The longevity of Spain's empire in South America can be explained
partly by the successful administration of the colonies. Spain was at
first primarily interested in controlling the independent-minded
conquerors, but its main goal soon became maintaining the flow of
revenue to the crown and collecting the tribute of goods and labor from
the Indian population. To this end, Spain soon created an elaborate
bureaucracy in the New World in which various institutions served as
watchdogs over each other and local officials had considerable autonomy.
Upper Peru, at first a part of the Viceroyalty of Peru, joined the
new Viceroyalty of Río de la Plata (whose capital was Buenos Aires)
when it was created in 1776. The viceroy was aided by the audiencia (council), which was
simultaneously the highest court of appeal in the jurisdiction and, in
the absence of the viceroy, also had administrative and executive
powers. The wealth of Upper Peru and its remoteness from Lima convinced
the authorities in Lima to create an audiencia in the city of Chuquisaca
(present-day Sucre) in 1558. Chuquisaca had become particularly
important as Potosí's administrative and agricultural supply center.
The jurisdiction of the audiencia, known as Charcas, initially covered a
radius of 100 "leagues" (179,600 hectares) around Chuquisaca,
but it soon included Santa Cruz and territory belonging to present-day
Paraguay and, until 1568, also the entire district of Cuzco. The
president of the audiencia had judicial authority as well as
administrative and executive powers in the region, but only in routine
matters; more important decisions were made in Lima. This situation led
to a competitive attitude and the reputation of Upper Peru for
assertiveness, a condition reinforced by the economic importance of the
Spain exercised its control of smaller administrative units in the
colonies through royal officials, such as the corregidor, who represented the king in the municipal governments
that were elected by their citizens. By the early seventeenth century,
there were four corregidores in Upper Peru.
In the late eighteenth century, Spain undertook an administrative
reform to increase revenues of the crown and to eliminate a number of
abuses. It created an intendancy system, giving extensive powers to
highly qualified officials who were directly responsible to the king. In
1784 Spain established four intendancy districts in Upper Peru, covering
the present-day departments of La Paz, Cochabamba, Potosí, and
The Spanish crown at first controlled the local governments
indirectly but centralized procedures as time went on. At first, Viceroy
Francisco de Toledo confirmed the rights of local nobles and guaranteed
them local autonomy. But the crown eventually came to employ Spanish
officials, corregidores de indios, to collect tribute and taxes from the
Indians. Corregidores de indios also imported goods and forced the
Indians to buy them, a widely abused practice that proved to be an
enormous source of wealth for these officials but caused much resentment
among the Indian population.
With the first settlers in Upper Peru came the secular and regular
clergy to begin the conversion of the Indians to Christianity. In 1552
the first bishopric in Upper Peru was established in La Plata; in 1605
La Paz and Santa Cruz also became bishoprics. In 1623 the Jesuits
established the Royal and Pontifical Higher University of San Francisco
Xavier of Chuquisaca, Upper Peru's first university.
Indian reaction to colonial rule and conversion to Christianity
varied. Many Indians adapted to Spanish ways by breaking with their
traditions and actively attempting to enter the market economy. They
also used the courts to protect their interests, especially against new
tribute assessments. Others, however, clung to their customs as much as
possible, and some rebelled against the white rulers. Local, mostly
uncoordinated, rebellions occurred throughout colonial rule. More than
100 revolts occurred in the eighteenth century alone in Bolivia and
Although the official Incan religion disappeared rapidly, the Indians
continued their local worship under the protection of local Indian
rulers. But as Christianity influenced the Indians, a new
folk-Catholicism developed, incorporating symbols of the indigenous
religion. Whereas early Indian rebellions were anti-Christian, the
revolts at the end of the sixteenth century were based in messianic
Christian symbolism that was Roman Catholic and anti-Spanish. The church
was tolerant of local Indian religions. In 1582, for example, the bishop
of La Plata permitted the Indians to build a sanctuary for the dark
Virgen de Copacabana on the shores of Lake Titicaca (Copacabana has been
a traditional Aymara religious center ever since).
The conquest and colonial rule were traumatic experiences for the
Indians. Easily susceptible to European diseases, the native population
decreased rapidly. The situation of the Indians worsened in the
eighteenth century when Spain demanded higher tribute payments and
increased mita obligations in an attempt to improve the mining output.
These profound economic and social changes and the breakup of native
culture contributed to the increasing addiction of Indians to alcohol.
Before the Spanish arrived, the Incas had consumed alcohol only during
religious ceremonies. Indian use of the coca leaf also expanded, and,
according to one chronicler, at the end of the sixteenth century
"in Potosí alone, the trade in coca amounts to over half a million
pesos a year, for 95,000 baskets of it are consumed."
Increasing Indian discontent with colonial rule sparked the great
rebellion of Túpac Amaru II. Born José Gabriel Condorcanqui, this
educated, Spanish-speaking Indian took the name of his ancestor, Túpac
Amaru. During the 1770s, he became embittered over the harsh treatment
of the Indians by the corregidores de indios. In November 1780, Túpac
Amaru II and his followers seized and executed a particularly cruel
corregidor de indios. Although Túpac Amaru II insisted that his
movement was reformist and did not seek to overthrow Spanish rule, his
demands included an autonomous region. The uprising quickly became a
full-scale revolt. Approximately 60,000 Indians in the Peruvian and
Bolivian Andes rallied to the cause. After scoring some initial
victories, including defeating a Spanish army of 1,200 men, Túpac Amaru
II was captured and killed in May 1781; nonetheless, the revolt
continued, primarily in Upper Peru. There, a supporter of Túpac Amaru
II, the Indian chief Tomás Catari, had led an uprising in Potosí
during the early months of 1780. Catari was killed by the Spaniards a
month before Túpac Amaru II. Another major revolt was led by Julián
Apaza, a sexton who took the names of the two rebel martyrs by calling
himself Túpac Catari (also spelled Katari). He besieged La Paz for more
than 100 days. Spain did not succeed in putting down all of the revolts
until 1783 and then proceeded to execute thousands of Indians.
