June 28, 2008

USAID and the US Are Being Kicked Out of Bolivia

MABB © ®

The diplomatic relations between Bolivia and the US have turned sour. The latest development was the (virtual) expulsion of USAID (the development agency) from the Chapare region in Cochabamba. As I posted earlier, coca growers in that region "invited" USAID to get out. Wisely, USAID heard and took the invitation.

As you may realize, this is not a good development in the diplomatic relations between Bolivia and the US. The American government must be, to say the least, worried about these developments. Although, it doesn't show, but I am guessing it must be.

What is worrisome is the showing complacence from the part of the Bolivian government with these actions. This is to the extent that Morales has congratulated the coca growers for their actions against USAID and has also invited the US government to leave Bolivia.

The US government has taken these words as unfriendly and worrisome.

At this point, the question arises: What will happen to the US-Bolivia relations?

On my part, I think it is a significant defeat for the US. One, because it shows their diplomacy is not working. Two, because any loss of contact with a country like Bolivia will be a bad signal from the US vis-a-vis the world. Countries around the world are like investors looking and analyzing each and every move the US is making. Three, it contributes to the bad image the US currently has in the world. This is one thing, I am sure, the US government is working against. Four, the US government does not want to loose support in the region (in this case contact). It must be afraid of the domino effect it might represent. Other people around the region might decide that is a good way to proceed. I see what is happening in Bolivia as a very low point in American diplomacy.

I have to add, it might even be due to the little importance the American government has placed in the region.

I am not sure this might even be good for Bolivia. Granted I consider this move by Morales has placed Bolivia in a position of relative strength, cutting off diplomatic relations with the biggest donor, might not be the smartest thing to do. The Morales government says they prefer receiving help from Europe than the US. I am sure, the people in the government has seen how much comes from the EU and how much help from the US. Need I say more?

For the time being, the relations are very tense and, I would say, there is a tendency to get even worst. The government's comments are not the most conciliatory!


mcentellas said...

I think it's also troubling, primarily because of the way Evo's government has handled the issue--since I think this will (in the long run) hurt Bolivia more than it hurts the US (though this does hurt the US). Chavez's position--which is essential for its role in Bolivia--is weakening, which will leave Bolivia exposed in the future. So far, I think Evo is more concerned w/ securing his "base" in anticipation of a recall referendum than in worrying about external politics.

Jorge said...

I think this recent burst of hostility from the Morales government towards the US has more to do with distracting public opinion from the sounding defeats inflicted by the autonomic movements than with anything else. Confronting the gringos and showing off "dignity" (by contrast with the "submission" of the past, as Morales puts it) always helps with the public. I would imagine that the US patience must be wearing thin by now, but what can it do? Given its terrible image internationally these days, the US cannot afford to appear as a bully cracking down on little Bolivia and its first indigenous president, so it has no good alternatives. In this game Morales seems to be winning.

Miguel says

I am not sure this might even be good for Bolivia. Granted I consider this move by Morales has placed Bolivia in a position of relative strength, cutting off diplomatic relations with the biggest donor, might not be the smartest thing to do.

I wouldn't be so certain about the US being the biggest donor in Bolivia. Contrary to the myth so widely believed in the US, the US gives worldwide far less in development aid (as percentage of GNI) than any of the major developed countries; in fact it is dead last among the OCDE countries, being surpassed even by not so major countries such as Greece or Portugal. And often what goes under "foreign aid" is in fact "military aid" (the most outrageous example of such "aid" is the one to Colombia).

Are there any hard figures about the US foreign aid to Bolivia compared to that of the EU? It would also be interesting to know how much of the US aid is for the military or the police and how much goes to civilian development projects. It is my impression that the "civilian" part of the aid is negligible, but I would like to know for a fact. For instance, a figure of 10 million dollars was quoted in the press for last year for alternative crops projects in the Chapare. If correct, this is really peanuts once you subtract the overhead and the salaries of the American personnel. In any case, it's nothing that Hugo Chávez cannot match.

mcentellas said...

It's important to remember than when we look at how the US compares to other countries in terms of foreign aid as percent of GNI .... that we remember how BIG the US GNI is compared to other countries.

