November 27, 2006

Morales Traveled Without Permission, While Bolivia Sinks Deeper into Potential Violence

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Second Update (Nov. 29)
The Bolivian government approved early today (after 24:00) the land reform law. The opposition is crying foul, due to what it considers the betrayal of three opposition Senators from Beni and Pando. Abraham Araujo Cuéllar (Unidad Nacional), Andrés Fermín Heredia Guzmán (Podemos), and Héctor Mario Vargas Rivera (Podemos) completed the quorum needed to pass the land reform bill. Some civic leaders are saying there was a bribe in play.

The bill sets the stage for the state to confiscate without any compensation "unproductive land", with unproductive being defined by the government.

The radicalizaiton of actions is to be expected.

First Update (Nov. 29):
Opposition forces have given the government 72 hours to make amends on the three issues in dispute - land reform, controll over Prefects and the 2/3 voting system in the CA. If the government does not, in the words of the opposition, 'pacify' the country, there will be a 24 hours general strike, starting Friday. Were the government not to make concessions, the strike can become indefinite.

Among the opposition forces are: Podemos, UN and MNR, the civic committees of 8 departments (La Paz, Santa Cruz, Cochabamba, Pando, Beni, Tarija, Oruro y Sucre) and the Prefects of the opposition six (La Paz, Santa Cruz, Cochabamba, Pando, Beni, Tarija).

Evo Morales is in Holland. This is his first stop on this latest trip which will take him to Nigeria and, of course, Cuba. In Holland he'll meet with Bolivian residents, the Queen, government officials and Shell executives. Moments before boarding the airplane told VP Garcia Linera that he trusted Garcia would solve the problems Morales was leaving behind. After making a short stop in Bolivia on Tuesday, Morales cannot stay outside Bolivia more than 5 days, since he does not have permission of Parliament to travel, he'll go on to the South America - Africa Summit in Nigeria. His final stop will be Cuba to celebrate Fidel's birthday.

Meanwhile, the conflict in Bolivia takes a turn for the worst. The ingredients for violence start to slowly come together. The march to La Paz is nearing its end. There are around 5000 campesinos on their way to La Paz to pressure a favorable vote on the land reform bill. Around 360 indigenous people from the north of La Paz will march today, Monday. The 1835 campesinos of the Indigenous Confederation of the Bolivian East is expected to reach La Paz on Tuesday. Additionally, the 1200 members of the National Council of the Qullasuyo (the Andes region) and the 1500 members of the Unique Worker's Union (CSUTCB) will wait to march on Tuesday. Within the leaders of this march the rhetoric has turned violent. There were many comments made by some leaders as to wanting to force some elite Senators to make the right decision. The emphasis is here on the word force.

At the same time opposition forces have convened a meeting in Cochabamba to form a more cohesive block to pressure the government to make its position on the 2/3 voting system more flexible. Civic representatives of 8 departments (Santa Cruz, Beni, Pando, Cochabamba, Tarija, La Paz, Oruro and Chuquisaca) and the 6 opposition Prefects have confirmed attendance. This meeting has triggered a government forces response. MAS supporters have announced demonstrations and marches to stop this opposition forces meeting. Once again, the rhetoric is radical with some of these leaders threatening with physical violence.

Lastly, the number of people in hunger strike, started by UN leader, Samuel Doria Medina, 12 days ago, has reached 273. People from the Santa Cruz department are the most engaged. This protest has started in direct response to the 2/3 vs. simple majority conflict in the Constituent Assembly. The protest is in favor of the 2/3 model.

The ingredients for violence are slowly comming together with thousands of people from opposite sides meeting in one place. The threat is highest in Cochabamba where the tempers are already high. In the mean time, Morales is outside Bolivia and has left the job to the VP, the person with most radical ideas in the government.

November 22, 2006

A New Period of Conflict in Bolivia

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Clonflict is approaching, once again, in Bolivia. The campesinos in the right are marching to La Paz to force the Senate to approve reforms to the INRA law. The landowners, businessmen and workers in the left are marching in defense of their land and their jobs.

There are three hot issues currently bringing conflict back into the daily lives of all Bolivians. The first reason is the planned reforms to the agrarian reform law, which would result in massive confiscation of land. The second reason is another reform initiative from the part of the government to exert more control over the heads of state governments, the Prefects. The third reason for the current conflict is the passing of article 71 in the internal regulations code of the Constituent Assembly. This article, easily passed by MAS using a not consensuated simple majority vote, would allow every article to be voted by simple majority.