In the late eighteenth century, a growing discontent with Spanish
rule developed among the criollos (persons of pure Spanish descent born
in the New World). Criollos began to assume active roles in the economy,
especially in mining and agricultural production, and thus resented the
trade barriers established by the mercantilist policies of the Spanish
crown. In addition, criollos were incensed that Spain reserved all
upperlevel administrative positions for peninsulares (Spanish-born
persons residing in the New World).
The Enlightenment, with its emphasis on reason, questioning of
authority and tradition, and individualistic tendencies, also
contributed to criollo discontent. The Inquisition had not kept the
writings of Niccolò Machiavelli, Benjamin Franklin, Thomas Paine,
Jean-Jacques Rousseau, John Locke, and others out of Spanish America;
their ideas were often discussed by criollos, especially those educated
at the university in Chuquisaca. At first the criollos of Upper Peru
were influenced by the French Revolution, but they eventually rejected
it as too violent. Although Upper Peru was fundamentally loyal to Spain,
the ideas of the Enlightenment and independence from Spain continued to
be discussed by scattered groups of radicals.
Bolivia - INDEPENDENCE FROM SPAIN, 1809-39
Landlocked Bolivia sits astride the Andes in the west-central part of
the South American continent. With an area of 1,098,581 square
kilometers, the country is about the size of Texas and California
combined, or twice the size of Spain. Bolivia has 6,083 kilometers of
land boundaries, which adjoin five countries. The country is bounded by
Brazil to the north and east, Paraguay to the southeast, Argentina to
the south, Chile to the southwest, and Peru to the northwest.
Stretching in a broad arc across western Bolivia, the Andes define
the country's three geographic zones: the mountains and Altiplano in the
west, the semitropical Yungas and temperate valleys of the eastern
mountain slopes, and the tropical lowlands or plains (llanos) of the
eastern lowlands, or Oriente. The Andes run in two great parallel ranges
or cordilleras. The western range (Cordillera Occidental) runs along the
Peruvian and Chilean borders. The eastern range (Cordillera Oriental) is
a broad and towering system of mountains stretching from Peru to
Argentina. Between the two ranges lies the Altiplano, a lofty plateau
805 kilometers long and 129 kilometers wide.
Mountains and Altiplano
The Cordillera Occidental is a chain of dormant volcanoes and
solfataras, volcanic vents emitting sulfurous gases. Bolivia's highest
peak, the snowcapped Sajama (6,542 meters), is located here. The entire
cordillera is of volcanic origin and an extension of the volcanic region
found in southern Peru. Most of the northern part of this range has an
elevation of about 4,000 meters; the southern part is somewhat lower.
Rainfall, although scanty everywhere, is greater in the northern half,
where the land is covered with scrub vegetation. The southern area
receives almost no precipitation, and the landscape consists mostly of
barren rocks. All of the Cordillera Occidental region is sparsely
populated, and the south is virtually uninhabited.
The Altiplano, the high plateau between the two cordilleras,
comprises four major basins formed by mountainous spurs that jut
eastward from the Cordillera Occidental about halfway to the Cordillera
Oriental. Along the Altiplano's eastern side is a continuous flat area,
which has served as Bolivia's principal north-south transportation
corridor since colonial times. The entire Altiplano was originally a
deep rift between the cordilleras that gradually filled with highly
porous sedimentary debris washed down from the peaks. This sedimentary
origin explains its gradual slope from north to south; greater rainfall
in the north has washed a larger quantity of debris onto the platform
The most prominent feature of the Altiplano is the large lake at its
northern end, Lake Titicaca. At 3,810 meters above sea level, it is the
highest navigable body of water in the world. With a surface area of
9,064 square kilometers, it is larger than Puerto Rico and is South
America's largest lake. Lake Titicaca is also deep, about 370 meters at
its maximum, but with an average depth of 215 meters; its volume of
water is large enough to maintain a constant temperature of 10° C. The
lake actually moderates the climate for a considerable distance around
it, making crops of corn and wheat possible in sheltered areas.
Lake Titicaca drains southward through the slow-moving, reedfilled
Desaguadero River to Lake Poopó. In contrast to the freshwater Lake
Titicaca, Lake Poopó is salty and shallow, with depths seldom more than
four meters. Because it is totally dependent on seasonal rainfall and
the overflow from Lake Titicaca, Lake Poopó's size varies considerably.
Several times in the twentieth century, it nearly dried up when rainfall
was low or the Desaguadero River silted. In years of heavy rainfall,
however, Lake Poopó has overflowed to the west, filling the Coipasa
Saltpan with shallow water.
Rainfall in the Altiplano decreases toward the south, and the scrub
vegetation grows more sparse, eventually giving way to barren rocks and
dry red clay. The land contains several salt flats, the dried remnants
of ancient lakes. The largest of these is the Uyuni Saltpan, which
covers over 9,000 square kilometers. The salt is more than five meters
deep in the center of this flat. In the dry season, the lake bed can be
traversed by heavy trucks. Near the Argentine border, the floor of the
Altiplano rises again, creating hills and volcanoes that span the gap
between the eastern and western cordilleras of the Andes.
The much older Cordillera Oriental enters Bolivia on the north side
of Lake Titicaca, extends southeastward to approximately 17 south
latitude, then broadens and stretches south to the Argentine border. The
northernmost part of the Cordillera Oriental, the Cordillera Real, is an
impressive snow-capped series of granite mountains. Many of these peaks
exceed 6,000 meters, and two--Illimani (6,322 meters), which overlooks
the city of La Paz, and Illampu (6,424 meters)--have large glaciers on
their upper slopes. South of 17 south latitude, the range changes
character. Called the Cordillera Central here, the land is actually a
large block of the earth's crust that has been lifted and tilted
eastward. The western edge of this block rises in a series of steep
cliffs from the Altiplano. The backbone of the cordillera is a high,
rolling plain, with elevations from 4,200 to 4,400 meters, interspersed
with irregularly spaced high peaks. Too high to be exploited for
large-scale commercial grazing, this area takes its name from the
predominant vegetation type, the puna.
