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ISR Issue 46, March–April 2006

Hope and challenge in Bolivia
Will Evo Morales end neoliberalism?

TOM LEWIS reporting from Bolivia

WINNING THE presidential election in Bolivia last December with an impressive 54 percent of the vote, Evo Morales joined Luis Inácio “Lula” da Silva (Brazil), Hugo Chávez (Venezuela), Tabaré Vásquez (Uruguay), Alejandro Toledo (Peru), and Néstor Kirchner (Argentina) as part of Latin America’s electoral backlash against neoliberalism.1 Morales, an Aymara Indian, assumed office January 22 as Bolivia’s first indigenous president. His government immediately symbolized hope for the 60 percent of Bolivians who live in poverty and who, along with the nation’s coca farmers, form the base of support for Morales’s political party and movement, the Movement Toward Socialism (MAS).

The election campaign unfolded as a national referendum on neoliberalism—the policies of privatization, austerity, and trade liberalization that have wreaked havoc on Bolivias poor and oppressed. Former president Jorge “Tuto” Quiroga, the candidate of the neoliberal Poder Democrático Social (PODEMOS), finished a distant second to Morales, receiving only 29 percent of the vote. MAS also won a majority in the lower house of Congress and almost captured a majority in the Senate. Three out of the nine state governorships went to MAS, as did the mayoralties of all of the major cities with the exception of Santa Cruz. The scale of MAS’s victory sent a powerful message from Bolivia’s voters to the captains of international finance, industry, and trade.

Initial steps in power

In the days following the election, Morales announced that he would repeal Supreme Decree 21060, the 1985 law that opened the door to the privatization of state enterprises and to measures imposing “flexibility” on Bolivian labor. Some critics on the Left considered the repeal of 21060 to be a merely symbolic gesture, since it has no retroactive effect of re-nationalizing privatized enterprises. Yet overturning the decree has topped the demands of Bolivia’s social movements since 2000.

This is because 21060’s infamous Article 55, which introduced labor flexibility, has served as the hammer with which the transnational and Bolivian bosses have busted unions, persecuted organizers, fired workers without cause, and spread fear among the rank and file, deterring them from joining in a collective fight for workers’ rights. The repeal of 21060 represents an important measure in limiting the ability of national and transnational capital in Bolivia to act with impunity.

In a further step, Morales indicated that he will use last May’s ruling by the Supreme Court—a ruling that invalidated existing contracts with transnational oil and gas companies—to negotiate new contracts on terms more favorable to Bolivia’s treasury. These contracts, which usually stipulate that transnational petroleum corporations pay only 18 percent in royalties to the government, were declared unconstitutional because the executive branch never submitted them to Congress for ratification, as required by law.2 Using a combination of royalties and more taxes, a new hydrocarbon law passed in April 2005 requires a total contribution of 50 percent from the transnationals. Morales will seek to replace the existing but invalid contracts with new ones based on the 50 percent formula.

Morales hopes to use super-profits from natural gas to pay for significant improvements in the living standards of Bolivia’s workers, peasants, poor, and unemployed. But Morales is not inheriting an already nationalized and developed hydrocarbon industry. The need to negotiate with foreign investors for development capital will limit how far he can go toward full nationalization. His stated plan is to nationalize only subsoil resources—the gas, oil, and minerals in the ground—and to leave surface property and exploitation largely in private hands.

When leaders in the national Coalition for the Defense and Recuperation of Gas speak of “nationalization,” however, they mean—beyond the state’s recovery of ownership of oil and gas reserves—the participation of Bolivian workers and the state in all aspects of production: exploration, extraction, industrialization, refining, and marketing. “If it’s only a law, it won’t mean much,” says Oscar Olivera, a spokesperson for the Gas Coalition and leader of the successful fight to overturn the privatization of water service in Cochabamba in 2000. “We will have to continue to push for a genuine nationalization.”