Three issues originating from government moves are the cause of massive mobilizations amongst the opposition forces. The Prefects have formed a block repudiating the proposed reform. A small group is counter proposing a measure where the President can be held accountable by the voters too. On the voting issue in the CA, there are at least 120 people in hunger strike, protesting what they call a MAS rollover. Many assembly delegates are complaining that their presence is not required. However, the most dangerous actions are the mobilizations of hundreds of campesinos on the one side and land owners, businessmen and their workers on the other side. These two groups are heading to a confrontation in the Santa Cruz region. One reason for this confrontation is the repetitive government requests to "defend" government propossed reforms. There is even talk of sending a contingent of people to Santa Cruz to (again) "defend" the government's plans.

November 18, 2006

In the Process to a Dominant Party System

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Yesterday, Friday, November 18, the Constituent Assembly (CA) approved article 71 of the internal regulations document. It says that the CA will approve all reforms to the constitution by absolute majority. That means it would require 128 of 255 votes for the approval of any reform. The exception is that in the end, the whole constitution would have to be approved by 2/3 majority and there is the option of "observing" 3 issues to be reconsidered and then voted with 2/3 majority. The decision was taken to use MAS' majority to approve this controversial measure, in light of the inability to reconcile differences with the opposition.

The graph above shows us the distribution of power within the CA. In it you can see MAS enjoys an ample majority of 137 seats or votes. Comfortably sufficient, in the case of absolute majority, to write the constitution itself. AP reports "LA PAZ, Bolivia - Supporters of leftist President Evo Morales won a key vote at an assembly to rewrite Bolivia's constitution, allowing them to draft populist reforms without input from opposition parties. The final draft of a new constitution, however, must still be approved by two-thirds of the body. In a heated session Friday at the constitutional assembly, delegates from Morales' Movement Toward Socialism party, or MAS, passed a motion requiring the assembly's decisions to be made by a simple majority vote. The party controls 137 of the assembly's 235 seats." At the same time, Silvia Lazarte, President of the CA, said to La Razon: "It is that way brothers, when decisions have to be made, they have to be made."

The opposition, which is in favor of the 2/3 variant of voting, as it was to be expected, is crying out loud, foul! Its numbers, in the present situation, have swelled to 113 seats with 14 political forces. There are strong protests to what they call, the imposition of MAS' will and the irruption of the central government. Already former president candidate for National Unity, Samuel Doria Medina, has started a hunger strike in various locations to protest this decision. The Santa Cruz Civic Committee has expressed its concern and has called next week to a asamblea de la crucenidad (Santa Cruz assembly) to determine in which way will it respond. Other parties and organizations will analyse the problem in their respective headquarters and will respond accordingly. There is a general feeling among opposition forces that their vote does not count and therefore their presence is not necessary in the assembly.

Adding fuel to the fire are the various indigenous and MAS supporter groups already mobilized to "control" the decisions of the CA in Sucre and the groups preparing to go give support to the MAS people in Santa Cruz and sorrounding areas. That is all at the request of the government.

The tensions, as is often in Bolivia, have risen again from one day to the next. The potential for confrontation between governmental forces and opposition is and will be in the next weeks, very high.

On the personal side, I am tending to classify the MAS government as a "Dominant Party System". I've looked it up and found the following definition in Wikipedia (yes, it is possible to find useful things in it):

A dominant-party system, or one party dominant system, is a party system where only one political party can realistically become the government, by itself or in a coalition government. Under what has been referred to as "electoralism" or "soft authoritarianism", opposition parties are legally allowed to operate, but are considered too weak or ineffective to seriously take power. In contrast to single-party systems, which tend to be authoritarian, dominant-party systems can occur within a context of a democratic system. Dominant-party systems have been criticized because corruption and insensitivity to public demands tend to arise for lack of an effective opposition.

A further distinction from a single-party system is that under the latter, other parties cannot compete to become the government because they are banned. Dominant-party systems exist only in states where other political parties are tolerated, but do not receive enough votes to have a realistic chance of winning. However, in some dominant-party systems, opposition parties are subject to varying degrees of official harassment and most often deal with rules and electoral systems (such as gerrymandering of electoral districts) designed to put them at a disadvantage or in some cases outright electoral fraud.

