About | Contact | Mongabay on Facebook | Mongabay on Twitter | Subscribe

Bolivia-Democracy and Economic Stabilization

MONGABAY.COM
Mongabay.com seeks to raise interest in and appreciation of wild lands and wildlife, while examining the impact of emerging trends in climate, technology, economics, and finance on conservation and development (more)

WEEKLY NEWSLETTER

Bolivia Index

President Jaime Paz Zamora
Courtesy Embassy of Bolivia, Washington

In 1985 the entire nation was submerged in a state of tense anticipation as Paz Estenssoro unveiled his strategy to confront the economic and political crisis. Throughout August 1985, a team of economists worked to design the new government's economic initiatives. The private sector came to play a crucial role in the elaboration and implementation of the government's economic policy. The private sector's main organization, the CEPB, had shifted its traditional support for authoritarian military solutions and by 1985 had become clearly identified with freemarket models that called for reducing the state's role in the economy. When the economic reforms were announced, the impact on the private sector became evident.

On August 29, 1985, Paz Estenssoro signed Decree 21060, one of the most austere economic stabilization packages ever implemented in Latin America. Hailed as the NPE, the decree sought to address the structural weaknesses in the state capitalist development model that had been in place since 1952. Specifically, the decree aimed at ending Bolivia's record-setting hyperinflation and dismantling the large and inefficient state enterprises that had been created by the revolution. Hence, the NPE represented a shift from the longstanding primacy of the state in promoting development to a leading role by the private sector. The NPE also rejected the notion of compatibility between populist redistribution and capitalist development that had characterized previous MNR-led regimes.

After addressing the economic side, Paz Estenssoro moved to resolve the political dimensions of the crisis. In fact, shortly after the announcement of Decree 21060, the COB, as it had done so often under Siles Zuazo, headed a movement to resist the NPE. But the COB had been weakened by its struggles with Siles Zuazo. After allowing the COB to attempt a general strike, the government declared a state of siege and quickly suffocated the protest. Juan Lechín Oquendo and 174 other leaders were dispatched to a temporary exile in the Bolivian jungle. They were allowed to return within weeks. By then, the government had already delivered the COB a punishing blow that all but neutralized organized labor.

Even as he moved to contain the COB, Paz Estenssoro sought to overcome the potential impasse between the executive and legislature that had plagued Siles Zuazo for three years. The MNR did not have a majority in Congress, and therefore Paz Estenssoro had to contemplate a probable confrontation with the legislature; for this reason, among others, he decreed the NPE. In moving to overcome this political gap, Paz Estenssoro did not seek support from the center-left groups that elected him. Indeed, any move in that direction would have precluded the launching of the NPE in the first place. Paz Estenssoro had in fact seized on parts of the program pushed by Banzer and the ADN during the electoral campaign. As a result, Banzer was left with the choice of backing Paz Estenssoro or opposing a stronger version of his own policy program.

Discussions opened by Paz Estenssoro with Banzer ripened into a formal political agreement, the Pact for Democracy (Pacto por la Democracia--pacto), signed on October 16, 1985. The formulation of the pacto was a crucial political development. Under its terms, Banzer and the ADN agreed to support the NPE, a new tax law, the budget, and repression of labor. In return, the ADN received control of a number of municipal governments and state corporations from which patronage could be used to consolidate its organizational base. The MNR also agreed to support reforms to the electoral law aimed at eliminating the leftist groups that voted against Banzer in Congress. Most important, the pacto allowed ADN to position itself strategically for the 1989 elections.

In the most immediate sense, the pacto was effective because it guaranteed the Paz Estenssoro government a political base for implementing the NPE. For the first time in years, the executive was able to control both houses of Congress. Paz Estenssoro used this control to sanction the state of siege and defeat all attempts of the left to censure the NPE. In broader historical terms, the pacto was significant because it created a mechanism to overcome the structural impasse between the executive and the legislature.

The pacto served other purposes as well; for example, it gave Paz Estenssoro leverage over some of the more populist factions of the MNR who were unhappy with the NPE because they saw it as a political liability in future elections. For three years, Paz Estenssoro used the pacto to prevent any possible defections. Hence, party factions that could have harassed the president contemplated the immediate costs of being cut off from patronage even as they were forestalled in their larger political goal of altering the NPE.

