers’ rights. The repeal of 21060 represents an important measure in limiting the ability of national and transnational capital in Bolivia to act with impunity.

In a further step, Morales indicated that he will use last May’s ruling by the Supreme Court—a ruling that invalidated existing contracts with transnational oil and gas companies—to negotiate new contracts on terms more favorable to Bolivia’s treasury. These contracts, which usually stipulate that transnational petroleum corporations pay only 18 percent in royalties to the government, were declared unconstitutional because the executive branch never submitted them to Congress for ratification, as required by law.² Using a combination of royalties and more taxes, a new hydrocarbon law passed in April 2005 requires a total contribution of 50 percent from the transnationals. Morales will seek to replace the existing but invalid contracts with new ones based on the 50 percent formula.

Morales hopes to use super-profits from natural gas to pay for significant improvements in the living standards of Bolivia’s workers, peasants, poor, and unemployed. But Morales is not inheriting an already nationalized and developed hydrocarbon industry. The need to negotiate with foreign investors for development capital will limit how far he can go toward full nationalization. His stated plan is to nationalize only subsoil resources—the gas, oil, and minerals in the ground—and to leave surface property and exploitation largely in private hands.

When leaders in the national Coalition for the Defense and Recuperation of Gas speak of “nationalization,” however, they mean—beyond the state’s recovery of ownership of oil and gas reserves—the participation of Bolivian workers and the state in all aspects of production: exploration, extraction, industrialization, refining, and marketing. “If it’s only a law, it won’t mean much,” says Oscar Olivera, a spokesperson for the Gas Coalition and leader of the successful fight to overturn the privatization of water service in Cochabamba in 2000. “We will have to continue to push for a genuine nationalization.”

Despite continued dependence on foreign investment, Morales will find himself in a relatively strong position for negotiating with the transnationals. Natural gas prices have risen quickly—even faster in percentage terms than oil prices—since the start of the Iraq War. Should the European corporations that presently dominate Bolivia’s hydrocarbon industry and U.S. companies prove stubborn in negotiating new contracts, China awaits its chance. And Venezuela’s President Hugo Chávez may be willing to contribute substantively toward financing the development of Bolivian gas.

Other early measures taken by the Morales administration included salary reductions of up to 58 percent for members of the executive and legislative branches of government, including the president, vice president, cabinet ministers, and elected representatives. He named a cabinet in which fourteen of the sixteen ministers come from indigenous groups and women hold the portfolios of Interior, Justice, Health, and Economic Development. Some controversy, however, surrounded the appointment of seven of the ministers because of their past work with neoliberal governments.

Among the most important steps taken by Morales has been the presentation to Congress of a proposal to call elections to a Constitutional Assembly in July 2006, and for the assembly to begin its work in August. The convocation of the Constitutional Assembly stood out as the MAS’s central campaign promise. The assembly’s aim, according to MAS officials, would be to “reestablish the nation on a new basis” and formally “end neoliberalism.” The “new basis” would take into account for the first time the interests and aspirations of Bolivia’s majority indigenous population.

Morales also decreed a 7 percent increase in teachers’ salaries as well as the creation of 3,500 new teaching jobs. Bolivian teachers were scheduled to receive a 3.5 percent increase under the budget Morales inherited for the current fiscal year, but salary cuts for other government officials made it possible to double the amount. Morales said the existing budget did not enable him to satisfy the teachers’ demand for 8,000 new jobs at present.

At the same time as Morales repealed Supreme Decree 21060 and moved toward nationalizing hydrocarbons in some form, he also took steps to placate the conservative leaders of the oil- and gas-rich eastern provinces, who want autonomy and who have threatened secession if Morales goes too far in dismantling neoliberalism. Morales thus approved private exploitation of the region’s iron and manganese mine in Mutún over the protests of environmentalists, unionists, and peasant groups.

Morales also issued a statement guaranteeing protection of the private property of big business and large landowners. And he reassured foreign companies and investors that their presence is welcome as long as their practices are “transparent”—meaning “incorrupt” and “non-subversive.” As a gesture of goodwill, and despite what many consider irrefutable proof, Morales absolved Repsol, the Spanish-Argentine transnational corporation, from allegations that it trafficked in contraband hydrocarbons.

