May 28, 2007

Bolivia, the US and the EU

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Lately, I have been finding lots of references to the transatlantic triangle made up by Latin America-US-EU. This relationship seems to be very important for both, the US and the EU, but not as important at it should be.

The diplomatic, as well as political and economic relations have been traditionally framed within the framework of trade, drugs and rock'n'roll (by that I mean culture, :-)). However, much has changed now that the latest elections wave in the region is more or less over. The move of Latin America to the left has strained this relationship. For reference purposes, I highlight three official sites, which should better define these relationships further.

This first site is the EU Commision's official site of its External Relations arm. The second and third sites are the US Embassy's and State Department's sites, where the US government outlines its foreign policy.

As you can see, the US' major policy areas are debt relief, counter-narcotics, cultural property protection and the millennium challenge program, and of course trade. As for the relations between the EU and Bolivia, they are similar to those with the US (drug trade and commercial trade), with one notable exception, migration. This last phenomenon has been hitting Western Europe right in the heart. So much so that is has become a major issue, not only in foreign policy, but in domestic politics as well.

Visit the sites. They make for an interesting, albeit short, read.

Bolivia's Economic Freedom

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According to the Heritage Foundation's Index of Economic Freedom, Bolivia has a 55% free economy. This means "Bolivia rates highly in fiscal freedom and solidly in freedom from government and monetary freedom. A very low income tax rate and moderately low corporate tax rate give it an enviable fiscal freedom score. Its freedom from government rating is also relatively positive despite a large amount of government spending. Inflation is not high, although prices are unstable and the government imposes de facto price controls on most utilities."

The foundation's assessment covers business, trade, fiscal, monetary, investment, financial and government, plus property rights, corruption and labor freedom. The trend though, is down.

May 25, 2007

Attacks on the Judiciary

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Over the last week or so I have been following, with a certain degree of worry, the attacks the Morales government has been throwing on the country's third government branch, the Judiciary. I started to write a post but found Miguel Centellas has posted twice on the same topic.

In his first post Centellas says "A series of attacks against the judiciary (most recently, claims of corruption & lack of “austerity”) have prompted many of the Supreme Court’s ministers to publicly consider resigning in protest. Additionally, a number of magistrates from the Fiscalía (the Bolivian Department of Justice) have complained that they are unable to properly carry out numerous ongoing investigations against members of the executive & legislative branches—particularly, when the targets of investigation are members of MAS (the ruling party). Their complaint: the government insists on assigning oversight to these proceedings, but often assigns the very officials under investigation to do the oversight."

According to current reports, the resignation of some magistrates (namely that of Supreme Judge Juan Jose Gonzales Ossio) has been another strategy by the government to incite massive resignations. La Razon reports that Gonzales, days after his seeming protest resignation, is being considered for a sort of promotion by the government.

On his second post Centellas continues: "This is really the most troubling thing about the current government. Its most frequently used tactic is social mobilization, which is more a tactic of opposition rather than of government. But they’re unwillingness to cede any political terrain suggests that MAS is unwilling to entertain the notion of political defeat. Having seized the reigns of power, MAS consistently seems to want more. And any institutionalized opposition is threatened with a battering ram of “social mobilization”—clearly an intimidation tactic—even while any counter-mobilization is dismissed (apparently only groups allied w/ MAS count as “social movements”)."

The big question that MAS supporters must be asking themselves is whether Morales is seeking to consolidate his power as it's being alleged. Why is his government attacking the Judiciary and provoking severe instability? Surely, there are other ways to deal with corruption without having to push the Judiciary into crisis and change all of the magistrates at once.

May 20, 2007

The Church and Evo Morales

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The 5th General Conference of the Latin American and Caribbean Bishops has began, and with it, the controversy between the Bolivian government and the Catholic Church. The controversy started by the words the Pope and the Bolivian Cardinal spoke in the conference.

Pope Benedict XVI, in his remarks in the inaugural session, made an allusion about the region and he said that "Latin America and the Caribbean, as other regions, has evolved to democracy, even though there are motives to worry over certain forms of authoritarian forms of government or subject to certain ideologies thought gotten over with and which do not correspond with men's and society's christian vision, as the Church teaches us." (translation from Spanish: En América Latina y el Caribe, igual que en otras regiones, se ha evolucionado hacia la democracia, aunque haya motivos de preocupación ante formas de gobierno autoritarias o sujetas a ciertas ideologías que se creían superadas, y que no corresponden con la visión cristiana del hombre y de la sociedad, como nos enseña la Doctrina social de la Iglesia.)

Moreover, in his intervention on May 15, Cardenal Julio Terrazas Sandoval, said: "In general, this beginning (that of the government's agenda) caused happyness and hope in some and suffering and disillusion in others. In less than a year it can be detected that some sectors of society and regions are pushing to demand the much advertized economic benefits, multiplying that way pressures and conflicts. To this can be added the awakening of an Andean indigenism, which denies the strong mestizo facton in Bolivia. There is talk of revenge, confrontations and armed resistance. (translated from the Spanish: En general este inicio causó gozo y esperanza en unos, sufrimientos y desilusiones en otros. A un poco más de un año de este proceso, se constata en diversos sectores sociales y regiones un cierto apresuramiento para exigir los beneficios económicos profusamente publicitados, multiplicando de esta manera presiones y conflictos. A esto se añade el despertar de un indigenismo sobre todo andino, desconocedor del fuerte mestizaje boliviano. Se suscitan posturas revanchistas, la incitación a las confrontaciones y hasta se habla de resistencias armadas.