Despite continued dependence on foreign investment, Morales will find himself in a relatively strong position for negotiating with the transnationals. Natural gas prices have risen quickly—even faster in percentage terms than oil prices—since the start of the Iraq War. Should the European corporations that presently dominate Bolivia’s hydrocarbon industry and U.S. companies prove stubborn in negotiating new contracts, China awaits its chance. And Venezuela’s President Hugo Chávez may be willing to contribute substantively toward financing the development of Bolivian gas.

Other early measures taken by the Morales administration included salary reductions of up to 58 percent for members of the executive and legislative branches of government, including the president, vice president, cabinet ministers, and elected representatives. He named a cabinet in which fourteen of the sixteen ministers come from indigenous groups and women hold the portfolios of Interior, Justice, Health, and Economic Development. Some controversy, however, surrounded the appointment of seven of the ministers because of their past work with neoliberal governments.

Among the most important steps taken by Morales has been the presentation to Congress of a proposal to call elections to a Constitutional Assembly in July 2006, and for the assembly to begin its work in August. The convocation of the Constitutional Assembly stood out as the MAS’s central campaign promise. The assembly’s aim, according to MAS officials, would be to “reestablish the nation on a new basis” and formally “end neoliberalism.” The “new basis” would take into account for the first time the interests and aspirations of Bolivia’s majority indigenous population.

Morales also decreed a 7 percent increase in teachers’ salaries as well as the creation of 3,500 new teaching jobs. Bolivian teachers were scheduled to receive a 3.5 percent increase under the budget Morales inherited for the current fiscal year, but salary cuts for other government officials made it possible to double the amount. Morales said the existing budget did not enable him to satisfy the teachers’ demand for 8,000 new jobs at present.

At the same time as Morales repealed Supreme Decree 21060 and moved toward nationalizing hydrocarbons in some form, he also took steps to placate the conservative leaders of the oil- and gas-rich eastern provinces, who want autonomy and who have threatened secession if Morales goes too far in dismantling neoliberalism. Morales thus approved private exploitation of the region’s iron and manganese mine in Mutún over the protests of environmentalists, unionists, and peasant groups.

Morales also issued a statement guaranteeing protection of the private property of big business and large landowners. And he reassured foreign companies and investors that their presence is welcome as long as their practices are “transparent”—meaning “incorrupt” and “non-subversive.” As a gesture of goodwill, and despite what many consider irrefutable proof, Morales absolved Repsol, the Spanish-Argentine transnational corporation, from allegations that it trafficked in contraband hydrocarbons.

An early controversy between the new Morales government and groups of Bolivian workers erupted in late January when officials apparently reneged on a campaign promise to triple the minimum wage. MAS literature circulating in the last ten days of the December campaign contained a pledge to raise the minimum wage from its current 480 bolivianos ($60) per month to 1,500 bolivianos ($185) per month. Morales’s chief economic advisor, Carlos Villegas, was forced to make a public statement in which he said no such promise ever came from an authorized source.3

Promise or no, ordinary working Bolivians clearly expect to see an improvement in their standard of living within the next twelve months. This attitude was reflected in the reaction to Morales’s 7 percent salary increase for teachers. Union leaders rejected the offer and urged instead that the increase match the promised 1,500 bolivianos per month.

What kind of party is MAS?

MAS is best understood as a social and political formation rooted in Bolivia’s social movements but lacking in a strong internal structure of its own.4 According to MAS strategist and now Vice President Alvaro García Linera, MAS consists of “a coalition of flexible social movements that has expanded its actions to the electoral arena. There is no structure; it is a leader and movements, and there is nothing in between. This means that MAS must depend on mobilizations or on the temperament of the social movements.”5

In fact, a party core does exist, which is comprised of a small group of professional politicians and intellectuals. This core looks to navigate a way among the forces of the largely white Bolivian oligarchy, transnational capital, U.S. imperialism, separatist tendencies, and the demonstrated power of Bolivia’s indigenous masses. In addition, MAS’s ascension to power is attracting all kinds of political opportunists and social climbers to the party’s officialdom, including many who once had no qualms about serving neoliberal governments.

