Sanctions Against Bolivia: Understanding The International Response

Bolivia has been the target of sanctions by the United States in the past. In 2008, the Bush administration imposed sanctions on Bolivia in retaliation for the expulsion of the US ambassador and the closure of US programs in the country. Bolivia has also faced sanctions for failing to meet its counter-narcotics commitments as a major drug-producing or drug-transit country. However, in 2007, the US spared Bolivia from narcotics sanctions, acknowledging its efforts to combat the drug trade. Additionally, Bolivia has been identified by the Financial Action Task Force (FATF) as having strategic deficiencies in anti-money laundering and counter-terrorist financing (AML/CFT) standards, leading to enhanced due diligence requirements. In 2024, there were calls for sanctions against those responsible for the 2019 coup in Bolivia, which resulted in several deaths.

Bolivia has been deemed a major drug-producing and drug-transit country

The country's favourable geographic, commercial, and economic factors have made it easier for drugs to be produced and/or trafficked through Bolivia. In addition, Bolivia's proximity to other major drug-producing countries, such as Colombia and Peru, has contributed to its role as a drug-transit country.

The Bolivian government has made efforts to eradicate coca cultivation and combat drug trafficking, including through the creation of the Coca Eradication Directorate (Dirección de la Reconversión de la Coca—Direco) and the National Directorate for the Control of Dangerous Substances (Dirección Nacional para el Control de Substancias Peligrosas—DNCSP). However, these efforts have had limited success, and Bolivia continues to be a major player in the illicit drug trade.

The presence of drug production and transit in Bolivia has had significant negative impacts on the country, including corruption within government and security agencies, violence, and the distortion of the country's economy and labour market.

The Bush administration imposed sanctions on Bolivia in retaliation for expelling the US ambassador

In 2008, the Bush administration imposed sanctions on Bolivia after the country's president, Evo Morales, expelled the US ambassador, Philip Goldberg, and shut down US programs in the country. Morales's actions were in response to the US's thinly-veiled support for what was described as a "civic coup" carried out by the ruling elites in Bolivia's eastern "Half Moon" region. The wealthy landowners in this region were pushing for autonomy to gain control over the area's considerable energy resources. A coordinated uprising earlier that month resulted in scores of deaths and nearly 1,000 wounded. Among the worst atrocities was the massacre of some 30 peasants at El Porvenir, near Bolivia's northern border with Peru and Brazil, on September 11. The Bolivian Permanent Assembly for Human Rights (BPAHR) accused officials and gunmen from the Department of Pando of firing "with cowardice" on men, women, children, peasants, and students. The BPAHR also accused road authorities of impeding the demonstrators' advance by sending digging crews to open trenches up to two meters wide.

In response to the massacre, Morales's government expelled Ambassador Philip Goldberg, charging him with working behind the scenes with leaders of the autonomy movement. Morales also shut down the offices of the United States Agency for International Development (USAID) for its complicity in the civic coup. USAID, a branch of the US State Department, was created in 1961 with the supposed purpose of providing "economic and humanitarian assistance" to other countries. However, the agency has often been employed as a tool to destabilize and overthrow governments that do not align with US interests. In Haiti, Venezuela, Chile, Argentina, and Uruguay, USAID provided cover for torturers and CIA agents.

As retaliation for the expulsions, the United States announced it would no longer consider Bolivia a partner in the war on drugs and would initiate the legal process to raise duties on imports from Bolivia. US officials stated that this decision was motivated by Bolivia's decision to remove US Drug Enforcement Administration (DEA) personnel from areas of suspected coca cultivation, the raw material for cocaine. While the consumption of coca leaves is legal in Bolivia, with peasants using it to combat hunger and the effects of living in high altitudes, US officials claimed that coca production was on the rise in the country. Bolivian officials denied this assertion.

In addition to the economic sanctions, the US attempted to create the impression of political chaos in Bolivia by ordering all non-emergency personnel and embassy family members to leave the country and advising all US citizens to do the same. The State Department also pulled all 113 Peace Corps volunteers from Bolivia, and American Airlines cancelled flights to the country. The State Department issued a public warning, stating, "US citizens currently in Bolivia should remain vigilant, monitor local media, review their security posture on a regular basis, and consider departing if the situation allows." These actions were widely interpreted in Bolivia and Latin America as a blatant attempt by the Bush administration to further destabilize a democratically elected regime.