As in Colombia and Venezuela, where pacts between the principal parties were responsible for the institutionalization of democracy, the pacto was deemed an important step toward consolidating a two-party system of governance. In contrast to the Colombian and Venezuelan cases, however, the pacto was based more on the actions of Banzer and Paz Estenssoro than on the will of their respective parties. Moreover, because the pacto was a reflection of patronage-based politics, its stability during electoral contests was tenuous at best. During the municipal elections in 1987, for example, party members, when confronted with patronage offers from opposition parties, faced enormous difficulties in adhering to it.

The campaign for the 1989 elections tested the pacto to the breaking point. At issue was the need to ensure that in the event neither candidate secured a majority, the losing party would support the victor in Congress. Polls conducted in December 1988 and January 1989 suggested that Banzer could emerge victorious. Under the terms of an addendum to the pacto signed in May 1988, the MNR would be obligated to support Banzer in Congress. This situation provoked a sense of despair in the MNR, which perceived itself as an extension of the ADN with no real likelihood of emerging victorious in May 1989.

In a surprising pre-electoral move, Banzer announced the formation of a "national unity wand convergence alliance" between the ADN and MIR. Congress deliberated fourteen hours on August 5 before electing Jaime Paz Zamora as president of Bolivia and Luis Ossio Sanjinés of the ADN Christian Democratic Party (Partido Demócrata Cristiano--PDC) alliance as vice president. On handing the presidential sash to his nephew, Paz Zamora, on August 6, Paz Estenssoro thereupon became the first president to complete a full term in office since his second presidency in 1960-64. The political maturity of the election was illustrated not only by Banzer's support for the MIR and the MIR's willingness to join with the ADN but also by the vows of both Banzer and Paz Zamora to continue with the policies of the NPE.

The "national unity and convergence alliance," however, revealed that old ways of doing politics had survived. Although the ADN and MIR each received nine ministries, the ADN controlled the principal policy-making bureaucracies, such as foreign affairs, defense, information, finance, mining and metallurgy, and agriculture and peasant affairs. The ADN's share of the cabinet posts went to many of the same individuals who had ruled with Banzer in the 1970s. The MIR's principal portfolios were energy and planning. Following a traditional spoils system based on patronage, the new ruling partners divided among themselves regional development corporations, prefectures, and decentralized government agencies, as well as foreign embassy and consular posts.