MAS has frequently used patronage to buy the support of significant peasant and indigenous organizations, as well as workers’ unions. The practice of patronage reached its height after the 2003 Gas War that toppled then President Gonzalo Sánchez de Lozada. MAS distributed funds and official posts to obtain the willingness of union and indigenous leaders to dampen the mood of rebellion and thus to allow the new government of President Carlos Mesa a chance to stabilize. Among the negative consequences of this practice was the split in the Bolivian Peasant Workers Confederation between a majority wing led by MAS operative Ramón Loayza and a minority wing led by its historical head Felipe “Mallku” Quispe.

The Gas War of 2003 gave rise among the social movements—the Central Obrero Boliviano (COB—Bolivia’s national trade union federation), and the powerful El Alto Federation of Neighborhood Organizations (FEJUVE)—to a political program known as the “October Agenda.” The Gas War of 2005, which overthrew President Carlos Mesa and produced the early elections that Morales won in December, was fought around the same program. The October Agenda calls for: hydrocarbon nationalization; renegotiation of existing oil and gas contracts; the arrest and trial of ex-President Sánchez de Lozada and others responsible for the many killed by repressive forces during the 2003 Gas War; an end to coca eradication; the renationalization of privatized social services, including water; and a Constitutional Assembly.

MAS’s campaign platform responds to most of these demands. As already indicated, MAS will seek a limited form of hydrocarbon nationalization. It has quickly followed through on its promise to call a Constitutional Assembly. MAS also intends to press for legislation expanding regional autonomy and increasing citizen participation in government (for example, by allowing the election of officials that traditionally have been appointed by the central government in La Paz). It has advanced plans to help small businesses and agricultural producers. And, as evidenced by Morales’s creation of a new Water Ministry, it apparently intends to pursue ways of de-privatizing at least some social services.

The question remains, of course, whether MAS has the conviction and stamina to hold firm against the obstacles that will be placed in its path by international and national capital and the Bolivian Right. Morales and MAS’s record over the past few years does not offer great hope that MAS will staunchly prosecute or defend an agenda of radical reform.

In the mid- to late-1990s, MAS enjoyed a reputation as a direct action social movement. But in 2002, Morales finished second in the presidential contest, narrowly missing first place in the popular vote. Since that time, MAS has focused its actions on winning the presidency and to operating in the electoral arena. This has led to a rightward evolution in its politics, to the point where García Linera describes MAS today as a “center-left” formation whose goal is the development of a kind of state capitalism, which he has labeled “Andean-Amazonian capitalism.”

For example, MAS could have led or formed part of a new anti-neoliberal government in the wake of October 2003. Instead, it lobbied against the October Agenda and for the constitutional succession of then Vice President Carlos Mesa, knowing full well that Mesa differed not at all from ex-President Sánchez de Lozada on neoliberal policy. Throughout the Mesa administration, MAS continued to act as a pillar of support for the government. Morales went so far as to campaign in favor of Mesa’s July 2004 gas referendum, even though the option of nationalizing oil and gas resources did not appear on the ballot.

MAS has repeatedly worked to contain Bolivia’s ongoing social rebellion. Its thinking has been that if it were thrust into power on the wave of popular revolt, it would risk a direct confrontation with U.S. imperialism. Characteristically, Morales refused to sign on to the slogan of “nationalization” until the very end of the Gas War of 2005. At one point he tried to jump to the front of the gas struggle with a moderate slogan defending the 50 percent formula. But the social movements quickly progressed beyond Morales and began to demand outright nationalization. Only when it became clear that the conflict would subside did MAS join the call for nationalization. Even then Morales proved key in channeling the revolt into the “safe” option of early elections—something that the social movements and the Left had never demanded. Indeed, the ensuing electoral period significantly lessened the momentum of the masses.

