charles castaldi is a former National Public Radio reporter in Latin America, who now lives in Nicaragua.
Published October 19, 2016
For centuries, Bolivia has been the poor cousin of its neighbors in the southern cone of Latin America. An outpost of the Inca empire in the 16th century, the area endured a brutal Spanish conquest that provoked the indigenous population into a string of uprisings, each of which was met with bloody repression. After independence in 1825 – the victors named the country after Simón Bolívar, the Venezuelan father of Latin America's anti-colonial struggle – it enjoyed an all-too-brief period of enlightened rule. But within a few years it was at war with its neighbors Peru, Paraguay and Chile. In the process, Bolivia lost both its access to the sea and the rich load of minerals under the coastal desert.
Except for a few attempts to improve the lot of indigenous people in the middle of the 20th century, corruption, electoral fraud and inept military rule seemed to define Bolivia's destiny. In the late 1980s, sweeping macroeconomic reforms combined with a rapid conversion to free markets – the "shock therapy" that made then-Harvard economist Jeffrey Sachs a star of his profession – tamed Bolivia's hyperinflation, which had reached an unfathomable 24,000 percent. But shock therapy fell short in meeting its broader goals. Bolivia's indigenous population remained among the poorest on the planet, and the country remained best known for its signal export, coca.
In the mid-1990s, Juan Evo Morales Ayma, an Aymara Indian who had risen out of poverty to become the leader of the coca growers union, took an essentially defunct right-wing party called MAS (Movement Toward Socialism) and reoriented it left. Evo, as he is known to one and all, began protesting against the U.S. funded attack on coca growing, which was the only source of income for many impoverished Bolivians. The country had become a major supplier to Colombian narcos in the 1980s, who processed the leaves to feed the robust American appetite for what was jocularly known to party animals as Bolivian marching powder.
By awakening the fury of the Indians, the political establishment signed its own death warrant.
In 1997, Morales was elected national deputy from Cochabamba, a city in the Andes. The powers-that-were did all they could to stymie his rise. However, the Aymara and Quechua Indian poor, who are a majority of the population, had seldom seen a politician who not only spoke for them, but actually looked like them. The United States declared him a threat to stability and Bolivian democracy, giving him a helpful boost among his constituents.
Those were also the halcyon days of the IMF's and World Bank's push for privatizing inefficient public sectors in developing countries. So, in the Bolivian town of Cochabamba, the municipal water authority was sold to a private consortium in which Bechtel, the multinational construction firm, was a major shareholder. The newly privatized utility doubled rates. But in the bone-dry altiplano, the Andean highlands around La Paz, water and access to it are not to be trifled with. The rate increases were met with stiff opposition that morphed into what came to be known as the Cochabamba water wars. Evo and his cocaleros joined the protests, which were met with violent government repression.
Just a few years later, another myopic move added credence to the view of many Bolivians that the white-skinned folks who ran the government were only interested in lining their pockets. This time, it was the sale of natural gas assets to American companies, allegedly at below-market prices. (Bolivia has the second largest reserves in Latin America.) More protests erupted, answered by yet more repression. But by awakening the fury of the Indians, the political establishment signed its own death warrant. One president after the other resigned in the face of ever-deepening crises. In 2005, Evo won the presidency by a landslide.
The initial take in Washington was that the populist leader was cut from the same authoritarian cloth as Hugo Chávez in Venezuela and was sure to drive the economy (further) into ruin. In fact, this government has had an economic track record that is the envy of its neighbors.
Growth for the last five years has averaged above 5 percent; all told, since Morales took office in 2006, GDP (adjusted for inflation) is up by 55 percent. Meanwhile, the central bank had stashed away sufficient foreign currency reserves to pay for a year and a half's worth of imports before the commodity boom ended in 2012. Only China can make the same claim.
Equally important, the income gains have been shared; the percentage of the population living in poverty has been reduced by one-third during Morales' years in office.
When I arrived in Bolivia, one story was monopolizing the headlines: a scandal involving Gabriela Zapata, an ex-girlfriend of Evo – he's not married – and her seemingly miraculous rise in a Chinese company that did $500 million worth of business with the Bolivian government. Beyond the corruption narrative, the story included a son she had with Evo, who he claimed had died as a baby.
