Bolivia's Ports: A Gateway To The Atlantic?

Bolivia is a landlocked country in South America, and its lack of access to the sea has hindered its economic growth. The country has been fighting with Chile over sovereign access to the Pacific Ocean and territory lost in the 19th-century War of the Pacific. Bolivia has been working to reduce its dependence on Chilean ports by exploring alternative routes, such as through Peru and the Paraguay-Paraná waterway, which provides access to the Atlantic Ocean. The development of these alternative routes has helped Bolivia save time and money in its trade operations.

Bolivia lost its coastline to Chile after the 19th-century War of the Pacific

Bolivia is a landlocked country that lost its coastline to Chile after the 19th-century War of the Pacific. The conflict, also known as the Saltpeter War, was fought between Chile and the joint forces of Bolivia and Peru from 1879 to 1884. The war was sparked by a dispute between Chile and Bolivia over control of a part of the Atacama Desert, which contained valuable mineral resources. Bolivia attempted to increase taxes on Chilean companies operating in the region, but Chile protested, arguing that this violated the 1874 Boundary Treaty. The dispute escalated, and on February 14, 1879, Chile occupied the Bolivian port city of Antofagasta. Bolivia responded by declaring war and invoking its secret alliance with Peru.

The War of the Pacific resulted in significant territorial losses for Bolivia and Peru. Chile annexed the Bolivian province of Litoral, leaving Bolivia landlocked. The loss of the coastline, which Bolivians refer to as "litoral," remains a deeply emotional and practical issue for the country. Bolivia fears being too dependent on its neighbours, Chile and Peru, for trade access. In the 1904 Treaty of Peace and Friendship, Chile agreed to build a railroad connecting the Bolivian capital of La Paz with the port of Arica and guaranteed freedom of transit for Bolivian commerce through Chilean ports. However, Bolivia has continued to seek sovereign access to the sea, and diplomatic relations between the two countries have been severed multiple times.

Bolivia has been fighting for sovereign access to the Pacific Ocean

In 1904, Bolivia signed the Treaty of Peace and Friendship, accepting its loss of coastal access in return for a promise of "fullest and freest" commercial access to Chilean ports. However, Bolivia has since sought to regain some form of sovereign access to the Pacific, arguing that its landlocked status has negatively impacted its economic development.

In 2013, Bolivian President Evo Morales filed a lawsuit at the International Court of Justice (ICJ) to force Chile to negotiate the handover of some of its land. Bolivia's argument centred on the economic benefits of coastal access, with estimates suggesting that its GDP would be a fifth higher if it had retained its coastline. The ICJ ruled in 2018 that Chile was not legally obliged to negotiate, dealing a blow to Bolivia's aspirations.

Despite this setback, Bolivia remains committed to pursuing sovereign access to the Pacific. The issue holds significant political and emotional weight for the country, with Bolivians regarding their landlocked status as a historical injustice and an affront to national pride. Additionally, the country continues to face challenges due to the higher transport costs associated with being landlocked, impacting its competitiveness in the international market.

To mitigate these challenges, Bolivia has been working to reduce its dependence on Chilean ports. It has explored alternative routes, including increasing trade through Peruvian ports and utilising the Paraguay-Paraná waterway, which provides access to the Atlantic Ocean. These efforts have yielded some success, with a decrease in the volume of Bolivian cargo shipped through Chile in recent years. However, Bolivia's desire for direct access to the Pacific Ocean persists, and it continues to seek a resolution to this long-standing dispute.

Bolivia's GDP is less than 15% the size of Chile's

Bolivia is a landlocked country that lost its coastline to Chile after the 19th-century War of the Pacific. As a result, Bolivia has historically been dependent on Chilean ports for its maritime trade. However, in recent years, Bolivia has been actively reducing its dependence on Chilean ports by exploring alternative routes, such as the Paraguay-Paraná waterway and ports in Peru.

Bolivia's GDP in 2023 was approximately $45.85 billion, with a growth rate of 2.4% compared to the previous year. While Bolivia's economy is the 95th-largest in the world in nominal terms, it is important to note that the country has a low GDP per capita, indicating a low standard of living for its citizens. On the other hand, Chile's GDP in 2023 was estimated to be around $305 billion, which is significantly higher than that of Bolivia.

