Bolivia's Stability: A Rocky Road To Recovery

Bolivia has been described as an island of economic stability in a region where many countries are facing economic crises. However, the country has faced political instability, with mass protests against irregularities in the 2019 presidential election leading to the resignation of President Evo Morales. Bolivia has the largest proportion of indigenous people, who make up around two-thirds of the population, and the country has the second-largest natural gas reserves in South America. However, there are long-running tensions over the exploitation and export of this resource, with indigenous groups arguing that the country should maintain control of its reserves.

Political stability

Bolivia has experienced periods of political stability and instability throughout its history. Here is an overview of the country's political stability:

Recent Political Stability

Bolivia has demonstrated a degree of political stability in recent years, particularly during the administration of Evo Morales, the country's first indigenous president, who served from 2006 to 2019. Morales implemented leftist socioeconomic policies and pursued conservative macroeconomic policies, resulting in economic growth and a reduction in poverty levels. Bolivia's GDP grew from just over $8 billion in 2000 to nearly $33 billion by 2015, with a significant increase in GDP per capita. During this period, the country also carefully increased its reserves from over $3 billion in 2006 to more than $15 billion by 2014.

Additionally, Morales introduced cash transfer programs that provided unconditional cash for pensions, prenatal and postnatal care, and education, directly benefiting Bolivian households. The adoption of a new constitution in 2009 decentralized the state structure, giving more power to local governments and diffusing political conflicts. The electoral court maintained its impartiality and political independence, contributing to the legitimacy of elections.

Recent Political Instability

However, Bolivia has also faced political instability, particularly surrounding presidential elections. In 2019, mass protests erupted due to irregularities in the presidential election, leading to the resignation of Evo Morales and a transitional government being put in place. This period of instability resulted in at least 35 deaths and more than 800 injuries.

The interim government, led by Jeanine Áñez, worked to restore stability and conducted new democratic elections in May 2020. The Luis Arce administration, which came into power in November 2020, has pledged to form a government of national unity.

Historical Political Instability

Historically, Bolivia has experienced periods of political instability, often coinciding with social and economic unrest. The country has a history of military coups, uprisings, and dictatorships. In the 20th century, there were several instances of political turmoil, including:

• 1920: Rebellion by indigenous peoples
• 1923: Revolt by miners that was violently suppressed
• 1964: Military coup led by Vice-President Rene Barrientos, leading to a period of political unrest
• 1971: Military coup led by Col Hugo Banzer Suarez
• 1980: Coup led by General Luis Garcia after inconclusive elections

Current Political Stability

As of 2024, Bolivia continues to face challenges, including tensions over the exploitation and export of natural resources, particularly natural gas, and the production of coca, the raw material for cocaine. However, the country has an elected government in place, and efforts are being made to address social and economic issues.

According to the Political Stability Index, Bolivia scored -0.28 points in 2022, with the world average being -0.07 points. This index measures the perceptions of the likelihood of government destabilization or overthrow by unconstitutional or violent means. While there may be ongoing challenges, Bolivia has demonstrated progress toward political stability in recent years.

Economic stability

Bolivia is considered an island of economic stability, even as it faces challenges. Surrounded by nations facing economic crises, Bolivia stands out for its economic stability and growth, especially under President Evo Morales, who served from 2006 to 2019. During his tenure, poverty rates dropped, aided by an increase in natural gas production. However, experts note that Bolivia's economic model faces challenges, including rising debt, shrinking reserves, and the devaluation of currencies in its primary trade partners, which has had repercussions for some Bolivian businesses and citizens.

Bolivia's economy is heavily dependent on the export of natural gas and minerals, and the country holds the second-largest reserves of natural gas in South America. However, there are long-running tensions over the exploitation and export of these resources, with indigenous groups advocating for maintaining control of the reserves as the country's sole remaining natural resource. The decline in natural gas production and the emergence of a parallel exchange rate have exerted pressure on the foreign exchange market.

Bolivia's economic stability is influenced by its trade relationships with neighbouring countries, particularly Argentina and Brazil. In recent years, Bolivia's trade partners have faced economic challenges, including recessions, currency devaluations, and inflation. These factors have impacted Bolivia's competitiveness in the export market and contributed to a growing deficit in the balance of payments.

To ensure sustainable growth and consolidate economic stability, Bolivia needs to address structural challenges. This includes promoting private sector development, boosting resilience to changes in the international environment, and seeking alternatives to gas exports. Encouraging private investment and foreign investment can help accelerate growth, improve employment, and diversify the economy. Additionally, Bolivia is vulnerable to climate-related disasters, such as droughts and El Niño events, which can impact its economic stability.

Overall, while Bolivia has demonstrated economic stability, particularly in a challenging regional context, it faces several challenges. Addressing these issues through policy reforms, private sector engagement, and climate resilience strategies will be crucial for maintaining and enhancing the country's economic stability in the long run.

Leadership

Bolivia has had a tumultuous leadership history, with 67 people serving as President since independence in 1825. The country has been ruled by key figures in the fight for independence, leaders of the War of the Pacific, representatives of the aristocracy, military dictators, and democratically elected leaders.

Bolivia's first president was Simón Bolívar, who was elected by the General Assembly of Deputies of the Province of Upper Peru. However, there is some debate among scholars as to whether Bolívar should be considered the first president, as he was never officially referred to as "president" in legal documents and renounced the title in favour of Antonio José de Sucre.

