In March 2021, Bolivia’s former president Jeanine Áñez was arrested by Bolivian authorities on suspicion of terrorism, sedition, and conspiracy. Prior to the arrest, Áñez protested on her Twitter account, saying, “Political persecution has begun. The ruling Movement for Socialism (MAS) party has decided to return to the ways of a dictatorship,” in a statement. What exactly is happening in Bolivia, where a former president who led the government until October 2020 has been arrested? This article looks at recent trends in Bolivia’s political situation and the challenges ahead, while also touching on the country’s domestic and international issues.

Bolivia’s National Congress building (Photo: Rodrigo Achá / Wikimedia Commons [CC BY 2.0])

History of Bolivia

Bolivia is a landlocked country located in the central part of South America. In the late 15th century, the territory of present-day Bolivia was incorporated into the Inca Empire, which was expanding its influence across the continent. From 1532 to 1825, after the Inca Empire was conquered by Spain, the region was under Spanish colonial rule and was heavily influenced by it. Bolivia is also rich in mineral resources such as gold, silver, and tin. After the discovery in 1545 of the Potosí silver mine in the southeastern part of what is now Bolivia, Potosí developed into one of the economic centers of the Spanish Empire. By the mid-17th century, Potosí’s population had reached about 160,000, comparable in size to the great cities of Europe at the time. However, most of the wealth generated by mineral resources was taken by Spain. Under Spanish rule, many Indigenous people were conscripted into harsh mine labor through the mita system, a labor draft that targeted adult Indigenous men. Countless Indigenous people perished due to exploitation, abuse, and accidents under the mita. Dissatisfaction grew among the criollos—descendants of Spanish immigrants—toward continued rule by the Spanish metropole. This discontent developed into a movement for independence from Spain, and riding the momentum of independence movements across Latin America, in 1825 Bolivia declared independence as the Republic of Bolivia (Note 1).

At independence, Bolivia’s population was about 1.1 million, of whom more than two-thirds were Indigenous. Meanwhile, a small group of elites—landowners and business magnates, mainly criollos who were a numerical minority—held power and continued to dominate poor Indigenous people, leaving the class-based social structure unchanged. This structure persisted until the Bolivian Revolution in 1952. The revolution led to agrarian reform in 1953, redistributing land to Indigenous peasant communities that had been oppressed and freeing them from coerced labor obligations.

Bolivia’s mineral resources also drew aggressive entry by foreign companies. From the 1900s, as the global silver market declined and demand for tin rose, tin became Bolivia’s main export. Unlike the silver era, when most capitalists were Bolivian, tin mining attracted capitalists and foreign firms from various countries. During the Cold War, the United States also intervened in the military and economic spheres to keep Bolivia from falling under Soviet influence. Specifically, under anti-communist governments supported by the United States, the Bolivian military was strengthened with U.S. assistance. The Central Intelligence Agency (CIA) also intervened militarily, assisting in the suppression of communist and anti-government forces within Bolivia. Economically, under President Hernán Siles Zuazo, who took office in 1956, Bolivia launched an economic program with large-scale financial aid from the U.S. aimed at curbing domestic inflation. Furthermore, Bolivia—where coca leaves are widely grown—is known as a point of origin for cocaine exports. In the 1980s, as the cocaine trade became a major problem, U.S. pressure led to intensified eradication efforts, including spraying herbicides on coca fields from helicopters.

After the end of the Cold War, the large-scale U.S. intervention diminished in the 1990s. However, partly due to the failed structural adjustment programs introduced under the pretext of rebuilding the economy by the World Bank and International Monetary Fund (IMF), Bolivia’s economy stagnated and poverty worsened. This trend was seen across Latin America. After a leftist government came to power in Venezuela in 1999, many countries in the region began shifting to left-leaning governments aiming to reduce income inequality and alleviate poverty. Known as the Pink Tide, this wave reached Bolivia as well, and in 2006 a leftist government led by Evo Morales took power.

