Bolivia's Faltering Revolution

...At the same time an MNR-sponsored Grand Peur swept the countryside...

...Some locals of the tin miners' union are Communist dominated, and the party has a voice in the central labor federation (COB...

...Officials of Bolivian Gulf say that another $50 million in development will have to be spent before they can consider building a pipeline, and the present oversupply of Venezuelan, Middle Eastern, and Soviet oil on the world market make Bolivia's prospects dubious...

...It has provided that often-underestimated blessing, stable government...

...A million dollars were wasted on a discontinued irrigation project in the Villamontes region of eastern Bolivia, which was so remote from populous areas that it could not be used...

...But it is evident that we can still be pressured into loans and grants by invoking the specter of Communism and Castroism...

...Two plants costing $225,000 to produce yucca flour would probably never be used, since there is no market in Bolivia for yucca flour...

...It was an attractive idea, and the mechanical engineering involved in building the road was superb...

...only one or two discovery wells have been successful, and these are in the isolated eastern province of Santa Cruz...

...Yet this bitterly poor country of only 3.5 million people (two-thirds of them illiterate Indians who cannot even speak Spanish) celebrated this April the tenth anniversary of a genuine social revolution, one of the few ever to take place in this hemisphere...

...But the really big profits went to the tin mining companies controlled by the Patino, Hochschild, and Aramayo families, which together produced eighty per cent of Bolivia's tin and twenty per cent of the world supply...

...Before 1952 the Quechua and Aymara Indians were not men but pongos, human livestock, who lived in wretched mud huts and slept on the floor like animals...

...The hope was that surplus farmers and miners could be attracted down from the altiplano and settled in farm colonies in the unexploited tropics...

...Navy and diplomatically isolated from its neighbors...

...But Bolivia has land frontiers with five other na tions, and a Communist victory there would be a staggering defeat for democratic socialism in the rest of the hemisphere...

...Historians with a fondness for cliches like to call Bolivia a 'Beggar on a throne of Gold...

...Mataco Indians from Argentina and Guarani from Paraguay generally did not know their ages, what country they came from, or how much they were being paid...

...An armed MNR revolt defeated the regular army and brought Victor Paz Estenssoro, a quiet-spoken former professor of economics, to power...

...Grace steamship lines and the John Deere agricultural implements firm also made generous profits from our ICA program...

...One director of COMIBOL negotiated a crooked contract for Argentine beef, escaped punishment and went off to comfortable exile in Buenos Aires...

...The American plan to encourage agricultural resettlement in Bolivia's empty Eastern tropics, one of the few aid projects that has gone beyond the piecemeal, emergency stage, has also so far proved a disappointment...

...Bolivia's history provides a case study, exaggerated almost to caricature, of the reasons for the economic and political backwardness of Latin America...

...The Indian does not allow himself to be understood, he doesn't desire communication...

...Retiring silent, immutable, he inhabits a closed world...

...And hanging over the market is a U.S...

...The Soviet offensive in Bolivia has been conducted directly, as well as through native and Cuban intermediaries...

...on my visits to Cuba in 1960 and 1961 I kept meeting Bolivian Communist leaders who had been given paid visits to Havana to learn the techniques of propaganda and guerrilla warfare at the source...

...1959: (Douglas Dillon, now Secretary of the Treasury): "The situation is serious and we cannot see that the situation is improving...

...A few thousand landowners thus lived in comfortable though land-poor luxury, while their pongos (serfs) subsisted on a diet of 1200 calories a day and endlessly chewed coca leaves to deaden their hunger and fatigue...

...American policy is still based on Professor Alexander's warning that the Communists "are the group most likely to profit from the national revolutionaries' failure"—a curious mirror image of the older argument that led us to support Perez Jimenez, Rojas Pinilla, Trujillo, Batista, and every other right wing dictator in this hemisphere...

...Poverty-stricken nations paradoxically produce some of the world's great fortunes...

...And agriculture, which still accounts for two-thirds of the labor force, makes use of only two per cent of the land area, and that in the bleak altiplano, the two and a half mile high tableland where the Indian majority lives...

...Kennedy has also been willing for the first time to make loans to state-owned industries, under new and more businesslike conditions...