Data as of December 1989

Background		Bolivia, named after independence fighter Simon BOLIVAR, broke away from Spanish rule in 1825; much of its subsequent history has consisted of a series of nearly 200 coups and countercoups. Democratic civilian rule was established in 1982, but leaders have faced difficult problems of deep-seated poverty, social unrest, and illegal drug production. In December 2005, Bolivians elected Movement Toward Socialism leader Evo MORALES president - by the widest margin of any leader since the restoration of civilian rule in 1982 - after he ran on a promise to change the country's traditional political class and empower the nation's poor, indigenous majority. However, since taking office, his controversial strategies have exacerbated racial and economic tensions between the Amerindian populations of the Andean west and the non-indigenous communities of the eastern lowlands. In December 2009, President MORALES easily won reelection, and his party took control of the legislative branch of the government, which will allow him to continue his process of change.
Location		Central South America, southwest of Brazil
Area(sq km)		total: 1,098,581 sq km land: 1,083,301 sq km water: 15,280 sq km
Geographic coordinates		17 00 S, 65 00 W
Land boundaries(km)		total: 6,940 km border countries: Argentina 832 km, Brazil 3,423 km, Chile 860 km, Paraguay 750 km, Peru 1,075 km
Coastline(km)		0 km (landlocked)
Climate		varies with altitude; humid and tropical to cold and semiarid
Elevation extremes(m)		lowest point: Rio Paraguay 90 m highest point: Nevado Sajama 6,542 m
Natural resources		tin, natural gas, petroleum, zinc, tungsten, antimony, silver, iron, lead, gold, timber, hydropower
Land use(%)		arable land: 2.78% permanent crops: 0.19% other: 97.03% (2005)
Irrigated land(sq km)		1,320 sq km (2003)
Total renewable water resources(cu km)		622.5 cu km (2000)
Freshwater withdrawal (domestic/industrial/agricultural)		total: 1.44 cu km/yr (13%/7%/81%) per capita: 157 cu m/yr (2000)
Natural hazards		flooding in the northeast (March-April)
Environment - current issues		the clearing of land for agricultural purposes and the international demand for tropical timber are contributing to deforestation; soil erosion from overgrazing and poor cultivation methods (including slash-and-burn agriculture); desertification; loss of biodiversity; industrial pollution of water supplies used for drinking and irrigation
Environment - international agreements		party to: Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Marine Dumping, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands signed, but not ratified: Environmental Modification, Marine Life Conservation
Geography - note		landlocked; shares control of Lago Titicaca, world's highest navigable lake (elevation 3,805 m), with Peru
Population		9,775,246 (July 2009 est.)
Age structure(%)		0-14 years: 35.5% (male 1,767,310/female 1,701,744) 15-64 years: 60% (male 2,877,605/female 2,992,043) 65 years and over: 4.5% (male 193,196/female 243,348) (2009 est.)
Median age(years)		total: 21.9 years male: 21.3 years female: 22.6 years (2009 est.)
Population growth rate(%)		1.772% (2009 est.)
Birth rate(births/1,000 population)		25.82 births/1,000 population (2009 est.)
Death rate(deaths/1,000 population)		7.05 deaths/1,000 population (July 2009 est.)
Net migration rate(migrant(s)/1,000 population)		-1.05 migrant(s)/1,000 population (2009 est.)
Urbanization(%)		urban population: 66% of total population (2008) rate of urbanization: 2.5% annual rate of change (2005-10 est.)
Sex ratio(male(s)/female)		at birth: 1.05 male(s)/female under 15 years: 1.04 male(s)/female 15-64 years: 0.96 male(s)/female 65 years and over: 0.79 male(s)/female total population: 0.98 male(s)/female (2009 est.)
Infant mortality rate(deaths/1,000 live births)		total: 44.66 deaths/1,000 live births male: 48.56 deaths/1,000 live births female: 40.57 deaths/1,000 live births (2009 est.)
Life expectancy at birth(years)		total population: 66.89 years male: 64.2 years female: 69.72 years (2009 est.)
Total fertility rate(children born/woman)		3.17 children born/woman (2009 est.)
Nationality		noun: Bolivian(s) adjective: Bolivian
Ethnic groups(%)		Quechua 30%, mestizo (mixed white and Amerindian ancestry) 30%, Aymara 25%, white 15%
Religions(%)		Roman Catholic 95%, Protestant (Evangelical Methodist) 5%