Yungas and Other Valleys
The northeastern flank of the Cordillera Real is known as the Yungas,
from the Aymara word meaning "warm valleys." The steep, almost
inaccessible slopes and peaks of this mainly semitropical valley area
northeast of La Paz offer some of the most spectacular scenery in
Bolivia. Rainfall is heavy, and lush vegetation clings to the sides of
narrow river valleys. The land is among the most fertile in Bolivia, but
poor transportation has hindered its agricultural development. The
government attempted to build a railroad through the Yungas in 1917 to
connect La Paz with the eastern lowlands. The railroad was abandoned,
however, after completion of only 150 kilometers.
The eastern slopes of the Cordillera Central descend gradually in a
series of complex north-south ranges and hills. Rivers, draining to the
east, have cut long narrow valleys; these valleys and the basins between
the ranges are favorable areas for crops and settlement. Rich alluvial
soils fill the low areas, but erosion has followed the removal of
vegetation in some places. The valley floors range from 2,000 to 3,000
meters above sea level, and this lower elevation means milder
temperatures than those of the Altiplano. Two of Bolivia's most
important cities, Sucre and Cochabamba, are located in basins in this
The eastern lowlands include all of Bolivia north and east of the
Andes. Although comprising over two-thirds of the national territory,
the region is sparsely populated and, until recently, has played a minor
role in the economy.
Differences in topography and climate separate the lowlands into
three areas. The flat northern area, made up of Beni and Pando
departments and the northern part of Cochabamba Department, consists of
tropical rain forest. Because much of the topsoil is underlain by clay
hardpan, drainage is poor, and heavy rainfall periodically converts vast
parts of the region to swamp. The central area, comprising the northern
half of Santa Cruz Department, has gently rolling hills and a drier
climate than the north. Forests alternate with savanna, and much of the
land has been cleared for cultivation. Santa Cruz, the largest city in
the lowlands, is located here, as are most of Bolivia's petroleum and
natural gas reserves. The southeastern part of the lowlands is a
continuation of the Chaco of Paraguay. Virtually rainless for nine
months of the year, this area becomes a swamp for the three months of
heavy rains. The extreme variation in rainfall supports only thorny
scrub vegetation and cattle grazing, although recent discoveries of
natural gas and petroleum near the foothills of the Andes have attracted
some settlers to the region.
Most of Bolivia's important rivers are found in the water-rich
northern parts of the lowlands, particularly in the Alto Beni (Upper
Beni), where the land is suitable for crops such as coffee and cacao.
The northern lowlands are drained by wide, slow-moving rivers, the three
largest of which--the Mamoré, Beni, and Madre de Dios--all flow
northward into the Madeira River in Brazil and eventually into the
Amazon. Riverboats along the Beni and the Mamoré carry both passenger
and freight traffic; rapids on the Madeira prevent river traffic farther
into Brazil. Near the Paraguayan border, shallow sandy streams carry the
seasonal runoff into the Pilcomayo or Paraguay rivers.
Rural society reflected the complex history that communities
experienced during the past several centuries. Hacienda expansion,
mining, and land reform affected regions and the communities within them
differently. The uneven impact of national political and economic
developments combined with ethnic diversity and ecological complexity to
create a highly variegated social landscape. The contrasts between
communities that had been free Indian settlements and those that had
been dominated by a hacienda persisted into the land-reform era. Regions
with a lengthy history of commercial farming differed from those geared
primarily to subsistence agriculture. Finally, a basic cleavage existed
between haciendas of the densely populated Quechua and Aymara
settlements in the Altiplano, valleys, and Yungas and plantations of the
Historically, Quechua and Aymara settlements were organized either as
haciendas, with a resident labor force of peons who owed labor to the
landowner, or as free communities. Social and economic differences
characterized both types of settlements. On the haciendas, residents
received different-sized plots of land in return for varying amounts of
service. The holdings of former peons reflected these initial
inequities, as well as different levels of success in the decades
following land reform. Free communities distinguished two or three
different categories of members. Those descended from the original
villagers had full access to and security of land tenure. Others who
came as landless laborers in the nineteenth century generally had less
land and less security. Still others were landless and relied on the
ties of kinship or ritual kinship and an ingrained community ethos about
sharing to gain access to a field. If surplus land existed, the landless
generally could obtain a plot for nominal rent.
Hacienda owners were casualties of the land reform. The wealthiest
left Bolivia or moved to La Paz. Many owners of medium-sized haciendas
moved to a provincial town and entered commerce. In some regions, land
reform proved to be merely the final in a series of economic reversals
that had begun decades earlier. In Cochabamba, for example, hacienda
owners had faced the combined problems of estate fragmentation, a
contracting market, and a well-organized and militant peasantry since
the turn of the century. For them land reform was the coup de grace.
In other regions, land reform had a very minimal impact. Haciendas in
the lowlands, the mid-sized haciendas of Monteagudo in Chuquisaca
Department, and the vineyards of the Cinti Valley, also in Chuquisaca
Department, were generally spared. Santa Cruz lacked the large,
well-organized Indian population of the Altiplano, valleys, and Yungas.
Landholders there not only escaped land reform but also received the
benefits of government development plans for the lowlands. Their major
problem was securing an adequate (and adequately docile) labor force.
They hired local subsistence farmers when possible and contracted with
labor recruiters who toured Aymara and Quechua settlements hiring
laborers for the sugarcane and cotton harvests.
In regions of limited hacienda expansion, preconquest settlement and
land-use patterns sometimes persisted. Individual extended kin-groups
known as ayllus tried to gain access to the resources of as many
different ecological zones as possible. During the Inca era, ayllus
maintained permanent resident colonies in each of the three natural
regions, creating what anthropologist John V. Murra has termed a
"vertical archipelago." These colonies ensured the Incas
access to the varied products of plateau pasture and field, transitional
zones, valleys, and tropics.