...He has, of course, denounced the MNR leaders as "petty bourgeois, who have completed the surrender to Yankee imperialism...

...The past decade has brought about greater changes than the preceding four centuries...

...Thus a nation the size of Texas and California combined with a population density of only eight persons per square mile, the lowest in the hemisphere, cannot feed its own people...

...it did not act, but was acted upon...

...This leaves the urban one-third of Bolivia's population more dependent than ever on imported food...

...The spectacle of American money being used to buy new playthings for a multimillionaire is enlightening...

...The MNR revolution, part of a continent-wide movement toward political and economic democracy, wrought a social transformation outstripping even the one that later took place in Cuba...

...Lincoln White, the State Department's press officer, has primly warned that a smelter "would be uneconomic and unfeasible for Bolivia at this time," and President Paz has so far hesitated to accept such a Greek gift for fear of losing his American grants —but he hasn't dared to reject Soviet offers outright, either...

...In the light of these circumstances, the Bolivians could not be blamed for regarding the sudden appearance of Mr...

...MNR President Siles Zuazo, who succeeded Paz in office, was persuaded to resume payment on them in 1958...

...landlords and mayordomos were frightened off or driven off, and the Indians seized the land...

...A 300-mile highway between Cochabamba and Santa Cruz was opened with much fanfare by Secretary Holland in 1954...

...The awakening of the Indian population is the principal accomplishment of the MNR, and one which is spreading beyond Bolivia's borders to Argentina, Peru, and Ecuador...

...But the Toba, who came across the border from Southern Bolivia in the harvest season, were well aware of their salaries, their rights under an Argentine-Bolivian labor compact, and the meaning of inflation and differential exchange rates...

...He inhabits a hermetic world, inaccessible to the white and the mestizo...

...The Administration's willingness to cooperate with nationalized industries in Bolivia, Brazil, and Mexico is a hopeful sign...

...They had only recently gained title to the cold, windswept lands their ancestors had worked for centuries, and against all "logic" they refused to abandon them for new settlements in the jungle...

...If we subtract these wasted sums and others like them, the total of our effective aid to Bolivia is somewhat less impressive...

...Although the free enterprise theology of Secretary Dulles led him to veto requested loans for COMIBOL and the government oil company (YPFB), he did approve shipments of surplus food, technical assistance missions, extensive road-building operations, educational and agricultural aid, and direct payments which have regularly provided between thirty and forty per cent of the Bolivian national budget...

...As Stanford University's Hispanic American Report (April, 1960, pp...

...This iniquitous system was brought to an end by the triumph of the National Revolutionary Movement (MNR) in 1952...

...To begin with, the program has been plagued with endemic mismanagement and corruption...

...The result of Bolivian and American failure to come to grips with the nation's basic needs is painfully evident...

...The Bolivian CP is very small—it got only two per cent of the vote in the 1960 presidential elections—but it has influence beyond its numbers and is supported by a hyperactive Cuban embassy...

...As Alexander suggests, the new petroleum legislation, written with the aid of U.S...

...Several years later United States advice was a key factor in the writing of a Petroleum Code which is, from the point of view of foreign company seeking concessions, one of the most liberal in America...

...And Patino Mines, Incorporated (28 per cent U.S.owned) continues to invest its Bolivian profits abroad, most recently in purchasing the Bowie racetrack and a luxury hotel in Mexico City...

...experts, is also generous...

...Our own failures in Bolivia provide some idea of the difficulties the Alianza will face elsewhere...

...In this connection the action of Henry Holland in resigning as Assistant Secretary of State for Latin American Affairs and turning up a few months later as a lawyer for oil interests seeking concessions in Bolivia has been criticized—particularly since he had been Assistant Secretary at the time the new Petroleum Code was written, with the help and advice of United States Government officials...

...The Indian acts and produces...

...production nevertheless continued to slide, from 43,000 tons in 1945 to 30,000 tons in 1953, to 15,000 tons last year...

...The Indian is an enigma...

...After interviewing migrant sugar-cane workers in Northern Argentina a few years ago, I was struck by the superior sophistication of the Bolivians, who had formerly been the most backward...

...The army was tamed by demotions, exile, and jail, and its weapons turned over to militia regiments of miners and farmers...