The disparity in GDP between the two countries can be attributed to several factors. Firstly, Chile has a strong and diverse economy, with a focus on natural resources, mining, and exports. Chile also benefits from its coastline and access to ports, which facilitate international trade. In contrast, Bolivia's economy has historically been dependent on a single commodity, such as silver, tin, or coca, with limited periods of economic diversification. Additionally, Bolivia's challenging topography, political instability, and low population growth have hindered its economic development.

To improve its economic situation, Bolivia has implemented various measures, such as macroeconomic stabilization, structural reforms, and encouraging private investment. The discovery of natural gas reserves and the nationalization of natural resources have also contributed to Bolivia's economic growth. However, despite these efforts, Bolivia's GDP remains a fraction of Chile's, highlighting the significant economic gap between the two countries.

Bolivia's exports are mostly raw materials and commodities

Bolivia is a landlocked country in South America that lost its coastline to Chile after the 19th-century War of the Pacific. Despite this, Bolivia has been able to export goods through Chilean ports, with Arica being the main port of traffic for goods linked to Bolivia. However, Bolivia has been actively seeking to reduce its dependence on Chilean ports by developing logistical alternatives, such as increasing the use of Peruvian ports and the Paraguay-Paraná waterway, which provides access to the Atlantic Ocean.

Bolivia's exports are largely comprised of raw materials and commodities. In 2022, Bolivia's total exports reached $13.7 billion, with raw materials such as scrap metal and gold, and fuels, primarily natural gas, being the top exports. Other exports include food products, manufactured goods, and vegetable oil. Bolivia's agricultural sector has experienced exponential growth, even amidst the COVID-19 pandemic, and it is now a significant contributor to the country's GDP.

In addition to its agricultural exports, Bolivia is also rich in non-renewable natural resources. Raw mining materials, natural gas, and hydrocarbons are among the country's largest exports. Bolivia possesses significant deposits of minerals such as zinc, silver, lead, copper, and tin, as well as lithium deposits that remain largely untapped. However, it is important to note that illegal and unsustainable mining practices, particularly in the gold sector, are common, and due diligence is necessary when considering any purchase arrangements.

The United States is a significant trading partner for Bolivia, with bilateral goods trade valued at approximately $1 billion in 2022. U.S. exports to Bolivia include mineral oils/fuels, plastic materials, food preparations, heavy machinery, and automobiles. Meanwhile, U.S. imports from Bolivia consist of raw materials and commodities such as raw tin, tungsten, mineral ores, cereals, and nuts.

Bolivia's ports have direct shipping connections with other countries

Bolivia is a landlocked country in South America, and its lack of direct access to the sea has hindered its economic growth. The country has been engaged in a long-standing dispute with Chile over sovereign access to the Pacific Ocean, which Bolivia lost in a 19th-century war. Despite this, Bolivia has been granted tariff-free access to the Chilean ports of Arica and Antofagasta, which are crucial for exporting raw materials and commodities to Asia. In 2017, Bolivia shipped about 80% of its total exports from Arica.

However, Bolivia has been working to reduce its dependence on Chilean ports by exploring alternative routes. One such alternative is the Paraguay-Paraná waterway, which offers an alternative route to the Atlantic Ocean and connects Bolivia with Argentina, Brazil, Paraguay, and Uruguay. In October 2024, three river ports on this waterway—Central Aguirre, Gravetal, and Jennefer—were awarded international classification, allowing for an increase in the volume of Bolivian cargo shipped through this route. The Paraguayan-Paraná waterway provides a more cost-effective and time-efficient route for Bolivian businesses, avoiding the costly overland route across the Andean Mountains to reach Chilean ports.

Bolivia has also been promoting greater trade through Peruvian ports, particularly the port of Ilo in southern Peru. In addition, there is a public-private partnership to develop the docks providing access to the Paraguay-Paraná waterway, further enhancing Bolivia's trade options.

The development of these alternative routes and partnerships has provided Bolivia with direct shipping connections to other countries, reducing its dependence on Chilean ports and improving its economic prospects. These efforts to diversify trade strategies and build better relations with South American trade blocs are expected to benefit Bolivia's economic growth in the long run.

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