Peasants in the Altiplano, valleys, and Yungas preferred dispersed
plots within a single natural region as well; in addition, some
cultivated scattered plots in different regions. Such land-use
strategies served as a hedge against the considerable uncertainty of
farming in the Andes. Planting small amounts of a crop in a variety of
different locations ensured against total loss in such unpredictable
localized disasters as hail and frost. In addition, these agricultural
practices took full advantage of the extreme variation in environment
within even short distances.
The pattern persisted despite the upheavals of the colonial,
postindependence, and modern eras. Under land-reform legislation, a
kin-group's lowland holdings could be declared "haciendas" and
made liable to expropriation. Development specialists frequently saw
this mode of land use, scattering small plots at considerable distances
from one another, as an impediment to agricultural production and
economic development. Nonetheless, Andean peasants resisted efforts to
consolidate their landholdings and acted to maintain their dispersed and
diversified plots wherever possible. In the late 1970s, anthropologists
found ayllus in northern Potosí Department farming roughly the same
territory they had held in the sixteenth century. The territory used by
these ayllus encompassed regions from the high plateau to semitropical
valley bottoms. The distance from the highest pastures to the lowest
fields was more than 100 kilometers and as much as 2,000 meters in
altitude. It took two weeks with fully loaded llamas to traverse the
territory. Households had access to the products of each region either
by producing or by exchanging them with kin.
The typical pattern of exchange saw llama herders loading their pack
animals after harvest and traveling to the valley bottoms. Even
households that did not have formal control of plots in other regions
would spend a good part of the year in different territories. This
seasonal movement gave all inhabitants a detailed, extensive knowledge
of the habitats their territory encompassed.
Before 1952 most villages shared little sense of community with
neighboring groups or the nation as a whole. Political participation,
especially in Indian communities, was negligible; powerful
outsiders--mestizos or whites--mediated links to the larger society. In
either case, the community itself remained a largely self-sufficient,
nonmonetary society with the nuclear family as the basic social unit.
Strong kinship and ritual kinship ties contributed to social cohesion,
but little additional community solidarity existed. A family's existence
centered on its lands and a complex system of community work and fiesta
The reforms in the 1950s brought extensive changes to Aymara and
Quechua communities. Agrarian reform and universal suffrage meant more
than simply transferring land titles, eliminating onerous work
obligations, or conferring voting rights. Many of these reforms had
already been reiterated in every legal and constitutional change since
the time of Simón Bolívar Palacio, who began the postindependence era
with decrees calling for distribution of land to landless Indians,
equality for all, and the end of compulsory labor. The changes of the
1950s fundamentally altered Indians' relationship to the larger society.
Political and economic links to town, city, and nation no longer
remained the exclusive monopoly of mestizos and whites. Increasingly,
Indians themselves served as their own intermediaries and power brokers.
Overall, the postrevolutionary period from the 1950s to the 1980s did
much to erode the isolation of rural society; peasants came into contact
with national society in ways unanticipated by an earlier generation.
Improvements in communications (radios) and transportation (roads) made
peasants aware of alternatives. Before the 1952 Revolution, only a few
peasant products had been sold through mestizo intermediaries or
hacendados. The revolutionary reforms generated an explosion of markets
and of marketing networks. In some regions, mestizo intermediaries still
played a prominent role; indeed, many former hacendados became
intermediaries when they lost their lands. In many areas, however,
marketing became a career for Indian and chola women.
Increasing population pressure in the Altiplano and expanding
economic opportunities elsewhere led to large-scale migration. Migrants'
experience with the world beyond the hacienda gave villagers a new and
very different connection with national society. Educational
opportunities increased dramatically at every level. Traditionally,
hacienda owners had done everything possible to limit their laborers'
access to schools. Some even expelled peons who dared to send their
children to school. Increased educational opportunities for young
Indians expanded their options for earning a living. Like migrants (and
the educated were frequently those who migrated), these individuals
became a resource for their families and communities. So, too, did the
increasing numbers of young men serving in the military.
The rise of peasant organizations and administrative reforms meant
job opportunities on the local level. Peasant organizations offered many
individuals a springboard to improve their own status at the same time
that they gave communities some control over local affairs. These
developments sharpened factionalism among communities. Neighboring
settlements, which might have had little interest in each other's
existence a decade earlier, for example, found themselves vying to be
designated as the canton seat. Land reform made ex-hacienda peons
and Indians in neighboring free communities rivals for haciendas
acquired in the twentieth century.
Factionalism within communities sharpened as well. The various
hamlets making up a single settlement often found little besides the
community's school and fiestas as points of common interest. Marriages
between various hamlets were a valuable link, as in- laws could serve as
go-betweens in disputes.
Consensus formed the basis of community decision making; strong
disagreement meant that a decision had to be postponed or participants
would seek another solution. In order to resolve pressing business,
communities sometimes scheduled meetings at times that were inconvenient
to opponents. The strong-minded could boycott meetings and refuse to
comply with community decisions. Households that felt deeply about a
project would sometimes go ahead and begin work in the hope that the
recalcitrant would eventually follow suit. Such community-wide projects
as road improvements and school buildings often existed in varying
stages of completion, waiting for needed funds or for disinterested
parties to finish their portion of the work. Villages were reluctant to
involve outside authorities to pressure dissenters into compliance.
The reforms of the 1950s highlighted the need for a knowledge of
Spanish as communities increased their dealings with the government.
Migrants who returned to their home communities during the 1950s and
1960s having learned Spanish played a more prominent role in community
affairs. As most communities resolved disputes stemming from land
reform, however, the volume of dealings with the national government
declined. An older pattern of leadership reasserted itself, and
seniority and success in the fiesta system again emerged as major
criteria in selecting leaders. The fiesta system in its classic form
consisted of a hierarchy of civil and religious offices, each of which
entailed specific duties (cargos) and obligations. An individual gained
prestige through completion of the cargos and upon finishing the entire
hierarchy became a respected community elder. The most prominent offices
were those where an individual assumed the sponsorship of a community
fiesta celebrating a Roman Catholic feast or saint's day.
