Socialista Non Grata: Bolivians Want Autonomy

♠ Posted by Emmanuel in at 5/07/2008 12:53:00 AM
Comrades and comradettes [sic], it appears that the efforts of Evo Morales to create a Hugo Chavez-style Bolivarian revolution in Bolivia are running into opposition from wealth landowners and other bourgeois enemy of the people. To paraphrase John "Triple H" Edwards, there are two Bolivias: those in the lowlands areas are typically better-off mestizos (of some Spanish ancestry) and those in the highlands are typically indigenous folks of modest means. Morales is supposedly the first indigenous head of state since the conquistadores came. Naturally, his constituency is more receptive to class warfare-type appeals such as land reform and energy industry privatization. You know, it's classic class warfare in the Marxist sense.

However, recent troubles stem from Morales losing administrative grip on the low-lying areas where the bulk of the energy revenues come from. In the EIU report below, it is noted that Santa Rosa province has voted in favour of secession from the government. In light of this "success," three other gas-rich provinces are likely to offer their own referenda and follow suit. What's a socialist to do without the revenues to fund la revolucion? In any event, the business climate in Bolivia is bound to become worse before it improves...

Resisting the central government, Bolivia’s Santa Cruz province voted in favour of autonomy in a referendum held on May 4th. Though expected, the “yes” victory is a blow to the administration of President Evo Morales, who sees the referendum as an illegal challenge to his authority. Three other eastern provinces are likely to follow suit with their own referenda, and this will heighten tensions between the federal government and provincial leaders. The risk of political instability will also increase, undermining effective governance and discouraging private investment.

Clashes between opponents and supporters of regional autonomy accompanied the voting in parts of Santa Cruz, Bolivia’s largest and most prosperous province. The government-run news service put the abstention rate at 40-45%, prompting federal authorities to call the vote a failure. However, exit polls show that at least 85% of those who showed up voted for greater autonomy.

The leaders in Santa Cruz and the other lowland provinces, which are home to Bolivians of mostly mixed or European ancestry, have long opposed Mr Morales’s policies, which favour indigenous groups (concentrated in the highlands) and which opponents see as threatening private property. Since taking office in January 2006, Mr Morales has nationalised the hydrocarbons industry and has promised to implement a land reform (which would affect large landholdings in Santa Cruz), among other socialist-oriented measures.

The referenda are also a response to the recent passage by a constitutional assembly of a new magna carta. That assembly is dominated by members of the governing Movimiento al Socialismo (MAS) party and other allies of Mr Morales, and was approved by a mere majority, with strong resistance from opposition groups. The government itself postponed a national referendum on the new constitution, hoping thereby to bring separatist provinces to the negotiating table. Instead, Santa Cruz went ahead with its plans for May 4th.

Under the statutes of the referendum, Santa Cruz officials will have greater control over matters such as taxation, immigration, transport and public security. The province will be able to directly elect its governor and a local legislature for the first time. In addition, it will seek to negotiate its own royalty agreement with private oil and gas companies.

It is too early to tell how and if these measures will be implemented, and the head of Bolivia’s armed forces has said that the referendum amounts to a threat to national security. Further, the legality of the referendum under the current constitution is still under question. Mr Morales has said he considers the outcome like that of an opinion poll, not a binding resolution.

What is certain is that the autonomy movement is a serious challenge to President Morales’s socialist ideology and vision for Bolivia, under which the government seeks to redistribute wealth and power to benefit the impoverished and long-disenfranchised masses of indigenous Bolivians. As a result, the referendum’s outcome could serve to widen the rift between the government and the rebel provinces, as well as worsen the racial, socio-economic and geographical divisions that characterise Bolivian society.

The Morales government has not stood idle as the Santa Cruz vote has gone forward. Rather, it has deepened its nationalist policies, announcing on May 1st the takeover by the state of Entel, Bolivia’s largest telecommunications company, and of four private energy companies.

The nationalisations are part of a longer process, and conform to Mr Morales’s view that strategic industries and public services should be controlled by the state. Yet the announcement was probably also designed to boost his support among his political base at a time when high inflation and the struggle with rebel provinces threaten to do damage to the president.

Yet the latest takeovers, combined with the ongoing political tensions, will further hurt the business environment and may lead to a longer postponement of foreign investment in sectors such as hydrocarbons and mining that face growing bottlenecks.

Even with the stronger fiscal revenues resulting from high energy prices and higher taxes on energy companies, Bolivia continues to be reliant on foreign investment and know-how to further develop its natural-resource industries. Yet investment in exploration and production in the oil and gas industry fell to US$149m in 2007 from US$650m in 2002, the lowest since 1996, according to the Santa Cruz-based Hydrocarbons Chamber. Santa Cruz and other lowland provinces produce the bulk of Bolivia’s the hydrocarbons, and Santa Cruz is home to the headquarters of most foreign companies engaged in the country.

Meanwhile, in light of the high level of support for autonomy, the government will eventually be forced to negotiate. He has already called all of Bolivia’s governors to the table. These talks will be difficult, given the Bolivia’s deep society fissures, which have become more pronounced since Mr Morales took office. Any consensus solution would probably mean adjustments to the MAS-approved constitution before it is put to a national ballot. For Mr Morales, such concessions would involve a considerable loss of face.

Nonetheless, it is unlikely that instability will escalate to a point where Mr Morales would be forced out of office. He has strong support among Bolivia's social movements, partly because they lack any credible alternative leader. Moreover, the traditional political parties are fragmented and without fresh leadership of their own. Yet the president’s popularity could well decline during the remainder of 2008, and this will complicate the task of getting backing for his new constitution and, more broadly, governing a divided nation.