The obstacles to democratic reform in Bolivia

...By the mid-1500s the Spanish had become enamored of the region's riches, particularly Cerro Rico, POLITICS ABROAD Bolivia's "rich mountain" of silver...

...And it comes on top of the various ways that the IMF, World Bank and InterAmerican Development Bank—under the influence of the United States, which holds virtual veto power in each institution—can wield their power, denying Bolivia loans and effectively destroying its reputation in the international financial community...

...A wizened old man stands up to concur...

...president George W Bush likes to boast of "the great democratic movement" that in recent decades has spurred "the swiftest advance of freedom in the 2,500 year story of democracy," crediting the United States with providing the shining example...

...To an outsider, Bolivians' reaction to the inequities of globalization may sound extreme...

...Everyone feels obligated to participate in the blockades and the marches, because it's their community responsibility...

...After a long day of manual labor at an altitude of thirteen thousand feet, the men are tired...

...These laws pose the greatest challenge for developing countries like Bolivia that are struggling to establish democratic legitimacy and prove to their people that their elected leaders do indeed represent them...

...The usual justification for the current laws is that foreign investment is critical to a country's growth, and without legal protection, multinational corporations won't invest...

...As is typical in the industry, the companies locked in those favorable terms through contracts that last thirty and forty years...

...We need to pursue our own ideas"— and the reaction grows louder—"What we need is a revolution...

...You, the people who grow our food, deserve more respect," he told the Quechua men and women who crowded into the town square...

...Coca growers, or cocaleros, are an important part of Morales's political base— a fact that gravely worries the United States...

...From elections to insurrection—We Swear...

...Bolivia's workers repeatedly rebelled, leading to a stunning succession of insurrections—averaging one per year until military rule finally gave way to democracy in 1982...

...Bolivians might have been content to wait for incremental improvements had the country not discovered, in the mid-1990s, that it was sitting on a large supply of natural gas, an increasingly important energy source...

...Harsh working conditions continued until independence in 1825 and beyond...

...Bolivia is now so entrenched in a global economic system that there's no turning back...

...The audience bursts into applause...

...En Constante Vigor is painted crudely above it...

...The government soon declared martial law...

...For Bolivia, whose annual revenues are only a little more than $2 billion a year, that's no small risk...

...Beginning in February, the protests grew violent as police fired rubber bullets and tear gas and protesters responded with Molotov cocktails...

...And after five hundred years of foreign and elite exploitation of Bolivian resources, most Bolivians feel their government has much to account for...

...Thousands more then thronged the streets in protest until, finally, de Lozada was forced to flee...

...Despite widespread privatization and two decades of fealty to IMF and World Bank dictates, Bolivia remains the poorest country in South America...

...We will recuperate what is ours...

...others stay awake by chewing bitter green coca leaves...

...So in May, Bolivians once again took to the streets...

...After Bechtel withdrew from Cochabamba, it sued the government of Bolivia under a U.S.-Bolivia bilateral investment treaty...

...Still, under pressure from corporate investors and their lawyers, the number of BITs—only 385 at the end of the 1980s, and more than 2,200 today—continues to grow...

...The weight of those chips is undeniable, given the approximately $3.5 billion that private companies have already invested in the natural gas industry and their expected profits, which could total tens of billions of dollars...

...We cannot give away what was given to us by Pachamama [Mother Earth...

...DAPHNE EVIATAR, a Brooklyn-based writer and lawyer, was a 2005 Alicia Patterson Foundation fellow...

...Finally, the law required Bolivian gas to be sold at international market prices—even as the companies were cutting deals with Bolivia's neighbors, like Argentina, to sell gas there for far less...

...Today, democracy is in serious danger...

...Morales has not only claimed that coca should be a legitimate product, but he's expanded that appeal to encompass the growing view among Bolivia's indigenous population, that all "natural resources"—whether coca, water, gas, or precious metals—are not mere commodities but part of the earth's sacred bounty...

...But if Morales "nationalizes" the industry, in whatever form, they'll certainly make good on those threats, through costly litigation or by using their legal claims as a bargaining chip in negotiating new contracts...

...As for how they'd get the necessary money, Mancilla assures me that the Chinese government has already sent representatives to talk to community leaders about investing...