Then, miracle of miracles, she revealed that the baby was alive and grown up, whereupon the government charged she had made up the story. She was subsequently arrested for money laundering, fraud and influence peddling. To top things off, the government also jailed her lawyer.
This outline for a telenovela – oops, this news – first dropped in February, just as Evo was asking voters to approve his proposal to change the constitution so he could stand for a fourth term. The "no" votes won by eight percentage points and Morale's government lashed out at opponents and the press, blaming them for manufacturing the Zapata story to besmirch his reputation.
My first stop in Bolivia was Santa Cruz de la Sierra, which lies in a fertile lowlands plain east of the Andes and is a geographic metaphor for the division that has riven the country for much of its existence. Santa Cruz has historically been dominated by land-owning oligarchs of European descent, whose race-based dislike of the "indios" from the western highlands is, even today, barely concealed. This translates into an Obama-like phenomenon: when some people criticize Evo, saying that the Zapata scandal confirms their worst fears about his corrupt and authoritarian leanings, it's hard to parse out how much this has to do with his being a dark-skinned man of indigenous blood.
But it doesn't take long to see that the economic boom on Evo's watch has remade Santa Cruz from a sleepy agricultural backwater to the economic engine of Bolivia. Construction, both multistory office buildings and housing, is booming. Indeed, Santa Cruz is one of the fastest growing cities in the world. Big money has been made virtually overnight, explaining the scads of Porsches, Mercedes and Audis that cruise the streets.
For decades, agriculture was the mainstay of the economy of the department of Santa Cruz, with mostly rice, corn, wheat, sugar, meat and poultry on the menu. (A "department" is the equivalent of a state in Bolivia.) Today, 70 percent of the food consumed in Bolivia is grown in the department. But it's natural gas and the infrastructure to support extraction that have brought boom times to the eastern region of the country, where Santa Cruz serves as de facto capital.
When Morales came to power, he made good on a promise to nationalize the hydrocarbon and mining industries. He flipped the government's cut of gas sales from 20 percent to 80 percent. The Brazilian, Spanish and French oil companies operating in Bolivia cried foul but stuck around, wagering that increased prices and greater volumes would make up for their lower share of the take.
It was a good bet. Earnings on fuel exports rose from less than $1 billion to over $6 billion last year. All told, Santa Cruz department's oil and gas production, added to all its other goods and services output, equals almost 40 percent of GDP. And in spite of the fact that Evo has chosen to let the golden goose survive – even thrive – locals aren't inclined to give him credit.
One morning, I toured a giant sugar mill in Santa Cruz that belongs to the Guttierez family, one of the oldest and most prominent families in town. As we made our way through giant buildings housing cane crushers, boilers and miles of pipes exuding steam, Eduardo Guttierez Jr complained about the restrictions Evo had imposed, requiring producers to set aside enough sugar for domestic consumption before exporting the residual at higher prices. What's more, he said, the refinery is now required to pay an extra month's wages to workers on top of the previously required 13th-month bonus common in Latin America.
In spite of this, he conceded, the sugar business has thrived. While one member of his family called Evo "a dictator surrounded by terrorists," Guttierez Jr sounded more balanced. "Evo was lucky, he was handed a good economic situation," he said, referring to the favorable gas export terms that were obtained just before Morales came to power. "At the same time, I wonder if another administration wouldn't have misspent those profits."
It's a variation on a refrain I will hear over and over again in Santa Cruz: we don't like the guy … still, we're doing pretty well … but things could be better. …
Outside the facility, bulldozers add to a giant mountain of cane residue from the milling process. A cloying sweet smell permeates the air. Beyond the mill, hundreds of acres of cane fields belonging to the Guttierez family form a giant rectangle in the middle of the city. Imagine Central Park as a private farm.
In the afternoon, I drive south through neighborhoods that look much like poor barrios in any Latin American city: tin roofs, some houses of brick, others of rough boards, rutted dirt roads, chickens free-ranging for urban detritus. That makes it all the more surprising to come across large, modern brick buildings that seem out of place amid the blight. Not one or two, but many. These are schools, built in the last few years, that would look at home in any American suburb.
Marbella Villalobos Mesa is waiting to pick up her child at the entrance of the Cupesi errado Primary School. "Before, there was nothing here," she said. "There was nothing for poor people like us. But since Evo, things have really changed. We have ended up much better off."
