Bolivia's Economy: Coca's Impact And Influence

Coca, a tea-like shrub, has been cultivated in Bolivia for centuries, with the plant being grown mostly by small farmers in the Chapare and Yungas regions. In the 1980s, coca was Bolivia's most lucrative crop and economic activity, with the country being the world's second-largest grower of coca, supplying approximately 15% of the US cocaine market at the time. The production and trade of coca have had a significant impact on Bolivia's economy, society, and culture, with the country now being the third-largest producer of cocaine in the world.

Coca's role in Bolivia's historical economy

Coca, a tea-like shrub, has been grown in Bolivia for centuries, mostly in the medium-altitude parts of the Bolivian Andes since the Inca era. In the 1980s, coca was Bolivia's most lucrative crop and economic activity, supplying approximately 15% of the US cocaine market. The country was the second-largest grower of coca in the world, with about 65% of all Bolivian coca grown in the Chapare region of Cochabamba. The rest was grown in the Yungas region of La Paz, and various areas of Santa Cruz and Tarija.

The Bolivian government estimated that coca production expanded from 1.63 million kilograms of leaves covering 4,100 hectares in 1977 to a minimum of 45 million kilograms over an area of at least 48,000 hectares in 1987. The number of growers expanded from 7,600 to at least 40,000 over the same period. The revenue generated from coca was unparalleled, making the risk worthwhile for many.

In addition to growers, the coca networks employed numerous Bolivians, including carriers, manufacturers of coca paste and cocaine, security personnel, and a wide range of more nefarious positions. The cocaine trade also accelerated the predominance of the US dollar in the economy and the large black market for currency, fuelling inflation in the 1980s. Coca's high prices also distorted other sectors, especially labour markets, as manufacturers in the Cochabamba area found it impossible to match the wages workers could gain in coca.

In 1983, the Bolivian government began efforts to eradicate the expansion of coca cultivation, committing to a five-year program to reduce coca production. In 1988, coca growing became technically illegal outside a specially mandated 12,000-hectare area in the Yungas. A four-year government eradication campaign sought to convert 55% of coca areas into legal crops, offering coffee and citrus fruits as alternative crops to coca. However, these crops were harder to sell and transport, and their return was a fraction of that of coca.

In 1991, under pressure from the US, Bolivia involved its military forces in anti-drugs actions, despite local opposition. In 1995, at the height of coca production, one out of every eight Bolivians made a living from coca. In 1997, President Hugo Banzer developed "Plan Dignidad" to counter the drug trade, focusing on eradication, interdiction, efforts to counter money laundering, and the implementation of social programs.

In 2005, cocalero union leader Evo Morales was elected president of Bolivia. Morales pursued a combined policy of legalizing coca production in the Chapare and Yungas and eradicating the crop elsewhere. In 2008, Morales gave the US Drug Enforcement Administration (DEA) three months to leave the country, accusing them of fomenting the drug trade. In 2011, coca cultivation fell to 27,200 hectares, a 12% decrease from the previous year.

Coca's impact on Bolivia's agriculture

Coca has been cultivated in medium-altitude parts of the Bolivian Andes since the Inca era. The coca plant is a tea-like shrub that grows relatively well on poor soil and has few problems with blight and pests. It can be harvested four to five times a year and has a life expectancy of 18 years.

In the 1980s, coca cultivation expanded substantially from the Yungas region north and east of La Paz into the Chapare region of Cochabamba. This was due to a combination of factors: the price of coca climbed, the economy collapsed, and unemployment soared. Farmers turned to coca for its quick economic return, its light weight, and the abundance of US dollars available in the trade—a reliable store of value in a hyperinflated economy. The Bolivian government estimated that coca production expanded from 1.63 million kilograms of leaves covering 4,100 hectares in 1977 to a minimum of 45 million kilograms over an area of at least 48,000 hectares in 1987. The number of growers expanded from 7,600 to at least 40,000 over the same period.