...We are the beneficiaries of these resources," says Olivera, who is Quechua...

...When the Bolivian government under former president Carlos Mesa raised taxes on natural gas production, almost all the major foreign oil companies— ExxonMobil, Spain's Repsol, the French company Total, British Gas, and Oklahomabased Vintage Petroleum—formally notified Bolivia of their plans to sue...

...But by then, the generals' looting had left the country in economic turmoil: in 1985, inflation reached 25,000 percent...

...Its rulers were convinced years ago by the IMF, World Bank, and American-educated economists to let foreign companies invest on extremely favorable terms...

...But an industry controlled by an accountable, democratic, and transparent government, which contracts on fair terms with private companies, is a goal the vast majority of Bolivians would support...

...countless slaves died in its caverns...

...President de Lozada ordered the military to break the road blockades, and soldiers soon killed more than sixty protesters...

...Instead, they would be adjudicated behind closed doors by panels of three private, international arbitrators chosen by the parties involved—often, corporate lawyers who in another situation might be representing one of the foreign corporations...

...And it's placed a growing number of Bolivians at odds with the perspective of Northern investment institutions such DISSENT / Spring 2006 n 25 POLITICS ABROAD as the World Bank or the IMF and with the many multinational corporations already entrenched in the country...

...We will continue to be slaves under this system...

...We don't want a capitalist system or a neoliberal system...

...To me, a New Yorker educated in neoclassical economics, their proposals sounded fairly reasonable, if a bit complex...

...And those suits would not be brought in an international court or other public, transparent forum...

...Standing in a brightly decorated gazebo, wreaths of flowers and produce around his neck, Morales promised to help them: "We will nationalize Bolivia's natural resources...

...In October 2003, activists learned that President Gonzalo Sanchez de Lozada, a wealthy mining entrepreneur who had played a key role in privatizing the gas industry, was considering yet another deal with foreign companies to export Bolivian natural gas—this time via a pipeline through Chile, Bolivia's age-old enemy...

...Evo Morales wants to respect the laws, but we need to take back this country from the transnationalists...

...At the urging of local leaders like Mancilla, tens of thousands of Bolivians went on strike and blocked the main arteries of El Alto and La Paz, cutting Bolivia's largest city off from critical supplies of food and gas...

...What's more, the companies had to pay only 18 percent royalties on gas produced and no taxes at all on production...

...Every other candidate, from left to right, made similar appeals to Bolivians across the political spectrum, all of whom feel they've been cheated out of the benefits of the country's natural resources...

...HENCE THE RISE Of their new leftist president...

...Not only is foreign aid from the United States contingent on maintaining that neoliberal economic system, but now private investors can essentially dictate Bolivian domestic law as well...

...We want to see the majority construct their own type of power," he says...

...That battle has inspired similar protests in other developing countries against privatization of local water systems...

...In the verdant highlands of Cochabamba, campesinos eke out a living growing bananas, beans, and potatoes that they sell for pennies at the local market...

...To his credit, he tried: he passed a law that raised taxes on gas production in Bolivia's larger fields...

...Now, it's a sign of strength and pride...

...For a country like Bolivia—the poster child for privatization schemes fostered by the International Monetary Fund and the World Bank in the 1980s and 1990s—is now so entangled in the international economic system, whose rules protect private corporate investments, that the democratically expressed will of the nation may well be irrelevant...

...Although the company had only operated in Bolivia for four months, it claimed $25 million in damages...

...What we need is a new system of our own," he continues, as murmurs of approval ripple around the room...

...What we get from Pachamama must exist in harmony with all living beings...

...DISSENT / Spring 2006 n 27...

...This term 'natural resources' is a capitalist term...

...But the international legal system makes it extremely difficult for a new leader to change them...

...Over the next four centuries, that one mountain turned silver mine, high in the Andean city of Potosi, would provide the Spanish close to seventy thousand tons of silver—enough, it is said, to build a bridge to Madrid...

...Foreign corporations that invested in Bolivia under former regimes can use international law to preserve the status quo...

...We learned in the streets that we can defeat the transnationalist companies and the Latifundios...

...on a chilly night in early December...

...Average Bolivians are now poorer than their grandparents were fifty years ago...