An early controversy between the new Morales government and groups of Bolivian workers erupted in late January when officials apparently reneged on a campaign promise to triple the minimum wage. MAS literature circulating in the last ten days of the December campaign contained a pledge to raise the minimum wage from its current 480 bolivianos ($60) per month to 1,500 bolivianos ($185) per month. Morales’s chief economic advisor, Carlos Villegas, was forced to make a public statement in which he said no such promise ever came from an authorized source.³

Promise or no, ordinary working Bolivians clearly expect to see an improvement in their standard of living within the next twelve months. This attitude was reflected in the reaction to Morales’s 7 percent salary increase for teachers. Union leaders rejected the offer and urged instead that the increase match the promised 1,500 bolivianos per month.

What kind of party is MAS?

MAS is best understood as a social and political formation rooted in Bolivia’s social movements but lacking in a strong internal structure of its own.⁴ According to MAS strategist and now Vice President Alvaro García Linera, MAS consists of “a coalition of flexible social movements that has expanded its actions to the electoral arena. There is no structure; it is a leader and movements, and there is nothing in between. This means that MAS must depend on mobilizations or on the temperament of the social movements.”⁵

In fact, a party core does exist, which is comprised of a small group of professional politicians and intellectuals. This core looks to navigate a way among the forces of the largely white Bolivian oligarchy, transnational capital, U.S. imperialism, separatist tendencies, and the demonstrated power of Bolivia’s indigenous masses. In addition, MAS’s ascension to power is attracting all kinds of political opportunists and social climbers to the party’s officialdom, including many who once had no qualms about serving neoliberal governments.

MAS has frequently used patronage to buy the support of significant peasant and indigenous organizations, as well as workers’ unions. The practice of patronage reached its height after the 2003 Gas War that toppled then President Gonzalo Sánchez de Lozada. MAS distributed funds and official posts to obtain the willingness of union and indigenous leaders to dampen the mood of rebellion and thus to allow the new government of President Carlos Mesa a chance to stabilize. Among the negative consequences of this practice was the split in the Bolivian Peasant Workers Confederation between a majority wing led by MAS operative Ramón Loayza and a minority wing led by its historical head Felipe “Mallku” Quispe.

The Gas War of 2003 gave rise among the social movements—the Central Obrero Boliviano (COB—Bolivia’s national trade union federation), and the powerful El Alto Federation of Neighborhood Organizations (FEJUVE)—to a political program known as the “October Agenda.” The Gas War of 2005, which overthrew President Carlos Mesa and produced the early elections that Morales won in December, was fought around the same program. The October Agenda calls for: hydrocarbon nationalization; renegotiation of existing oil and gas contracts; the arrest and trial of ex-President Sánchez de Lozada and others responsible for the many killed by repressive forces during the 2003 Gas War; an end to coca eradication; the renationalization of privatized social services, including water; and a Constitutional Assembly.

MAS’s campaign platform responds to most of these demands. As already indicated, MAS will seek a limited form of hydrocarbon nationalization. It has quickly followed through on its promise to call a Constitutional Assembly. MAS also intends to press for legislation expanding regional autonomy and increasing citizen participation in government (for example, by allowing the election of officials that traditionally have been appointed by the central government in La Paz). It has advanced plans to help small businesses and agricultural producers. And, as evidenced by Morales’s creation of a new Water Ministry, it apparently intends to pursue ways of de-privatizing at least some social services.

The question remains, of course, whether MAS has the conviction and stamina to hold firm against the obstacles that will be placed in its path by international and national capital and the Bolivian Right. Morales and MAS’s record over the past few years does not offer great hope that MAS will staunchly prosecute or defend an agenda of radical reform.

In the mid- to late-1990s, MAS enjoyed a reputation as a direct action social movement. But in 2002, Morales finished second in the presidential contest, narrowly missing first place in the popular vote. Since that time, MAS has focused its actions on winning the presidency and to operating in the electoral arena. This has led to a rightward evolution in its politics, to the point where García Linera describes MAS today as a “center-left” formation whose goal is the development of a kind of state capitalism, which he has labeled “Andean-Amazonian capitalism.”