Bolivia has been placed on the US FinCen AML/CFT Deficiencies Warning List

The FATF has noted that Bolivia has taken steps towards improving its AML/CFT regime, including by enacting new legislation to address deficiencies in the criminalisation of money laundering and terrorist financing and working towards strengthening the capacity and autonomy of the Financial Intelligence Unit (FIU). However, despite Bolivia's high-level political commitment to work with the FATF to address these issues, it has not made sufficient progress in implementing its action plan within the established timelines.

The FATF encourages Bolivia to continue working on addressing the remaining issues, particularly enhancing the legal framework for identifying and freezing terrorist assets. In the meantime, the FATF calls on its members and other jurisdictions to apply enhanced due diligence when dealing with Bolivia to protect the international financial system from the risks of money laundering and terrorist financing. This means that financial institutions should conduct enhanced scrutiny of transactions involving Bolivia to guard against money laundering and to identify and report any suspicious transactions.

The placement of Bolivia on the US FinCen AML/CFT Deficiencies Warning List does not necessarily indicate that the country is subject to sanctions. However, it is a recognition that there are risks associated with financial dealings with Bolivia due to the identified deficiencies in its AML/CFT regimes. It is important for financial institutions to be aware of these risks and to take appropriate measures to mitigate them.

Bolivia has been identified as having strategic AML/CFT deficiencies

FATF identified Bolivia as having strategic AML/CFT deficiencies as part of its ongoing review of compliance with the AML/CFT standards. This means that Bolivia's regime to counter money laundering and terrorist financing has been found to have critical weaknesses.

In response to this identification, Bolivia developed an action plan with the FATF to address the deficiencies. Bolivia provided a written high-level political commitment to rectify the issues. This commitment was welcomed by the FATF, which called on Bolivia to implement the action plan within the proposed timeframes.

Bolivia was deemed to have made significant progress in improving its AML/CFT regime by June 2013. As a result, it was removed from the FATF List of Countries with strategic AML deficiencies and was no longer subject to the FATF's monitoring process.

Despite this progress, Bolivia continues to face challenges related to money laundering and financial crimes. The US State Department categorises Bolivia as a Country/Jurisdiction of Primary Concern in this regard. Criminal proceeds laundered in Bolivia are primarily derived from smuggling contraband and the drug trade.

Bolivia avoided US narcotics sanctions in 2007

The history of Bolivia–United States relations has been marked by periods of cooperation and tension. Diplomatic relations between the two countries were established in 1849, following Bolivia's independence from Spain. However, tensions arose in 2006 with the election of Evo Morales as president of Bolivia. Morales' platform included programs to legalise the use of coca, a traditional medicine for the Aymara people of Bolivia. The US, on the other hand, was concerned about the drug trade and the use of cocaine, a highly concentrated form of an active ingredient of coca.

In 2007, Bolivian Vice President Alvaro Garcia Linera accused the US Embassy of using aid programs to fund the government's political opponents. He specifically cited the funding of Juan Carlos Urenda, the author of a plan for Santa Cruz's secession from Bolivia. Despite these accusations, the US continued to provide support to the Bolivian government, including counter-narcotics efforts, and in 2007, the US recertified Bolivia as not having "failed demonstrably" to cooperate on counter-narcotics issues.

However, tensions escalated in 2008 when US President George W. Bush placed Bolivia on a counter-narcotics blacklist, stating that Bolivia had "failed demonstrably" to meet commitments to combat the production and trafficking of illicit drugs, mainly cocaine. In response, Evo Morales accused the US of trying to thwart his policies and supporting a pro-autonomy movement that used terrorist tactics. Morales also expelled the US ambassador, Philip Goldberg, and the Drug Enforcement Administration (DEA) from Bolivia, further straining bilateral relations.

In conclusion, while Bolivia avoided US narcotics sanctions in 2007, the country has had a complex and often strained relationship with the US due to differences in policies regarding coca and drug trade, as well as political tensions.

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