...In contrast to our attitude toward Castro's Cuba, such aid has been forthcoming, in an amount so far equal to about a quarter of a billion dollars...

...the Chamber even went so far as to refuse to confirm ex-President Siles as Ambassador to Uruguay...

...but if the U.S...

...This estimate is no doubt entirely right...

...the Indian tenant owed personal service to his master, and could be rented out or sold with the estate...

...Shortly thereafter, for reasons having nothing to do with the MNR, the price fell as low as 80 cents, and until recently has hovered at about $1 a pound...

...Peasants who formerly did not dare protest to their masters against forced labor of three or four days a week now come to La Paz to explain their problems to the President of the Republic, and receive a sympathetic hearing...

...We have got rid of a number of the inept amateur diplomats who got us into such a mess in Cuba and other countries...

...His income, tax free because he was a Bolivian diplomat, was in some years greater than the national budget, and, as he once loftily told an inquiring official, "he was not interested in investments in Bolivia...

...The Kennedy Administration has given special attention to this inherited headache, which is such an ill omen for the success of our aid programs elsewhere...

...strategic stockpile of 349,000 tons, part of which Senator Symington is now trying to dispose of...

...Only a few thousand natives and some Japanese immigrants have taken advantage of the opportunity to emigrate, and many of them left after a year or two, disgusted with the strong-arm rule of Luis Sandoval Moron, the MNR boss of the area...

...One confidential source pointed out that a sizeable percentage of U.S...

...By calling for "direct action by the masses" for wage increases such Communist leaders as Ireneo Pimentel and Federico Escobar (both union officials at the big Siglo XX mine) hope to weaken the government and gain popularity for themselves...

...No recital of the errors and shortcomings of the MNR and the American aid program should blind us to the accomplishments of the Bolivian revolution's first decade...

...Other American beneficiaries of "foreign" aid were the holders of $57 million in defaulted Bolivian bonds issued during the 1920's...

...Benjamin Stephansky, formerly a labor specialist at the University of Chicago, has been named as our Ambassador in La Paz with the evident hope that a trained economist can suggest workable reforms...

...As Robert J. Alexander points out in The Bolivian National Revolution (1958): The United States was not willing to begin such a program until at least a preliminary arrangement had been made with the old tin-mining companies, in which a considerable amount of United States capital was invested...

...No revolution in history has had so much outside aid, yet Bolivia's GNP has fallen from $210 million in 1950 ($84 per capita) to $191 million last year ($64 per capita...

...An agricultural vocational training center costing $160,000 was abandoned because it was too far in advance of Bolivia's needs...

...But in 1956 the MNR agreed to grant forty-year concessions to for eign firms, along with special tax exemption and import permits...

...Fidel's plans for Bolivia are no secret...

...Simon I. Patino, an Indian from, Cochabamba, came to control half of the nation's tin production and lived in Paris, Nice, and Biarritz like a great lord...

...Now master of his own land and labor, the Indian probably eats a little better and lives more comfortably, but he has neither the ability nor incentive to produce a surplus for the market...

...Many expensive and ill-conceived projects were undertaken which later had to be abandoned because they did not suit the country's needs...

...Last October in New York Khrushchev offered $10 million to build a long-hoped-for tin smelter...

...Since each decline of one cent costs Bolivia about $600,000, this disastrous slide, typical of what has happened to other Latin American commodities like coffee, wool, and copper, wrecked the nation's foreign exchange position at the very time that imports had become more essential than ever...

...Agricultural equipment worth $500,000 was lost, and other equipment, including combines, was rusting in the original crates because, again, it was unsuited to Bolivian agriculture...

...But we have not yet come to grips with basic problems: the need for massive social reforms, for birth control, for civilian control of the military, for a Latin American common market, and for economic independence from the United States...

...Bolivia nationalized her oil in 1937, and agreed to indemnify Standard Oil for its properties in 1942...

...in December a visiting squadron of Russian experts offered a $150 million low-interest long-term loan "without political conditions" —i.e., without even demanding the renewal of diplomatic relations between the two countries...

...In eight years our total aid has added up to more than Bolivia's annual Gross National Product, and it is evidently going to continue...