The organization of fiestas varied. Mestizo sponsors could canvass
their settlements for donations, which limited their own financial
outlays. In Indian communities, where the sponsor bore most of the cost,
the fiesta required a major financial sacrifice. In one survey, sponsors
of major community fiestas spent from 12 to 80 percent of their cash
income from the sale of agricultural products to discharge their fiesta
responsibilities. On the whole, however, communities spent much less
than they had before agrarian reform. Fiestas also required an enormous
expenditure of time, as sponsors began planning for the most prominent
fiestas years in advance.
The fiesta was a forum for the acceptable display of wealth and
socioeconomic status. An individual gained significantly in prestige and
standing by sponsoring the major fiestas. Friends and relatives often
helped by offering food, drinks, and money. Those who provided the
assistance could expect similar help when they assumed a comparable
office. Gifts were recorded in written form, and participants had a
strong obligation to reciprocate.
The late 1970s and 1980s were not easy for rural Bolivians. The
peasant-military alliance that had been forged in the 1960s ended in
1974 with the bloody repression of a peasant demonstration. In general,
the turnstile governments of the late 1970s and early 1980s were
unsympathetic to peasants. Economic stabilization packages exacted a
heavy toll. The generally difficult economic situation of the 1980s
curtailed nonfarm employment at the same time that increasing population
put pressure on land.
The Working Class
Migration has transformed social relations since the 1952 Revolution.
Before the revolution, the average peasant's horizons were delineated by
his or her village, those similar settlements surrounding it, and a
nearby mestizo town. Contact with the world beyond was limited to an
occasional trip to the landlord's city residence or his other haciendas.
Few peasants had actually lived in a city, worked in the mines, or
served in the military.
By the 1970s, however, most rural young adults could expect to spend
at least part of their lives away from home. Many of these would migrate
permanently to a city. Others would seek occasional wage labor to
supplement their farm earnings. Some also migrated to foreign countries,
seeking seasonal work on plantations in Argentina, in the ports of
northern Chile, or in the Brazilian Amazon.
Rural-to-urban migration typically constituted a lengthy process. A
peasant might begin by working in a city during slack agricultural
periods. Young men and women often had their introduction to the city
through marketing their families' farm products. In addition, military
service gave young men an awareness of the larger society, as well as
some experience in nonagricultural work.
Migration rarely represented a decisive break with the community of
origin. Migrants maintained complex, ongoing, and mutually fruitful
relations with their natal communities. They also served as liaisons
with national society. The migrants' knowledge of Spanish and greater
familiarity with the government bureaucracy were invaluable resources.
Former residents became particularly important after the 1953 enactment
of the Agrarian Reform Law. In addition to helping obtain land titles
and working out agreements with the former landowners, they also
continued to mediate between their villages and the nation.
Aid from kin and fellow villagers was essential to the success of
migrants. Earlier migrants assisted those who followed by providing
temporary housing and help in finding work. Most migrants belonged to an
association of former residents of their native village. These
organizations offered recreation and assistance to migrants. The
idiosyncratic job choices of individual migrants spawned unique patterns
of occupational specialization. The majority of the migrants from one
village, for example, became tailors with the help of an early migrant
from the same settlement. In other instances, regional agricultural
specializations formed the basis for occupational choices; butchers, for
example, often came from cattle-raising areas.
Even highly successful, long-term migrants did not sever their ties
with relatives and neighbors in the countryside. Migrants retained their
rights to land. Women and children spent years in the village while
husbands and fathers remained semipermanent city residents. Families
routinely returned to the countryside to help during harvesting and
planting. Grandchildren spent their vacations with grandparents in the
village. Many migrants continued to participate in community fiestas,
concrete evidence of their willingness to continue to fulfill community
obligations beyond those owed to kin.
Bolivian governments had long promoted the notion of colonization,
especially in the lowlands. Plans were first put forth in the 1830s, and
formal proposals were outlined in legislation in 1886, 1890, and 1905.
Colonization did not occur, however, until after the 1952 Revolution.
One of the goals of the victorious Nationalist Revolutionary Movement
(Movimiento Nacionalista Revolucionario--MNR) was to provide a safety
valve for population pressure in the Altiplano by promoting
"Bolivianization" of the frontier. Other objectives were to
increase the production of domestic food crops and to integrate more
farm families into the national economy. In the next three decades, both
government-sponsored and spontaneous settlements fueled a population
explosion. The main zones of growth were the region around Santa Cruz
(Santa Cruz Department), the Alto Beni (Beni Department), and the
Chapare (Cochabamba Department). From 1900 to 1950, Santa Cruz's
population grew at less than 1 percent annually; between 1950 and 1976,
however, the annual rate climbed to more than 4 percent. The sheer
numbers of migrants created a land-rush atmosphere. In the province of
Obispo Santisteban (Santa Cruz Department), authorities granted titles
to 55 percent more land than the province encompassed.
Because most migrants came from the overpopulated Altiplano, they
entered sharply different environments. The Oriente had a highly
distinct regional culture. A unique dialect of Spanish, known as
castellano camba, identified Oriente natives. Plantations in the region,
unscathed by the land reform, still had a resident labor force, but it
was not organized into the cohesive community characteristic of the
traditional hacienda. Farming and herding in the Andes had little in
common with the requirements of agriculture in the tropical lowlands.
Official settlement projects ranged in approach from meticulously
detailed planned colonies to the simple provision of a plot of land,
some technical orientation, and assistance in gaining a land title. In
general, government projects suffered from a lack of competent
technicians, poor coordination among the various agencies charged with
assisting the colonists, and lack of continuity at the upper
administrative levels. Land titles were rarely granted within the amount
of time specified on the project. Roads were neither completed nor
maintained according to plans. About half of the colonists abandoned
their plots and moved on.