Morales proclaimed in the last days of the presidential campaign, “We will bury neoliberalism.” He did not say, “We will bury capitalism.” Moreover, according to García Linera, socialism remains a project that must be postponed for 50 to 100 years in Bolivia. Morales thus does not intend to construct socialism but rather to establish a new accommodation with global capitalism based on a revitalized role for the state in providing for the well-being of its citizens.

Such a renewal of the state’s role in society is the concrete meaning of Andean-Amazonian capitalism: a return to a form of state-led capitalist development that preceded the era of neoliberalism—rather than a challenge to capitalism itself.

If MAS prevails against the forces arrayed against it, neoliberalism is on the way out in Bolivia. Indeed, at stake in Bolivia today is whether neoliberalism will be reformed away, or whether the battle against neoliberalism will be combined with a fight against capitalism. The world’s imperialist powers recognize these stakes and have moved to smooth some of the rough edges of neoliberalism in Bolivia. The International Monetary Fund has recently forgiven $251 million in Bolivian debt, and Spain has written off another $120 million in private debt. These steps will help to put money at Morales’s disposal to inject into social programs.

Nevertheless, the dynamic of severely polarized class and social forces embodies the potential to frustrate both imperialism’s hope for as little change as possible and Morales’s hope for significant but moderate reform.

Social movements and the Left

After twenty years of privatization and cuts in social spending, Bolivia remains the poorest country in South America. Gross Domestic Product today stands at less than half of where it stood when economic guru Jeffrey Sachs designed a neoliberal structural adjustment program for Bolivia in the mid-1980s.

Job opportunities for urban and rural workers have diminished overall, raising official unemployment to an unprecedented 13 percent. The formal sector of the economy accounts for only two out of every ten jobs, while the highly unstable informal sector provides seven out of every ten jobs. The state employs one out of every ten workers. Only 22 percent of Bolivians earn enough to keep their families adequately nourished, while social services reach less than one-third of the population. By 2003, real wages had fallen to levels below those of 1990, with underemployment affecting 62 percent of workers in the formal sector and 70 percent of workers in the informal sector. One recent study concludes that, “With low salaries and growing insecurity in their sources of income, the majority of workers have seen their quality of life decline. Their reduced spending capacity has had the effect of shrinking the internal market, creating a vicious circle that reproduces a decline in investment and employment.”6

Conditions such as these have spawned powerful social movements in Bolivia. These are the groups that overwhelmingly turned out to support MAS’s electoral bid. Morales’s survival will depend on his ability to retain their loyalty. With no irony intended, Morales himself encouraged them to challenge him if necessary, saying “I may make mistakes. But if I slow down, push me.” Yet before the election, Morales also told La Gaceta:

If I’m elected president, unfortunately it will be my duty to respect those neo-liberal laws. Some changes we will be able to make by decree, others through the legislature, but immediately there aren’t going to be great changes because these are twenty years of neo-liberal laws—that can’t be erased in one swipe.7
The electoral period from July to December presented the left wing of the social movements with a dilemma. The Left had concluded at the end of the Gas Wars of 2003 and 2005 that the social movements as a whole lacked a “political instrument”—some form of party or political organization—that could help to give direction to the mobilized masses at times when the possibility of gaining state power presented itself. Each Gas War represented such an occasion, but the Left twice found itself unprepared. Subsequently, faced with a six-month electoral interlude, the Left had insufficient time, and no real political space among the masses, in which to build a “political instrument.”

One alternative, therefore, was to abstain from the election and to focus exclusively on the work of party building. COB president Jaime Solares chose this path. He and a few other small radical groups launched a self-proclaimed revolutionary party out of the COB in July. After at first declaring his candidacy and then withdrawing it for lack of support, Solares repudiated the election. Joining the COB in the abstentionist camp were the Bolivian Miners’ Union (FSTMB), the Regional Workers’ Confederation (COR), and, initially, FEJUVE.8 These groups made no progress toward increasing the size of its existing revolutionary formation during the electoral period. Today, they have given Morales a three-month deadline to nationalize hydrocarbons before they renew street demonstrations.9

A much discussed alternative among the radical Left turned on the possibility of abstaining from the election at the national level but presenting independent candidates at the regional and local levels. This proposal acknowledged the movements’ concerns over the reliability of Morales to carry out a program of radical reform, but it also reflected the view of many that it would be a mistake to surrender the electoral field of debate to the center and Right by abstaining from participation. The debate turned bitter as the prospect for independent candidacies faded into the background, and as the majority of local and regional candidates with left credentials decided in the end to run on the MAS ticket. This legacy is a new source of fragmentation within the social movements today between those who want to maintain the political independence of the social movements and those who want to enter the government.