The US remains the world's largest single aid donor, w/ $12.9 billion (2003/04). The next biggest donors are Japan ($9.2 billion), Germany ($5.4 billion), and France ($5.2 billion). Greece and Portugal don't even make the top 10 list. No. 10 is Norway ($1.8 billion).


Anonymous said...

How do you even define USAID? I mean is not any money that was raised with US tax paying dollars technically USAID?

Jorge said...

The US remains the world's largest single aid donor, w/ $12.9 billion (2003/04). The next biggest donors are Japan ($9.2 billion), Germany ($5.4 billion), and France ($5.2 billion). Greece and Portugal don't even make the top 10 list. No. 10 is Norway ($1.8 billion).

Being the largest single aid donor doesn't make it the most generous. In fact the US is the stingiest of all developed countries relative to GNI (the measure the UN and common sense uses for generosity).

It is very telling from your figures that Norway, with a population of just 4.5 millions, gives 1.8 billions in real (i.e. non-military) development aid. So each Norwegian citizen gives $400 annually, while each US-American gives only $43 in foreign aid -- a pittance in comparison.

mcentellas said...


I appreciate your point about US stinginess w/ foreign aid. I don't dispute that at all. But it's important to distinguish absolute figures from % of GNI figures.

For what it's worth, studies have also shown that Americans give more personal money (as in, through foundations) than Europeans. I don't have the figures w/ me now, but I remember a paper showing that when combined, those figures put the US total "aid" on par w/ the of European countries on a per capita basis. In other words, European citizens are very unlikely to donate money to private charity groups, while American citizens are very likely to do so.

But your point, Jorge, is valid. And I don't dispute it. I just like to keep the difference between absolute figures and % of GNI clear.

For a similar problematic comparison: Japan was (until recently) limited to spending only 1% of its GDP for military spending. But because it was such a high GDP, it put Japan military spending on par w/ China, France, and the UK. Together, those four countries joined the US (which spent much more, of course) as the five largest military spenders in the world!

Tambopaxi said...

...More relevant question is how did USAID assistance in Bolivia compare to other donor programs in the same country? Was USAID the biggest donor in country, or was it someone like the Japanese or the CAF?

The Chapare program had been around for years and basically was the centerpiece for the U.S. non-military/police counternarcotics effort in country. While the future of INL/military assistance programs remains to be seen (murky, to say the least), removing the "soft" side of CN work in country bodes ill for the rest of the USG CN program in country, and if that happens, one could very well expect to see coke production and exports to the States and Europe shoot way up. When that happens, there will be all of attendant nasty side effects in Bolivia including more corruption, crime, and eventually increased coke consumption within Bolivia's own borders - if these things aren't happening already.

As well, while the act of kicking the hated gringos in the teeth makes for short term gratification, it will dawn on the people in Bolivia, beginning in the Chapare itself, that foreign assistance is better than none. Since last year's USAID program allocated about $90 million to Bolivia, I'd guess that going from that to zero in a short time will be felt somewhere - not that that will matter to Morales.

Gringo said...

One point about "foreign aid" that has not been brought up is the issue of open economies. Access to the US economy has brought hundreds of millions of Indians and Chinese out of poverty.

The US economy is much more open to third world exports than the EU.

It was good to see that the issue of individual versus government aid was brought up.

What Evo has done will not incline the US towards trade agreements with Bolivia. But that's OK, as Hugo by himself can consume a fair amount of Bolivian exports. ( I hope some have a sense of humor.)

Gil said...

Jorge says:

"Contrary to the myth so widely believed in the US, the US gives worldwide far less in development aid (as percentage of GNI) than any of the major developed countries; in fact it is dead last among the OCDE countries, being surpassed even by not so major countries such as Greece or Portugal."

Perhaps we (US) need to re-think the value of our pittance in development aid. Doesn't seem to be doing much good apparently, you know, compared to Greece and Portugal.

I could think of quite a few places where that $12.9B could be invested within the US, with the added benefit of ending complaints about our nefarious intentions attached to the money we donate.