Only about 15 percent of the settlers who migrated to the region from
the early 1950s through the early 1980s came as part of
government-sponsored colonies. Nonetheless, spontaneous settlements,
too, suffered from the poorly developed infrastructure. Migrants
resorted to a variety of methods to produce cash crops and market them
without losing most of the profit to intermediaries. In some colonies,
settlers cut their own feeder roads. Like those in government-sponsored
settlements, spontaneous colonists often had difficulty getting land
titles. They lacked technical advice and access to agricultural credit.
In general, however, spontaneous settlers managed to form organizations
and to develop sufficient organizational savvy and community spirit to
deal with the logistics of establishing farms in the Oriente. Surveys
found that income in spontaneous colonies averaged 75 percent higher
than in government-sponsored projects. One of the fastest-growing
colonization regions in the 1980s was the Chapare, Bolivia's principal
coca-cultivating area. Major reasons for the influx of colonists to this
tropical New Jersey- size region were the completion of a United
States-financed paved road from Cochabamba in 1972 and the take-off of
the cocaine- exporting industry in the late 1970s. By 1985 the
population had burgeoned to 120,000, as compared with 80,000 in 1981 and
26,000 in 1967. Some press reports in 1988-89 cited Chapare
population figures as high as 200,000. A 1981 survey found that most
small-scale farmers in the Chapare were former highlanders, mainly from
the upper Cochabamba Valley but also from Potosí Department, who
resettled and cleared land for food and coca cultivation.
The Oriente also attracted small numbers of Italian, Japanese,
Okinawan, and North American Mennonite settlers. In contrast to native
Bolivians, these settlers were often more educated, had better technical
training, came with more capital, received larger parcels of land in
better locations, and had more ongoing support from their own
governments or sponsoring agencies. They usually succeeded, although the
turnover in a settlement's early years often nearly approximated the
rates encountered in government colonies.
The first settlers in a new community typically consisted of a group
of men who began clearing plots. Most brought their families to join
them as quickly as possible; beginning farming in the tropical forest
required the whole family's labor. A colony's founders were frequently
kin and compadres; these ties helped create a spirit of cooperation and
community solidarity. Settlers used the same kinds of strategies that
had permitted Andeans to survive through the centuries. Colonization
itself was an extension of the "vertical archipelago."
Colonists expanded their regional ties by farming in the new settlement
zones. Like rural-urban migrants, they maintained their links with their
home villages. Kin sent gifts of food; colonists reciprocated with items
of lowland produce. Those with land in the Altiplano continued to farm
it and spent a good portion of the year there.
Community organizations were synonymous with the community itself in
a settlement's early years. They agitated for land titles and maintained
order, settling everything from marital disputes to property boundaries.
They functioned as self-made extension agencies: their meetings were a
forum for sharing experiences, organizing for joint endeavors, and
overcoming the isolation of the frontier. The organizations' influence
often waned as a community aged, reflecting both the politico-economic
climate and the community dynamics. Solidarity declined as some settlers
moved on and others spent more time away from their farms as wage
laborers. New settlers, often members of a different ethnic group,
bought out the original colonists, adding another element of
The migrants' degree of success varied considerably. Some were
supported by their families in the Altiplano, who did not own enough
land for all their children but who could send a son or daughter to the
Oriente. These moderately capitalized migrants became veritable
entrepreneurs in the expanding Santa Cruz economy. Many others simply
transplanted a marginal subsistence holding from the Altiplano to the
tropical forest. Unsuccessful colonists generally cleared subsistence
plots, farmed them for a few years, and then sold out to more
capitalized farmers. Poorer settlers moved farther on toward the
frontier, often clearing the land with destructive methods. Many of
these settlers destroyed tropical rain forests without conferring either
the advantages of a stable system of swidden, or slash-and-burn,
agriculture (which involved cutting down the forest, burning the dried
debris, and planting crops over a period of two to three years) or those
of permanent cultivation.
Although subsistence farmers entered the cash economy to purchase a
few essentials, they found the terms of exchange distinctly unfavorable.
Price uncertainty added to the problems generated by lack of knowledge
of the tropical ecosystem. Cheaper subsidized credit was available only
to farmers with land titles. Rural intermediaries controlled most
marketing and took a hefty share of the profits.
The poor subsisted through a variety of stratagems. Even with the
substantial increase in population, land reserves gave poorer families a
sort of "safety net." A one- to two-hectare subsistence plot
formed part of an intricate mix of income- generating and subsistence
activities. The rural poor alternated between seasonal wage labor and
subsistence agriculture. Some lived in town part of the year and found
employment as street vendors, cargo carriers, construction laborers, or
The massive numbers of migrants had a pervasive impact on regional
society. Cambas, native lowlanders, felt a certain resentment against
the Altiplano migrants, Kollas. Each characterized the other group in
predictably negative terms. Migrants were easy to identify on the basis
of language or accent. Discrimination against them ranged from poor
treatment by shopkeepers to the refusal of service at restaurants. Santa
Cruz natives of all classes made common cause against the newcomers.
Regional loyalties cut across class lines. Occasionally, landholders
were able to recruit the support of cambas through appeals to regional
The Spanish arrived in what is present-day Bolivia in 1532 and
replaced an Inca economic system based on collective agriculture, the
ayllu, and economic tributes to a socio-religious hierarchy with a
system dominated by the conquistadors and the Spanish crown. They
organized the Indians into an encomienda system in which they again paid
tributes, now to conquistadors, and toiled in the silver mines of Potosí
under a compulsory labor system called the mita. Through the
exploitation of Indian labor, the Spanish by the mid-1600s had converted
Potosí into South America's most populated metropolis.
