BOLIVIA'S "MACHO FINANCE" Labor Resists Austerity
Wise, Carol
"Macho finance" was the phrase used by Mexican President Miguel de la Madrid Hurtado to describe the de- fiant stance of the Bolivian labor movement on its country's external debt. As the economic...
...Once these internal conflicts are resolved, the COB says it has every intention of doing just that...
...As the COB's executive committee gradually settles in after the recent elections, the UDP has clearly put any further austerity attempts on the back burner until the new leadership takes over...
...The result is that Bolivia is once again dependent on just one or two exports-tin and natural gas-for survival...
...The MIR rejoined the UDP in April when Siles, left alone in coalition with the Bolivian Communist Party, began losing political ground in Congress against the ascendant right- wing Christian Democrats and the conservative wing of the MNR...
...Under the present plan the FSTMB's general secretary, Victor Lopez Arias, occupies the top executive position of COMIBOL's sevenmember board of directors...
...Why doesn't the United States pay for its own fiscal deficit and war costs...
...Furthermore, although Bolivia's external debt is minuscule visa-vis the other Latin American debtors, combined interest and amortization payments on the public and private external debt easily surpassed 100% of export earnings this year...
...No one expects a full recovery until the U.S...
...Besides the various left and right strands of the MNR, political representation runs the gamut from the pro-Chinese Communists, to the MIR, to a small Trotskyist faction...
...Workers control, or co-gesti6n obrera, was first introduced as an ultra-radical goal in the 1950s, but in the current eco- nomic crisis it has become labor's prime defense against apparent government intentions to return the bankrupt mining sector to private hands...
...Mexico and Brazil seem to have established the regional austerity model for dealing with the crisis, and have received their creditors' accolades...
...Juan Carmona, president of the La Paz branch and economics professor at the Catholic University, estimates that full implementation of last April's austerity measures would have resulted in a 400% average increase in the metropolitan consumer price index...
...diplomat, Siles was hoping that a less combative COB would emerge with the new executive committee, but the mood of the COB Congress was exactly the opposite...
...While, at least theoretically, a strong left-wing - labor movement would seem a natural ally of a centerLeft regime, there are a number of factors working against such an alliance...
...Interestingly, although official suspension of payments on the private debt has invited the expected threats from creditors, there have as yet been no trade or investment sanctions waged against Bolivia...
...t- _ils- a 9 gured as one of the region's strongest labor movements...
...The private sector has split over the COB's gains, with the more moderate elements supporting the decision to suspend payment on the private debt, and the conservatives bitterly attack- ing the COB for failing to integrate a more articulate fiscal policy into its overall economic program...
...Given the historical backdrop of chronic military coups, including a major coup attempt by one of Bolivia's "secret" civilianmilitary lodges as recently as June 30, it is clear that formal IMF intervention could well be a case of political and economic suicide...
...Workers are a majority on the board...
...First is a longstanding and bit- ter personal rivalry between Siles and COB leader of 32 years, Juan Lechin Oquendo...
...As the economic crisis wears on in Latin America-and a number of countries fall prey to the IMF austerity route that has supposedly been so suc- cessful in reviving Mexico and Brazil-many of the smaller and less debt-ridden states have gone looking for their own solutions...
...The Siles regime is in the unenviable position of having taken over just as Latin America entered the most severe stage of the debt crisis and international recession...
...Like many throughout Latin America, the COB blames the projected U.S...
...But given the intense rivalry between the COB and the Siles-Paz government-with each accusing the other of opportunism--it is not clearwhere such a coalition would come from...
...Pressure from the banks and the IMF have fanned the flames of nationalism...
...Now Bolivian labor appears determined to set the Latin American trend for resisting such a model, and to seek solutions which do not bear so heavily off labor alone...
...Small Debt to Private Banks On top of these political complexities, it is the present economic crisis that has driven the biggest wedge between the government and labor...
...Through a series of 24-hour hunger strikes and general work stoppages over the last five months, workers have also won back subsidies on seven items considered crucial to the daily food basket, and a 130% retroactive wage increase to compensate for last April's currency devaluation...
...asked the minister of planning in an August article in the La Paz daily, La.Presencia...
...The international economic recession is another matter, and on this front Bolivia has been hard hit...
...prime rate begins to ease down...
