It was caused by an excessive increase in the price of fuels. The event demonstrates the difficulties of entering into a truly alternative mode of development, but it also reveals the limits of the Bolivian government’s stated effort to re-establish and decolonize the state.
The Ipsos Institute released a survey showing that the popularity of President Evo Morales fell from 84% in 2007 to 36% in January of 2011. The results are worse for Vice President Alvaro García Linera whose level of approval fell from 46% in November of 2010 to 29%.
The ex-Minister of Hydrocarbons, Andrés Soliz Rada, was asked, “if the cycle of political and economic transformation that Evo Morales has deployed in his first six years of governing has reached its end.” He didn’t manage to give a full answer, but it was the first time a question like this has been raised in the Andean country. The “gasolinazo,” the huge increase in the price of fuels decreed at the end of December and annulled just five days later to avoid almost certain upheaval, was an earthquake sufficiently devastating to bring about a radically new political situation in Bolivia.
None of the many analysts who try to explain what happened were able to foresee that a government that was reelected barely a year ago by 64% of Bolivians, could come to face such critical social protest. Moreover, the regions where the president won more than 80% of the vote were the most mobilized against the government’s decision to raise gas prices. The Aymara Altiplano and the coca-growing zones of Chapare spawned collective actions, including the attack and burning of state institutions, which focused the anger of the population against the same people they elected.
A brief summary of what happened in those five days can provide some guide to what is in play.
The Uprising that Won’t Go Away
In mid-December the media began to disseminate official announcements about the big difference between Bolivian fuel prices and those of the rest of the region, which was said to encourage contraband and the draining of the country’s currency. On Dec. 26, while Evo Morales was on a trip to Venezuela, Vice President Alvaro García Linera published Supreme Decree 748 that raised the price of gasoline 72% and revealed the fragility of the government.
On Dec. 27, drivers began a 24-hour work stoppage and various social and civil organizations came out with declarations against the measure. A day later, the miners of Huanuni also decided to stage a 24-hour work stoppage. Government officials estimated that the protests were small and isolated and declared that the decision [to raise the price of fuels] was “irreversible.” On his return, Morales announced a 20 percent increase in the salaries of educators, health workers, the armed forces and police. On Dec. 30, protest marches began in all major cities, paralyzing the country.
Civic organizations, neighborhood councils, unions and campesino and indigenous organizations rejected Decree 748. In Cochabamba, 14,000 people demonstrated. In El Chapare the coca growers, who were believed to support Evo unconditionally and who formed his main grassroots base of support, blocked the highways. Drivers announced another stoppage, this one for 48 hours. The government was supported by the Confederation of Private Businesses of Bolivia and the National Chamber of Commerce–usually its opponents.
Huge demonstrations took place in mining areas where government support is traditionally high. In El Alto, the bastion of Evismo where Morales won 81% of the vote, a crowd, which included the legendary Federation of Neighborhood Councils (FEJUVE) that provoked the 2003 uprising against Gonzalo Sánchez de Lozada and the Regional Worker Center, attacked the headquarters of organizations that supported Decree 748. They also attacked the city government and various headquarters of groups affiliated with the official Movement Towards Socialism (MAS).
The crowd burned tollbooths on the El Alto-La Paz toll road, burned a Venezuelan flag and portraits of Evo. In La Paz, there was a large demonstration of thirty thousand people and attacks on police trying to prevent the crowd from entering the Plaza Murillo, the seat of the government. On Dec. 31, Evo attended an assembly of coca growers in the Chapare region to seek support, but instead those gathered there asked him to cancel the fuel price hike.
In a message to the nation two hours before the end of the year, the president revoked Decree 748. He said that the increase was inevitable, but that he had an obligation to “rule by obeying” and that was the reason for his turn-about. On Jan. 2, the vice president asserted that the increase in the price of fuels was necessary but that the measure would be taken in consultation with the social sectors because “in the long run, this situation would be unsustainable.”
The Power of the Oil Companies
The events described above indicate that if the decree hadn’t been withdrawn, the country would have advanced toward its fourth social breakdown since the impressive insurrection in Cochabamba in April of 2000 known as the “Water War”, which forced the rightwing government to reverse the privatization of potable water. The current government complained about the popular rejection of the increase in fuel prices, but it didn’t open a public debate about how to prevent the economy from losing $380 million annually from subsidies, $150 million of which is the result of contraband.
According to Soliz Rada, “The gasolinazo has generated a feeling that the petroleum companies have regained domination of the country,” neutralizing and even reversing the effect of the hydrocarbon nationalization nearly six years ago. The ex-minister defended the “state advances” in mining such as the installation of a lithium carbonate processing plant and another one for copper, the enlargement of the mining refinery of Huanuni, a tin foundry and the creation of the Bolivian Gold Corporation, which assured state control of the precious metal.
However, all Bolivians know that George Soros’s San Cristóbal mine, which mines zinc, silver and lead, generates annual profits of a billion dollars and pays barely $35 million in taxes. The ex-minister charges that the monetary reserves of $10 billion, the largest amount the country has ever had, are used for current expenses (salaries and social benefits) and not for the strategic investments the country needs if it wants to make the promised “industrial leap” a reality.
Specialists are familiar with the macroeconomic data, and most of the population also understands and discusses it, which limits any government’s room for maneuver. The ex-Vice Minister of Lands, Alejandro Almaraz, explained that the losses from contraband and the money spent in subsidizing fuels is a trifle compared to the $1.5 billion that the state corporation YPFB has committed to pay oil companies for supposed losses on investments, even though these companies continue to own and benefit from these investments.
