July 27, 2007

About the Constitutional Assembly: Deciding Moments

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These are deciding moments for the Constitutional Assembly in Bolivia. So far around 32% of the articles have been approved and presented by the individual commissions. There are about five working days left until August 6th, when the entire assembly is supposed to present the new constitutional text to the people. And, there is a long list of unresolved issues. The assembly is under tremendous pressure, however they know (they should know) time has ran out and as such it has to be prolonged.

Regardless of whether the assembly was declared originaria (originary) or not (if it was originary, it did not need to take Congress into account for any decision), it has to come back to Congress now to ask for an extension. This is significant, both for the government and for the opposition, because it could signify a bend on the process. Until now, the government has been able to more or less direct the path of the assembly. It has, after all, a comfortable majority. For one MAS has been able to push this 'originary' issue to be included into the new text. Additionally, it has been able to pass a vision de pais (vision of country) through moves in the commission with the same name. The danger for the government now is that things will not go as they want, not that things have been going their way but more or less they have had small victories.

In Congress things look bleaker for the government. Even though it has a majority in the lower chamber, it does not have control of the Senate, where the opposition has the control. In light of this situation, any decision coming from Congress has to include the opposition's point of view. At the same time, the opposition has been quick to point out their determination to observe the government's proposals. One issue that is sure to be treated is the approval of the text with a 2/3 voting system rather than simple majority, which is the government's wish. Other issues certain to appear in the negotiations agenda are, the extension (of course), the funding and the referendum mechanism.

The opposition wants to make sure all the proposals will have to be approved by the 2/3 super majority. That way, they do not hand the government a blank check to write the constitution by itself. In fact, as we speak, negotiations are under way. There negotiations, however, are not to include the issues pertaining only to the assembly, I am almost certain that the following themes will also be touched:

The kind of state model Bolivia will have, currently there are three proposals.

The autonomic model, at this time there are two proposals, although somewhat similar.

The moving of the capital to Sucre.

The re-election of the president (Morales wants an indefinite term).

It is clear the government, MAS, Evo Morales and Alvaro Garcia will have to negotiate with the opposition if they want to achieve something. That is the only way they will be able to pass desperately needed laws to continue with the assembly. As I said before, the opposition has to make sure, to preserve its existence, that these topics are dealt with to its satisfaction.

The coming week will be deciding for the assembly. Congress will have, once again the ball on its court and will have to make some difficult decisions. But, in the end, I think it will have to approve an extension.

July 22, 2007

The La Paz Town Hall Meeting

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Back in January 2005, Santa Cruz organized a mega demonstration, which they called a cabildo (town hall meeting). There they claimed that around one million citizens decided to push forward with the demands for more regional autonomy. Fast forward to July 20, 2007, the 'other Bolivia' has raised its voice in another mega demonstration, which they also called cabildo.
The people from La Paz and El Alto gathered in El Alto to demonstrate their rejection to the proposed move of the government seat back to Sucre, Bolivia's official capital and once seat of government

There are no official numbers of how many people attended. The Bolivian Information Agency, ABI, says there were close to two million people there. No way to confirm that.

The pictures below show the gathering on Friday, July 20, 2007. More pictures can be accessed at Bolivia's national information agency, ABI.

In my opinion, this latest cabildo only reinforces the idea that the country is deeply divided along regional lines. Clearly we can observe the two regions being able to get over a million people together. Considering that Bolivia has 9 million inhabitants, these two demonstrations have been able to gather almost a quarter of the population. That, in support of two different causes. What I am wondering at this moment is that the middle region is not saying anything so far. Right in the middle of the conflict lies Cochabamba, the third largest city (formerly second) in the country. The question is: which side will they pick?

Talking about the paceno cabildo, it decided to give the Constitutional Assembly (CA) 17 days to erase from the debate agenda the issue of moving the seat of government to Sucre. And, in a very Bolivian manner, they said if the CA did not comply, they would start mobilizations, which I assume would mean more demonstrations, marches, and more political pressure. At the very same time, in Sucre, the commission in charge of pushing for the move of the seat of government met to plan out their strategy to continue. Of all things, they are planning to hold, yes, a gathering of people. Perhaps it will be next week.