Independence in 1825 did little to improve the economic lot of
Bolivia's Indian majority. Indeed, the already unfair distribution of
land, a legacy of the encomienda system, was worsened when the
government abolished the land tenure system of the Indian communities in
1866. The system that emerged was dominated by nearly feudal peonage
rather than wage labor.
By the late 1800s, the silver industry had suffered a sharp decline
and was replaced by tin mining. The tin industry benefited from the new
rail access linking the country's mines to Pacific Ocean ports for the
first time. The rail access to ocean ports had become crucial to the
Bolivian economy by the early 1880s because Chile had seized the
country's outlets to the sea during the War of the Pacific, 1879-80.
Bolivia's tin industry boomed in the early twentieth century as the
invention of the vacuum-packed tin can and the assembly of the
automobile raised world demand for tin. By the end of World War I, the
country was the world's second-leading producer, mining a fifth of
global output. The unprecedented international demand for tin, the high
concentrations of easily accessed tin in the new mines, low taxation,
and cheap labor made the industry highly lucrative. The nation's tin
industry and the economy at large became completely dominated during the
1920s by the Patiño, Hochschild, and Aramayo tin-mining families, who,
along with the lawyers who defended them, were collectively known as the
rosca. The rosca not only dominated economic affairs but politics as
well, and it constituted a formidable elite in conjunction with the
landed oligarchy that had developed since 1866. This class contrasted
sharply with most of the country's poor citizenry who worked the
marginal agricultural plots of the highlands or labored under appalling
conditions in underground tin mines.
The Great Depression in 1929 and the devastating Chaco War (1932-35)
with Paraguay marked the beginning of a period of growing disdain for
the country's elite. The Great Depression caused tin prices to plunge,
thereby hardening the plight of miners and lowering the profits of the
rosca. During the Chaco War, highland Indians were enlisted to defend
Bolivia's vast Chaco lowlands, with its rumored oil reserves. The war
exposed highlanders for the first time to their nation's vast tracts of
land. As Indians and organized labor began to play a more prominent role
in national life after the Chaco War, mining and landed interests could
no longer stop the momentum for social, economic, and political reforms.
The principal economic goals of the 1952 Revolution were land reform
and the nationalization of the tin mines, both of which were swiftly
enacted. Even before the Nationalist Revolutionary Movement (Movimiento
Nationalista Revolucionario--MNR) could implement its Agrarian Reform
Law on August 2, 1953, the long- oppressed Indians began to seize the
latifundios. Two years into the reform program, the government
accommodated 49 percent of all farming families who had claimed their
The state also expropriated underutilized arable land. On October 31,
1952, the government nationalized most of the tin mines and legally
transferred them to the Mining Corporation of Bolivia (Corporación
Minera de Bolivia -- Comibol), which dominated mining activity until
1985. Much of the elite fled the country or resettled in the
underpopulated department of Santa Cruz.
The MNR's postrevolutionary economic policies focused on the public
sector, especially Comibol and the Bolivian State Petroleum Company
(Yacimientos Petrolíferos Fiscales Bolivianos-- YPFB), as the spearhead
of economic growth. The MNR also promoted cooperatives, particularly in
mining and agriculture, as an alternative to the latifundios. The
government enacted social reforms, such as universal suffrage, and
forged a greater role for organized labor in society. Although most of
its economic policies were not conventional, the revolutionary
government did accept a stabilization plan backed by the IMF in 1956 and
1957 in an effort to reverse negative growth and serious inflation.
Economic growth averaged 4.5 percent from 1965 to 1980, lower than
the growth rate in most Latin American economies. Minerals still
dominated the nation's economy, however; tin accounted for 40 percent of
exports and 15 percent of government revenues as late as 1980. Natural
gas and oil reduced that dependency somewhat beginning in the early
1970s, but not enough to insulate the economy from commodity price
swings. Protracted disputes between the government and labor also
characterized this period.
Economic growth accelerated during the 1970s, averaging 5.5 percent a
year, one of the fastest rates of expansion in Bolivian history. This
expansion resulted primarily from higher export commodity prices. Large
public sector spending also spurred economic output as external
financing cushioned budget deficits. The brisk rise in output also
occurred in part because of sharp restrictions on organized labor
imposed by the military government of Hugo Banzer Suárez (1971-78).
Political stability and higher commodity prices in turn favored greater
foreign investment, which also improved national accounts. Moreover, the
government announced large reserves of oil during the 1970s. Although
revised downward years later, the oil discoveries improved Bolivia's
creditworthiness with foreign commercial banks.
The economic expansion of the 1970s also contributed to rapid growth
of the Santa Cruz area. Partly because the government favored that
region, but also because of increased colonization, higher cotton and
soybean prices, and infrastructure developments, the area flourished.
For a time, the city of Santa Cruz threatened to overtake La Paz as the
nation's most important financial center.
By the 1980s, the public sector had ballooned to encompass 520
agencies, including 120 federal agencies and 50 state-owned enterprises
or financial institutions. Comibol accounted for 65 percent of all
mineral production, YPFB produced 80 percent of all oil and natural gas,
and the government owned over half of the banking system's assets. The
government also controlled the manufacture of glass, textiles, cement,
dairy products, oils, and sugar, mostly through the Bolivian Development
Corporation (Corporación Boliviana de Fomento--CBF), then the nation's
principal development bank. Public sector corruption had become common,
and certain government agencies increased their scope solely to expand
their influence in the bureaucracy.
Bolivia's minor "economic miracle" of the 1970s began to
weaken in 1978 when political instability returned in force. Several
foreign commercial banks reassessed Bolivia's ability to service its
nearly US$3 billion debt, most of which had been acquired by the Banzer
government. External financing from private sources came to a complete
halt by the early 1980s; in the absence of external financing to cover
increasingly large budget deficits, the government opted for the
inflationary policy of printing more money. The value of the peso
dropped rapidly, and high international interest rates multiplied the
By 1985 the nation's per capita income had fallen below 1965 levels,
and rampant hyperinflation ravaged the Bolivian economy. Prices
escalated so rapidly that inflation reached over 24,000 percent by 1985.
