January 08, 2006

Morales' World Tour

MABB © ®

Elected president (not yet official) Evo Morales, has embarked on a world tour right after his historic win in the December 18, 2005 general elections. I wonder what was it that made him hit the road so fast. I guess he was just trying to start ahead on the international front. His world tour has taken him to pay unofficial visits to Fidel Castro's Cuba, Hugo Chavez's Venezuela, Jose L. Rodriguez Zapatero's Spain, Javier Solana in Brussels, Jacques Chirac in France and as a last stop he is paying a visit to President Hu Jintao in China. It seems to me the order of the visits is according to Morales' priorities.

Morales comes to power in a situation no other president of Bolivia has come before. He is the first president, in recent times, to take office in a very benevolent economic climate. Bolivia's economic situation is pretty stable. The main variables, inflation, growth, budget deficit and foreign debt are more or less tamed. Bolivia has had a relatively stable inflation rate and economic growth over the last 15 years. In these terms one can speak of success controlling inflation and inducing some growth in the economy. This has resulted in a relatively stable economic environment. In recent years, the once worrysome budget deficit has come into a much better state. The ability of Bolivia to finance its government and its affairs has become more manageable (among other things it helps to be collecting more taxes).

Morales is in a particularly better stance as other recent presidents in the sense that as a result of him coming to office, taking into account recent historical events, the international community of creditors has decided to eliminate a big chunk of Bolivia's foreign debt. Yes, the decision was made before Morales was elected, but one cannot deny the fact that recent events have had to influence that decision. The international community was worried about what was going on in Bolivia. Besides, all along it was clear that there was a very real possibility that Morales would end up in the president post. This relief of debt would result in an even more significant ease in the Bolivian accounts. As it wold be expected, more money will be available to the government to press on its agenda. It is a tremendous help for an incoming president knowing that the coffers will be full when he gets to office.

Now, as a result of his current world tour, Morales is getting even more help. Aside from picking up moral support in Cuba, in Caracas he picked up promises of plentiful oil suppies and financial aid in various forms. I expect Chavez will be buying some ammount of Bolivian debt in the near future. In Madrid, Morales got another debt relief deal. Spain will eliminate 50% of Bolivia's debt and that money will go to education, among other things. Now, in Brussels I take it he only got warnings and some promises of working together. In China, Morales potentially will be getting much needed investment. As everyone knows, the Chinese government has been eager to take up investments in resource rich Latin America. Now the Chinese government has a golden opportunity to reach-in into some of the resources Bolivia has to offer. One thing to consider though is that since the Chinese economy has started to cool-off a little, will the same level of demand persist over time? Who knows.

All in all, Morales has a very positive outlook to start governing. I guess my question at the beginning has been answered with all the support, promises, financial backing and debt relief Morales picked up during his visits. It all will depend what does he do with all those goodies.