Bolivians Reject Free Markets, by TOM HAYDEN
Source News for Social Justice Action
Date 04/08/04/12:34

[posted online on July 21, 2004]

Bolivia's fragile government gained temporary breathing room in Sunday's
referendum over the nation's natural gas and oil reserves, but the "yes"
vote also strengthened the position of Evo Morales and his Movement Toward
Socialism (MAS) which can revise the measure that will be sent to the
legislature on August 7.

In the run-up to the July 18 vote, radical Indian and labor leaders
threatened boycotts and the burning of ballot boxes against a referendum
that left out the option of state nationalization. Nevertheless, the
referendum also meant a continued rejection of the free-market policies
championed by the former president, Gonzalo Sánchez de Lozada, the
University of Chicago economist who was driven into exile last October
after police killings of nearly one hundred Indians who protested his rule.

The referendum, the first in Bolivia's history, included five questions.
Voters supported the repeal of the existing privatization law, the
"recuperation" of "ownership of all hydrocarbons at the wellhead,"
refounding of Bolivia's state oil company to "take part in all stages of
the hydrocarbon production chain," and exporting gas that promotes domestic
industrialization, with fees and taxes up to 50 percent of the value of
production, with revenues primarily going to education, healthcare, roads
and jobs.

Progressive critics assert that some seventy existing contracts with
multinational oil and gas companies remain intact, but these interests were
not able to mount an effective campaign against the reforms that were being
proposed. On the right, the sentiment of many in the Bolivian business
class was reflected in an essay by an American Enterprise Institute pundit
in the July 9 Wall Street Journal declaring that the referendum meant
economic suicide. The AEI analysis correctly pointed out, however, that a
"yes" vote would mean "that President Carlos Mesa will have bought himself
enough legitimacy to remain in office until the end of his term in 2007,"
which most observers believe was the real purpose of the referendum,
conceived as it was after mass rioting paralyzed the country last October.

Early returns indicated an 80 percent majority in favor of repealing the
existing hydrocarbons law pushed in the 1990s by the hated Sánchez de
Lozada (or "Goni"), whose political consultants were the star liberal
Democratic pollster Stanley Greenberg and former presidential campaign
manager James Carville. The Washington-based Greenberg firm represents
British Petroleum, one of the multinationals with billions invested in
Bolivia. BP supported the referendum, along with the International Monetary
Fund (IMF) and the World Bank, as did US Embassy officials, because the
possible alternative--an Indian-led revolution--was even worse.

In the weeks before the vote, the de facto liberation of numerous Indian
communities on the Bolivian altiplano above La Paz struck terror in the
country's elite. On the eve of the referendum, the Brussels-based
International Crisis Group (ICG) warned of Bolivia's "most dangerous
moment" in a report on the crisis titled "Too Deep To Heal?" The report
advised a public relations offensive to demonstrate how natural gas "can
jump-start economic development."

The referendum went relatively smoothly, however, apparently because of a
popular consensus that radical change might be achieved with less loss of
life through reforming the system. Evo Morales, who narrowly missed being
elected president in 2002, campaigned for the referendum while indicating
that he would seek a more progressive redistribution of gas and oil
revenues in the Congressional debate ahead, along the lines of the US New
Deal and earlier Latin American nationalizations.

Morales's support for the referendum, however, effectively marginalized
more radical nationalists, whose ranks had already been in disarray. The
MAS, which Morales heads, is expected to win numerous municipal seats in
the December elections. His stance also may have been influenced by a US
retreat, at least rhetorically, from its war to eradicate coca leaf.
(Morales is the leader of the coca growers union, which has been opposing
the eradication efforts.)

While authorship of Sunday's referendum was not clear, La Paz-based
social-science researcher Tom Kruse reported that lobbyists for
international hydrocarbon firms were consulted in the drafting. Reached in
England, Greenberg said he knew of no current involvement by his firm in
the referendum. He retains "a great deal of respect" for the exiled Goni,
he added, and described his work for BP as "mainly environmental" and not
connected with Bolivia.

The Greenberg firm, along with Carville, has done extensive polling of
Latin American opinion and consulting for Eduardo Duhalde, whose popular
support as Argentina's president fell to 8 percent after repression of
antiglobalization protests in the 1990s, as well as Francisco Labatista,
the candidate of Mexico's Institutional Revolutionary Party, which sent
armed forces to quell the 1995 Zapatista uprising before being defeated at
the polls.

It appears that the Greenberg-Carville axis attempted to export the Clinton
Administration's free-trade policies to Latin America, with disastrous
political results. Prompted by popular resistance from Mexico, Bolivia,
Argentina, Ecuador and Brazil, however, the Clinton-era policies are being
re-examined, from the New Deal tone of this week's Bolivian referendum to
the language of Senator John Kerry's platform recommendation for "review"
of trade policies.

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