Why Bolivia has suddenly become important


by Sunny
19th December, 2005 at 9:42 am    

The US government and media have been anxiously watching the Bolivian elections for some obvious reasons. Unfortunately for them, Evo Morales, a former coca farmer and the country’s first indigenous Indian President, won the election yesterday.

The news is ‘unfortunate’ for the US administration because Morales has promised to be a “nightmare” for them. Heh, another one to add to the list. I believe this piece of news is important for a few reasons.

Evo Morales has become great friends with Hugo Chavez (Venezuela) and Fidel Castro (Cuba) – both hated by the U.S. government – and wants more control over the country’s massive natural gas reserves.

More significantly, Latin America has moved sharply to the left of politics in its recent elections, to the dismay of America, in rebellion against the failed economic polices pushed on to them in the 90s by the World Bank and the IMF with the USA’s blessings.

Privatisation of state companies at cheap prices, laying of thousands of workers in the name of efficiency, letting multinationals exploit national resources, currency and capital flows instability, and being crippled by high debt payments (back to the IMF/World Bank) brought Argentina to its knees a few years ago and threatens many others. The Latin Americans now want greater control and stability over their own economies.

On a broader level it is the slow death of American neo-classical economic theory pushed by Reagan and Thatcher, that by privatisation and letting free-markets reign supreme, wealth would “trickle-down” to the poor. All Latin America got (and Africa is waking up to) was instability and more poverty.

It also reflect a big blind-spot many western economists have: failing to understand that economic policies that may work in one country may fail miserably in another depending on circumstances.

Hugo Chavez (and soon Evo Morales) is hated by the right and some on the left, but he has the popular support of his people. With America’s unfortunate indifference to the impact of the economic policies they prescribe to others, they are losing neighbours and friends fast.


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  1. Paul Brown — on 19th December, 2005 at 11:13 am  

    Those liberal hawks that claim the US is no longer an imperial power may have to reconsider when they look at the US response to the rise of social democratic governments in Latin America. They have already done everything they can to destabilise the chavez government, and they are obviously going to throw their energy into preventing the Movement Towards Socialism from coming to power in Bolivia. I think morales will be a very pragmatic and able leader, but there will inevtibaly be collusion between the capitalist class in bolivia and the US to undermine, or indeed overthrow, his government.

    There is also no reason why coca production shouldn’t be legalised, it’s a great cash crop with a huge market, and should be taken out of the hands of criminal gangs and traffickers.

  2. Paul Brown — on 19th December, 2005 at 11:20 am  

    While we’re talking Latin america, there has been bright news from Chile, where Michelle Bachelet should win the January 15th election unless something dramatic happens. She is a socialist, feminist and secularist who was tortured under the Pinochet regime. Another signifigant step forward for Latin America.

  3. Siddharth — on 19th December, 2005 at 11:21 am  

    I am hopeful. Hopeful Evo can lead his country out of poverty and into prosperity. Hopeful that he can lead the nationalisation of Bolivia’s resources. Hopeful that for once USA can keep its intrusive politics out of an American country. And hopeful the IMF-mandated privatistion policies will get thrown back at them. If anyone deserves to wear a Che t-shirt with gleeful pride, its Evo.

  4. Paul Brown — on 19th December, 2005 at 11:25 am  

    Well, perhaps the US is so bogged down in the Iraq quagmire it may not have the will or the resources to interfere in bolivia.

  5. El Cid — on 19th December, 2005 at 11:49 am  

    It’s early days still but I don’t get a sense that Evo is as confrontational as Chavez. Whichever way you look at it, it’s good for Bolivia and Bolivians, especially its indigenous people.

  6. El Cid — on 19th December, 2005 at 12:03 pm  

    Anyway, sorry to digress but ’tis the season of goodwill and I thought your readers — Asian and non-Asian — might be interested in this little article here. It sort of warms the cockles but might anger the jihadist chav.

