The threat of the good example

Bolivia's experiment with economic and political democracy needs our solidarity and also contains much from which we can learn. Samuel Grove and Pablo Navarrete report

January 6, 2009
10 min read


Pablo NavarretePablo Navarrete is a British-Chilean journalist and documentary filmmaker. He is the founder of www.alborada.net and a correspondent for the Latin America Bureau (LAB)

Bolivia, a country used to being ignored by the western media, has hit the headlines in recent months due to the marked increase in violence among opponents and supporters of the government. In December 2005, an electorate in which 62 per cent of the population identify themselves as indigenous voted in their first indigenous president, Evo Morales, on a mandate of radical reform. This has met with fierce opposition among Bolivia’s wealthy, predominantly white elite.

Particularly controversial has been the issue of land reform. Bolivia has one of the most unequal rates of land ownership in the world, with one per cent of landowners owning two-thirds of the country’s farm land. It is no surprise, then, that Morales’s proposed reforms have provoked the ire of Bolivia’s landed elites. In the richer provinces, these elites began orchestrating violence against indigenous people in alliance with crypto-fascist paramilitary youth mobs. Among their demands are regional autonomy and a greater share of oil and gas profits – concessions that Morales is unwilling to give. At the time of writing, the worst of the violence seems to have subsided and talks between the government and opposition have resulted in Bolivia’s Congress approving a referendum on a new constitution early next year. But the underlying conflict is unlikely to be easily resolved and could flare up again at any time.

Conflict of interests

In Civil War is not a Stupid Thing, the political economist Christopher Cramer critically reflects upon the prevailing ideology surrounding conflict in the ‘third world’. He argues that historically the west has looked upon conflict in these places as a ‘deviant aberration from a more normal world of liberal peace, best exemplified by Northern prosperity and stability’. For Cramer, in the past few years this prejudice has been integrated into a neoliberal analysis that emphasises the immediate economic costs to societies of conflict, with these two assumptions combining to support the notion that conflict is ‘development in reverse’.

A cursory look at the British media’s reporting of the crisis in Bolivia supports Cramer’s thesis. Both the Guardian and the Independent observed that Bolivia was beginning to resemble a ‘failed state’. The Daily Telegraph’s Daniel Hannan chided the Bolivian government for placing ideology before compromise, accusing ‘Morales’s palaeo-socialism’ of ‘shrinking the economy’, thereby having the effect that ‘Bolivians are poorer, angrier and more violent than I have ever known them – they deserve better than this’. The Financial Times, meanwhile, harboured doubts about the ability of ‘increasingly politicised institutions to support entrepreneurialism and economic growth’. The message is clear: conflict is antiquated, a distraction from the more civilised business of money making.

It woould be ironic if the west’s detached attitude to events in Latin America were to be explained in part by neoliberal notions, given that the current global neoliberal order had its bloody birth in Latin America – in Chile in 1973. In the wake of the US-sponsored coup that overthrew Salvador Allende’s democratically-elected government, economists from Milton Friedman’s Chicago School rammed through radical neoliberal reforms. Chile served as a laboratory for radical ideas that would later be adopted by the west, with Margaret Thatcher an infamous admirer of the military dictator General Pinochet’s ‘restructuring’ of Chilean society.

There are, in fact, close parallels between the modern histories of Britain and Bolivia. The post-war era in both countries was shaped by popular democratic governments that vastly expanded the public realm. In Britain, the Labour government of Clement Atlee nationalised Britain’s major industries and founded the NHS. In 1952 in Bolivia, the left-wing National Revolutionary Movement (MNR) of Victor Paz Estenssoro nationalised the mines and established national education and healthcare systems. In both countries these reforms remained largely unchanged until the mid-1980s.

Bolivia embraced neoliberal changes in 1985, following the re-election of the MNR – once again headed by Paz. This time, Paz promptly reversed the reforms of 1952, floating the peso, cutting public sector salaries and eliminating food subsidies, price controls and restrictions on foreign commerce. As in Britain, the neoliberal revolution continued through the 1990s with the privatisation of the oil, gas, tin, telecommunications and railway industries.

War on democracy

In Bolivia, the manner in which these reforms were instituted was profoundly undemocratic. Paz had run on a mandate of fiscal responsibility and an allegiance to his ‘nationalist revolutionary’ past. Once in power, though, the New Economic Policy (NEP) was instituted as a presidential decree. The idea was to pass the reforms before trade union and civil and peasant groups had a chance to react. React they did, however, just as the British unions did in response to Thatcher’s reforms, calling a general strike. As Naomi Klein has noted, Paz’s response ‘made Thatcher’s treatment of the miners seem tame’. He declared a state of emergency and rounded up the top 200 union leaders, loaded them on to planes and flew them to remote jails in the Amazon.

The turn to neoliberalism has been a common theme of the past 30 years in much of the world – to the extent that we can now speak of a neoliberal global economic order. In large measure this global revolution has relied upon circumventing national democratic processes. ‘Privatisation’ and ‘liberalisation’, in reality, amount to technical terms for removing critical economic decisions from the realm of public accountability. Democracy is further undermined when national democratic decisions can be vetoed by capital flight as a consequence of international free trade. This is something John Maynard Keynes recognised when he warned that ‘nothing less than the democratic experiment in self-government [is] endangered by the threat of global financial forces.’