He denounced the $250 million paid to the transnational Transredes despite proof that it had committed grave crimes against the State and also criticized “the $700 million dollars we give away to Brazil every year in gas and the other petroleum products that we sell them in the absence of the famous and long-announced separation plant that would cost just $150 million dollars”.
Almaraz added that, “the few oil fields currently in production are declining and can no longer produce enough oil to satisfy internal consumption.” But most of the new blocks of available oil reserves have been set aside for the same transnationals “that already have in their power more than 80% of our remaining hydrocarbons”. In other words, Petrobras, Repsol and Total. They stand to be the main beneficiaries of the increase in domestic prices, a requirement for them to return to invest in exploration for new wells.
Meanwhile, the government has not been able to explain clearly to the people the reasoning behind the increase. Evo cited smuggling of contraband by women in baby bottles and men in their belts, which only increased the anger of the population.
The debate over development
Many analysts insist on the need for an open debate on the development model. The director of the Bolivian edition of Le Monde Diplomatique, Pablo Sefanoni, appears to lean towards “a new [kind of] development with an ecological conscience.” Trotskyists, who exercise significant influence in Bolivian unions, pulled out the same tired arguments: “If the oil companies don’t invest because they don’t get what they want, the only solution is to nationalize them and put them under worker control.”
Raúl Prada, former Vice Minister of Planning, maintains that the way in which the measure was implemented and the argument was presented shows that “neoliberal logic” continues operating in the government in spite of loud anti-colonialist declarations.
He affirms that the Bolivian economy is still far from entering into even the initial phase of an alternative model. This points to the need to revitalize “the decolonization process, the foundation of the plurinational, communitarian and autonomous State, with inspiration from models of civilization antagonistic to capitalism – that offer real alternatives to modernity and development.”
Good words and the best of intentions, without doubt. But that discourse, already written into the new constitution of 2009, does not offer specific solutions to the urgent problems of small, dependent countries in the region. In this sense, the problems Bolivia is facing are not unique to it.
Bolivia has strengthened the role of the State in the economy, applied prudent macroeconomic policies and sought to contain inflation through the appreciation of the national currency. The reserves accumulated thanks to the elevated prices of primary products and the promotion of realistic policies to industrialize them have not led to the desired and predicted results. Industrialization is revealing itself to be a much more complicated path, longer and steeper than foreseen.
In fact, the proposed increase of fuel prices is an admission that without the “know-how” of the giant multinationals, it will be almost impossible to adopt a new model to add value to primary products—even with enough monetary resources to do that. This is not a problem caused just by imperialism, capitalism or multinationals.
Well-known examples reveal that the “industrial leap” normally requires decades of joint effort between the State and national capital, and participation of international capital. Brazil and its giant businesses such as Petrobras started down this road in the 1950s, and after half a century have just begun to bear fruit. While this is not an ironclad rule, the leap can´t be made over the course of one or two governments. Even less likely to happen are changes as ambitious as those attempted in the Bolivian Constitution.
To add to the difficulties, the world is facing a new wave of inflation, greater even than that recorded between 2003 and 2008. The FAO announced recently that world prices for rice, wheat, sugar, barley and meat would continue increasing through 2011 and will exceed the record set in 2007 and 2008. According to the organization, the rising prices will affect more than 80 countries, each of which could face situations similar to Tunisia’s unrest, but also unrest in southern Chile where the price of gas increased by 20%.
Towards a Political Crisis
After the turbulent period between 2000 and 2005, when Evo became president, stability came at the price of increasing State expenses through subsidies, food vouchers, and a broad range of social policies focused on diminishing poverty. The cycle of rising prices in commodities permitted the government to cover the increased expenditure with a degree of ease. However, the cycle now appears to have broken and the generalized rise in prices is beginning to have a boomerang effect.
But there’s more. In the last year, Evo’s government committed several errors that cost him politically in the municipal elections, where there was a strong reversal in the bastions of the MAS. In the Dec. 2009 presidential vote, Evo was re-elected with an overwhelming 64%, while in April of 2010 his party lost seven of the ten largest cities and suffered a sharp drop in El Alto. Various conflicts rooted in the laws of autonomy followed, with campesinos in the province of La Paz and with the Civic Committee of Potosi over the establishment of production initiatives.
The Aymara sociologist Pablo Mamani Ramírez, one of the exponents of the new Indian intellectualism, points to four problems: the failure of the nationalization of hydrocarbons, which in reality was a modification of contracts to improve the terms for the State; the failure of decolonization and reestablishment of the State; the fallacy, as the Vice President indicated, that with the present government the country’s huge structural problems would be resolved; and the re-emergence of social conflict that weakens the government’s grassroots base of support.
All four problems indicated are important, but the last one could lead the country into a grave political crisis since active popular support has come to be the principal argument the government uses to manage delicate situations. Mamani’s description of what happened in El Alto (assault on and burning of government and social movement buildings) leads one to conclude that, “grassroots leadership allied with the government has been overtaken by its own rank-and-file,” who are acting on the margins of and even against the organizations they belong to.
The Emergency Committee against the Gasolinazo, created by independent social organizations to confront the crisis provoked by Decree 748, released a communiqué which “proposes to suspend the intermission of struggles of October of 2003,” which overthrew Sánchez de Lozada.
Bolivia remains a major battlefield in the struggle for power. It’s an interesting case because, in spite of massive electoral support, the government appears fragile and is having to pull back on a measure to impose an adjustment in the State’s account. And here we see a paradox of leftwing governments: they close ranks and consolidate strength before the Right but don’t know what to do when faced with grassroots social mobilization.
The situation in Bolivia shows the underlying problems in the development model, which continues to be fundamentally neoliberal even though it is not privatized. This could soon be seen in other countries that currently believe themselves to be safe from crisis.