What is at Stake in Bolivia

What is at Stake in Bolivia

As the opposition was unable to come up with a single candidate , Mr Arce’s victory is almost assured. Should this be the outcome , the road ahead seems to be rather bumpy. As the next president of Bolivia will need to undertake adjustments to steer the economy out of recession in the aftermath of Covid19 and the accelerated passing of the fossil fuel era.

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As I write this column Bolivia prepares to elect the head of state that would succeed Evo Morales the leftist president that for 14 years ruled the country through well thought out changes to the constitution and populist agitation as has been the rule in Latin America for the past 500 years. Mr Morales presided over an authoritarian regime that persecuted dissenters and opposers alike while engaging in an economic management that produced an average GDP growth of 4.9% with inflation holding steady at 5.5% and international reserves reaching $15B or about 50% of GDP over this 14 year presidency. As a result there was growth in the middle classes and with it the desires of the population to enjoy more freedom and a stronger democracy. Indeed, according to Reuters “Evo Morales …. steered South America’s poorest country through an unprecedented period of political stability and economic prosperity since sweeping to power in 2006”. But prosperity always triggers political mobilization and so happened in Bolivia. On October 2019 they were about to deny Morales yet another term in office when organized civic society unveiled a massive fraud prepared by the government to pocket the election. And a peoples rebellion ensued leading to Mr Morales resignation and the take over of the presidency by Jeannie Anez a senator who acted as care taker in spite of her ambitions to stay and launched elections for October 2020. Leading the race were Luis Arce , former Minister of Finance under Morales representing Morales’ Party MAS; Carlos Mesa, a journalist and historian former Vice President and President of Bolivia representing Comunidad Ciudadana and Luis Fernando Camacho representing Creemos, a Santa Cruz based movement that led the charge against the attempted electoral fraud of October 2019.

As the opposition was unable to come up with a single candidate , Mr Arce’s victory is almost assured. Should this be the outcome , the road ahead seems to be rather bumpy. As the next president of Bolivia will need to undertake adjustments to steer the economy out of recession in the aftermath of Covid19 and the accelerated passing of the fossil fuel era. Truth be told, Mr Morales successful economic management flew on the commodity boom of the late 20th century that flipped over the first decade of this century . But given the lack of effort to diversify exports Bolivia is today trapped in a double whammy: reduced demand for oil, gas and other fossil products and increasing pressures to deploy more resources in protect the Amazonia rain forests from the excesses of climate change that burned away 20% of the region last year. Further while grains and metals might increase both in price and volume of exports the increase will most probably not make up for the collapse in prices and export volume for oil and gas.

As a result, and assuming Mr Arce comes out as the winner he will have to enter into an agreement with the much hated FMI to stabilize the economy. This, of course, is anathema to Mr Morales who is the owner of Mr Arce’s party and who will be back in Bolivia the same day Arce is declared winner. Paralysis will most likely ensue. And while MAS still has a sizable majority on congress to pass any economic adjustment package both leaders need to agree on the content and direction of economic policy to profit from this majority. A tug-of-war might emerge between Mr Morales and Mr Arce . meanwhile the situation could deteriorate chipping away MAS’ support among the people who began to distance from that party when unveiled as supporter of the 2019 electoral fraud attempt. MAS could easily lose its overwhelming majority at the upcoming congressional elections. Should this be the case democracy will enjoy a field day in Bolivia.

Should Mesa be the winner MAS would certainly make everything within its power to boycott any adjustment . Mesa jut then needs to masterfully play the victim up and until the next parliamentary election when he could lead the charge against MAS and its allies. In this scenario instability would be the rule for the first two years of the Mesa administration. But the loss of control over the lucrative coca trade and other corrupt sources of income as a Mesa Administration exercises control over the coca areas and reinstates cooperation with worldwide law enforcement agencies could inflict a severe tactical blow to Mr Morales. Judicial investigations opened to Mr Morales for the attempted electoral fraud would run course further impairing Mr Morales capacity to lead MAS.. For a country that has been kidnapped by the Castro-Chavez alliance for the last 14 years the future seems to be better than that of Cuba, Nicaragua or Venezuela.

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