It's a win-win, we get to keep our money and complaints about our worldwide meddling end.

The only thing that would stay the same would be complaints about how stingy we are compared to the rest of the world, but we seem to have that now with $12.9B. It appears you can never please everybody...

Good luck with those Venezuelan petrodollars and Cuban doctors that come with no strings attached.



mabb said...

I think every step Morales is taking has carefully been thought out to strengthen his government. In that respect, I agree with those who say he is demonizing the US to secure support. After all, a 'saviour' needs an enemy to fight against.

What is at the core of Morales' motivations, in my opinion, is that USAID provides financing (not innocently we have to say) to NGOs working to strengthen democracy, civil society and their values. Now, many of those NGOs do not agree with Morales' 'revolution' and therefore, they are the enemy.

About the question on how much the US gives to Bolivia, I found these numbers. USAID says that the amount for 2007 was 123 million, from that 34 mil. for narcotics affairs and military. The rest is for democracy support, food security, economic opportunities, health, environment and integrated development. USAID assistance (not counting military and narcotics affairs) has sharply dropped down from a high in 2004 of over 95 mil., to 85 in 2005, 84 in 2006 and around 87 mil. in 2007. At the same time, the US has an average of 25 ONGs between 2000 and 2005. In 2006 this number went down to 12. The only country that comes close is Italy with a rough average of 7 or 8 NGOs in the same time. I take NGOs as being projects where this money gets spent. This figures does not take into account (it should though) the Bolivian NGOs or projects, as I would call them.

I think, as tambopaxi does, it is important to remember the impact of the financial aid in the country. In Bolivia, the US is the biggest donor.

What gringo says it's true. Chavez can singlehandedly replace the US as a consumer of Bolivian goods, as long as the price of oil is high. :-)

And lastly, I am not surprised the attitude Gil shows. In the end, why help if it doesn't help. Might as well take care of the needs at home. I think, that is a valid reaction, but I am not sure is realistic. Granted, I am myself getting more critical with foreign aid as time passes on. I am not sure it achieves the goals it is set up to achieve.

Jorge said...

Gil writes:

I could think of quite a few places where that $12.9B could be invested within the US, with the added benefit of ending complaints about our nefarious intentions attached to the money we donate.

It's a win-win, we get to keep our money and complaints about our worldwide meddling end.

I can only agree with you, Gil. I can also think of a few places within the US where this money would be more useful. At the rate things go these days, the US might need itself some foreign aid not too far down the road.

I also share the skepticism of Miguel as to the usefulness of foreign aid. Getting rid of it altogether wouldn't probably make much of a difference in people's life in the third world, and it would not only save each American taxpayer a whopping $43 a year (that's 1/2 tank of gas these days, you know), but would also have the moral benefit of eliminating all pretense of generosity.

Gringo said...

My remark about Venezuela becoming a market for Bolivian exports was a snarky aside about Hugo's publicly stating that he was a coca consumer- pasta de coca, if memory serves me correctly.

mabb said...

Well, Venezuela has been "exchanging" goods with Bolivia (in the spirit of ALBA). Chavez has once mentioned that Venezuelans were prepared to buy products from Bolivia in exchange for oil. What Chavez said is that he dreamt with the time when he could sip a Coca tea.

At this point, I would almost expect Hugo to step in in replacement of the US.

StJacques said...

This is an interesting discussion which has been thankfully free of political invective and has attempted instead to present hard facts and informed opinion.  Though everyone posting here has offered something worthwhile, I would like to say that generally speaking, I agree with mcentellas.  The hurt will be mutual, though Bolivia will suffer more because of its increased vulnerability; the outright dollar amounts do count and to that point I would like to add that real results on the ground in Bolivia are achieved one dollar at a time; and more U.S. aid is needed worldwide, whether it is counted in outright dollars or percentage of GNI, and especially towards the development of capital resources (infrastructure) that are most sorely needed.  But that is a problem in Bolivia, because building modern capital infrastructure usually requires a level of technological expertise which calls for the use of U.S. contractors, which does not disseminate the kind of aid Morales wants; cash disbursements to Bolivian personnel and projects and spending on consumable resources.  It's not just the dollar amounts that matter.  The type of aid is also important.