  7. El Cid — on 19th December, 2005 at 12:05 pm  
  8. leon — on 19th December, 2005 at 12:17 pm  

    With Chavez wanting to unite South America and having good relations with the Caribean, the US power dropping in the medium to long term, the rise of China (with India as it’s second in command) to superpower status the future looks very different from the present indeed.

    What the UK will do in the coming geo-political context should be interesting also…

  9. Robert — on 19th December, 2005 at 1:14 pm  

    Leon – there’s a long article published in The Business on What China Can Teach The West which deals with specifically this question.

  10. Dynesh — on 19th December, 2005 at 4:19 pm  

    I do believe in Libertarianism, which espouses the free market cause. Having said that, I do also believe that the libertarian belief that freeing up a market will create wealth for everyone is flawed, as the examples in Latin America show. But the simple fact is, even left wing governments cannot actually remain closed and cut off from the global reach of free trade. In India, for 45 years we had a closed, state-run economy that created a huge bureaucracy that sucked (and still sucks) up so much money just to keep it running. It slowed down government in the name of providing employment.

    I suppose the truth, as always lies in between. Socialism provides for equality but its fundamental flaw is that it forces collective idealism on everyone, even those who dont need or want it. Free trade provides a fast pace of wealth creation (as seen in India over the 90s) but creates wide disparities between rich and poor (since the poor dont actually benefit from free trade unless they get opportunities to create wealth). Just my two cents. Merry Christmas and a Happy New Year to everyone, or Happy Holidays (For fear of offending anyone…)

  11. Paul Brown — on 19th December, 2005 at 4:39 pm  

    Which is why any even vaguely serious person espouses social democracy, ie a mixed economy with a strong public sector but a free market as well; just a free market that is restrained by taxes, trade unions, and a strong public sector.

  12. Dynesh — on 19th December, 2005 at 5:00 pm  

    Paul, ideally that would be perfect, but in India, much of our public sector isnt strong, most public sector (government owned companies) are ailing since they are badly run. They need federal government money just to pay salaries. Our trade unions often think they should be running the companies. They would run them all right – into the ground. To them, any hint of the word ‘efficiency’ is anathema. As for taxes, I’m not going to touch this topic. By general agreement, our tax system is a mess.

  13. leon — on 19th December, 2005 at 5:18 pm  

    I think you’ll find that Libertarianism typically means something quite different in Europe!

  14. Dynesh — on 19th December, 2005 at 5:20 pm  

    Well I meant the philosophy that supports induvidualism and the free market….though as far as I know, there are many sub-groups and variants (social libertarians, nationalistic libertarians etc…)

  15. Salam Dhaka — on 19th December, 2005 at 6:19 pm  

    IMF and World bank is pulling the same “efficiency” and “privatization” crap in Bangladesh. Not surprisingly, the poor have gotten poorer and rich have gotten richer and you have all kind of instability. I am sure someday we too can wake up to this nonsense and find a leader that wants to control our own destiny. For too long, we have a had donor driven reforms because we have had a corrupt upper echelon.

  16. El Cid — on 19th December, 2005 at 8:30 pm  

    For too long, we have a had donor driven reforms because we have had a corrupt upper echelon.

    It’s a tricky one and not one I have a ready answer for (the more I know, the less I understand, as Paul Weller once sang).
    But just as many New Labourites like me (*swallow pride*) look back at the Thatcher era in Britain and in hindsight think she carried through some necessary reforms, I also think there was some merit at least in the so-called Washington consensus.
    Sure, things could have been done a lot better with a more progressive and less dogmatic slant. But “efficiency” and “privatisation” are not dirty words in my book. It just depends.
    Corruption has long been a problem in Latin America, as it is in many societies. But you can’t just lay that at the door of donors, since their reforms were meant to strengthen the rule of law and to empower the market vis a vis the the state. Corruption was surely worse under the region’s military regimes of the 1970s when power was arbitrary, and what we have here is peaceful transtion to a long-overdue indigenous-led goernment in Bolivia.
    The fact of the matter is that unless you subscribe to ludicrous notions of autarchy — of the kind that held an independent India back for decades, for example — you need to attract foreign investment to build up infrastructure, generate jobs, build up industries, etc. That applies even to resource-rich countries. And you’re not going to do that if foreign investors fear for their investments and if loans are not paid back.
    So it’s only natural that creditors should want to set conditions, to make sure it doesn’t just go into the pockets of corrupt government officials, only for the next government to refuse to pay it back.
    I have barely scratched the surface of what is a huge subject. I think each case needs to be looked at it on its own merits. I’m not defending the multilaterals. I’m just saying that it is too easy and too convenient to say, oh, it’s the evil World Bank’s and IMF’s fault, when much of the blame usually lies at home.

