- The Washington Times - Wednesday, August 7, 2002

LA PAZ, Bolivia Bolivia's new president, Gonzalo Sanchez de Lozada, began his five-year term in office yesterday, inheriting a country in the midst of economic and social crisis.
Mr. Sanchez de Lozada, in his inaugural speech which was met initially with some protest signs held up by opposition congressmen appealed for unity.
"We must celebrate our cultural and biological diversity. There is strength in that diversity," he said. "We must unite to avoid and overcome the economic crisis that is spreading throughout Latin America."
The new Bolivian leader, 72, was president of the country from 1993 to 1997. Popularly known as "Goni," the new president inherits an economy that grew only 0.5 percent last year and has high government debt, with 65 percent of Bolivians in poverty and joblessness soaring.
Nearly 12 percent of Bolivians who live in the cities are officially out of work. An estimated two of three Bolivians work in the so-called informal sector people who do not draw formal or regular salaries, but engage in such activities as shining shoes or selling produce in the streets.
Even with high-profile debt relief over the past decade in exchange for market reforms, Bolivia currently owes $4.37 billion to international lenders, well more than half its annual gross national product of $7 billion. About 80 percent of new loan monies go right back to lenders to pay down interest and part of the principal of old debts.
Mr. Sanchez de Lozada is a millionaire businessman who built the nation's largest private mining company, Comsur. He was planning minister in the 1985-89 Victor Paz Estenssoro government, and is president of the center-right National Revolution Movement party.
In his previous term as president, he won acclaim by choosing an Aymara Indian, Victor Hugo Cardenas, as his vice president and for implementing land reforms, education reforms and decentralization of government.
But his effort to sell off state companies in the energy, telecommunications, and transportation sectors produced a stormy legacy.
"Jobs have been eliminated, prices have gone up, cheap exports are flooding our markets; meanwhile, the multinationals are taking all their profits out of the country," said Congressman Rosendo Copa.
The growing Bolivian protest movement of recent years, like in many other Latin American countries, has made free-market reforms and privatization of state entities a principal target. Last month, faced with persistent worker demonstrations, Bolivia jettisoned foreign companies in favor of restoring day-to-day management of government mines to Comibol, the state mining company.
Almost every one of the 11 candidates in the presidential election this year called for changing the neoliberal, free-market economic model. Mr. Sanchez de Lozada says that he intends to proceed with more government intervention in the economy, moving beyond the free-market reforms first implemented in the country in 1985 under the advice of Harvard economist Jeffrey Sachs and the International Monetary Fund.
One of the new Bolivian leader's first moves will be jump-starting an emergency plan that features a $5.2 billion state investment over the next five years in infrastructure projects, such as roads and basic services, to create thousands of jobs.
In the early days of his government, he will also have to make a key decision on whether to ship Bolivian natural gas through a port in Chile to markets in California and Mexico.
The $6 billion project, headed by a consortium of multinational gas companies, could be a major financial windfall for South America's second-poorest country if regulated properly.
But emotions run deep concerning the issue in this landlocked country, with most Bolivians preferring no project at all unless Chile gives them some sovereign access to the Pacific coastline, which the country lost in a war with Chile in 1879.
"Goni sold out the country before. We fear he will do so again. His privatization of the state gas company has had little benefit for Bolivia," said Enrique Mariaca, a former energy minister.
Corruption will also be a major challenge for the new government. According to Transparency International, the country is the most corrupt in Latin America. Mr. Sanchez de Lozada himself is the target of a congressional investigation of accusations of unethical dealings with Enron Corp.
Continuing U.S.-backed efforts to eradicate illegal coca will also top the new president's agenda, as coca farmers, led by Evo Morales who finished a close second in the presidential election will likely press harder with demands for more legalized coca growing and greater support of alternative development projects.
In an interview yesterday, Mr. Morales said the U.S. Embassy's intervention in the presidential election was hypocritical.
"They are supporting politicians widely known to be corrupt, and some of the coalition government leaders have even been jailed for narco-trafficking," he said.
Mr. Sanchez de Lozada won the presidency in a runoff vote in Congress after attracting only 23 percent of the popular vote in national elections. His coalition government, with the Movement of the Revolutionary Left party, has a razor-thin majority in Congress.
Bolivian political analyst Jorge Lazarte said the new government will need to forge a social pact with Mr. Morales and others in the opposition if his government is to succeed. "The next few years will be critical if we are to avoid falling like Argentina," he said.

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