Evo Morales, who became president in 2006 (Photo: Ministério das Relações Exteriores / Flickr [CC BY-NC 2.0])

The Evo Morales administration

Recent Bolivian politics cannot be discussed without Evo Morales, who served as president from 2006 to 2019. Originally a coca grower, Morales led the Movement for Socialism (MAS) party and in January 2006 became the country’s first Indigenous president. Advocating the correction of economic inequality, easing regulations on coca producers, and expanding Indigenous rights by promulgating a new constitution, MAS enjoyed overwhelming support among Indigenous people, who make up roughly half the population. Morales also espoused strong anti-U.S. and anti-neoliberal (Note 2) positions and called for returning more of the revenues from natural resources to the Bolivian people. In January 2009, a national referendum was held on whether to adopt a new constitution; with 61.4% support, the new constitution—expanding Indigenous rights, promoting decentralization, advancing agrarian reform, and establishing state ownership of natural resources—was promulgated in February.

Under President Morales, Finance Minister Luis Arce pursued proactive economic policies, including the nationalization of hydrocarbons, telecommunications, and mining companies. Morales also sought to develop a lithium industry. Lithium is used in lithium-ion batteries for smartphones and electric vehicles, and global demand is surging. It is estimated that about 70% of the world’s lithium reserves lie where Chile, Argentina, and Bolivia meet, with the largest share believed to be within Bolivia. In April 2018, the president of Bolivia’s state mining company launched a project to produce 40,000 tons of lithium carbonate annually, supported by a group of German SMEs. However, given Bolivia’s history of expropriation of mining profits by Spain and foreign firms, many Bolivians opposed foreign entry into the national lithium sector. After initially reaching an agreement, Morales canceled the contract with the German company amid large-scale public protests.

Alongside these state-led industrial policies, rising global mineral prices also powered Bolivia’s economic expansion: over the decade to 2016, per capita GDP increased from about US$1,000 to about US$3,000. Sustained growth also lifted 1 in 5 people out of poverty. Known for its anti-neoliberal stance and resistance to the influence of foreign governments and international organizations, the Morales administration also famously refrained from taking IMF loans.

People listening to a speech by Morales (Photo: World Bank Photo Collection / Flickr [CC BY-NC-ND 2.0])

While MAS enjoyed overwhelming support among Indigenous people, Morales’s policies were unpopular with elites who supported neoliberalism and had long wielded power over Indigenous communities, and there remained right-wing forces and their supporters opposed to MAS. The city of Santa Cruz, one of Bolivia’s largest, is known for its concentration of right-wing supporters and is home to major right-wing party alliances.

Although Morales had held power for many years, Bolivia’s constitution limits presidents to two consecutive terms. After first taking office in 2006, Morales later revised the constitution. Upon assuming office in 2014, he argued that only elections won under the new constitution counted toward term limits. Thus, although it was his third inauguration since 2006, he claimed the 2009 inauguration was the first term and 2014 the second. However, to run again in the 2019 presidential election—even counting 2009 as the first—would violate the two-term limit. Morales therefore held a referendum in February 2016 on amending the constitution to reset the term count and allow him to run in 2019 for a third consecutive term. The referendum was narrowly defeated. It appeared the long Morales era would end when his term expired. However, in September 2017, MAS petitioned the Supreme Court to strike down the term-limit provisions as unconstitutional, and in November the Court ruled in their favor, allowing indefinite re-election for the presidency. This drew widespread criticism as a blatant abuse of power and caused many Bolivians to grow distrustful of Morales. Falling global commodity prices and a slowdown in economic growth further eroded his support.

A tumultuous year

In October 2019, a presidential election was held, and Bolivia’s Supreme Electoral Tribunal announced that Morales had secured re-election. Allegations of electoral fraud in the vote count soon surfaced, sparking protests centered in Santa Cruz that spread nationwide. The Organization of American States (OAS) sent observers and investigators and issued a report citing “serious security flaws,” which further fueled the protests. However, no actual evidence of fraud emerged, and many experts later criticized the OAS report as misleading. Nevertheless, the number of protests surged after the October 20 vote, peaking in early November. Bolivia’s military and police then urged Morales to resign, and he stepped down. Morales later said an arrest warrant had been issued against him and fled to Mexico on November 12, and then to Argentina in December.