...But as many Bolivians already know, President Morales will have a tough time following up the campaign rhetoric with decisive action...

...ACTIVISTS MAY have a harder time getting the oil companies invested in Bolivia to do the same...

...The statements in this dingy auditorium reflect a growing sentiment across South America, where anger at the unfulfilled promises of the "Washington Consensus"—the neoliberal economic model imposed on much of the continent in the late 1980s and 1990s— has led to a succession of left-leaning governments, from Hugo Chavez in Venezuela to Luis Ignacio Lula da Silva ("Lula") in Brazil, Nestor POLITICS ABROAD Kirchner in Argentina, and, most recently, Evo Morales in Bolivia...

...But Bolivians know that their leaders followed World Bank and IMF advice for decades, and 65 percent of the population is still poor-40 percent extremely so, according to the bank's own standards...

...Instead of owning, extracting, and selling this increasingly lucrative resource, the government was contracting with a slew of foreign companies to do it...

...Apparently none of those pleas, which dominated the presidential campaign, had penetrated the well-guarded walls of the World Bank...

...But the law has gone so far to protect those companies that, in effect, they now have more control over domestic policy than do elected governments...

...They want to work within the system...

...MAS [Morales's party, the Movement To22 n DISSENT / Spring 2006 ward Socialism] isn't really going to change anything," he tells the audience, which grows as more and more men, and a few women, trickle in...

...We want more social control, more participation of the people, where everything is clear and government is accountable...

...A rainbow banner—known locally as the Wiphala, a flag representing half a millennium of indigenous resistance—hangs on the wall behind them...

...Under a series of bilateral investment treaties signed by former Bolivian leaders, foreign companies can sue the country's central government if it changes its laws in a way that they claim undermines the value of their investments...

...IN MANY WAYS, the anger that brought down the last two presidents dates back to the arrival of the Spanish conquistadors, when Bolivia was part of the Inca Empire...

...That could lead this notoriously unstable nation—already the record-holder for coups d'etat—toward an even more volatile future...

...Many of those miners migrated to the countryside to grow coca—one of the few lucrative crops—or to the city slums as laborers...

...Convinced—in no small part by the World Bank and the IMF—that attracting foreign investment was key to developing the industry, Bolivia passed a law in 1996 that made those companies the owners of the gas, which they could now book as reserves on their balance sheets, and gave them virtually complete control over its production and sale...

...Expectations were high that his successor, Carlos Mesa, could mediate the conflict...

...And they've become increasingly angry that the vast majority of Bolivians still aren't receiving the benefits...

...is printed in black letters above them...

...Although the text is mostly a summary of the policy positions of the eight candidates running for president in Bolivia's December elections, Mancilla is explaining why he believes that even the leading leftist candidate, Evo Morales, an Aymara Indian like himself, will not solve Bolivia's problems...

...Aside from the disorienting altitude, I'm trying to keep up with the mixture of Spanish and Aymara and to follow the succession of men who stand to cheer on the coming insurrection...

...But in a place like Bolivia, where the public has just demonstrated overwhelming support for dramatic change (Morales was the first president to win more than 50 percent of the vote in Bolivia's 180-year history), the anti-democratic impact of these treaties could backfire...

...And it's that sort of constraint on democracy that may bring far more radical responses in Bolivia—and far sooner than those foreign investors might think...

...Desperate, the elected leadership, following the advice of American economist Jeffrey Sachs, adopted a mix of radical reforms later called "shock therapy," which included devaluing the currency, eliminating tariffs, slashing state spending, and selling off state-owned industries...

...But what kind of a revolution do we want...

...Convinced they wouldn't see the benefit, they determined to stop the deal...

...Who will control it—the government or the widely reviled foreign corporations—became the overarching question in the December presidential election...

...Countries such as China and Cuba, meanwhile, have attracted significant investment from countries with which they don't have these treaties...

...government and foreign investors...

...The only way to save democracy is to create our own ideological direction...

...An Aymara Indian and former leader of the coca growers' union, Morales also appeals to the many campesinos who've lost their livelihood in recent years from coca farming, as the United States imposed and funded a radical coca eradication campaign...