The Morales government did not like the two remarks and is asking, as we speak, clarification to the Pope's representative in Bolivia. Morales said that the Church should decide whether it should pray or do politics.

This is the latest tension between the church and the Morales government. It really started when some administration officials were suggesting to reform religion education by including indigenous or Andean religion in the curriculum.

It is unclear, at this point, why has the church chosen to publically critisize Morales. They were in good terms until this week.

May 17, 2007

The Andean Trade Preference Act (ATPA) and Bolivia

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The Bolivian Government is currently lobbying the US Government for the extension of the ATPA. An official delegation is in Washington, DC talking to congressmen to convince them to vote for an extension of that program. However, the Bolivians are finding difficulties in doing their job. According to reports, they have found missinformation as well as outright opposition. An outspoken opponent has been Sen. Charles Grassley (R), the Iowa Senator and Ranking Member of the powerful Committee on Finance, who said the following as he was speaking on the floor of the Senate yesterday:

"As for Bolivia and Ecuador, I see no reason to further extend ATPA benefits. In fact, it boggles my mind that the governments of Ecuador and Bolivia would even ask us for extensions of these trade preferences. After all, the current leaders of those two countries have based their careers on attacking U.S. policies—our trade policies in particular. Yet, ironically, they wrap their arms around one U.S. trade law, the ATPA. Why? Because under this program they can sit back and receive duty-free access to our market no matter how irresponsibly they act. Apparently, it doesn’t matter to them that Ecuador expropriated the assets of its largest foreign investor, a U.S. company, and subsequently sent in troops to guard the facilities that it seized. Apparently, it doesn’t matter that President Morales of Bolivia nationalized Bolivia’s hydrocarbon sector and ordered the Bolivian military to occupy gas fields. President Morales also threatened to evict foreign companies, including U.S. companies, unless they turned the titles to their properties over to the state. Well, the fact is, those actions matter to me. We should not reward the bad behavior of those two governments by maintaining unilateral trade preferences on their exports to the United States. We should not let ATPA evolve into an entitlement program. Instead, we should allow ATPA to lapse, and then see what type of economic relationships the governments of Bolivia and Ecuador want to establish with the United States. For starters, those relationships must be based on a genuine respect for the rule of law."

The remarks of the Senator from IA could signal a problem for the Morales government. Bolivia is relying more and more on this program to increase employment, trade, growth and economic stability. A recent report by the IMF is very optimist on the performance of the Bolivian economy.

"These are historical times for Bolivia and I feel privileged for the opportunity to observe these developments closely. The country faces today both opportunities and challenges—the opportunity of taking advantage of vast natural resources; and the challenge of managing those resources efficiently to promote growth, employment, and social inclusion. Bolivia is well placed to address these challenges. The macroeconomic context is relatively strong, the external conditions favorable, and debt relief has helped significantly reduce the constraints from this source. Bolivian policy makers have incorporated many lessons from the country's history—in particular the importance of economic stability as a necessary condition for progress towards those broader objectives. While ownership of a home-grown strategy for the future is of paramount importance, lessons and experiences from other countries and regions that have made this transformation may also be extremely useful for Bolivia at this time. In particular, attracting new and highly productive investments from the public and private sectors should be one of the highest policy priorities for the coming years."

The newpaper La Razon published the following graph depicting the increased dependence of the Bolivian economy on the ATPA program.

Furthermore, the Third Report to the Congress on the Operation of the Andean Trade Preference Act as Amended April 30, 2007 says:

"U.S. imports under the ATPA from Bolivia rose 6 percent, from $157 million in 2005 to $166 million in 2006. The top U.S. import under ATPA/ATPDEA from Bolivia was jewelry (primarily gold) and parts, which accounted for 28 percent of ATPA/ATPDEA entries in 2006. U.S. imports of jewelry and parts from Bolivia increased 16 percent, from $65 million in 2005 to $75 million in 2006. The second largest ATPA/ATPDEA entry was apparel ($31 million), which accounted for 21 percent of ATPA/ATPDEA entries from Bolivia in 2006. Apparel imports under ATPA/ATPDEA fell 12 percent from 2005 to 2006. Other leading ATPA/ATPDEA entries in 2006 were petroleum products ($27 million), tungsten concentrates ($17 million), and raw cane sugar ($7 million)."
I think it is undisputable that the benefits of the ATPA are having a significant effect on the Bolivian economy. If the US Congress decides to agree with Sen. Grassley, it would be a big blow for the Bolivian economy and it would have many ripples in the political arena as well. Many of the people who are benefiting from this program are people working in the textile industry in the difficult city of El Alto.


Latin America: Building on Recent Trend and Sustaining Rising Prosperity

Floor Statement of Senator Chuck Grassley on May 16th, 2007

Third Report to the Congress on the Operation of the Andean Trade Preference Act as Amended

May 08, 2007

The Fight Over the Capital

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The fight over the seat of government presses ahead. The Sucre department continues to argue that the seat of government be moved to Bolivia's capital, Sucre. However, this demand has run against a massive wall of refutation. La Razon published a poll which say that 63% of Bolivians in the four major cities disapprove of the idea.

This has emboldened the opponents of the proposal and has made it so much difficult for the people in Sucre who are pushing for it. It has also revealed divisions within the Sucre department. On the one side, there are those who are supporting this effort and on the other side are people who said they were not included in the organization or were not asked of their opinion.

At the moment, just when it looked that the efforts to bring the government back to the capital were gaining momentum with the backing of Santa Cruz, Beni, Pando and Tarija, it looks now as if the road has gotten steeper and more difficult.