On the other hand, some dominant-party system occur in countries that are widely seen, both by their citizens and outside observers, to be textbook examples of democracy. The reasons why a dominant-party system may form in such a country are often debated: Supporters of the dominant party tend to argue that their party is simply doing a good job in government and the opposition continuously proposes unrealistic or unpopular changes, while supporters of the opposition tend to argue that the electoral system disfavors them (for example because it is based on the principle of first past the post), or that the dominant party receives a disproportionate amount of funding from various sources and is therefore able to mount more persuasive campaigns.

This definition seems to be fitting well to picture where, I think, MAS is heading to. Were the absolute majority vote mode of approval accepted and used, MAS would have all the advantages to approve a constitution without having to talk once with the opposition and compromise in any issue.

November 16, 2006


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The lastest efforts from the government to further their agenda is a proposed bill to controll the prefectural office. As you know, Bolivia's Prefects are the heads of state governments, similar to Governors in the US. Since last December these figures have enjoyed a certain power of independence against the government. According to modifications to the law made during the 2005 crisis, the Prefects started being elected rather than being appointed by the President, as it was the law before. This status brought them more responsibilities and at the same time more independence, which translated into political power.

At the moment, and as a result of last December's elections, there are newly elected Prefects in each of the nine departments. As the graph on the left shows, only three are militants of MAS. The rest are considered to be in the opposition. This situation is not confortable for the government and thus is trying to change it. Now, the Morales government, and more specifically the Vice-minister of Decentralization, wants to propose an amendment to the Administrative Decentralization Law. Such amendment would introduce a mechanism to "interpellate" those Prefects who do not "behave". So, if there is a complain against the Prefect, the problem would be taken to the President, whom in turn would ask the Congress to "Interpellate" the Prefect. If the interpellation is sustained, the Prefect would be forced to resign.

The question is then, is there a need for such an amendment? I think, if the Prefects were elected by popular vote, and if there is a need to somehow exert some control over them in the name of democracy, then periodic elections will do the trick. No need to institutionalize some kind of control mechanism. After all, they are voted by popular vote. What's more democratic than that?

November 10, 2006

Bolivia - Chile Relations

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On the rocky Bolivia-Chile relations of late has been observed a shy turn-around. The two countries have taken carefully planned small steps towards rapprochement. It all started with Evo Morales' visit to Michelle Bachelet's inauguration. The favor was returned by Bachelet coming to Morales' inauguration. Since then there have been elastic exchanges between the two governments. The insistence by Bolivia to include the sea access issue in any talks has been the highest hurdle to pass. However, since Morales abandoned Mesa's approach of "gas for sea", things have been softer. Lately, the head of the Chilean Military visited Bolivia, showing thus an even closer approach.

In this thorned relation, there are two issues demanding the most attention because they are the most delicate. The first issue is the age old Bolivian demand to sea access. This issue has been, as you well know, the cause Bolivia and Chile haven't had formal diplomatic relations in a long time. The other issue is the Silala stream. The Silala is a stream originating in Bolivia which runs to Chile via a channel constructed by the rail company, Ferrocarril Antofagasta, to supply it with water. Bolivia wants compensation for the use of its waters by Chilean companies. These two issues are the most difficult to solve, and are the two huge stones blocking cooperation among the two countries.

Following you can find the new agenda between the two countries:

  1. Desarrollo de confianza (Trust development)
  2. Integración fronteriza (Border integration)
  3. Libre tránsito (Free transit)
  4. Integración física (Physical integration)
  5. Complementación económica (Economic cooperation)
  6. Tema marítimo (Maritime issue)
  7. El Silala y recursos hídricos (The Silala issue and water resources)
  8. Instrumentos de lucha contra la pobreza (Fight against poverty)
  9. Seguridad y Defensa (Security and defense)
  10. Cooperación para el control del tráfico ilícito de drogas y químicos (Cooperation on drug trafficking)
  11. Educación, ciencia y tecnología (Education, science and technology)
  12. Cultura (Culture)
  13. Otros temas (en este punto ingresó el tema energético) (Other- possibly energy)

November 08, 2006

Corruption index: Bolivia

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Just wanted to quickly post this graph, for all to read (for me too). Source: La Razon.

November 04, 2006


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The graph on the left is showing unemployment figures in Bolivia from four different entities. The first comes from the statistics institute, INE. In my opinion this one is the most reliable. But, that's just my opinion. It is funy to notice that the two government agencies have a lower rate than the other two "independent" organizations (independent from the government, I mean). Anyway, the argument of the graph is that unemployment has been decreasing since 2004. As a good economist, I ask myself why?