...When presented with the ultimatum of an indefinite miners' strike or cogesti6n, a workers' control scheme was drawn up and approved by both sides...
...The banks won't discuss renegotiation without an IMF "adjustment plan...
...Lechin has repeatedly stated his intention to step down and make way for new blood, implying that labor will work primarily within its own ranks to produce an electoral front...
...Bolivia will become more earnest about straightening up its economy and attacking the public sector budget deficit as soon as Reagan shows signs of doing the same," says COB's Armando Morales, expressing the bottom line...
...Despite fierce infighting amongst the various political factions, the agenda was dominated by the formulation of a fullscale Emergency Economic Plan...
...Many be- lieve that, at least for the time being, it would be better for Bolivia to go it alone in attempting to resolve the problem of meeting payments on the private debt...
...Interest Rates Responsible Bolivia, like many of the smaller and poorer Latin American states, would like to see the IMF adopt more flexible lending policies, or stick to its original mandate of lending solely for balance-of-payments support, and let borrowing countries tend to their own wage and price policies...
...Such was the standoff toward the end of last year when the lending consortium of 128 banks refused to budge on the private portion of the external debt...
...Much of Siles' policy paralysis seems to stem from a Catch-22 of international finance...
...Thus, of the total $5.3 billion owed, only $720 million was contracted with private banks on short payment terms and at interest rates above the average international lending rate, known as the LIBOR...
...A COB-UDP union has been further hindered by the fact that each is plagued with internal strife...
...This can most likely be attributed to the extremely small amount owed, and to the banks' preoccupation with the outcome of the Mexican, Brazilian and Argentinian renegotiations...
...As the UDP approaches its third year in office with no official budget or development plan, the Workers' Central has gradually formulated a comprehensive oppositional economic policy which encompasses everything from trade and exchange rates to a renovation of the Ministry of Peasant Affairs...
...Why do we have to cover the North American deficit...
...And in a nation with 189 coups in 159 years, a military takeover remains a not so remote possibility...
...These measures have triggered an intense struggle between the COB and the UDP over economic policy...
...Where hard-nosed solutions are called for, Siles seems to offer only the rhetoric of 1950s-style populism...
...In its own defense, the COB contends that the revival of the trade union movement over the past few years has set off fierce leadership struggles within a number of unions and between unions...
...And, for better or worse, most of these loans are sunk into specific development projects, and not so easily siphoned off into the infamous Miami bank accounts...
...In general terms, the drastic drop in demand for raw materials in the industrialized countries is reflected in a 21% decrease in the Gross National Product (GNP) between 1980-1983...
...Bolivia does not have the "authoritarian advantage," says the COB, of a Brazil or a Mexico in handling the kinds of IMF-related turmoil witnessed last spring in the Dominican Republic...
...KNOVEMBER/DECEMBER 1984 I today's pressing economic questions...
...Despite a long spell of military repression and labor violence throughout the 1970s, organized labor has Carol Wise was a pre-doctoral fellow last summer at the Bolivian Central Bank...
...The UDP embarked half-heartedly on a series of austerity measures which culminated last April in a 75% currently devaluation and the lifting of price controls on a long list of statebacked commodities and services...
...And the IMF won't even consider formal "intermediation," as the process is known, without a domestic austerity scheme...
...They ranged from a pricing policy within the state oil company more favorable to local producers, to indefinite suspension of amortization and interest payments on the $720 million private external debt...
...180-200 billion public sector deficit for the unbearable inter- est rates of the 1980s...
...Bolivian labor, in particular, has succeeded in resisting the divide and conquer tactics of the IMF-most notably by directly pressuring for last summer's formal suspension of interest payments on the Bolivian private foreign debt...
...He points to the 36% drop in per capita consumption between 1980- 1983, and an average minimum wage that has slipped well below $30 a month, as signs that such an increase 10 REPORT ON ThE AMERICAS REPORT ON THE AMERICAS 10would have been "absolutely intolerable for the working population...
...The labor movement, if not the government, has apparently recognized that it is going to take much more than -an improvisational economic policy to bail Bolivia out of its current economic woes...
...It appears labor will not move beyond its purely oppositional role into a cohesive electoral force in the near future...
...This means that the bulk of the debt is owed at lower interest rates and 10-15 year payback periods...