  17. Sunny — on 19th December, 2005 at 9:46 pm  

    Salam Dhaka – I did concentrate on Latin America but you are completely right, unfortunately Bangladesh is slowly becoming the latest victim of IMF/World Bank stupidity. About time those useless organisations were shut down.

    Paul – thanks for that info about Chile, I didn’t know there was an election coming there too, will watch it with interest.

    Dynesh – you make a good point about the Indian comparison. If I had more time, I would have examined that too, and brought in Japan – whose economic model I studied for my uni project.

    In both cases, I am convinced that while it’s important to stimulate and encourage local competition (which India did not do and Japan went into oligopolies), in both cases they don’t need western ideas super-imposed, but rather economic policies tailored towards those countries.

    Despite all the progress in India, not much of that wealth has touched the poor villagers – only those urbanites who can afford an education. Either way we still have a society that is widening its wealth gap. The aim now should be to provide opportunity for everyeone, not just th well-off.

  18. El Cid — on 19th December, 2005 at 10:33 pm  

    About time those useless organisations were shut down.
    And instead we’d have…..? (I know it’s an unfair question; just give us a basic idea).

  19. Sunny — on 19th December, 2005 at 11:40 pm  

    I’d turn the question around – why are those organisations needed in the first place?

    IMf/World Bank have firstly been responsible for letting corrupt leaders finance pet projects. Secondly the economic policies they subscribe are hopelessly out of tune with what works locally. This has been proven repeatedly in Africa and Latin America. Thirdly they don’t take into account environmental damage and the impact that their lending will have on people, preferring instead to let the govts make that decision.

    Now I don’t want either of them to poke their business into other countries’ agendas, but I really don’t see the need for an external body to lend money for “development” that has yielded no significant benefits (Singapore, S Korea, Taiwan etc have done great without them).

    As in the case of countries like Bangladesh, they say: “fine we’ll lend you money as long as you privatise your state industries”, which really should be focused on stimulating local competition rather than forcing open an economy so multi-nationals can come in and destroy local industry.

    In conclusion – what are the reasons for actually having them?

  20. jasonr — on 20th December, 2005 at 2:08 am  

    As an American, I see you people as so utterly deluded. Sorry, I just don’t get Europe. Socialism has failed over and over again. Venezuala has third world pay scales and high unemployment, and it’s run by a nutcase who relies on demagoguery and intimidation to retain power. France has 10% unemployment and 1% annual growth, not to mention a rioting underclass. America has 5% unemployment (considered full employment), and had 4.3% growth last quarter. And this post was the umpteenth post I’ve seen that eagerly anticipated the rise of China and the new world order. First of all, china is a few decades behind in technology. Second, it’s already moving gradually toward more democratic freedoms and will HAVE to democratize as the people become more prosperous, and mostly, what the hell, Europe???? China is a communist state that imprisons political dissenters, censors books and the internet, and gives its people no say in who governs them. This is your dream??? I think there’s an irrational hatred of Bush among Europeans, and I can tell you that it has fostered an American distrust of Europe. Americans see Europeans as weak socialists, ungrateful for American support, and supportive of our enemies. We see you as having your hand out, demanding America pay for everything, but at the same time telling us to keep our mouth shut. I think Americans take a much more realistic view of the world. I remember everyone gasping when Bush named the axis of evil. The political correctness meters went haywire. Now the EU is facing the reality of dealing with one of those countries. The leader of Iran is calling for the destruction of Israel, denying the holocaust, and seeking to place nuclear weapons a few miles from Israel. Bush was absolutely right. And much like Iraq, the EU and UN will offer worthless rhetoric, the US and/or Israel will take care of things, and Europe in the end will bash America instead of the whacko who caused the problem. Like I said, I don’t get Europe. And it’s hard to take you seriously.