On its part, the government welcomed this gathering. Its argument is that the issue is prone to divide Bolivia. I am not sure if they are blind, but don't they see that Bolivia is already divided? Or perhaps they mean geographically?

This issue promises to continue to be a leading headliner in the next weeks. What would be the answers of Santa Cruz, and of all places, Cochabamba?

Finally, I think it is a good idea to move the capital back to Sucre. As my friend Miguel Centellas says: "...I doubt Sucre wants to become the new marchodromo (I suspect its experience w/ protesters & the Constituent Assembly may have soured many sucrenses from their desire to reclaim the capital)." I suspect pacenos should be more than happy to cease to be the official marchodromo (referring to the almost daily marches and demonstrations in the streets) of Bolivia.

July 18, 2007

The IMF on Bolivia

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Here is what the IMF has to say about Bolivia's current economic conditions. They sound almost too diplomatic or carefully worded to me. What do you think?

On July 13, 2007, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Bolivia.


The economy has continued to benefit from rising natural gas export volumes, which has been compounded, over the last two years, by high hydrocarbons and mining export prices. Real GDP growth has been around 4-4½ percent, mainly driven by an expansion in hydrocarbons and mining-related activities. The external current account has recorded large surpluses, and net international reserves have risen to historically high levels. The fiscal position has improved sharply and—reflecting also debt relief under the Multilateral Debt Relief Initiative (MDRI) —Bolivia's public debt has declined markedly. Financial sector stability has improved, with comfortable levels of liquidity and full net foreign assets (NFA) coverage of deposits, although vulnerabilities remain. The key economic trends of the past year are projected broadly to continue in the period ahead, although with a somewhat lower fiscal surplus.

However, inflation has picked up in recent months, due in part to negative supply shocks but also to rapid monetary expansion. While part of the recent price increases has been associated with floods and one-time adjustments in some administered prices, both core and headline inflation have displayed an upward trend since the last quarter of 2006, driven by higher prices of nontradable goods and services. The Central Bank has responded to rising price pressures by increasing its open market operations and by appreciating the Boliviano against the U.S. dollar under the crawling peg regime.

Significant changes in hydrocarbons policy have been implemented over the last two years, resulting in a higher government tax take and a greater public sector role in the sector. Following a national referendum in August 2004, a new hydrocarbons law was enacted in May 2005 and a related decree issued in May 2006. The main effects of the new legislation have been: (a) a "migration" of the contracts with the foreign companies operating in Bolivia, from risk-sharing contracts to an arrangement whereby all production is surrendered to the state energy company YPFB, which has been made the country's sole exporter of natural gas; (b) a permanent increase in natural gas royalties, from 18 percent to 50 percent of turnover; and (c) a requirement that YPFB regain control over the five hydrocarbons companies that were privatized in the 1990s.

Following a boom in the late 1990s, which included large-scale privatization, private investment levels in Bolivia have been depressed in the past few years. While there has been significant FDI in the mining sector and public sector investment has increased, this has not been enough to overcome the fall in other private investment, notably in foreign hydrocarbons-related investment. As a result, Bolivia's overall investment-to-GDP ratio, as well as the share of private investment in total investment, are among the lowest in the region.

Even though social indicators have improved in recent years, Bolivia's levels of poverty and inequality are persistently high. In 2005, extreme poverty amounted to 37 percent of the population, while absolute poverty reached 60 percent. Also, income inequality was among the highest in the region. Although Bolivia will be able to meet some of the Millennium Development Goals (e.g., child mortality, maternal health, gender equality, and water and sanitation), achievement of other goals by 2015, such as those of eliminating extreme poverty and universal primary education, remains a significant challenge.

