Bolivia's Turbulent Political Climate: Understanding The Unrest

Bolivia is a landlocked country in central South America. It is a developing country with a multiethnic population of around 12 million people. Bolivia has a rich history, having been part of the Inca Empire before Spanish colonisation in the 16th century. Since independence, Bolivia has lost over half of its territory to neighbouring countries. Bolivia has been governed by democratically elected governments since 1982, but in recent years, the country has experienced political instability, including a failed coup attempt in 2024. Currently, the country is facing an economic crisis due to fuel and dollar shortages, and there is ongoing tension between supporters of the current president, Luis Arce, and followers of his predecessor, Evo Morales.

Political rivalry between Evo Morales and Luis Arce ahead of 2025 election

Former Bolivian President Evo Morales and current President Luis Arce are engaged in a bitter power struggle for control of the Movimiento al Socialismo (MAS) party ahead of the country's 2025 presidential election. The rivalry between the two leaders, who were once allies, has consumed national politics and jeopardized the country's economy, with both men intending to run as the MAS party candidate in the 2025 election.

The MAS party has dominated Bolivian politics for almost two decades, and the upcoming election will be a crucial test of its continued strength. Morales and Arce represent different factions within the party, with Morales seen as having greater populist appeal, especially among rural workers, while Arce is viewed as more technocratic and economically focused.

The rift between the two men first emerged in 2019 when Morales, who was already Bolivia's first Indigenous president, ran for an unconstitutional third term. This decision provoked anger within the MAS party and sparked mass protests that ultimately led to Morales' resignation and exile. After an interim government took control, Arce, who was Morales' former finance minister, won the 2020 election on a platform of restoring economic prosperity to Bolivia.

However, Arce's presidency has been plagued by economic challenges, including a shortage of US dollars, fuel shortages, and declining natural gas production, which have led to protests and a decline in his approval ratings. Morales has sought to capitalize on Arce's struggles, announcing his own plans to run in the 2025 election, which would be a violation of the constitutional court ruling that bars him from seeking a third term.

The rivalry between Morales and Arce has escalated into public attacks and accusations of corruption, drug trafficking, and treason. The conflict has also spilled over into the streets, with supporters of both men clashing in violent protests. The instability within the MAS party has stalled critical legislation and limited the government's ability to address the country's economic woes, leading to a downgrade of Bolivia's bond ratings to junk status.

With the MAS party fractured and the country facing economic uncertainty, the outcome of the 2025 election remains uncertain. However, the conservative opposition remains divided and may struggle to mount a serious challenge to the MAS, despite its internal divisions. As the election approaches, the rivalry between Morales and Arce is expected to intensify, with both men vying for control of the party and the country's future.

Bolivia's discovery of huge natural gas reserves

Bolivia, officially the Plurinational State of Bolivia, is a landlocked country in central South America. Bolivia's economic history has been characterised by a single-commodity focus, with tin and silver previously being the country's most valuable natural commodities. However, in recent times, natural gas has become the country's most valuable natural commodity. Bolivia's proved natural gas reserves are estimated to be 10.7 trillion cubic feet as of 31 December 2017, ranking 38th in the world. Most of these reserves are located in the eastern region of the country, particularly in the states of Tarija, Santa Cruz, Cochabamba, and Chuquisaca.

The discovery of these huge natural gas reserves in Bolivia dates back to the late 1980s and early 1990s, aiding the country's economic recovery after years of serious economic problems, including hyperinflation, recession, and austerity. The privatisation of the natural gas sector in 1994 and the subsequent re-nationalisation in 2006 by President Evo Morales are also notable aspects of Bolivia's natural gas industry.

The exploitation of these natural gas reserves has had both positive and negative impacts on Bolivia's economy and political landscape. On the one hand, natural gas exports bring in significant revenue for the country, contributing to economic growth and political stability during the Morales administration. On the other hand, there have been conflicts over the state's role in controlling natural resources, and challenges in finding markets for domestic and international utilisation of natural gas due to a lack of infrastructure.

In February 2022, Bolivia's government announced the successful drilling of a new natural gas well, the Margarita 10 well, with potential reserves of 300-350 billion cubic feet, a significant discovery amid a domestic drop in hydrocarbon production. This new well is expected to help Bolivia meet its export agreements with neighbouring Brazil and Argentina.

Coup attempt by Gen Juan José Zúñiga

On 26 June 2024, Bolivia experienced a coup attempt led by General Juan José Zúñiga, which ended after just five hours. The coup began when soldiers and armoured vehicles took up positions on Murillo Square, where key government buildings are located, including the presidential palace. One armoured vehicle attempted to smash down the entrance to the palace.