Languages(%)		Spanish 60.7% (official), Quechua 21.2% (official), Aymara 14.6% (official), foreign languages 2.4%, other 1.2% (2001 census)
Country name		conventional long form: Plurinational State of Bolivia conventional short form: Bolivia local long form: Estado Plurinacional de Bolivia local short form: Bolivia
Government type		republic; note - the new constitution defines Bolivia as a "Social Unitarian State"
Capital		name: La Paz (administrative capital) geographic coordinates: 16 30 S, 68 09 W time difference: UTC-4 (1 hour ahead of Washington, DC during Standard Time) note: Sucre (constitutional capital)
Administrative divisions		9 departments (departamentos, singular - departamento); Beni, Chuquisaca, Cochabamba, La Paz, Oruro, Pando, Potosi, Santa Cruz, Tarija
Constitution		7-Feb-09
Legal system		based on Spanish law and Napoleonic Code; has not accepted compulsory ICJ jurisdiction; the 2009 Constitution incorporates indigenous community justice into Bolivia's judicial system
Suffrage		18 years of age, universal and compulsory (married); 21 years of age, universal and compulsory (single)
Executive branch		chief of state: President Juan Evo MORALES Ayma (since 22 January 2006); Vice President Alvaro GARCIA Linera (since 22 January 2006); note - the president is both chief of state and head of government head of government: President Juan Evo MORALES Ayma (since 22 January 2006); Vice President Alvaro GARCIA Linera (since 22 January 2006) cabinet: Cabinet appointed by the president elections: president and vice president elected on the same ticket by popular vote for a single five-year term; election last held 6 December 2009 (next to be held in 2014); note - per the new constitution, presidents can serve for a total of two consecutive terms election results: Juan Evo MORALES Ayma elected president; percent of vote - Juan Evo MORALES Ayma 64%; Manfred REYES VILLA 26%; Samuel DORIA MEDINA Arana 6%; Rene JOAQUINO 2%; other 2%
Legislative branch		bicameral Plurinational Legislative Assembly or Asamblea Legislativa Plurinacional consists of Chamber of Senators or Camara de Senadores (36 seats; members are elected by proportional representation from party lists to serve five-year terms) and Chamber of Deputies or Camara de Diputados (130 seats; 76 members are directly elected from their districts [7 or 8 of these are chosen from indigenous districts] and 54 are elected by proportional representation from party lists to serve five-year terms). elections: Chamber of Senators and Chamber of Deputies - last held 6 December 2009 (next to be held in 2015) election results: Chamber of Senators - percent of vote by party - NA; seats by party - MAS 26, PPB-CN 10; Chamber of Deputies - percent of vote by party - NA; seats by party - MAS 89, PPB-CN 36, UN 3, AS 2
Judicial branch		Supreme Court or Corte Suprema (judges elected by popular vote from list of candidates pre-selected by Assembly for six-year terms); District Courts (one in each department); Plurinational Constitutional Court (five primary or titulares and five alternate or suplente magistrates elected by popular vote from list of candidates pre-selected by Assembly for six-year terms; to rule on constitutional issues); Plurinational Electoral Organ (seven members elected by the Assembly and the president; one member must be of indigenous origin to six-year terms); Agro-Environmental Court (judges elected by popular vote from list of candidates pre-selected by Assembly for six-year terms; to run on agro-environmental issues); provincial and local courts (to try minor cases)
Political pressure groups and leaders		Bolivian Workers Central or COR; Federation of Neighborhood Councils of El Alto or FEJUVE; Landless Movement or MST; National Coordinator for Change or CONALCAM; Sole Confederation of Campesino Workers of Bolivia or CSUTCB other: Cocalero groups; indigenous organizations (including Confederation of Indigenous Peoples of Eastern Bolivia or CIDOB and National Council of Ayullus and Markas of Quollasuyu or CONAMAQ); labor unions (including the Central Bolivian Workers' Union or COB and Cooperative Miners Federation or FENCOMIN)
International organization participation		CAN, FAO, G-77, IADB, IAEA, IBRD, ICAO, ICC, ICCt, ICRM, IDA, IFAD, IFC, IFRCS, ILO, IMF, IMO, Interpol, IOC, IOM, IPU, ISO (correspondent), ITSO, ITU, LAES, LAIA, Mercosur (associate), MIGA, MINUSTAH, MONUC, NAM, OAS, OPANAL, OPCW, PCA, RG, UN, UNASUR, UNCTAD, UNESCO, UNFICYP, UNIDO, Union Latina, UNMIL, UNMIS, UNOCI, UNWTO, UPU, WCL, WCO, WFTU, WHO, WIPO, WMO, WTO