I would like to refer everyone to Evo's complaint that only 30% of US aid goes to Bolivian personnel and projects, which he charges represents a lack of "transparency."  I am afraid that on this issue I believe there is real demagoguery on his part, because a very important 40% of US aid to Bolivia (70% of all aid Bolivia receives from the outside world) goes to exactly the type of projects Bolivia truly needs most; which include roads, assistance for small businesses (both are instances of capital resource investment), and health clinics (not a capital resource, but humane). [See NY Times 2006 article as additional source].  The problem with all of this is that infrastructural investment does not spread the wealth around quickly and its benefits are not so immediately evident, as would be the case with expanded expenditure on health care and a greater emphasis upon direct cash transfers to Bolivian personnel for their own projects.  Morales is staying true to Populist form and insisting upon immediate attention to quality-of-life expenditures; and while that does have an immediate positive impact, it also creates a dependency upon the annual disbursement of what is a consumable resource whose intrinsic value lies only in its consumption, rather than applying capital resources which produce their own interest and sustain both growth and development by their delivery of future wealth apart from continued foreign contributions.

Now I have not raised the issue of enhancing opportunities for corruption in the delivery of aid for projects other than those which develop capital resources, because this discussion has been quite civil from my viewpoint.  I will only state that I believe that the plan Morales would prefer for higher spending on consumbable resources and direct cash tranfers to Bolivian personnel and projects would raise the likelihood of the misuse of such aid.

Once again, this was a really good discussion to read.


mabb said...

That is true. Bolivia will also hurt. I think there is no question about that, but in the medium term or even the long run.

However, it's funny how things seem to be going one way, yet have a way to turn around or change direction unexpectedly. Two weeks ago, or even one week ago, it seemed the US was under pressure. As some people pointed it out earlier, how was the US going to make face Morales' attacks without appearing in the international arena as the big mean bro against the almost David-like indigenous president? Now, however, things have changed and it seems (to me at least) that what the US is doing (pulling out its ambassador) is not being perceived as bad. Now if we add the pulling out of the Peruvian ambassador, the things seems to be tilting against Bolivia. It might just be too early to say if this diplomatic row will enhance or damage the image of either country.

But, in general terms, I do agree with the argument that Bolivia will suffer more with every dollar that doesn't get there.

The question you pose is important. The kind of aid has to be revised. That is what I mean when I say I am skeptic about foreign aid. For what I have been able to observe in Bolivia, most foreign aid tends to finance some kind of project. I've read that most projects are small and started by Bolivians. Now, which Bolivians benefit from those projects? Most are the people who work on those projects. It is not uncommon to have a project coordinator (usually an academic oriented person) and two or three office workers. These people get paid with the project's money. Not to forget, also, the different contractors, which are, again, researchers, former government officials, etc. The bulk of the money gets spent on these kind of costs. The rest is implemented in the project, whatever it may be. As far as I've seen, these projects produce an insane amount of studies, research papers, reports, etc. All free of charge, under the premise of knowledge production. What is really felt on the ground is minimal. People are still living in the utmost poverty in rural Bolivia.

It seems to me the international cooperation community, is contributing to create a small cadre of consultants and researchers, who produce an important amount of knowledge about Bolivia. This group is compact, well educated and they seem to know each other very well. I call it the industrialization of foreign aid.
What hard advances have been made on the fight against poverty? I tend to say, not many.

That is the reason I am starting to question foreign aid or international cooperation (as other countries like to call it).

Sorry for rumbling around! :-)

StJacques said...


No need to apologize for rumbling around, you have raised what I consider to be some important questions.

You mention the proliferation of studies and academic initiatives as troubling because they do not produce enough tangible progress in terms of what is usually referred to as "output-based aid," (OBA), which is something I'm going to guess you have heard about in Bolivia.  Now I do not know enough about the number of studies, etc. you cite, but I am going to accept as factual what I think you are suggesting, which is that there are just too many of them when compared with the scarce delivery of worthwhile progress.  But I think that point raises another question: "why do we not see more in the way of real progress"?