  21. El Cid — on 20th December, 2005 at 8:47 am  

    In conclusion – what are the reasons for actually having them?

    Ah, Singapore, South Korea, Taiwan — now they have done consistently well since WW2.

    Hmmm. Well, I must confess I have never been challenged with the idea that there is no role whatsoever for a multilateral lender of last resort and a bank to help with economic underdevelopment.
    I mean, you seem to forget that South Korea in 1997/1998, funnily enough, and even Britain in 1977/79 had a dire need for the IMF’s services.

  22. Paul Brown — on 20th December, 2005 at 10:26 am  

    Jason, what you think of as Socialism is nothing whatever to do with Socialism. We still have many working examples of Socialism in Britain – the NHS, comprehensive schools, social housing, local authority old people’s homes, the welfare state in general – anybody who believes in cradle to grave social security beleives in some form of socialism.

    Poverty in the US is extreme and appalling, and you have the 24th worst human rights record in the world according to the Human rights Index, while Briatin is placed at 148th.

  23. El Cid — on 20th December, 2005 at 2:58 pm  

    For the record, there are loads of Latam elections next year:
    Chile, presi, 2nd round, January
    Costa Rica, general, February
    Colombia, legislative, March
    Peru, general, April
    Colombia, presidential, May
    Mexico, general, July
    Brazil, general, November
    Venezuela, presidential, December

  24. douglas — on 20th December, 2005 at 2:59 pm  

    Jason,

    What arrogance! Your petty little country has nothing to teach the world. It is led by a self serving ignoramous who cannot even think properly. Clearly that has affected you. It is also full of religious fools. Enough! It has you for a citizen.

    You, who live and breathe in the most ignorant nation on Earth, come here to preach? What foolishness.

    We all love to be taught right from wrong by right wing lunatics. Especially Americans. Pray continue, but expect no sympathy, understanding or agreement.. That is, after all what you have come to expect. I doubt your views are particularily acceptable in NYC, although they might be just the thing in the South.

    Just so you understand, I have never read a bigger load of bullshit in my life.

  25. El Cid — on 20th December, 2005 at 3:07 pm  

    And Sunny: Taiwan and Singapore were also once dependent on the IMF/World Bank.

  26. Don — on 20th December, 2005 at 3:13 pm  

    Jason,

    If you don’t ‘get’ Europe, surely that is a problem with your education/ mental capacity, rather than something for Europe to worry about? You do seem rather pleased with your own lack of understanding.

  27. El Cid — on 20th December, 2005 at 3:24 pm  

    ..irrational hatred of Bush among Europeans
    I don’t get the “irrational” bit Jason.

  28. Peter — on 20th December, 2005 at 3:26 pm  

    I used to live in Bolivia and have followed the events there over the last few years with great interst. Hell, the outgoing President, Eduardo Rodríguez, is an old colleague of mine.

    The great thing about Morales is that he is Aymara. Whether his policies will be good for the country, I really don´t know. Because Bolivia has been through all this before, in the 1950s, and it didn´t do much good then.

    Bolivia certainly needs free trade by the way. The pre-colonial economy worked through exchange with neighbours. To this end, it would be good if Venezuela were to join Mercosur.

    Let’s see what happens. I hope things go well for the people of Bolivia.