Flag description		three equal horizontal bands of red (top), yellow, and green with the coat of arms centered on the yellow band note: similar to the flag of Ghana, which has a large black five-pointed star centered in the yellow band; in 2009, a presidential decree made it mandatory for a so-called wiphala - a square, multi-colored flag representing the country's indigenous peoples - to be used alongside the traditional flag
Economy - overview		Bolivia is one of the poorest and least developed countries in Latin America. Following a disastrous economic crisis during the early 1980s, reforms spurred private investment, stimulated economic growth, and cut poverty rates in the 1990s. The period 2003-05 was characterized by political instability, racial tensions, and violent protests against plans - subsequently abandoned - to export Bolivia's newly discovered natural gas reserves to large northern hemisphere markets. In 2005, the government passed a controversial hydrocarbons law that imposed significantly higher royalties and required foreign firms then operating under risk-sharing contracts to surrender all production to the state energy company. In early 2008, higher earnings for mining and hydrocarbons exports pushed the current account surplus to 9.4% of GDP and the government's higher tax take produced a fiscal surplus after years of large deficits. Private investment as a share of GDP, however, remains among the lowest in Latin America, and inflation remained at double-digit levels in 2008. The decline in commodity prices in late 2008, the lack of foreign investment in the mining and hydrocarbon sectors, and the suspension of trade benefits with the United States will pose challenges for the Bolivian economy in 2009.
GDP (purchasing power parity)		$43.38 billion (2008 est.) $40.88 billion (2007 est.) $39.08 billion (2006 est.) note: data are in 2008 US dollars
GDP (official exchange rate)		$16.6 billion (2008 est.)
GDP - real growth rate(%)		6.1% (2008 est.) 4.6% (2007 est.) 4.8% (2006 est.)
GDP - per capita (PPP)		$4,500 (2008 est.) $4,300 (2007 est.) $4,200 (2006 est.) note: data are in 2008 US dollars
GDP - composition by sector(%)		agriculture: 11.3% industry: 36.9% services: 51.8% (2008 est.)
Labor force		4.454 million (2008 est.)
Labor force - by occupation(%)		agriculture: 40% industry: 17% services: 43% (2006 est.)
Unemployment rate(%)		7.5% (2008 est.) 7.5% (2007 est.) note: data are for urban areas; widespread underemployment
Population below poverty line(%)		60% (2006 est.)
Household income or consumption by percentage share(%)		lowest 10%: 0.5% highest 10%: 44.1% (2005)
Distribution of family income - Gini index		59.2 (2006) 44.7 (1999)
Investment (gross fixed)(% of GDP)		18% of GDP (2008 est.)
Budget		revenues: $8.039 billion expenditures: $7.5 billion (2008 est.)
Inflation rate (consumer prices)(%)		14% (2008 est.) 8.7% (2007 est.)
Stock of money		$3.998 billion (31 December 2008) $3.032 billion (31 December 2007)
Stock of quasi money		$6.339 billion (31 December 2008) $4.729 billion (31 December 2007)
Stock of domestic credit		$5.433 billion (31 December 2008) $4.759 billion (31 December 2007)
Market value of publicly traded shares		$NA (31 December 2008) $2.263 billion (31 December 2007) $2.223 billion (31 December 2006)
Economic aid - recipient		$582.9 million (2005 est.)
Public debt(% of GDP)		45.2% of GDP (2008 est.) 46.3% of GDP (2007 est.)
Agriculture - products		soybeans, coffee, coca, cotton, corn, sugarcane, rice, potatoes; timber
Industries		mining, smelting, petroleum, food and beverages, tobacco, handicrafts, clothing
Industrial production growth rate(%)		10.6% (2008 est.)
Current account balance		$2.015 billion (2008 est.) $1.984 billion (2007 est.)
Exports		$6.448 billion (2008 est.) $4.49 billion (2007 est.)
Exports - commodities(%)		natural gas, soybeans and soy products, crude petroleum, zinc ore, tin
Exports - partners(%)		Brazil 60.1%, US 8.3%, Japan 4.1% (2008)
Imports		$4.641 billion (2008 est.) $3.24 billion (2007 est.)
Imports - commodities(%)		petroleum products, plastics, paper, aircraft and aircraft parts, prepared foods, automobiles, insecticides, soybeans
Imports - partners(%)		Brazil 26.7%, Argentina 16.3%, US 10.5%, Chile 9.5%, Peru 7.1%, China 4.8% (2008)