In 1982, when a major military drug trafficking group lost national power and a civilian, democratic government took office, the Cochabamba peasants began making coca paste because of its incomparable profits and wages. The growing international demand for cocaine, particularly in the US, stimulated increased coca leaf production in Bolivia by these small farmers.

In 2009, the UN Office of Drug Control estimated that 30,900 hectares of coca were planted in Bolivia, making Bolivia the third-largest producer of coca after Colombia and Peru. The Chapare region alone supplies 70% of the nation's coca leaf crop. In 2019, Bolivia's coca cultivation totalled 42,180 hectares, an increase of 28% over 2018. The US encourages the Bolivian government to continue its efforts to reduce coca cultivation and cocaine production, which remains steady.

In Bolivia, coca is legally sold in wholesale markets in Villa Fátima in La Paz and in Sacaba, Cochabamba. Sales of coca leaf amounted to approximately US$265 million in 2009, representing 14% of all agricultural sales and 2% of Bolivia's GDP.

Coca's contribution to Bolivia's GDP

Coca has had a significant impact on Bolivia's economy, particularly in the 1980s when it became the country's most lucrative crop and economic activity. Here is an overview of Coca's contribution to Bolivia's GDP:

The Rise of Coca in Bolivia:

Bolivia has a long history of coca cultivation, dating back to at least the Inca era. However, it was in the 1980s that coca production expanded significantly, especially in the Chapare region of Cochabamba. This expansion was driven by various factors, including the increasing price of coca, economic collapse, soaring unemployment, and the quick economic returns offered by the crop.

Economic Impact:

During the 1980s, coca was estimated to generate between $600 million and $1 billion annually for the Bolivian economy, depending on prices and output. This made coca-related exports equal to or even surpass the country's legal exports. The revenue from coca provided a much-needed source of income for many Bolivians, including small farmers, carriers, manufacturers, and various other positions within the coca networks.

International Market:

Bolivia became a significant player in the international cocaine market during the 1980s. It was the second-largest grower of coca globally and supplied approximately 15% of the US cocaine market during this period. The revenue generated from exports of coca paste and cocaine contributed significantly to Bolivia's GDP.

Social and Political Impact:

The production and trade of coca had far-reaching social and political impacts in Bolivia. It led to the emergence of the cocalero movement, which became an important political force in the country. The movement advocated for policies of "social control" over coca growing, and its members even co-founded a political party, the Movement for Socialism. In 2005, Evo Morales, a cocalero union leader, was elected president of Bolivia.

Government Regulations and Eradication Efforts:

The Bolivian government has implemented various regulations and eradication efforts to control coca cultivation. These include the creation of the Coca Eradication Directorate and the National Directorate for the Control of Dangerous Substances. However, these efforts have often been met with resistance and have had limited success. The complex dynamics between coca growers, the government, and the international community continue to shape Bolivia's economic landscape.

In conclusion, coca has had a significant impact on Bolivia's GDP, particularly during the 1980s when it became the country's most lucrative crop. The revenue generated from coca production and its role in the international cocaine market have made it an important, yet controversial, contributor to Bolivia's economy. The social, political, and regulatory aspects surrounding coca continue to shape its contribution to the country's GDP.