A protest march in Bolivia (Photo: Szymon Kochański / Flickr [CC BY-NC-ND 2.0])

Following Morales’s resignation, in November 2019 former second vice president of the Senate Jeanine Áñez assumed the interim presidency without the vote required by law in the legislature. Áñez came from the right wing, and the United States and Bolivians opposed to Morales hailed her appointment as “a victory for democracy.” MAS and Morales supporters, however, condemned the military’s actions against Morales and Áñez’s ascension without due process as a U.S.-backed coup and a breakdown of the rule of law, and they protested. Large-scale demonstrations against the Áñez interim government also followed.

Áñez’s first moves as interim president were heavy-handed measures against the Morales camp. Prosecutors and judges were pressured to open criminal investigations into more than 100 people, including Morales and former government officials, on charges such as sedition and terrorism, with the aim of thoroughly weakening MAS. She also issued a presidential decree granting security forces immunity for the use of force to maintain public order, enabling violent crackdowns on protests. The Inter-American Commission on Human Rights reported fatal incidents involving state security forces on November 11 in La Paz, on the 15th in Cochabamba, and on the 19th in El Alto in 2019, in which local residents and other opponents of Áñez’s appointment were killed. These events drew widespread criticism of Áñez for human rights abuses and intensified protests. In 2020, she also faced accusations of politically exploiting the COVID-19 pandemic to cling to power. The interim government—established to hold new elections—initially scheduled the vote for May 3, 2020, but postponed it twice citing the spread of the virus, ultimately pushing it to October 18.

In foreign policy, Áñez took the opposite approach to Morales. First, on lithium policy: as noted, Morales had unilaterally canceled the contract with a German company, stalling talks with foreign firms. Áñez indicated a policy of reopening talks with German and Chinese companies. The United Kingdom also moved to court Bolivia’s lithium sector: after the new government took office, the British embassy and British companies drew closer to Bolivian authorities and are said to have provided funding for public–private lithium exploration and development projects. The UK government prioritizes lithium battery technology in its industrial strategy, and by engaging the new right-wing Áñez government, it appeared to aim to establish itself as a strategic partner in Bolivia’s lithium industry.

Bolivia’s Salar de Uyuni, said to boast the world’s largest lithium reserves. (Photo: Luca Galuzzi / Wikimedia Commons [CC BY-SA 2.5])

Second, in April 2020, the Áñez interim government received financing of US$346.7 million from the IMF as pandemic relief. This sharply contrasted with former President Morales’s anti-neoliberal policies that ignored IMF prescriptions. The problem was that Bolivian law required congressional approval for sovereign borrowing, yet Áñez obtained the loan without the legislature’s consent. There were also concerns about whether an unelected interim administration had the authority to make decisions that would fundamentally change the country’s economic model. Moreover, the loan carried a high interest rate of 7% (Note 3) and imposed austerity conditions, which was criticized. MAS had supported the growth of small and medium-sized enterprises, which employ over 80% of the population, but austerity made this impossible, ultimately squeezing many people’s livelihoods. Some saw behind these radical economic moves an intent on the IMF’s part to use the interim period to dismantle MAS’s previous model and pivot Bolivia’s economy.

Challenges ahead for the new left-wing government

On October 18, 2020, the presidential election was finally held, and MAS’s Luis Arce won with 55.1% of the vote. Faced with a choice on the interim government’s policies, a majority of Bolivians opted to return MAS to power. As noted, Arce served as finance minister under Morales and contributed to Bolivia’s economic takeoff; in an unstable Bolivia, he is expected to provide social and economic leadership. What challenges must the Arce administration overcome to stabilize society and foster growth? Below are several, including domestic and foreign policy issues.