Reserves of foreign exchange and gold		$7.722 billion (31 December 2008 est.) $5.318 billion (31 December 2007 est.)
Debt - external		$5.931 billion (31 December 2008) $5.385 billion (31 December 2007)
Stock of direct foreign investment - at home		$5.998 billion (31 December 2008)
Stock of direct foreign investment - abroad		$NA
Exchange rates		bolivianos (BOB) per US dollar - 7.253 (2008 est.), 7.8616 (2007), 8.0159 (2006), 8.0661 (2005), 7.9363 (2004)
Currency (code)		boliviano (BOB)
Telephones - main lines in use		690,000 (2008)
Telephones - mobile cellular		4.83 million (2008)
Telephone system		general assessment: privatization begun in 1995; reliability has steadily improved; new subscribers face bureaucratic difficulties; most telephones are concentrated in La Paz and other cities; mobile-cellular telephone use expanding rapidly; fixed-line teledensity of 7 per 100 persons; mobile-cellular telephone density slighly exceeds 50 per 100 persons domestic: primary trunk system, which is being expanded, employs digital microwave radio relay; some areas are served by fiber-optic cable; mobile cellular systems are being expanded international: country code - 591; satellite earth station - 1 Intelsat (Atlantic Ocean) (2008)
Internet country code		.bo
Internet users		1 million (2008)
Airports		952 (2009)
Pipelines(km)		gas 4,883 km; liquid petroleum gas 47 km; oil 2,475 km; refined products 1,589 km (2008)
Roadways(km)		total: 62,479 km paved: 3,749 km unpaved: 58,730 km (2004)
Ports and terminals		Puerto Aguirre (inland port on the Paraguay/Parana waterway at the Bolivia/Brazil border); Bolivia has free port privileges in maritime ports in Argentina, Brazil, Chile, and Paraguay
Military branches		Bolivian Armed Forces: Bolivian Army (Ejercito Boliviano, EB), Bolivian Navy (Fuerza Naval Boliviana, FNB; includes marines), Bolivian Air Force (Fuerza Aerea Boliviana, FAB) (2009)
Military service age and obligation(years of age)		18-49 years of age for 12-month compulsory military service; when annual number of volunteers falls short of goal, compulsory recruitment is effected, including conscription of boys as young as 14; 15-19 years of age for voluntary premilitary service, provides exemption from further military service (2009)
Manpower available for military service		males age 16-49: 2,295,746 females age 16-49: 2,366,828 (2008 est.)
Manpower fit for military service		males age 16-49: 1,666,697 females age 16-49: 1,906,396 (2009 est.)
Manpower reaching militarily significant age annually		male: 108,304 female: 104,882 (2009 est.)
Military expenditures(% of GDP)		1.9% of GDP (2006)
Disputes - international		Chile and Peru rebuff Bolivia's reactivated claim to restore the Atacama corridor, ceded to Chile in 1884, but Chile offers instead unrestricted but not sovereign maritime access through Chile for Bolivian natural gas and other commodities; an accord placed the long-disputed Isla Suarez/Ilha de Guajara-Mirim, a fluvial island on the Rio Mamore, under Bolivian administration in 1958, but sovereignty remains in dispute
Electricity - production(kWh)		5.495 billion kWh (2007 est.)
Electricity - production by source(%)		fossil fuel: 44.4% hydro: 54% nuclear: 0% other: 1.5% (2001)
Electricity - consumption(kWh)		4.665 billion kWh (2007 est.)
Electricity - exports(kWh)		0 kWh (2008 est.)
Electricity - imports(kWh)		0 kWh (2008 est.)
Oil - production(bbl/day)		51,360 bbl/day (2008 est.)
Oil - consumption(bbl/day)		60,000 bbl/day (2008 est.)
Oil - exports(bbl/day)		10,950 bbl/day (2007 est.)
Oil - imports(bbl/day)		6,172 bbl/day (2007 est.)
Oil - proved reserves(bbl)		465 million bbl (1 January 2009 est.)
Natural gas - production(cu m)		14.2 billion cu m (2008 est.)
Natural gas - consumption(cu m)		2.41 billion cu m (2008 est.)
Natural gas - exports(cu m)		11.79 billion cu m (2008)
Natural gas - proved reserves(cu m)		750.4 billion cu m (1 January 2009 est.)
HIV/AIDS - adult prevalence rate(%)		0.2% (2007 est.)
HIV/AIDS - people living with HIV/AIDS		8,100 (2007 est.)
HIV/AIDS - deaths		fewer than 500 (2007 est.)
Major infectious diseases		degree of risk: high food or waterborne diseases: bacterial diarrhea, hepatitis A, and typhoid fever vectorborne diseases: dengue fever, malaria, and yellow fever water contact disease: leptospirosis (2009)
Literacy(%)		definition: age 15 and over can read and write total population: 86.7% male: 93.1% female: 80.7% (2001 census)
Education expenditures(% of GDP)		6.4% of GDP (2003)