  29. jasonr — on 20th December, 2005 at 7:47 pm  

    Lol, you’re an amusing little fellow, douglass. You sound like one of those unemployed 20 year old wimps who put on gay little masks, protest WTO summits, and pretend to be a deep thinking revolutionary. Get a life. As for America’s poor, get real. Anyone remotely functional has housing, television, car, etc… Also, they’re not poor because of American policies or the American economy. They’re poor mostly because of poor choices, addictions, and the like.

  30. Don — on 20th December, 2005 at 10:23 pm  

    jasonr,

    Yup. Plus we’d all be speaking German if it wasn’t for you.

  31. Sunny — on 21st December, 2005 at 8:57 am  

    Peter – interesting perspective. I think free-trade blocks are great, but as long there is a fairly strong domestic economy to take part. Nafta for example, seems to have done little but lead to more screaming and shouting by all sides, and America still keeps its agricultural subsidies sky-high. I’m not against free trade per-se, but I fervently believe in the “infact industry protection” model.

    El Cid – heh, I knew you were going to pull up some examples where the two lent money during financial crises. To be honest – I don’t have an answer for that. True South Korea needed help during the currency crises of the time, but I’m thinking there has to be another more efficient and “no string attached” model.

    I did briefly consider the UN but that was a silly idea. Maybe there does need to be some sort o world bank that can provide liquidity in case a govt has major problems. I just don’t like the way the IMF/WB lend money to smaller countries for other projects that come with all sorts of silly strings. I can give you many more examples of that.

    Maybe S Korea should have done what Malaysia did and limit capital movements. Capitalists bitched and moaned, but they came back.

  32. jasonr — on 21st December, 2005 at 2:38 pm  

    Yeah Don, you probably would be. But “educated” leftists see American evil in the use of the atomic bomb. Stalinism, Japanese labor camps, etc. are brushed aside with little angst. In Iraq the left brushes aside torture chambers, mass graves, rape rooms, etc., but howls about some ugly chick taking stupid pictures of Iraqi prisoners. It’s irrational and utterly moronic, but it’s what the left is about. You derive a feeling of moral superiority by bathing everything in a notion of moral relativism. But you’re really just silly children. Yes yes, America is evil and Bush is the real terrorist…. Now go hug a tree and demand someone else support you.

  33. Col. Mustafa — on 21st December, 2005 at 2:51 pm  

    Its sad when people see things in only left and right.
    And also then adamently proclaim that thier way of thinking is right.

    No one is ever completely correct.

  34. Vladimir (hugging a tree) — on 21st December, 2005 at 3:17 pm  

    Though I would have loved to comment on Jasonr’s comment I am too busy being a silly child and hugging a tree.

    Perhaps someone else will care to comment on your asumptions of the left, and their belief that America is evil. I would think they may like to state that they do not see America as evil but some what hypocritical.

    Also they point out the fact that people on the left do not ignore the acts of Stalin or Japan, but it is the fact that such rullers and states do not exist of have changed, and therefore little contemporary debate surrounds these issues that you have raised.

    However America preaches about free trade while heavily subsidising the American economy. And though it criticises numerous nations attempts at gaining nuclear power, it seems intent on developing a new generation of nuclear weapons.

    However I hope you will understand that I am far too bussy hugging a tree, to comment extensively on what you have said..

  35. El Cid — on 21st December, 2005 at 3:49 pm  

    jasonr,
    Your assumptions are way off target. Whether it’s Steinbeck or Stevie Wonder, there is a lot to admire about the US of A.
    You have a very distorted and wrong view of people on this side of the Atlantic, let alone on this blog.
    We don’t tend to brush shit from our communities under the carpet but confront it straight on (well, not everyone, mentioning no names).
    The fact of the matter is that in order to claim the moral high ground you need to be (or at least try to be) consistent. You gotta know what it is that you are fighting to uphold.
    I’m not gonna make any assumptions about you — about whether you’re an Appalachian redneck or a Manhattan sophisticate, a soldier serving in Iraq or a gay Hell’s Angel from San Francisco.
    But …howls about some ugly chick taking stupid pictures of Iraqi prisoners — that’s an appalling throwaway line.

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