Executive Board Assessment

Executive Directors welcomed the continued strong performance of Bolivia's economy, with booming hydrocarbon and mining exports contributing to rapid accumulation of external reserves and a large fiscal surplus. GDP growth has been satisfactory; inflation remains moderate, albeit with some pick-up in recent months that is partly attributable to exogenous shocks; and the public debt has declined because of debt relief and an active debt management strategy.

Directors noted, however, that poverty remains high in Bolivia, in part because of the limited employment impact of growth in the hydrocarbons and mining sectors. They stressed the importance of implementing policies conducive to a recovery of private investment from its low level and to a diversification of the economy, which they saw as critical for sustained economic growth and poverty reduction in the medium term. In particular, Directors highlighted the need to improve the investment climate, including through greater legal and institutional stability and maintaining a rules-based approach toward private investment. Some Directors encouraged the authorities to re-consider their decision to exit from the World Bank's investment dispute settlement framework.

Directors commended the authorities' strong emphasis on safeguarding macroeconomic stability. A key challenge in this respect is to manage the large revenues from hydrocarbon exports in a manner compatible with price stability and maintenance of export competitiveness. In light of this, Directors welcomed the authorities' commitment to maintain a fiscal surplus, which they also saw as consistent with a prudent long-term use of the hydrocarbon resources. They stressed that this will require considerable control over expenditure, including at the subnational level. They suggested that the authorities develop a realistic medium-term expenditure framework, taking into account the country's absorptive capacity.

Directors underscored that structural reforms should make the budget a more effective developmental and poverty-reducing tool. They encouraged the authorities to consider reducing the large and poorly targeted hydrocarbon subsidies, while introducing properly designed measures to protect the poor. Improvements of the tax system, intergovernmental relations, and the budget process should also be a priority. These reforms would release fiscal resources for financing development and poverty-reducing spending.

Directors noted the modest nominal appreciation of the Boliviano over the last two years under Bolivia's current exchange rate regime. Given the upward pressure on the equilibrium exchange rate stemming from the rapid growth of Bolivia's energy exports and indications that the currency may be undervalued, many Directors welcomed the authorities' intention to exercise greater exchange rate flexibility within the crawling peg regime in the period ahead. They believed that greater flexibility will also help reduce dollarization and forestall the adverse distributional impact that would result from allowing inflationary pressures to take hold. Over the medium term, this increased flexibility could be followed by a gradual and properly sequenced transition to a more flexible exchange rate regime, for which Fund technical assistance could help provide a roadmap. Some Directors, however, expressed concern about a move toward greater exchange rate flexibility, pointing to the impact on competitiveness of the non-hydrocarbon sectors of a currency appreciation, as well as to balance-sheet, inflation, and dollarization risks that would arise from increased volatility under a more flexible exchange rate system. Directors also encouraged the authorities to use open market operations more actively to tighten monetary conditions and reduce inflationary pressures.

Directors commended the authorities' success in maintaining financial stability, while encouraging further action to implement the 2003 Financial Sector Assessment Program recommendations in order to address remaining vulnerabilities. Key issues include closer monitoring of banks' loan provisioning and solvency; introducing prudential regulations to mitigate credit and market risks, particularly credit risks arising from dollarization; amending the legislation governing corporate bankruptcy and restructuring; strengthening the Financial Intelligence Unit and legislation against money laundering; and elimination of the financial transactions tax because of its adverse effect on financial development. Directors welcomed the authorities' intention to subject the recently created development bank to standard prudential requirements, while stressing the need to prevent undue competition with the microfinance sector.

In the hydrocarbons sector, Directors considered that the new operating contracts with the foreign energy companies constitute an important step towards a more favorable investment climate. However, they observed that the authorities now face the challenge of securing the major additional investments that will be needed to fulfill their export commitments to Argentina while satisfying rising local demand. Directors encouraged the authorities to continue to seek mutually acceptable arrangements with foreign investors.

July 16, 2007

What Pacenos Say About Pacenos!