In the end, the vast majority of Bolivia’s social movements decided upon a tactic of strategic support for Morales and the MAS. They based their support on the likelihood that Morales’s election would pave the way to two crucial advances: a Constitutional Assembly and hydrocarbon nationalization. They also considered as possibilities that a MAS government might undertake a new agrarian reform, and that it might succeed in bringing Sánchez Lozada to trial for the deaths of February and October 2003. Some sectors of the social movements also used the electoral period to strengthen their own organizations. A National Coalition for the Defense and Recuperation of Water was founded, expanding the work of local and regional water associations. And an important “Unity Pact” was re-signed between indigenous organizations and non-indigenous peasant groups.

On balance, the social movements have been (at least temporarily) weakened as a result of the elections. The unseemly scramble to the halls of power by once committed activists such as Abel Mamani, who is now the new water minister, has left organizations such as Mamani’s FEJUVE disoriented and absorbed by internal recriminations. Many leaders of the irrigators associations and the cocalero movement—the groups that formed the backbone of the April 2000 water rebellion in Cochabamba—now occupy government posts or congressional seats belonging to MAS. Absent the militants of these movements, the mobilizing capacity of the water coalition, for example, is dramatically reduced. Any return to activism aimed at pressuring Morales’s government on the part of the social movements is unlikely to occur in the proximate future, since it would presume a distancing of the leaders from the government, or the rank and file from their leaders. And that process, should it occur, will not happen overnight.

Too few movement leaders remain faithful to grassroots organization and direct action as the road to profound social change. One leader who has is Oscar Olivera, who turned down the post of labor minister in order to preserve his political independence. Olivera did participate in the December election. But he views the MAS government only as a transitional state that offers greater opportunities than the neoliberal state for building a mass movement that can fight for genuinely revolutionary change.

The international Left has tended to greet MAS’s victory in largely uncritical fashion. One exception is James Petras, who sees nothing in MAS besides symbolic gestures, and who expects Morales to conduct neoliberal business-as-usual, with only cosmetic reforms to help small businesses and peasants.10 At the opposite pole from Petras stands Atilio Borón, who claims the exhaustion of the neoliberal model, and who discounts the application to Bolivia of any clear distinction between “reform” and “revolution.” Instead, Borón admonishes Bolivia’s workers and the Left to learn from Salvador Allende’s experience in Chile and to restrain themselves from pushing Morales too far and too fast.

What more could the [right-wing] reaction against Morales ask for than for [the opposition to Morales] to be led by the hard left—the hard and immature left—that is capable of hiding beneath plebeian dress and ringing speeches the plans for destabilization that imperialism and its allies possess! Not even the CIA’s best scenarios could match the effectiveness that such clumsiness would have!11
Neither Petras’s nor Borón’s position does justice to the dynamic nature of Bolivia’s current conjuncture. In contrast to Petras’s view, advances will be made under Morales, within certain limits. The main reason such advances will occur is that, barring their unlikely capitulation or collapse over time, Bolivia’s social movements will ensure that meaningful progress is made. Without the ongoing mobilization of the social movements, however, advances will stall short of reaching movement goals.

This fact explains why Borón also errs in his analysis of post-election Bolivia. No one can predict, of course, nor should they misjudge, the timing and pace of events that might lead to a situation in which the MAS government would try to force the social movements to back down in the face of imperialist and right-wing conspiracy. Such an eventuality could be a matter of a few years or a couple of decades, depending on the development of mass consciousness and the capacity of ordinary Bolivians to fight not just against neoliberalism but for a “post-capitalist,” democratic and socialist society.

