- The Washington Times - Monday, October 20, 2003

LA PAZ, Bolivia — What started a month ago as a protest over privatization and exports of natural gas has evolved into a nationwide revolt and last week’s resignation of President Gonzalo Sanchez de Lozada.

South America’s poorest country is now under the leadership of former Vice President Carlos Mesa, who seeks to rebuild optimism for the challenges ahead.

Bolivia was convulsed by its largest popular uprising since the revolution of 1982 because of a combination of factors, including its poor, native Indian majority asserting itself; failing free-market reforms, especially a disappointing privatization; and a president who badly miscalculated the limits of his people’s patience.

When soldiers last week fired at peaceful marches and road blockades, leaving dozens of people dead and injured, Bolivians reacted with fury.

Demonstrations against gas exports that began in mid-September left more than 70 people dead and at least 200 injured, human-rights groups reported. The violence incensed the capital, and protests spread to other Bolivian cities. Key allies of Mr. Sanchez de Lozada, including his vice president and some Cabinet ministers, withdrew support.

“Before the killings, dialogue was possible,” said socialist opposition leader Evo Morales. “But now the butcher must go if we are to preserve democracy.”

The protests over gas exports were begun by the union representing many of Bolivia’s poor majority, the indigenous farmers. But a national strike eventually broadened to include many of the country’s 8.5 million people, including teachers, miners, health care workers, butchers, bread makers, and taxi and bus drivers.

The gas-export issue was of profound importance for Bolivians and became the catalyst for mounting discontent over market reforms begun in 1985, said Alvaro Garcia, a sociologist at the Greater University of San Andres in La Paz.

“The people are tired of the neoliberal model, and tired of promises by the political class that have not been honored. Poverty and unemployment are worsening,” he said.

Two-thirds of Bolivians continue to struggle below the official poverty line of $60 per month. More than seven of every 10 jobs created over the past 15 years are in “the informal sector,” where workers do not draw regular salaries but do things like shining shoes or selling produce.

Bolivian Indians, who come from 36 tribes and make up about 70 percent of the population — the largest percentage of indigenous people of any country in Latin America — say their needs still are not being addressed, despite modest political gains in last year’s national election.

Meanwhile, Bolivians say their country’s principal economic asset, abundant natural gas — the second-largest deposits in South America after Venezuela’s — is being squandered to enrich the few.

“These protests were about who participates, who decides, who benefits in a process that will have enormous impact on Bolivia’s future,” said Tom Kruse, a researcher at an economic think tank in La Paz.

In fact, the 1996 privatization of the state gas and oil company, YPFB, so far has brought questionable benefits. Employment at the state company’s associated enterprises has fallen to nearly half previous levels.

The annual royalties and tax income collected from the sector are estimated at $200 million, less than 3 percent of the gross domestic product. Before privatization, the state company paid $300 million in royalties annually. The decline in government income is even more striking since Bolivia’s known gas reserves have grown ninefold since privatization took hold.

Bolivians are increasingly demanding greater state control of their national resources, pointing to continuing state ownership of Venezuela’s and Brazil’s energy sectors and Chile’s ownership of its national copper company, Codelco. In last year’s presidential elections, which Mr. Sanchez de Lozada won with just 22 percent of the vote, this topped the list of campaign issues.

Most critics of Bolivia’s privatization policies do not propose nationalizing the gas sector, however. Instead, they propose that the state return to the former system in which the state retained 50 percent of natural-gas royalties in its partnerships with private companies, instead of the current 18 percent royalties plus taxes.

Moreover, Bolivians consider the government’s promotion of a $6 billion plan by three foreign companies — British Gas, British Petroleum and Repsol YPF of Spain — to export gas to Southern California through a port in Chile, as an affront to Bolivia’s dignity.

In an 1879 conflict among Bolivia, Chile and Peru known as the War of the Pacific, Chile grabbed 108,000 square miles of Pacific coastline from Bolivia. Antagonism toward Chile has survived in schools and elsewhere in Bolivia’s cultural life.

Bolivians partly attribute their continuing underdevelopment since the 19th century to their lack of a Pacific port. La Paz has lobbied hard in every available international forum to recover some seaside territory.

The Organization of American States has passed 11 resolutions since 1979 in support of maritime access for Bolivia. Since 1963, this landlocked country has maintained a modest navy in preparation for its return to the sea. Its main base is Lake Titicaca, on the border of Peru.

Bolivian historian Ramiro Prudencio says that Chile nearly acceded to Bolivia’s demands in 1926, when the United States, acting as mediator, recommended that the port of Arica in northern Chile be given to Bolivia. Chile agreed, but Peru balked and the idea was shelved.

“This has been a century of missed opportunities,” said Mr. Prudencio. “It will take the intervention of the United States again to finally resolve this.”

Popularly known as “Goni,” Mr. Sanchez de Lozada, 73, was already a magnet for controversy when he took office a year ago.

The millionaire owner of Comsur, Bolivia’s largest private mining company, Mr. Sanchez de Lozada grew up in the United States and still speaks Spanish with an American accent. As president from 1993 to 1997, he won praise by choosing Victor Hugo Cardenas, an Aymara Indian, as his vice president and for implementing land and education reforms.

But his embrace of privatization as backed by Washington, especially his selling off state companies in the energy, telecommunications and transportation sectors, added to a questionable legacy.

“Bolivians see Goni as defending foreign interests more than their own,” said Andres Soliz Rada, a former Bolivian senator who has written a book about the president.

In February, at the urging of the International Monetary Fund, the government tried to raise income taxes to tackle a growing deficit, but demonstrations resulting in 32 deaths forced officials to roll back the taxes.

At times, it seemed the IMF and Washington had abandoned Bolivia.

As a presidential candidate, Mr. Sanchez de Lozada proposed to create thousands of jobs through public works projects and made this the centerpiece of his campaign, but foreign loans and grants were too little and too late. The IMF had discouraged money transfers because of Bolivia’s rising budget deficit and large foreign debt.

When Mr. Sanchez de Lozada met with President Bush, he asked for emergency assistance of $150 million to help make up for the budget shortfall. But only $10 million was given to Bolivia during his 15 months in office — and that for the continuing effort to eradicate coca, the raw material for cocaine.

“I’m not going to say that the problems of my government, or those of Bolivia, are the fault of the United States,” Mr. Sanchez de Lozada told the Miami Herald upon arrival in the United States after his overthrow. “But they could have done a little more to help us.”

His successor as president, Mr. Mesa, a historian and former television journalist, is politically independent. He has been supportive of the coca-eradication program and market reforms backed by Washington, but most observers agree the new political climate in Bolivia will necessitate a new approach to economic problems.

Mr. Mesa, who could serve out the remaining three-plus years of Mr. Sanchez de Lozada’s term until 2007, instead has proposed that his government serve as a transition to early elections.

After being sworn in as president last week, Mr. Mesa pledged in his address before the Bolivian Congress to pursue a referendum on natural-gas exports and speed constitutional reforms, key demands of the protesters against Mr. Sanchez de Lozada.

“We have to rebuild the state so that it responds to the citizen and the citizen feels committed with his state because that state serves all citizens,” said Mr. Mesa.

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