...But if the suggestions seemed well grounded as an economic matter, they underscored just how wide is the gulf between the bank's technocrats and the Bolivian people...

...That's why we're so united...

...That view is based on longstanding traditional Quechua and Aymara beliefs about the sanctity of the earth...

...Evo is part of the same capitalist system," he says, looking around the room like a father providing guidance to his sons...

...Before, to be called indigenous or Aymara was considered an insult...

...It has to be about how the people here live, with their customs...

...In one pueblo after another, Morales promised to "re-take" Bolivia from the transnacionalistas and "recuperate" the country's riches...

...On the left, many were angry that it allowed foreign corporations continued ownership and control of Bolivian natural gas, which by then was yielding record profits...

...The architects of Bolivia's privatization insist that the new policy succeeded: it attracted private companies and billions of dollars in foreign investment...

...Eventually, they agreed to wait and see what the new government does...

...The bankers shake their heads at local ignorance...

...We don't think we are the owners of these resources," Oscar Olivera, a leading activist in Cochabamba, told me when I met him last November...

...But the law was too convoluted and too compromising to please anyone...

...Even the World Bank, in a 2003 report, concluded that "the relatively strong protections in BITs do not seem to have increased flows of investment to signatory developing countries...

...These rules were designed to foster confidence among international investors and economic stability in developing countries...

...THEIR "REVOLUTION," Mancilla tells me, would bring those values into government...

...The treaties require companies to notify the government six months before filing a claim...

...I was struck by the force of these clashing worldviews as I walked out of a two-hour meeting at the World Bank headquarters in downtown La Paz in December...

...By April, thousands of Cochabambinos, from poor farmers to middle-class professionals, had barricaded the roads, shut down the city, and taken over the town square...

...By the time the "water war" was won, six protesters had been killed and dozens injured...

...Veterans of the water war say the same about the cooperative water systems they're putting in place...

...But as the price of oil and gas skyrocketed in the international market, and energy prices at home climbed accordingly, Bolivians have recognized the value of what their government so easily gave away...

...If, as the international financial system would have it, foreign corporations are able to steer the domestic government, then Bolivians will be denied even that sort of responsible management of their country's most prized natural resource...

...This investmentprotective regime may actually undermine the interests of those same investors it aims to protect, for as it denies a democratic society the power to determine its own fate, it risks fueling the most radical elements of an already restive population...

...DeDISSENT / Spring 2006 n 23 POLITICS ABROAD spite the public consequences of these cases, affected citizens have no right to participate, view the evidence, or attend the hearings...

...The cover of the bright red paperback features two menacing-looking men in ski masks holding rifles...

...But in the end, Mesa couldn't stem the mounting anger at an economic system seen as fundamentally indifferent to the needs of Bolivians...

...But like the rest of Bolivia's industries, the state-owned hydrocarbons business was being sold off...

...One of Pachamama's greatest gifts to Bolivia has turned out to be a huge reserve of natural gas...

...The neighborhood meeting hall has filled with mostly men, small and dark, hunched over in dusty plastic garden chairs, the collars on their thin jackets pulled up around their necks to protect against the cold...

...A natural gas industry, Mancilla says, could be run cooperatively, like many of those water systems are now...

...And it stemmed, in large part, from the same cultural perspective on natural resources that fueled the more recent uprisings over natural gas in El Alto and La Paz...

...A communally-run oil and gas industry might have its pitfalls and likely won't happen in Bolivia anytime soon...

...For Bolivia, this is no idle threat...

...It's not surprising that Bolivians put more faith in cultural and communal traditions than in the economic orthodoxies of Northern financial institutions...

...He's called this meeting to present a new book he's written with his companeros, as he calls them...

...The indigenous people don't use that term...

...Morales campaigned there last fall, promising something better...

...De las elecciones a la insurrection . . . Carajo...

...For weeks I'd heard candidates, activists, farmers, and neighborhood leaders assert the importance of Bolivians' reclaiming ownership and control of their natural resources...

...Like most buildings in this fast-growing city high in the Andes, the hastily constructed brick and adobe structure has no modern plumbing or insulation...

...Since 2003, Bolivians have forced out two presidents due to growing frustration with the government's failure to improve conditions for 2.4 n DISSENT / Spring 2006 ordinary Bolivians...