In this respect, Borón draws the worst possible lesson from his analogy between Bolivia today and the Chilean experience of 1970–1973. Over the course of that time, Chile’s workers did in fact go “too far” in the eyes of imperialism and the Chilean ruling class. The class struggle reached the point of challenging the very existence of Chilean capitalism. Chile’s bosses recognized this and determined to overthrow Allende once his government could no longer control the working-class movement. Caught between the rock of their own too limited reforms, and the hard place of needing to neutralize the military threat, Allende and his Popular Unity party decided to urge workers to back down by continuing to insist on the possibility of using the existing state to end capitalism.

As we now know, Allende was fatally wrong not to have sided with workers in a revolutionary surge to defeat the forces of reaction. His illusions concerning the ultimate nature of the capitalist state—even a “state-capitalist” state—were responsible for Chile’s tragedy in 1973.12 The efforts of the Popular Unity government to hold down the class struggle weakened the mass movement and created the space for a military coup that Chile’s workers were not organizationally or politically prepared to resist. That is the conclusion that is best drawn from Borón’s comparison of Chile’s past and Bolivia’s future.

It is improbable that neoliberalism in Bolivia—still backed 100 percent by Washington and the bulk of the European Union—will be abandoned without a struggle. Evo Morales deserves the support of socialists for every blow he strikes against neoliberal policies. And he deserves our criticism for every accommodation he makes to global capitalism. But in the end, the fate of neoliberalism and capitalism in Bolivia rest in the hands of the masses who are increasingly asserting their own control over the future.

Tom Lewis is a frequent contributor to the ISR.

1 I have left out Chile’s Michelle Bachelet from this list of presidents because the reform of neoliberalism did not constitute a central feature of Bachelet’s campaign. It should be noted that Lula, Kirchner, Toledo, and Vásquez have all sold out to neoliberalism, as did Ecuador’s Lúcio Gutiérrez (who was later thrown out by a mass insurrection). Chávez’s relation to neoliberalism is too complex an issue to discuss here.

2 Throughout the 1990s, transnational oil and gas companies took $9 billion out of Bolivia and left only $300 million in the country.

3 “Bolivia: El gobierno miente sobre el salario mínimo,” Redacción de Econoticiasbolivia, January 27, 2006, avaialble online at

4 G. Búster, “La victoria de la esperanza,” Sin Muro (January 2006), 7.

5 Raul Zibechi, “Two opposing views of social change in Bolivia,” IRC Americas, December 14, 2005. Cited in Benjamin Dangl, “Bolivia’s trial by fire,” Znet, January 11, 2006,

6 Silvia Escóbar de Pabón, “Globalización, trabajo y pobreza: El caso de Bolivia,” Trabajo y producción de la pobreza en Latinoamérica y el caribe (Buenos Aires: CLACSO, 2005), 65–66. The statistics reported in this paragraph come from the same article, which in turn reported them from Dossier estadístico de empleo, condiciones laborales y dimensiones de género (La Paz: CEDLA, 2003).

7 Quoted in Gretchen Gordon, “Evo Morales becomes Bolivia’s next president, now his real challenge begins,” Znet, December 19, 2005.

8 Following a divisive internal fight, FEJUVE declared its support for Morales a few weeks before the election.

9 Only FEJUVE can marshal any real forces at present to make good on the threat to renew mass protests. The COB and FSTMB are too small on their own.

10 James Petras, “Evo Morales y Bolivia: Gestos populistas y fondo neoliberal,” Econoticiasbolivia, January 16, 2006, For the English version: “Evo Morales: populist gestures and neoliberal substance,” January 1, 2006,,

11 Atilio Borón, “La encrucijada boliviana,” Rebelión, 28 December 2005,

12 For a fuller discussion of Chile 1970–1973, see Tom Lewis, “Chile: State and revolution,” International Socialist Review 6, Spring 1999.

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