Bolivia gained independence from Spain in 1824, with Simón Bolívar as its liberator and first president. The country has since been through several periods of political instability, including multiple coups d'état, civil wars, and revolutions.

The country's leadership has also been marked by the struggle for indigenous rights. Evo Morales, who served as Bolivia's 65th president from 2006 to 2019, is widely regarded as the country's first indigenous president. Morales' administration worked towards the implementation of left-wing policies, focusing on the legal protections and socioeconomic conditions of Bolivia's previously marginalized indigenous population. Morales increased taxation on the hydrocarbon industry to fund social spending and emphasized projects to combat illiteracy, poverty, and racial and gender discrimination.

However, critics point to democratic backsliding during Morales' tenure and argue that his policies sometimes failed to reflect his environmentalist and indigenous rights rhetoric. In 2019, Morales resigned amid allegations of election fraud and fled to Mexico and then Argentina, where he was granted political asylum.

Following Morales' resignation, Jeanine Áñez, a member of Congress, became the interim president. However, her presidency was also marred by controversy, with supporters of Morales claiming that her succession was unconstitutional. Áñez withdrew from the October 2020 presidential election, which was won by Luis Arce, returning the MAS socialist party to power. Arce has pledged to form a government of national unity.

Natural resources

Bolivia is a landlocked country in South America with a rich endowment of natural resources. The country's historical economic growth has been largely driven by its natural resources, including cocoa, silver, and tin. Bolivia's agricultural sector, including crops such as coffee, soybeans, and sugar, is also a significant contributor to the economy.

One of Bolivia's most important natural resources is its arable land. In 2014, arable land accounted for roughly 4.13% of the country's total area. The agricultural sector gained prominence in the 1980s due to the country's need to diversify its economy, and it continues to be an essential part of the economy today.

Bolivia also has a well-developed livestock industry, with farmers rearing a wide range of animals, including cattle, pigs, goats, and sheep. The country's forestry sector is also significant, with timber exports valued at over $30 million during the 1980s.

Minerals have played a vital role in the Bolivian economy for centuries. While tin and silver were historically the most important minerals, today, lithium and natural gas are among the most critical natural resources for the country. Bolivia has the largest concentration of lithium in the world, with reserves of approximately 5.5 million tons, mainly located in the deserts within the salt flats. The country also has the second-largest reserves of natural gas in South America, and this sector has experienced significant growth since the government privatized it in the 1990s.

In addition to lithium and natural gas, Bolivia has significant deposits of other minerals, including zinc, silver, lead, copper, and tin. The country also has oil reserves, with a total of approximately 2,475,558,137 cubic feet of oil located primarily in the eastern and southern regions.

However, the Bolivian economy faces challenges due to the volatility in global prices of oil and natural gas, as well as the impact of natural disasters on its agricultural sector. Despite these challenges, Bolivia remains a significant producer and exporter of natural resources, contributing to its economic growth and development.

Foreign relations

Bolivia has traditionally maintained diplomatic relations with all countries in the hemisphere except Chile. Bolivia lost its access to the coast during the nineteenth-century War of the Pacific with Chile, and the two countries have had a tense relationship since. Bolivia has wanted a sovereign corridor to the South Pacific Ocean ever since, and this issue has been a cornerstone of Bolivian foreign policy.

Bolivia is a member of the United Nations and some of its specialized agencies and related programs, the Organization of American States (OAS), Andean Community (CAN), Non-Aligned Movement, International Parliamentary Union, Latin American Integration Association (ALADI), World Trade Organization (WTO), Rio Treaty, Rio Group, Amazon Pact, Union of South American Nations (UNASUR), Bolivarian Alliance for the Americas (ALBA), and the Community of Latin America and Caribbean States (CELAC). It is also an associate member of Mercosur.

Bolivia has pursued a foreign policy with a heavy economic component. It has become more active in the Organization of American States (OAS), the Rio Group, and in MERCOSUR, with which it signed an association agreement in 1996. Bolivia promotes its policies on sustainable development and the empowerment of indigenous people.

Bolivia has had a close relationship with the United States, but this has turned sour since Evo Morales took power. Relations became openly hostile in 2008, and the two countries have not had ambassadorial relations since. Bolivia expelled the Drug Enforcement Agency (DEA) and the US Agency for International Development (USAID) from the country, and the war on drugs remains a main point of disagreement. Bolivia has also accused the US of meddling in its internal affairs and attempting to destabilize the government.

Bolivia has a fierce loyalty to Cuba and Venezuela, and a recent friendship with countries like Russia, Iran, and China. Bolivia is the only country in South America that remains a strong ally and defender of Venezuela's president, Nicolás Maduro. Since 2006, Venezuela has donated approximately $290 million for Morales' state program "Bolivia cambia, Evo cumple" ("Bolivia changes, Evo delivers"). In return, Bolivia agreed to export soy worth $13 million per month to Venezuela. Morales has also declared Bolivia's "unconditional support" for the Venezuelan regime, stating that "to defend Venezuela is to defend Latin America's sovereignty".

Bolivia's relationship with Cuba is also extremely tight. In the decade following Morales taking power in 2006, Cuban doctors performed $63 million in medical care treatments for Bolivian patients, while more than 5,000 Bolivian doctors were being trained in Cuba.

Bolivia's foreign policy can be seen as consistent but not necessarily pragmatic or beneficial for anyone outside the government party. Morales focuses on what works well with his trusted audience and not necessarily what is best for Bolivia as a whole.

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