Bolivia Is Undergoing A Tectonic Shift

Bolivia Is Undergoing a ‘Tectonic Shift’ Under Its New Conservative President BOLIVIA Bolivia In 2008, then-Bolivian President Evo Morales – his country’s first indigenous head of state and a darling of the left in South America – expelled the American ambassador and the US Drug Enforcement Administration. Relations between the two countries deteriorated sharply. Almost two decades later, center-right Bolivian President Rodrigo Paz extradited Sebastian Marset, an alleged Uruguayan drug lord, to Virginia to face charges of money laundering. The move signaled the resumption of legal cooperation between Bolivia and the US and a mending of relations. Marset’s capture and extradition is an example of the dramatic changes that the current president, the first conservative politician to lead the country in two decades, has brought to Bolivia since his election victory in October. There has been a “tectonic shift” in Bolivia in recent months, say observers. During the runoff election, in which Paz faced a more conservative rival after infighting within the left divided the electorate, Paz pledged to bring “capitalism for all” to the country. In particular, Paz has vowed to create a mining and oil boom. Bolivia, for example, is blessed with 20 percent of the world’s lithium reserves but has failed to benefit from the massive spike in demand for the mineral, which is essential for electric vehicle batteries and other technologies. “Peru last year had mining revenues of around $50 billion,” Paz told the Financial Times. “Chile had revenues with state and private companies of $65 billion. And we . . . had just $6 billion.” Paz also recently attended American President Donald Trump’s “Shield of the Americas” summit in Miami. The organization included far-right luminaries like Argentine President Javier Milei and El Salvadoran President Nayib Bukele. Moves like these are reasons why Bolivia under Paz has received billions in loans from the Inter-American Development Bank in Washington. He has faced headwinds, however. For example, critics of Paz’s reform plan say it flouts the law and will harm the environment. Writing in the Conversation, Enrique Castañón Ballivián, a lecturer in international development at University College London, wrote how Paz has garnered emergency powers and made changes to national taxes without legislative approval, given the central bank too much leeway in acquiring foreign debt, and fast-tracked commodity extraction projects without pollution safeguards or local approval. Paz’s defenders counter that he must do something to bring prosperity to the landlocked Andean nation. Morales nationalized the country’s lithium industry, vowing to retrieve the so-called “white gold” without multinational corporations, wrote Progressive magazine. He invested $1 billion into the state-owned Yacimientos de Litio Bolivianos, but the company has failed to capitalize on the country’s resources. Paz also ended fuel subsidies to shore up the Bolivian government’s finances, part of an austerity plan that led to other cuts in public services and stipends. Mass nationwide, union-led protests broke out in response. After weeks of negotiations with unions and other groups, the government retreated: It eliminated or changed most of the cuts even as the fuel subsidy cut remained. Yet even Paz’s detractors admit that the subsidies were unsustainable. He increased the minimum wage, school stipends, and state pensions in a bid to take the sting out of the new policy. Paz has a tough road to travel. But analysts say they are amazed at what he has done already. When he took office, Paz faced a country in economic crisis with inflation topping 20 percent, depleted foreign currency reserves and lines at gas stations stretching for blocks, wrote Americas Quarterly. At the same time, he faced staunch opposition from the legislature, the opposition and within his own government. “Any one of these challenges might have immobilized a new administration,” the magazine wrote. “Yet in his first 90 days, Paz has done what many believed impossible: He not only survived the initial storm but also began to change the nation’s trajectory.”