The presidential inauguration of Luis Arce. (Photo: The presidential inauguration of Luis Arce / Wikimedia Commons [CC BY-SA 4.0])

First is how to handle MAS leader and former president Morales. Having returned from exile after MAS’s victory, Morales remains a polarizing figure, as seen in the local elections of March 2021, where many MAS candidates reportedly selected or endorsed by him struggled. Although President Arce has stated clearly that “Morales will not be involved in the administration,” how Arce manages Morales—who still wields influence within the party—will be a key challenge.

Second is the handling of former president Jeanine Áñez and the attendant judicial issues, which have caused major ripples. In March 2021, Áñez was arrested on suspicion of terrorism, sedition, and conspiracy, and prosecutors sought six months of pre-trial detention. MAS has long argued that “Áñez and her allies carried out a coup to oust Morales,” and the authorities acted on that claim. Áñez’s party denies there was any coup and accused the government of launching political persecution. Under Áñez, the judiciary already showed a tendency to align with those in power, as seen in criminal investigations against members of the Morales government under political pressure. Arce announced right after his October victory that his administration would not pressure prosecutors or judges and in November set up an expert commission to draft reforms to ensure judicial independence. However, Áñez’s arrest has cast doubt on the credibility of those commitments. Further judicial reform is essential to safeguard independence.

President Luis Arce (Photo: OECD Development Centre / Flickr [CC BY-NC-ND 2.0])

Resource development policy is another challenge. On lithium, negotiations with the German company have been difficult. Arce believes foreign cooperation is indispensable for developing the lithium industry and has maintained a positive stance on talks. However, to win public support for partnerships with foreign firms, the government must ensure fair terms of profit-sharing and maximize Bolivia’s benefits. Arce is therefore seeking to further revise the terms of the contract that was canceled in 2018 under Morales. Bolivia also exports natural gas, but shipments to Brazil and Argentina have declined in recent years, weighing on growth. The COVID-19 pandemic shrank Bolivia’s economy by 6% from pre-pandemic levels, and tens of thousands are projected to have fallen back into poverty, making a return to previous growth levels difficult. To leverage abundant resources like lithium and achieve stronger growth, further negotiations with foreign companies will be necessary.

The borrowing from the IMF under Áñez also became a serious issue. Concerned that the 2020 IMF loan could trigger long-term IMF involvement in the Bolivian economy and impose conditions that would burden the public, Arce moved to reverse course. In February 2021, at Arce’s direction, Bolivia’s central bank repaid the full US$351.5 million borrowed under Áñez—including interest—to the IMF. Due to the high interest rate, the move resulted in a net economic loss of about US$4.7 million, but Bolivia again chose to free itself from the IMF. In the wake of this episode, the MAS government is expected to be even more resistant to the IMF; attention now turns to what economic policies it will pursue.

Conclusion

In Bolivia, where Indigenous people—often socially vulnerable—constitute roughly half the population, the MAS government, which pursues policies to reduce inequality and alleviate poverty, is likely to continue enjoying broad support. Yet, as noted, challenges abound. In regions such as Santa Cruz, where right-wing parties are strong, protests have been held demanding audits of whether the October 2020 election was conducted properly, and the political situation cannot yet be considered stable. To improve matters, the political process must become more transparent, a trustworthy system must be established, inequality must be reduced, and polarization eased. After nearly a year under an interim government, Bolivia finally has a new administration. We will continue to watch the country’s trajectory as it navigates ongoing political and economic instability.

Note 1 Simón Bolívar, who led five South American countries to independence from Spain, also contributed to Bolivia’s independence, and the newly independent nation was named the Republic of Bolívar in his honor. In 2009, with the promulgation of the new constitution under Morales, the country’s official name was changed to the “Plurinational State of Bolivia.”

Note 2 Neoliberalism is the idea that deregulation and minimal government intervention in markets should allow the economy to be driven by free competition.

Note 3 The Development Bank of Latin America (CAF) interest rate is 2%

Writer: Seiya Iwata

Graphics: Hikaru Kato

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