...Fidelista influence was strong enough to make Bolivia one of the six nations that refused to vote for the expulsion of Cuba from the OAS at Punta del Este last January, despite what must have been enormous pressure from the American delegation...

...Testimony before Congressional committees investigating our aid program (quoted by Heliodoro Gonzales, "The Domestic Political Effects of Foreign Aid," InterAmerican Economic Affairs, Autumn, 1961) makes bleak reading: 1958: "Economic conditions have not improved as had been hoped for nor has the political situation become more settled...

...Almost overnight the Indians were given land, civil liberties, the right to vote, military drill, and rifles...

...Santa Cruz today still has fewer inhabitants than it had in the gaudy days of the pre-World War I rubber boom...

...Another portion allegedly went for repayment of defaulted foreign loans which were contracted in the early part of this century under such scandalous terms that many do not think repayment should be resumed...

...In Bolivia after eight years we are only holding our own, preserving an unstable situation by massive infusions of aid without basically altering an unhealthy colonial economy...

...In practice, however, little distinction was made between badly run latifundia and well-cultivated estates, and Bolivia lacked the technicians and the foreign exchange that would have made possible assistance to the peasant proprietor...

...Under government ownership things went from bad to worse...

...the mountain of Potosi alone yielded 60 million troy pounds of silver (worth $600 million today), and the city of Potosi was the largest in all the Americas...

...Although the actual granting of land titles was carried out very slowly (and with considerable violence and bribery of government officials), the number of landholders shot up in a few years from 50,000 to 800,000...

...Even without the price decline, the government mining company (COMIBOL) was in serious trouble...

...Holland so soon after his resignation from the top United States diplomatic post concerned with Latin American affairs as "pressure" of a rather obvious sort...

...Paz, the first Bolivian president in thirty years to finish out his term, turned over the office in due course to Siles, and was in turn re-elected in a reasonably free election in 1960...

...During his first term (1952-1956) Paz transformed Bolivian society...

...It must be confessed that the record to date is not a very heartening one...

...Even the much-publicized powdered milk plant at Cochamba, built as a joint U.S.-UNICEF project, was still not in production, and it did not appear that the plant would have adequate milk supplies for many years to come...

...in 1951, with prices rising as high as $1.80 a pound because of the Korean War, tin exports brought in $93 million...

...In Bolivia then, even more than elsewhere in Latin America, the cold war balance is a delicate one, and neither side has gained a definitive victory...

...This remarkable social achievement has, however, been put in jeopardy by the mediocre performance of the economy under the MNR...

...A feudal system brought over from Spain and grafted onto the communal agriculture of the Inca survived in Bolivia down to the 1952 revolution...

...Our experience there thus provides useful information as to the expanded Alianza's prospects for success elsewhere in Latin America...

...The Indian lives...

...49-50) sums up the findings of a Senate investigating committee: It was discovered that no adequate financial records of expenditures or losses were kept until 1957, and that more than a million dollars were unaccounted for...

...Geographic poverty, the heritage from Spain, a one-crop economy, racial and social tensions, and the absence of a middle class—these conditions, present everywhere to the south of us, are so overwhelming in Bolivia that one almost despairs of bringing the nation into the twentieth century...

...Agricultural production, always insufficient to cover the country's needs, dropped rather sharply and has yet to recover...

...Given the chaotic state of mining and agriculture, Bolivia's revolutionary leaders would have faced disaster without American aid...

...Between 1954 and 1957 more than $2 million in food and fiber gifts were lost through overcrowding of ports serving Bolivia and theft of material in transit...

...The agricultural slump was accompanied by a collapse in the tin industry...

...Thus Simon Patino's heir Antenor, who is so wealthy that he found it expedient to lend COMIBOL $5 million last year in return for a special divorce law, will continue to draw payments from wretched miners of the altiplano...

...Bolivia got the first loans under President Kennedy's much-publicized Alliance for Progress...

...As a recent Minister of Education put it: The Indian is a sphinx...

...Since World War II tin exports had provided about two-thirds of Bolivia's meager foreign exchange earnings...

...The significance of this revolution is enhanced by Bolivia's key position in the heart of South America, by its relation with similar revolutionary movements elsewhere in the area, and by its close ties with the United States, all of which make Bolivia a proving ground for the concepts of the Alliance for Progress...