General Zúñiga stated that he wanted to "restructure democracy" and that while he respected President Luis Arce "for now", there would be a change of government. He also accused an "elite" of taking over the country and vandalising it.

President Arce responded to the coup attempt by calling on the public to "organise and mobilise... in favour of democracy". He also announced that he was appointing new military commanders, confirming reports that General Zúñiga had been dismissed after openly criticising former president Evo Morales.

General Zúñiga was arrested and removed from his role on the same day as the coup attempt. Footage from inside the presidential palace during the coup attempt shows President Arce confronting General Zúñiga, ordering him to stand down and vacate his role.

The public prosecutor's office has opened a criminal investigation into the coup attempt, and several people have been arrested, including the head of the Bolivian Navy, Vice-Admiral Juan Arnez Salvador.

Bolivia's football team

The Bolivia national football team, nicknamed La Verde, has represented the country in men's international football since 1926. They are one of ten members of FIFA's South American Football Confederation (CONMEBOL). Bolivia's home matches are played at Estadio Hernando Siles, which, at 3,637 metres (11,932 ft) above sea level, is one of the highest football stadiums in the world. In 2024, the Bolivian Football Federation decided that home games would be played at the Estadio Municipal de El Alto stadium, which stands at an altitude of 4,150 metres (13,620 ft).

Bolivia debuted in international football in 1926, one year after the Bolivian Football Federation was founded, and joined FIFA that same year. They participated in the 1926 South American Championship in Chile, playing their first match against the hosts on 12 October 1926. Bolivia ended up losing 7-1, despite scoring first. They also lost their following three matches against Argentina (0-5), Paraguay (1-6), and Uruguay (0-6).

Bolivia has participated in the World Cup three times: in 1930, 1950, and 1994. In their first two appearances, they lost all their games, failing to score a single goal. In 1994, Bolivia qualified for the World Cup by finishing second in Group B. In the tournament, they were drawn into Group C, playing against Germany, South Korea, and Spain. They lost to Germany and Spain, and drew with South Korea, failing to advance past the group stage. Despite their early exit, Bolivia scored their first-ever World Cup goal in the 1994 edition, courtesy of Sánchez.

Bolivia's greatest football achievement was winning the 1963 South American Championship, which they hosted. They went undefeated, with five wins and one draw, claiming the title out of seven countries. Bolivia also finished as runners-up in the 1997 Copa América, losing to Brazil 3-1 in the final.

In recent years, Bolivia has struggled in World Cup qualifiers and suffered defeats at the 2024 Copa América. However, they have found success in their new home stadium in El Alto, defeating Venezuela 4-0 and Colombia 1-0 in World Cup qualifiers.

Bolivia's use of the yuan for trade

Bolivia is now using the yuan to pay for imports and exports, becoming the latest country in South America to regularly use the Chinese currency in a small but growing challenge to the hegemony of the U.S. dollar for international financial transactions in the region. Between May and July of 2023, Bolivia conducted financial operations amounting to 278 million Chinese yuan ($38.7 million), which accounted for 10% of its foreign trade during that period. Bolivia's state-run bank, Banco Union, has started to carry out transactions using China's currency, the yuan.

Bolivia's beleaguered president announced the country's use of the yuan for trade shortly after an alleged coup attempt in July 2023. The country has experienced political unrest, with supporters of former President Evo Morales, who was in power from 2006 to 2019, clashing with followers of the current president, Luis Arce, ahead of the 2025 election.

Bolivia is the third South American nation to adopt the yuan for trade settlement, following Argentina and Brazil. This shift away from the U.S. dollar is part of a global de-dollarization wave, as more countries seek to reduce their reliance on the U.S. currency and forge stronger ties with China. Bolivia has experienced dollar shortages since February 2023, which have severely impacted its economy.

The use of the yuan in Bolivia is still relatively small but is expected to increase over time. Banana, zinc, and wood manufacturing exporters are conducting transactions in yuan, along with importers of vehicles and capital goods. These transactions are carried out electronically through the state-owned Banco Unión.

The adoption of the yuan for trade in Bolivia has sparked mixed reactions. Some analysts and members of the opposition have criticized the move, arguing that it is not a long-term solution to the country's economic problems. However, others have dismissed this criticism, noting that the use of the yuan merely provides an alternative to the U.S. dollar, which has become more expensive amid rising interest rates.

Bolivia's decision to use the yuan for trade is part of a broader trend in Latin America, where many countries have stronger trade ties with China than with the United States. This shift reflects a desire to decrease dependence on the U.S. dollar and forge stronger political and economic alliances with China.

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