She receives a government stipend for each child who attends school – a conditional stipend system for the poor of the sort that has swept across Latin America. Under Evo, literacy has climbed about 10 percentage points to a respectable 96 percent of the population. But even though the government spends more proportionally on education than most Latin countries, there's no denying that the educational system has problems retaining students who reach working age.
Villalobos tells me she cleans homes and her husband is a mason. They make a combined income of about 3,500 bolivanos a month, which works out to about $500, not counting the children's stipend. It could be worse: the minimum wage in Bolivia is $260 a month.
Inside the front gate, Sergio Rivera, a young teacher, wonders (somewhat aggresively) why I was asking questions. When I explained, he said: "How could we possibly complain about the way things are going? This wasn't Argentina or Venezuela, which had periods of great wealth. We come from abject poverty."
Rivera points around. He, like everyone around me in and out of the school, has an indigenous complexion. "Most people have experienced the racism that predominated in this part of the country," Rivera said. "Our parents certainly did. But with Evo, things are different. And some people here aren't happy that their skin color no longer gives them a position of privilege."
As I exit, the school another parent, Irina Gil, stops me. "Don't forget, Percy has also done a lot for us poor," she said.
The Percy in question is Percy Fernández, the popular mayor of Santa Cruz and a member of an opposition party. Democracy at the municipal level seems alive and well – all the largest cities are ruled by members of the opposition. Mayor Percy, by the way, is no Boy Scout. He has been taken out of circulation by members of his own party for issuing death threats against journalists and groping women at public events.
Everywhere are reminders of the social division and its origins. The council chamber, where members of Evo's party are in the minority, is adorned with a large mural depicting Spanish soldiers bristling with swords and lances accompanying priests who are converting almost naked Indians to Catholicism. It's a throwback to an era in which the Spaniards were seen by Latin American elites as bringers of civilization.
The next day, I'm in Colinas del Urubó, a new development north of the city where many of the mansions rival those of Beverly Hills in size and architectural crassness. We're talking 10,000 square feet and millions of dollars. And the lots are selling like hotcakes, with buyers coming from the growing ranks of both well-heeled Bolivians and foreigners who suddenly see Bolivia as a safe haven.
Later in the day, as a light rain falls, I go running along the forest that borders the Piray River, which snakes through Santa Cruz. Soon, I'm following a trail into dense woods and as I come to a clearing, a pack of dogs and a woman with a rather unfriendly countenance intercept me. At first, I'm more concerned about the woman than the snarling dogs. But the sight of an older American in running gear in the rain has her perplexed.
Her name is Amalia Osinogo, and she has lived in this ramshackle neighborhood for decades. When Evo first ran, she campaigned for him and registered everyone in the community to vote. "We were all for him here," she said. "He was a candidate like we had never seen before."
She thought that, in return, the new government would help them obtain titles to the land on which they had squatted. "They came and put in electricity," she said. "But after that we never saw them again. It turns out Evo is like all politicians: once he gets your vote, you stop existing."
She finds his efforts to change the constitution to get re-elected objectionable. "If Evo is not careful," she said, "if he keeps pushing for these types of changes that are against our constitution, he's going to lose the support of people like me."
She invites me to walk through the neighborhood along the river. We reach the riverbed, which, at over a mile across, consists of strands of beige water lacing through deposits of silt from the Andes. Along one bank, a cowboy moves his cattle through high grass. Across the river, I can make out the mansions of Colinas del Urubó.
A day later, I talk to Pedro Rivero Jordan, the executive editor of El Deber (which loosely translates as "duty"), the most influential newspaper in Santa Cruz. These days, he said, freedom of expression in Bolivia is a mixed bag. You can find plenty of critical programs on television. Likewise, there are plenty of newspapers that report on government corruption or publish anti-Morales opinion pieces.
"It would be a fallacy to say there's no freedom of expression here," Rivero said. "However, the spaces are diminishing and there's more and more intimidation." He wonders what will happen if the economy turns south or, as is inevitable, more cases of corruption surface. "We'll see how they handle things," he said. "But I'm not optimistic."
Rivero, who died at age 84 before this article went to press, was particularly worried about the designs of Vice President Álvaro García Linera, who, depending on whom one talks to, is either one of the brilliant intellectuals behind Evo's ascent or a terrorist turned Machiavelli. His statements about the fourth estate lean more toward the latter. Regarding the journalists who uncovered the Zapata scandal, García Linera said, "Those responsible [whom he labels 'political media mafia'] will have to go to jail. The law will be applied to all of these liars."