I know the U.S. can be faulted for not doing everything it can to develop a working relationship with third world societies that delivers more in the way of foreign aid in general, and I am sure this would apply to Bolivia as well.  But I also am convinced that Morales has damaged a relationship that was producing the kind of results Bolivia needed and that the outlook for the future of Bolivia has been considerably dimmed as a result.

Let me raise the issue of the Decentralized Infrastructure for Rural Transformation program (IDTR as Spanish Acronym) as an example, and I'm going to guess again that you have heard of it.  Funding the development of rural electrification and increased access to communications systems is one of many projects that can truly benefit Bolivia's poor.  About the only thing I can think of that is more important are highways, which I know are also needed badly.  But the IDTR is certainly an extremely good idea because it will enable Bolivians not only to improve their quality of life in immediate terms, but also to participate in a market economy to a far greater degree than they do at the present.  That means increased income and many more jobs, especially higher-paying jobs.

When the World Bank launched this project in 2004 with a long-term allocation of about $60 million and an immediate U.S. contribution of $20 million, it got going in a hurry.  (See source.)  Through the year 2005 there was consistent progress, maybe not as fast as would be liked, but the output was being delivered.  But you can also see from the source I just cited that in 2006 (Morales's first year) progress in continuing to deliver results declined, that most bids, which were submitted competitively, were awarded to foreign enterprises because they had the technical know-how, and that even though there had been progress in developing local-international alliances to give Bolivian enterprises an opportunity to participate, they were not moving very fast and that the Bolivian government complained about this development.

This is the type of project that will be coming to an end now that Morales is forcing the U.S. out of the country.  And the type of aid that will replace it will arrive in the form of Cuban health care workers, Venezuelan and Cuban teachers (who will bring political indoctrination with them), and not much more.  That New York Times article I cited in my first post above also broadcast that Venezeula would be providing technical assistance for Bolivia's petroleum industry, but that is a complete joke.  Venezuela's own oil industry is in sharp decline; production is falling, new exploration has practically ended, refining capacity has shrunk, and scandals associated with national oil revenues are a daily revelation.  What I have heard of Bolivia's YPFB recently does not give me much assurance that its future is any brighter.

But Morales will get what he wants by changing the rules of foreign aid in Bolivia -- political support to maintain himself and the MAS in power.  That will be a tragedy for Bolivia eventually, because the hopeful outlook for developing its capital infrastructure is disappearing based upon what I see in recent events.

But I will hope for the best.


Gringo said...

What Chavez said is that he dreamt with the time when he could sip a Coca tea.

Actually Miguel, he has said a bit more than that.
Watch Hugo say that he chews pasta de coca every morning. Here are some written commentaries on the matter. Whether he actually does or is simply saying so for theatrical effect, is another issue. The Venn diagram of Hugo and the Truth has a very small intersection.

mabb said...

stjaques: I agree with what you are saying. I think the kind of aid Morales wants is that which one can hand in checks himself. It is more public and goes along the populist-father-state culture in Bolivia. No argument there.

One thing is clear though, they are two completely different conceptualizations of approaching a problem. The US is a more do-it-yourself approach, while the current Bolivian government has more of a father taking care of his kids kind of approach.

In addition, as I argued before, this fits Morales' political needs at the moment. He needs an enemy, to unite Bolivians and fight against. What better than the imperialist, neoliberalist, elitist, (and who knows what else...) US.

Gringo: I tell you, as a rule I like to be respectful when I comment about some politician. But, forgive me, but I think the word clown describes Hugo Chavez very well. :-)

StJacques said...

On Chavez ...

Put me down for clown too.


Norman said...

Well, I'd be inclined to watch the price of Chapare products (other than coca) over the next year as production falls. a Google-Earth of the region shows a lot of cultivation near the major roads. I think we'll see a shift from fruits to coca in the area.

These roads, BTW, flood out fairly often around the end of the year when the rains come. A lot of USAID $$ has gone to helping out after these events.

One aside: they need a lot more roads and a market for their products. Has Morales done anything to develop such a market; I mean now that he isn't blockading the roads himself.