In Bolivia, neoliberalism was initially hailed as an enormous success. Prior to Paz’s reforms, inflation had skyrocketed to over 14,000 per cent. Within two years of the reforms it had been brought down to 10 per cent. But as inflation came down, unemployment went up. Bolivia experienced massive lay offs, including 22,000 from the state mines alone, rising to 45,000 by 1991.

Unemployment took its heaviest toll on Bolivia’s fragile industrial sector. Without state backing, factory closures led to 35,000 people losing their jobs. Those that remained in employment did not fare much better, with real wages dropping by 40 per cent. Not only did neoliberalism fail to create jobs, but the dismantling of the central bureaucracy undermined the government’s ability to respond to the damaging effects of joblessness. Many who lost jobs migrated to the east of the country to grow coca, which by the 1980s was Bolivia’s most profitable export.

While ultimate responsibility for the NEP lies with Paz and his ’emergency team’ of technocrats and business leaders, the reforms were also largely a product of the aggressive influence of international financial institutions, particularly the IMF and World Bank. The NEP was largely designed to court their approval, while the waves of privatisations in the 1990s were on the explicit instructions of the IMF – in fact, the IMF was so impressed with the results that Bolivia was held up as a model for less developed countries around the world.

The Bolivian government’s pandering to the demands of the IMF in the 1990s can be interpreted as a consequence of the devastation wrought on Bolivia’s democracy by the NEP. Having been shut out of the sphere of governance, the public had limited means with which to press the government to act in its interests. The result was a return to an imperial arrangement whereby Bolivia’s elites auctioned off their country’s land and resources to the highest foreign bidders.

The looting of Bolivia reached its nadir in 2000 when the World Bank facilitated the privatisation of the water supply in the city of Cochambamba to a foreign multinational consortium led by London-based International Water Limited (IWL). In exchange Bolivia would receive $600 million of debt relief. The consortium immediately raised water rates by 35 per cent, and in the drive for profit maximisation a law was even briefly passed prohibiting people from collecting rainwater. For the majority of Bolivians, their patience had run out.

Democracy returns

In voting for Morales and his party in 2005, the Movement towards Socialism (MAS), Bolivians voted for democracy. Morales was elected on a platform of facilitating popular participation in the running of the country and the economy through the widening of the public sphere, the representation of social movements in executive office and the introduction of indigenous rights. Nationalisation of key industries ensured that profits stayed in Bolivia and the government had the capacity to govern.

As left historians Forrest Hylton and Trevor Sinclair elegantly put it in their book Revolutionary Horizons: ‘The election of Evo Morales did not bring about a revolution. It was a revolution that brought about the government of Evo Morales.’

Prior to the 2005 election, popular mobilisation had already brought down two presidents and vetoed the accession of a third. The toppling of these governments was not led by MAS; rather the MAS leadership trailed a popular mobilisation led by indigenous groups, trade unions and federations of coca growers.

It was out of this coalition that the proposals for nationalisation, constitutional reform and economic and political restructuring emerged. MAS itself was a political organisation founded by civil groups in the 1990s to articulate popular demands. In his inauguration speech Morales appealed to these groups saying ‘Control me. If I can’t advance, push me, brothers and sisters. Correct me constantly, because I may err.’

Morales was reliant on these groups during the crisis. That Morales’s supporters continue to resist the opposition’s campaign of violence is testament to their overwhelming national support and ability to mobilise to defend the government’s legitimacy.

While the British media openly discussed the possibility of a civil war, Morales’s popularity has risen since the 2005 election, including in the richer provinces. It is this support that pressured opposition members in Congress to ratify a new draft of the Bolivian constitution on 21 October. A national referendum on whether or not to make the document official is scheduled for 25 January next year.

It is significant that Bolivia’s latest crisis coincided with the 35th anniversary of the coup in Chile. It is also worth reminding ourselves that it is doubtful whether the Chile coup would have succeeded without international complicity. The parallels have not gone unnoticed in Latin America as neighbouring countries have queued up to pledge support to Morales and condemn the violence. Argentine president Christina Kirchner warned: ‘If we don’t act now, in 30 years we may be watching documentaries [about Bolivia] like those we see today about Salvador Allende.’ Her statement contained a veiled reference to the US government, whose shadow looms large over the crisis. In September, relations between the US and Bolivia became openly hostile when Morales expelled the US ambassador, accusing him of subverting Bolivia’s democracy by colluding with opposition groups.

A revolution without borders

In the 1980s, the US waged a war against a democratic revolution in Nicaragua. During the revolution, Tomas Borge, a founding member of the Sandinistas, stated his desire for a ‘revolution without borders’. What he meant was that he hoped the revolution could serve as a model for other societies. In the context of the cold war, the US government and its backers in the media did not need to resort to a sophisticated neoliberal analysis to distort the meaning of Borge’s words; it was enough to report that Nicaragua was intent on spreading a permanent ‘Soviet-style’ revolution across the western hemisphere.

The reality is that the distortion was intended to conceal something far more threatening – what Oxfam rather shrewdly described at the time as ‘the threat of the good example’. Bolivia’s experiment with democracy is an example for all of us. At a time in which neoliberalism has hollowed out our democracy while simultaneously propelling us down a path of economic and ecological disaster, the stakes could not be higher. Showing solidarity with Bolivia at this time is undoubtedly important for the people there. It might be just as important for us. n


Pablo NavarretePablo Navarrete is a British-Chilean journalist and documentary filmmaker. He is the founder of www.alborada.net and a correspondent for the Latin America Bureau (LAB)


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