...To him, the fact that political mobilization draws on ancient communal practices is critical...

...We want a communitarian system, a system from our own ancestors...

...Abraham Mancilla, the fiery speaker at the local meeting and a law student at El Alto's public university, is one of the leaders Mamani is speaking of...

...From this have come political projects, local leadership, strategic actions, and concrete demands for people's lives—for things like water and electricity...

...But the Bolivian government agreed to cancel its contract with the private water company...

...A diminutive, pensive man, Olivera came to international attention in 2000, when he led a series of protests in Bolivia's thirdlargest city against a subsidiary of Bechtel, Inc., that had purchased the local water system and dramatically raised water rates...

...And over the next decade, Bolivia's estimated natural gas reserves multiplied more than tenfold...

...Even former government officials who helped craft the deals admitted, when I met with them, that these terms have not been fair to Bolivia...

...It's nearly 9:00 p.m...

...Specifically, they're entitled to sue the national government if it passes a law that a company believes is discriminatory or amounts to an expropriation—direct or indirect—of their investments...

...And the suits can seek compensation not just for the money the corporations have already invested, but for projected profits that they might have earned, had the tide of public opinion not turned against them...

...In the process, they're stifling local ideas about how the country's natural resources could support more sustainable and politically palatable development...

...But to many Bolivians, mass actions seem the only means of holding their leaders accountable...

...But this capitalist system, run by the transnacionales, has done nothing for us...

...Some doze in their chairs...

...Within our organizations, we're still governing ourselves the way our ancestors did," he told me, as we made our way through the crowded streets of El Alto on a December afternoon...

...WORDS LIKE "NATIONALIZATION" and "recuperation" echoed in the international media last winter, alarming the U.S...

...But the cost was steep...

...The bank's experts had just explained to me why Bolivia ought to retain its current contracts with the foreign oil companies and create a tax scheme tying taxes and royalties to international market conditions...

...These are the same norms and values brought from the provinces and still practiced here in the city...

...They talk in this election about progress, but what about liberty...

...In recent years, due to exploration by private companies beginning in the mid1990s, the estimated size of Bolivia's natural gas reserves has grown from five trillion to fiftyfour trillion cubic feet, and this energy source has become the great hope for the country's future...

...The Canadabased Institute for International Sustainable Development in a recent report noted that "the agreements may be negatively correlated to investment flows...

...But for all the fanfare over Morales's election and an apparent shift to the radical left, the growing popular desire for radical change in Latin America may well be crushed before it gets off the ground...

...That soon stabilized the currency, but it also left tens of thousands who had been on the government payroll unemployed, particularly in the newly privatized tin mining industry...

...It's an obligation that comes from inside...

...He and his fellow activists also recently won a striking post–water war victory...

...We need to create something new," he says, and younger men in the audience stand to echo his views...

...Although known in the United States as the base for cocaine, coca leaves in Bolivia are widely used for tea and herbal medicines, or chewed to stave off hunger or stay awake, especially by workers in the high altitudes...

...Abraham Delgado Mancilla, a wiry twentyeightyear-old in black jeans and glasses, stands onstage...

...The identity of people and of communities has become a very important issue in the country," says Pablo Mamani, a sociologist who specializes in indigenous social movements...

...Enraged, Cochabamba activists launched a worldwide 26 n DISSENT / Spring 2006 campaign to embarrass Bechtel into backing down...

...In January, Bechtel's subsidiary agreed to withdraw its claim—only the second time a company has agreed to drop a case filed under a bilateral investment treaty following local pressure...

...After weeks of blocked roads, burning tires, rubber bullets, and tear gas, President Mesa resigned...

...Yet, as the United States pushes these investor-protective treaties on some of POLITICS ABROAD the world's weakest nations, we make it impossible for emerging democratic leaders to make good on their promises...

...This is my first visit to El Alto, and my head is spinning...

...According to its study, "countries like Brazil and Nigeria have seen large investments despite shying away from such treaties, while many Central African or Central American nations have seen little investment despite having entered into rafts of BITs...

...And there's little evidence that these Bilateral Investment Treaties (or BITs) are actually needed...

...Olivera and others are now helping communities develop cooperative water and other service delivery systems based on this view...