...And American aid carried with it certain obligations...

...1962: (Professor Richard W. Patch of the American Universities Field Staff): "American aid has brought respect for the United States in gov ernment c>rcles, but hardly love from the mass of people who continue among the most poverty stricken of Latin America...

...The MNR record on civil liberties is not perfect, but there are opposition newspapers and parties and deputies...

...As Walter Guevara Arze, the losing candidate that year put it, "a fraudulent election is better for Bolivia than a revolution...

...The former owners had put no capital into exploration or new equipment since about 1935, and the mines were in a run-down condition...

...Cuba is an island which can be surrounded by the U.S...

...The silver boom was followed, after a long interval, by a boom in other metals, especially tin...

...Bolivia also has large, though still unexploited, oil reserves, and the eastern provinces of Beni and Santa Cruz can produce cattle, cotton, sugar, rubber, and tropical fruits...

...Alexander's explanation of the circumstances surrounding this reversal of policy is worth quoting: There was a certain amount of pressure exerted by the United States Government—or at least the Bolivian Government might well think that there was...

...But the human engineering involved was faulty, for the Quechua and Aymara failed to behave like American frontiersmen excited by the prospect of cheap land...

...These prospects, however, have so far been illusory...

...So is the widespread success and acceptance of the Peace Corps, which is already active in Bolivia and bringing to bear the idealism and practical approach that have been lacking in the past...

...Bolivia imports more than half of its food and its per capita income of about $70 a year is, next to Haiti's, the lowest in the hemisphere...

...As a result of pressure from the powerful Miners' Union (FSTMB) thousand of new workers were hired and unproductive mines continued in operation...

...The Indian majority was in the nation, but not part of it...

...1961: (Lincoln Gordon, now Ambassador to Brazil): "There has not been progress...

...President Kennedy takes a personal interest in Latin America (which always bored Secretary Dulles) and has introduced some administrative reforms and some new ideas...

...Instead he used his immense income to purchase tin mines in Malaya and smelters in Europe, helping to decapitalize an already impoverished economy...

...it costs the company between $1.40 and $2.10 to produce a pound of tin that sells for $1.20...

...The government continues to teeter on the edge of bankruptcy, and a murderous inflation has been slowed down but not stopped by an American-sonsored stabilization plan (when I visited the country the boliviano was worth 1/120th of a cent...

...Professor Patch, on the scene in La Paz, reported this February that "sentiment for Communist Cuba is a contained but explosive force...

...when I visited Bolivia in 1959 it had been completely paved...

...During the colonial period Upper Peru, as it was then called, was indeed a source of immense wealth...

...It is very difficult to foresee what the future of Bolivia is and how Bolivia is going to get to stand on its own feet...

...The text of the Agrarian Reform law calls for the preservation of efficiently run medium-size holdings and the provision of technical aid to the new small-holders...

...The MNR made the Indian a part of society, and for the most part still retains his loyalty...

...Worn out equipment, absenteeism, feather-bedding, strikes, and depletion of the ore bodies have cut production per miner in half since nationalization...

...At present, despite a recovery in the market price of tin, COMIBOL's losses are running at about $1 million a month...

...There has been economic stagnation and in fact the living standard per capita has gone down...

...The miners, subject to silicosis and tuberculosis and earning in most cases less than sixty cents a day, were kept at work by cruelly repressive measures punctuated by open massacres...

...An Agrarian Reform law issued by presidential decree on August 2, 1953 gave a color of legality to what had already taken place, and promised to pay for expropriated land with 25-year bonds (so far never issued...

...another was caught making profitable deals with his parents on behalf of the company...

...Six months after taking office Paz nationalized the Big Three mining companies, promising, however, to pay for them in the future...

...Economic blunders have been made, but the record in Castro's Cuba does not suggest that Soviet-style development is any more rapid or free from error...

...and the MNR cannot improve on their performance of the past decade, not even another $250 million will keep the Cubans, the Russians, and the Chinese out of La Paz...

...Mining in Bolivia has always been a robber industry which rested on semi-servile labor and brought wealth only to a very few...

...Private companies have so far spent $90 million in exploration and drilling...

...aid had been diverted to the repayment of the Export-Import Bank loans so that the bank could maintain its records of no defaults...