No time to make of this question a research question, but here go some reflexions. Over the last decade or so, Bolivia's macroeconomy has been relatively stable. For one, inflation, which once plagued the country like famine, has been low and thus kept in check. Another thing, over the same period there has been economic grownt. I remember to have read, somewhere, that Bolivia grew at a 3% on average. Exports were fantastic, in the same period. Alone, hydrocarbons were a major source of dollars. So good was the situation that savings in Bolivianos started to replace savings in dollars. So, macroeconomically, Bolivia was going relatively good.

In comes this government in January 2006. And no, I won't say everything went south. In fact, things got even better. There were a couple of things which added to the situation. For one, the debt relif Bolivia got from its creditors such as the international credit organizations and governments like the Spanish, who forgave Bolivia's foreign debt. This was a significant push to bring more macro stability and set this government on the right foot. Problems in the deficit were more directly affected. This year, for the first time in a long, long time, Bolivia will have a surplus instead of a deficit. That is really extraordinary. Also, not having to make payments on the deb, is a significant developlemt. That means more money in the government's pockets. Of course, the government started to receive more dollars from the nationalization and the new conditions in the natural gas sector. So, the government has more money. That alone is a special situation unlike any other government in history. Lastly, the Morales goverment is receiving money (or shall I say help) from the Venezuelan government. Chavez is being very generous with Bolivia funding projects left and right. For example he is paying to establish a national radio network to bring radio to the four corners of the country. Another thing Chavez is doing is he is buying Bolivian debt and he is buying Bolivian products such as soya. That also brings more money to the government's pockets. Morales has even asked every MAS member working in the government and every other functionary working in the government to pay into a fund in support to the party, MAS.

The question is what is the Morales government doing with so much money. Well, here is my scepticism taking over. Morales and his government are using the money to fund populist policies designed to keep their supporters happy and him in power. He has offered employment to the rebel cooperatives in Huanuni to appease them and bring them to his side. He is paying out a "bonus" to every child in Bolivia. He keeps paying out the solidary bonus to the elderly. He is spending lots of money alone in the nationalization of the companies and the restarting of the national energy company, YPFB.

These examples do not amount to a significant percentage of the national budget, but they are examples of his tendency to spend to keep support alive. The problem with this is that is might not be a sustainable way. Yes, Bolivia has some dollars now, but what about in the next years, decades? It is my opinion that one of the reasons unemployment is tending to go down is because of Morales' populist policies. And the problem with populist policies is the they tend to be short-sighted. They might be good to keep public support, but they make no economic sense. In other words, most of the time, they are not sustainable. And that is the key word here, sustainability. The country must be able to keep on generating income, just like anyone. It cannot continue spending without worrying about from where is the next dollar going to come.

At present time, this does not look good. The only significant source of income for Bolivia seems to be natural gas. Bolivia cannot stay dependent on a commodity, we know what happens then. The diversification of the economy is also a priority. This is what makes income sustainable.

November 02, 2006

Decentralization or Regionalism

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The Morales government has made public its proposal to modify the decentralization scheme in Bolivia. According to Fabián Yaksic, Vice-minister of Decentralization, the new structure would entail, 9 departments, 42 autonomic regions, 327 municipalities, and a yet unidentified number of territorial indigenous organizations.

What is new, is the division of the Bolivian territory in 42 autonomic regions. This would introduce a new level of territorial division between the departmental level (or in the US case, the state level) and the municipal level (in the US, the local level).

I wonder if the government has paid attention to the extensive literature about the Bolivian experience with decentralization. I have, and if there is one conclusion that stands out, is the fact that in the current situation, there is deficiency in the coordination work between the departmental governments and the municipal governments. They just do not communicate with eachother. In fact, there are some studies contending that the departmental level of government or prefecture (as it is called in Bolivia) hinders the work of the municipal government. I am thinking, how is one more level going to help?

I am tending to agree on this one with the Prefect of Santa Cruz. He sais that the plans of the government are to rest power from the prefect by dividing the department into regions. So, politically motivated reforms to an issue like the decentralization process where it is also necessary to pay attention to technical issues, are not useful.

November 01, 2006

The New Contract With the Energy Companies

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Really quick, I wanted to post this La Razon graph depicting the new conditions affecting the energy companies' operations in Bolivia.

I haven't looked at it in detail, but on the fly I am thinking, if the companies agreed to this conditions, if they agreed to keep investing, and if they said this deal is benefitial for them. Also, if the deal is benefitial for Bolivia, I'd say, way to go Evo.