Vice President Álvaro García Linera, depending on whom one talks to, is either one of the brilliant intellectuals behind Evo’s ascent or a terrorist turned Machiavelli.
After the tropics of the eastern lowlands, La Paz, the de facto capital of Bolivia – the actual capital is Sucre – is geographic shock. First, there's the sight of the Andes, with glacier-topped 21,000-foot-high Mount Illimani dominating the horizon. The altiplano is a harsh, almost Martian, landscape. La Paz itself sits in what appears to be an eroded canyon at 12,000 feet – an altitude that leaves all but the most acclimatized visitors puffing along the vertiginous streets. But it is the inhabitants of La Paz, not the topography, that make the strongest impression. Unlike Santa Cruz, this is the heart of Aymara indigenous culture. Indian faces are everywhere, their exuberant clothing offering a contrast to the dull gray of the city.
I had last been in La Paz in 1980 during the brief but brutal rule of Gen. Luis García Meza Tejada. Even the military found him reprehensible and removed him after a 13-month reign. The city was a sad and frightening place in those days. Now I saw indigenous women everywhere in their colorful multilayered skirts and bowler hats, a fashion statement introduced by European railroad workers in the 19th century.
The women are called cholitas, which used to be a derogatory term. In the 1980s, they were not even allowed to enter parts of the city, ride public transportation or enter most establishments. Bolivia, before Evo, was, for all practical purposes, an apartheid state. But cholita has since morphed into a term of indigenous pride.
Another change that strikes me as I move around the city is the plentiful commerce on the streets. The government has let the informal sector flourish as a way to put money into the pockets of indigenous people for whom it's the only source of income. It's part of an economic policy that is largely the brainchild of Luis Alberto Arce Catacora, the economy and finance minister of Bolivia.
That evening, I visit Arce on the top floor of a 20-story building in the heart of La Paz. Even at 8 p.m., there are people milling about and holding meetings. One cholita in traditional garb introduces herself as part of his planning staff. Arce's own large office has a spectacular view of the city below, not to mention a bunch of conference tables overflowing with files.
Arce, a former central banker who began advising Evo before he was elected, is in his mid-50s, but his laid-back manner and easy laugh make him seem younger. He's one of the few original cabinet members who remains in the government. In the beginning of his administration, Evo filled his cabinet with like-minded activists with no administrative experience. But it didn't take long for him to realize he needed ministers who could actually administer.
Arce's rap is full of Marxist terminology. But it's camouflaged in a modern analysis of the economy that would not sound alien to your average ivory tower liberal academic.
He persuaded Evo to throw out the IMF/World Bank playbook as soon as he was elected. Then came the nationalization of natural resources.
"The sales of our state-owned companies in the '90s never produced any profit for us," he said. "There was just a penetration of foreign capital for the exploitation and pillaging of our natural resources."
The first phase in his plan, which he calls the New Bolivarian Model, was to regain control of Bolivia's natural resources through renationalization and increased taxes. Then came the second phase, industrialization. "We sold our gas to Argentina and Brazil, and they converted it to petrochemicals," he noted. "We've since built two petrochemical plants, one to export to Brazil and the other to Argentina. Now we're reaping the profits; we are creating industry and adding value on our side of the border."
He sees big potential for Bolivia with a new fertilizer plant, with plastics, with electricity. "Why are Argentina and Brazil buying our gas to produce electricity?" he asked. "Why don't I sell them electricity? We have the natural resources to sell energy to all of our neighbors."
His policies, which Evo's critics grudgingly label as prudent, have made the Bolivian economy healthier than it has ever been and obviously played a big part in Evo's re-elections. Leftist governments in Venezuela and Nicaragua have spent heavily to score populist points. But Evo has been downright thrifty from the beginning, when he acceded to Arce's pleas not to double state salaries. The windfall from higher taxes on the sales of gas went to a mix of industrialization, savings for the inevitable rainy day, and targeted aid to the poor.
"The primary focus of our economic policies has been to attack unemployment and inequality with the redistribution of profits," he said. "We've about 10 million inhabitants in Bolivia, and we've taken about two million of them out of poverty. And we've been able to do this without making the rich poorer."