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What is a paceno? A paceno is a person who was born in La Paz city. There are other words to describe pacenos, such as chukuta, kolla, andino, or even some times arrogant.

Bolivia is more or less divided into regional parts, with each inhabitant of each region having a word to describe him or her. As much as a californian is a californian and a newyorker is a newyorker, a paceno or a camba is just that, a paceno or a camba. However, these last terms are 'loaded' terms. The appellatives have more than just geographical connotations. They have cultural, idiosyncratic, and even moral meanings.

The paceno word has its meaning, which many tend to equal to that of "arrogant inhabitant of the capital city". In recent days, La Paz celebrated its 198 anniversary. For that occasion, the Director of the La Razón newspaper, Carlos Rocha, wrote a special article giving 16 reasons to be proud of La Paz. In this piece, he talks about the paceno's bad habits. Now, if those are enough motives to be proud to be a paceno, I don't know. I, as a paceno, am not particularly proud of them (the bad habits). If this is supposed to be humorous, you can see what kind of humor pacenos are loaded with......!

Anyway, the article talks says that pacenos are dishonest, introverted, lack international relations, have no respect for the city they live in, have no respect for the local laws, intolerant, racists, lack of planning skills and thus improvise too much.

Wow, what a load of habits. In my oppinion, many of the habits are close to reality, others are just too general being able to fit anyone in the world.

But, read the article in Spanish, it brings the argument much closer. This way, you might just begin to understand your paceno amigo.

July 12, 2007

Global Threats Perception in the US and the Bolivian Factor

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Yesterday, Wednesday July 11, Dr. Thomas Fingar (Wiki-bio), Deputy Director of National Intelligence for Analysis at the Office of the Director of National Intelligence testified before the House Armed Services Committee on global security assessments. In his testimony, Mr. Fingar, briefly referred to the events in Latin America.

Here is the entire excerpt (pgs. 14 to 16) from this testimony on Latin America. You can find his entire testimony here.

Gradual consolidation of democracy has remained the prevailing tendency in Latin America, despite the challenge to democratic tenets in a few countries. Moderate leftists who promote macroeconomic stability, poverty alleviation, and the consolidation of democratic institutions continue to fare well, as do able conservative leaders. Indeed, the overall health of Latin American democracy is reflected in the results of a survey by a reputable Latin America polling survey: fifty-eight percent of the respondents said that democracy is the best system of government. This number is up five percentage points, compared to results from the same poll in 2005.
At the same time, individuals who are critical of free market economics and have friendly relations with Venezuela’s President Chavez won the presidency late last year in two of Latin America’s poorest countries, Ecuador and Nicaragua—both after Evo Morales’ victory in Bolivia in December 2005. The strong showing of presidential candidates with leftist populist views in several other countries during the elections of 2006 speaks to the growing impatience of national electorates with corruption—real and perceived—and the failure of incumbent governments to improve the living standards of large elements of the population. Public dissatisfaction with the way democracy is working is especially troubling in the Andes. Democracy is most at risk in Venezuela and Bolivia. In both countries, the elected presidents, Chavez and Morales, are taking advantage of their popularity to undercut the opposition and eliminate checks on their authority. In Venezuela, Chavez reacted to his sweeping victory last December by increasing efforts to deepen his self-described Bolivarian Revolution while maintaining the struggle against US “imperialism.” He revoked the broadcasting license of a leading opposition television station, on 28 May, and has nationalized the country’s main telecommunications enterprise and largest private electric power company. He has forced US and other foreign petroleum companies to enter into joint ventures with the Venezuelan national petroleum company or face nationalization. Negotiations on compensation and the autonomy remaining to the companies that have chosen to stay in Venezuela are pending. Chavez is among the most stridently anti-American leaders anywhere in the world and will continue to try to undercut US influence in Venezuela, the rest of Latin America, and elsewhere internationally. He is attempting to establish relationships with nations such as Iran, China, and Russia that will lessen his country’s longstanding economic ties to the US. Chavez’s effort to politicize the Venezuelan Armed Forces and to create a large and well-armed military reserve force are signs that he is breaking with the trend in the region toward more professional and apolitical militaries. He has purchased modern military equipment from Russia, including 24 SU-30 multi-role fighters, which can perform air-to-air, strike, and anti-ship roles, and is moving toward upgrading other force projection capabilities. These weapons purchases increasingly worry his neighbors and could fuel defense spending by his neighbors.
Cuba remains Venezuela’s closest ally. Fidel Castro’s protracted convalescence leaves the day-to-day governing responsibilities to his brother Raul. Key drivers in influencing events in post-Fidel Cuba will be elite cohesion in the absence of Cuba’s iconic leader and Raul Castro’s ability to manage what we assume to be high public expectations for improved living conditions. This year may mark the end of Fidel Castro’s domination of Cuba; but significant, positive political change is unlikely immediately. Although Raul Castro has solidified his own position as successor, it is too soon to tell what policy course he will take once Fidel has left the scene. In Mexico, President Felipe Calderon’s public security initiatives, early efforts to address poverty, and quick handling of political controversies have been highly popular and have put to rest attempts to question the legitimacy of his presidency. His government is taking steps to address problems that affect both Mexican and US security concerns, including drug smuggling, human trafficking, and associated violence.