...This point ought to be among Latin America's common objectives and plans...
...As with many countries in the region, exports have dropped back to the levels witnessed in the early 1960s...
...The COB points out that even if strict austerity were adopted, implementing the plan against popular will is another matter...
...The COB's political makeup tends to be even more complex...
...In a formal agreement signed between the COB and the UDP in early July, four other concessions were granted...
...In 1984 alone inflation has been run- ning around 1000%, the fiscal budget deficit at approximately 34% of GNP and unemployment is registering a fivefold increase...
...MIR leader Jaime Paz points to the excessive number of strikes-a total of 54 in the first eight months of civilian rule-as "a destabilizing threat," and contends that "even the military has shown better restraint...
...The Bolivian Workers' Central (COB)-the national labor federation-has not exactly been a welcome player alongside Siles' Democratic Popular Unity coalition (UDP...
...A graduate student in political science at Columbia University, her last contribution to the Report was "Peru-Amnesty Speaks Out," in the January/February issue...
...revived itself to the point of playing a major policy role in the center-Left civilian coalition government of President Hernin Siles Zuazo...
...Paz's MIR, which is looked to by some in the region as one of the more promising new Left groups, went so far as to depart temporarily from the government in frustration over Siles' passive wait-and-see economic policy...
...Theirs is an animosity that dates back to the first Siles Adminis- tration when labor split with Siles' National Revolutionary Movement (MNR) in 1957 over the implementa- tion of a severe economic stabilization plan...
...Multilateral lenders such as the European Economic Community have readily continued lending to the Siles regime since it became one of the region's first debtors of the 1980s to formally break ties with the private banks six months ago...
...Strikes Deemed "Destabilizing" The labor movement has also come under frequent fire from the new-Left MIR...
...Yet, the re-election of the septuagenarian general secretary to his post by a small margin at the COB's sixth National Congress in September has set the timetable back...
...Siles initially resisted COMIBOL's domination by the powerful mine- workers' union (FSTMB) as "a threat to democratic balance of power...
...The MIR has been particularly critical of Lechin for not attempting to form a left-wing coalition to compete electorally...
...According to Armando Morales, secretary of the COB's economic commission, negotiations are now underway for the implementation of similar schemes in the state oil enterprise, as well as the national railway company...
...According to one U.S...
...Most independent local observers attribute the COB's success in asserting its economic will to the MNR's inability to grapple with San Jos6 tin mine, Oruro, Bolivia...
...The COB and the UDP remain at loggerheads over labor's demands for a comprehensive price stabilization plan and an index-linked basic wage...
...In Bolivia the debt problem has been buffered somewhat by a long history of "soft" loans and develop- ment aid from major multilateral and bilateral lenders such as the Inter- American Development Bank and the U.S...
...U.S...
...The mining union, in collaboration with the COB, is now in the process of estab- lishing a network of committees throughout the FSTMB to promote maximum workers' participation in managing the state mining company...
...Almost immediately upon election in 1982, the UDP front fell into disarray, with heavy infighting between Siles' reformed "old" Left MNR and the various "new" Left forces that have crystallized in the Movement of the Revolutionary Left (MIR) under the leadership of Vice President Jaime Paz Zamora...
...Lechin's National Revolutionary Party of the Left (PRIN) remains active in the Workers' Central, as well as a new antigovernment bloc known as the Unified Revolutionary Directorate (DRU) which has drawn its membership from all of the other factions...
...On the other hand, the COB's ad- vances have not been automatic, nor have they been accepted unanimous- ly...
...Since Bolivia's revolution of the 1950s, the COB has periodically fiNOVEMBERIDECEMBER 1984 '-a"""- lr"- "C( i...
...Contrary to regional trends, Bolivian labor actually appears to be gaining quite a bit of ground...
...Yet, the UDP's inability to formulate even the most minimal program in the face of the current economic crisis has provided labor with what many view as an op- positional foothold unseen in the last 30 years...
...Democratic Balance Threatened" The COB's first major victory came last November when workers assumed management of the state mining com- pany (COMIBOL...
...On the debt issue, the COB has won the support of a sizeable social democratic contingent within Bolivia's 2,000-member Colegia de Economistas, the country's major professional organization of economists...
Vol. 18 • November 1984 • No. 6