There is some fear that, with gas prices low, Bolivia will find itself hard-pressed to continue its generous redistributive policies. But Arce appears unperturbed. "Prices of minerals have been falling since 2011 and prices of gas have been falling since 2014," he said. "But we'll continue to do well, because we are keeping the profits in the country."
It helps, of course, to have stashed away $13 billion in foreign reserves (as of April 2015), which is being spent down slowly to buffer the energy-price shock.
Indeed, while Arce talks the lefty talk, his stewardship is praised by the financial establishment in Washington and New York. "Now even at the IMF they admit that all is not well with neo-liberalism," he chuckled.
"We had the great fortune of being able to think about our model, plan it, dream it," he said. "And thanks to the political will of President Evo, we've had the opportunity to see it crystallize. Not too many economists get that opportunity."
The next morning, I take a ride on one of Morales's infrastructure investments that has been a big hit with the public: a $250 million gondola system with three lines that connect far reaches of this chaotic, mountainous city. The government simply wrote a check to an Austrian company, which built the first three lines. Four more are planned.
My 40-cent ticket gets me on the red line to El Alto. The gondolas are full, the faces around me entirely indigenous. The ride feels like flying over the red brick houses stacked tenuously up the sides of canyons.
In La Paz, as a general rule, the higher you go, the poorer the neighborhood. That seems the case when traveling to El Alto, an incorporated city that sits on the 14,000-foot plain above La Paz. It's a place that the whiter folks who live in the south of La Paz generally don't visit, although it's now just two gondola rides away.
El Alto has grown sharply in recent decades, drawing in immigrants from the countryside. It's a stark, otherworldly mix of truck stops, construction sites and mostly poor homes. Outside the center, the streets are dirt; it's often hard to tell if behind the walls there are homes or empty lots. But then one spots a cholet, a mansion to which no verbal description can fully do justice. Suffice it to say that the most famous cholet – the word combines chola and chalet – is called Optimus Prime. That's right, from Transformers. It's an architectural style that was introduced by a local Aymara builder named Freddy Mamani Silvestre, and it combines colorful indigenous themes in a baroque style that seems oddly modern.
The cholets mirror the mansions I saw in Santa Cruz, except these mansions are being built for Aymara Indians who have become wealthy since the rise of Evo. Along with repeated warnings not to wander around El Alto alone, I was told that Aymaras are very reluctant to talk to strangers – not uncommon for an indigenous people. But when I spotted a cholet under construction and began asking about building methods and rebar sizes, the owner, Mario Choque, a compact Aymaran in his early 60s, began to share complaints about errant plumbers and incorrectly sized electrical wire.
Building woes turn out to be an icebreaker in any culture, though Choque's accent posed a bit of a challenge to me. In El Alto, the lingua franca is Aymara, not Spanish.
Soon enough, Choque was showing me around his half-done cholet. We're talking thousands of square feet per floor. And 30-foot ceilings. The typical price tag these days is upward of $500,000.
The bottom floor will go to retail space, he explained, and above that, one floor will become an AstroTurfed sports arena. "I'm like Evo, I love soccer," he said, when he sees my surprised look. "I want my grandchildren to have a safe place to play. We have no parks in El Alto. I'll also rent it out."
He'll also rent out space on the upper two floors, which he plans to decorate in wild colors for weddings and parties. On top of the flat roof is his residence, which bears no architectural resemblance to the rest of the building and looks like a chalet that was dropped in by helicopter. For the moment, it's just an empty shell, but Choque beams with unaccustomed emotion. "Things are going well for us in El Alto," he allowed.
In Choque's case, that's plainly an understatement. Two of his brothers are also building cholets. I ask him how he has managed to make so much money. He runs through a dizzying list of businesses and family links that cover everything from traditional fabrics, to cheap imported Chinese fabrics, to bars and food stalls, to trucking. "I grew up poor, just like Evo," he said. "And now look, he's indigenous just like me and he's president."
For the immediate future, it appears that Arce's handling of the economy has left the country in the enviable position of enjoying growth even in the teeth of the big commodity price declines. Arce said he has a plan to remake the Bolivian economy by 2025.
Therein lies the challenge. Evo's current (and last constitutionally mandated) term runs out in 2020. But the government's image and popularity is firmly anchored in his person, and he has yet to cultivate a successor. Can the New Bolivia survive the departure of its iconic leader?