July 06, 2007

For Santa Cruz, Autonomy is Serious

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For the Santa Cruz department, to obtain control over its affairs is supremely important. That is the reason why it created the Asamblea Provisional Autonomica de Santa Cruz (Provisional Autonomic Assembly of Sta. Cruz, roughly translated). This entity has worked on the drafting of a proposal to reform the current constitution and, lately, on an autonomic statute.

The statute, presented on July 2 of this year, outlines in detail what is it that Santa Cruz means when it speaks of autonomy. I look at the document as Santa Cruz's own constitution. It talks about the Santa Cruz identity, its own history, its symbols, and its own government structure. Furthermore, it even touches the topic of defense and indigenous autonomies.

It also seems to me to closely follow the federalist line. If you read the document It'll seem to you that it is of a federal state it is talking about. I don't really understand why it just doesn't mention federalism out loud. It would make more sense that way.

I have to say though, while the document talks about autonomy and the power of making decisions independently, it does mention about the competencies of the central government and the municipal governments. At one point it mentions the shared taxes from the natural gas exports as a structure or mechanism in place to redistribute these funds, without trying to redefine or even abolish it altogether. That would be expected of a state which wants to be independent.

The document, imho, is not a total declaration of independence, but it does have those overtones.

A proof of that is the following reference made in the same website. There I found an interesting link in the publications section. In this section there is a book entitled: "History of Santa Cruz de la Sierra", written by Enrique de Gandia. The book starts like this: "Este libro es la historia de una Nación cuya independencia será algún día una realidad" (This book is the history of a nation, whose independence, one day, will be a reality.). Now that should be an alarming sentence for those skeptics of Santa Cruz's autonomy.

With references to works of that nature, the people of Santa Cruz will have a heck of a time convincing other departments to join in their cause. I would even say, the either Beni, nor Tarija are willing to go that far.

July 05, 2007

Bolivian Bloggers Project Gets Go

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From time to time I like to highlight some happenings within the Bolivian blogsphere or what I like to call, the boli-blogsphere. This time it is about a project Eddy, Mario and Hugo have started. The project is on local education in El Alto, Bolivia. It aims at giving the basic skills for blogging to local people. These people, in turn, will start telling the world about their lives, their communities, their culture and so on. The project is part of Global Voices' Rising Voices project.

Very important job! Through the computer we all will have a small, but important, window into the individual worlds of each blogger. This, in my opinion, complements the picture the mainstream media paints about all these areas in the world, and for sure covers some wholes left by it.

So, two thumbs up for Eddy, Mario and Hugo, kudos for Rising Voices and much success to all!