Coca-related corruption in Bolivia

• Political Corruption: The illicit narcotics trade has led to corruption within the Bolivian government and security forces. In the 1980s, the "cocaine coup" led by Luis García Meza Tejada was backed by the cocaine "mafia," with high-ranking officials involved in the drug trade. This period saw widespread corruption, including bribery and embezzlement of state funds. Similar allegations of corruption have been made against subsequent administrations, with politicians and officials accused of colluding with drug traffickers.
• Law Enforcement Complicity: There is evidence of widespread corruption within Bolivia's police forces. In 2011, the country's former anti-drug czar, Police General Rene Sanabria, was arrested and later convicted of drug smuggling. Sources indicate that drug-related corruption persists, with elements of the police working with Colombian drug traffickers in Santa Cruz. The Special Counter-Narcotics Police Force (FELCN) has also expressed frustration with the justice system, citing cases where drug traffickers have been released due to judicial inefficiency or corruption.
• Judicial Corruption: The Bolivian justice system has not been immune to coca-related corruption. Criminal defense attorneys in Santa Cruz assert that bribery is prevalent, with payments made to prosecutors and judges to secure the release of accused drug traffickers. There have also been reports of judges being implicated in drug-related corruption, accepting bribes to release suspects, return confiscated drugs, and purge incriminating files.
• Penitentiary System Corruption: Bolivia's prison system, notably Palmasola in Santa Cruz, is also affected by corruption. Reports indicate that individuals can bribe police to gain entry, allowing criminals to operate with impunity and continue their illegal activities.
• Lack of Law Enforcement Tools: Bolivian law enforcement agencies lack crucial tools to effectively combat organized crime. Intercepting communications and rewarding informants, which are essential in fighting organized crime, are illegal or lack the necessary legislation in Bolivia. This hampers their ability to gather intelligence and build cases against criminal organizations.
• Money Laundering: Money laundering is relatively easy in Bolivia due to the lack of controls over the banking system. There have been few money laundering investigations and even fewer convictions, making it attractive for drug traffickers to launder their illicit profits.
• Informality and Illegality: Bolivia has a significant informal and illegal sector, with smuggling being a tolerated industry. This lack of reporting and transparency makes it challenging for law enforcement to track economic activity related to the drug trade.
• Border Control and Migration: Bolivia's porous borders and lack of migratory controls make it a hub for drug trafficking and transnational organized crime. The ease of movement across borders allows not only the trafficking of drugs but also the precursor chemicals and foreign manpower needed for drug production. Additionally, international criminals can enter and exit the country with little fear of detention.
• Lack of State Presence in Rural Areas: Vast areas of Bolivia's territory have little to no state presence, providing opportunities for drug production and processing in remote locations. This makes it difficult to detect and destroy clandestine laboratories and coca plantations.
• Political Polarization and Media Pressure: The political environment in Bolivia is highly polarized, and there are reports of promotion within the police force being based on political affiliation rather than merit. Additionally, the government has been criticized for a lack of transparency and the politicization of state institutions. Media outlets have also faced pressure from the government, with a law meant to address the portrayal of indigenous people being used to control the narrative.

Coca's influence on Bolivia's international relations

The US-backed attempts to criminalise and eradicate coca outside of the Yungas region led to violent clashes between drug police, the Bolivian armed forces, and the cocalero movement between 1987 and 2003. The cocaleros, or coca growers, became a significant political force during this period, co-founding the Movement for Socialism party. They advocated for policies of "social control" over coca growing, maintaining a pre-set maximum area of cultivation as an alternative to drug war policies.

The US and Bolivia signed a joint plan in 1987 to eradicate 70% of Bolivia's coca fields, with the US providing $300 million over three years. This plan included voluntary eradication and financial compensation for coca growers. However, the economics of eradication were frustrating, as the destruction of coca fields drove up local prices, making coca more attractive to growers.

The Bolivian government's eradication efforts continued into the 2000s, with President Evo Morales, a former cocalero leader, pursuing a policy of legalising coca production in certain regions while continuing eradication elsewhere. In 2008, Morales expelled the US Drug Enforcement Administration (DEA) from Bolivia, accusing them of fomenting the drug trade. Despite this, Bolivia's relations with the US improved due to the success of Morales' administration in reducing coca cultivation through voluntary participation and enforcement by coca growers' unions.

Bolivia's role as a producer of coca leaves and cocaine has also made it a strategic hub for drug trafficking. The country's geography, including its western Altiplano region, has made it an asset for traffickers, with drugs destined for both the European and US markets. The reorganisation of drug trafficking routes has contributed to this development. Bolivia's cocaine industry has drawn in Colombian-style drug violence, with hired assassins and drug barons exerting control through bribes and assassinations.

Overall, coca has had a significant influence on Bolivia's international relations, particularly with the United States, due to its role in the illicit drug trade and the resulting efforts to eradicate its cultivation. The complex dynamics between coca growers, the Bolivian government, and international actors have shaped the country's political landscape and relations with other nations.

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