For example, MAS could have led or formed part of a new anti-neoliberal government in the wake of October 2003. Instead, it lobbied against the October Agenda and for the constitutional succession of then Vice President Carlos Mesa, knowing full well that Mesa differed not at all from ex-President Sánchez de Lozada on neoliberal policy. Throughout the Mesa administration, MAS continued to act as a pillar of support for the government. Morales went so far as to campaign in favor of Mesa’s July 2004 gas referendum, even though the option of nationalizing oil and gas resources did not appear on the ballot.

MAS has repeatedly worked to contain Bolivia’s ongoing social rebellion. Its thinking has been that if it were thrust into power on the wave of popular revolt, it would risk a direct confrontation with U.S. imperialism. Characteristically, Morales refused to sign on to the slogan of “nationalization” until the very end of the Gas War of 2005. At one point he tried to jump to the front of the gas struggle with a moderate slogan defending the 50 percent formula. But the social movements quickly progressed beyond Morales and began to demand outright nationalization. Only when it became clear that the conflict would subside did MAS join the call for nationalization. Even then Morales proved key in channeling the revolt into the “safe” option of early elections—something that the social movements and the Left had never demanded. Indeed, the ensuing electoral period significantly lessened the momentum of the masses.

Morales proclaimed in the last days of the presidential campaign, “We will bury neoliberalism.” He did not say, “We will bury capitalism.” Moreover, according to García Linera, socialism remains a project that must be postponed for 50 to 100 years in Bolivia. Morales thus does not intend to construct socialism but rather to establish a new accommodation with global capitalism based on a revitalized role for the state in providing for the well-being of its citizens.

Such a renewal of the state’s role in society is the concrete meaning of Andean-Amazonian capitalism: a return to a form of state-led capitalist development that preceded the era of neoliberalism—rather than a challenge to capitalism itself.

If MAS prevails against the forces arrayed against it, neoliberalism is on the way out in Bolivia. Indeed, at stake in Bolivia today is whether neoliberalism will be reformed away, or whether the battle against neoliberalism will be combined with a fight against capitalism. The world’s imperialist powers recognize these stakes and have moved to smooth some of the rough edges of neoliberalism in Bolivia. The International Monetary Fund has recently forgiven $251 million in Bolivian debt, and Spain has written off another $120 million in private debt. These steps will help to put money at Morales’s disposal to inject into social programs.

Nevertheless, the dynamic of severely polarized class and social forces embodies the potential to frustrate both imperialism’s hope for as little change as possible and Morales’s hope for significant but moderate reform.

Social movements and the Left

After twenty years of privatization and cuts in social spending, Bolivia remains the poorest country in South America. Gross Domestic Product today stands at less than half of where it stood when economic guru Jeffrey Sachs designed a neoliberal structural adjustment program for Bolivia in the mid-1980s.

Job opportunities for urban and rural workers have diminished overall, raising official unemployment to an unprecedented 13 percent. The formal sector of the economy accounts for only two out of every ten jobs, while the highly unstable informal sector provides seven out of every ten jobs. The state employs one out of every ten workers. Only 22 percent of Bolivians earn enough to keep their families adequately nourished, while social services reach less than one-third of the population. By 2003, real wages had fallen to levels below those of 1990, with underemployment affecting 62 percent of workers in the formal sector and 70 percent of workers in the informal sector. One recent study concludes that, “With low salaries and growing insecurity in their sources of income, the majority of workers have seen their quality of life decline. Their reduced spending capacity has had the effect of shrinking the internal market, creating a vicious circle that reproduces a decline in investment and employment.”⁶

Conditions such as these have spawned powerful social movements in Bolivia. These are the groups that overwhelmingly turned out to support MAS’s electoral bid. Morales’s survival will depend on his ability to retain their loyalty. With no irony intended, Morales himself encouraged them to challenge him if necessary, saying “I may make mistakes. But if I slow down, push me.” Yet before the election, Morales also told La Gaceta:

If I’m elected president, unfortunately it will be my duty to respect those neo-liberal laws. Some changes we will be able to make by decree, others through the legislature, but immediately there aren’t going to be great changes because these are twenty years of neo-liberal laws—that can’t be erased in one swipe.⁷