Barter flourished as money was seen as virtually worthless. The coca and
cocaine industry propped up the economy and flooded the financial system
with United States dollars. In order to restore public confidence in the
national currency, the Hernán Siles Zuazo government (1982-85)
announced a "dedollarization" decree that outlawed the dollar
deposits and loans used by 90 percent of the economy. The policy caused
massive capital flight, burdened the banking system by forcing it to
convert into greatly overvalued and essentially worthless pesos, and
destroyed the nation's deposit base. From 1979 to 1985, successive
Bolivian heads of state negotiated six tentative stabilization programs
(paquetes económicos) with the IMF, but none was implemented because of
the lack of political continuity and the strength of the political
In August 1985, President Paz Estenssoro promulgated Bolivia's New
Economic Policy (Nueva Política Económica--NPE). The NPE's main
feature was the floating of the peso with the United States dollar. The
plan also liberalized import policies by introducing a uniform tariff of
20 percent. In addition, the NPE called for a radical restructuring of
the public sector, including the dismantling of the CBF, the laying off
of 20,000 of Comibol's 27,000 employees, the partial privatization of
the Mining Bank of Bolivia (Banco Minero de Bolivia -- Bamin), the
reduction by one-third of YPFB's work force, and a virtual spending
freeze for all state-owned enterprises. The policy also deregulated the
economy, legalized dollars, eliminated subsidies, and lifted price
controls. Although drastic, the NPE succeeded in suffocating rampant
hyperinflation; within a few months, inflation had dropped to an annual
rate of 10 to 20 percent.
The international tin market collapsed in October 1985, adding to
Bolivia's problems with hyperinflation, recession, and austere
stabilization. Declaring an end to the tin era, the government further
encouraged the diversification and privatization of the economy. It also
enacted a major tax reform measure in May 1986 that lowered the
country's highest tax bracket from 30 to 10 percent and simultaneously
instituted a general value-added tax. Economists generally perceived the
1986 tax reform as an important policy tool in continuing to stabilize
The crash of the tin market and the NPE's austerity program led to an
estimated unemployment rate of 21.5 percent by 1987 (the unemployment
rate had risen steadily from 5.5 percent in 1978 to 10.9 percent in
1982, 15.5 percent in 1984, and 20 percent in 1986.) In response, the
government promulgated the Reactivation Decree in July 1987. Under the
decree, the government created the Emergency Social Fund--financed in
part by West European and Latin American governments as well as the
World Bank --to develop public works projects to activate the
unemployed. The decree also fostered export activity by introducing tax
rebates for exporters and by establishing the National Institute for
Export Promotion. In addition, the 1987 reactivation measures included
sophisticated financing schemes aimed at eliminating the country's debt
with commercial banks.
Bolivia - ECONOMIC POLICY
Potatoes, the basic staple of highland Indians since pre-Inca times,
remained the most important food crop in the late 1980s. In 1988
approximately 190,000 hectares, mostly in the highlands, produced
700,000 tons of potatoes. These figures compared unfavorably, however,
with 1975, when 127,680 hectares provided 834,000 tons of potatoes,
indicating that yields were dwindling. Bolivia was generally
self-sufficient in potatoes (over 200 varieties were grown), but imports
were needed during occasional periods of drought or freezing. Bolivia
also exported some of its harvest to Brazil. The lack of new seed
varieties, chemical fertilizers, and irrigation systems, together with
the continued exhaustion of the highland soils, was responsible for the
low yields. In the late 1980s, the lack of financial credit at planting
time represented the greatest impediment facing potato growers.
Corn was the second major food crop, and its importance was growing.
Corn covered more hectares than any other crop. In the late 1980s,
approximately 300,000 hectares provided more than 475,000 tons of white
corn, the traditional corn of Bolivia. Yellow Cuban corn, grown in the
tropical areas of Santa Cruz, was becoming more common; 160,000 hectares
produced 350,000 tons of yellow corn in 1988. Sixty percent of the corn
(both white and yellow) was grown by small farmers in the valleys, with
the remaining 40 percent planted by medium-to-large farmers in Santa
Cruz. Small farmers used at least half of their corn for human
consumption, as animal feed, or for brewing chicha, the primary
intoxicating beverage consumed by Bolivian Indians. The other half of
their production and most of the commercially farmed corn were sold to
Bolivia's forty private animal-feed plants, which bought 50 percent of
the country's annual corn output. Many corn farmers were members of the
Corn and Sorghum Producers Association (Productores de Maíz y
Sorgo--Promasor). Promasor was particularly active in Santa Cruz, where
its members also produced 20,000 tons a year of sorghum, a
drought-resistant crop, from some 6,000 hectares of land.
Rice was an increasingly popular crop in Bolivia. Eaten by people in
the lowlands and valleys since the 1950s, rice became the focus of
government import-substitution policies beginning in the 1960s. In the
late 1980s, the country was generally selfsufficient in rice, some years
importing and other years exporting. Bolivia's rice, however, was not of
high quality by international standards, thus limiting export markets.
In 1988 some 90,000 hectares of land, mostly in Santa Cruz and Beni
departments, produced 140,000 tons of rice. Bolivia imported onefifth of
its total consumption of rice in 1988. Approximately 20,000 small
farmers produced the bulk of the country's paddy rice and, in turn, sold
it via truckers to thirty private rice mills.
Barley was a common crop in the highlands and was particularly well
suited for the high altitudes. In 1988 the cultivation of 80,000
hectares by 300,000 highland farmers produced 75,000 tons of barley,
which was used primarily in the country's robust beer industry. About 10
percent of the barley was consumed on the farm as fodder. Bolivia
imported about one-quarter of its total consumption of barley in 1988.
Quinoa, the "mother grain" of the Incas, was the only food
crop in the highlands that experienced sustained growth during the 1970s
and 1980s. Cultivation of quinoa, which grows only above 2,000 meters,
jumped from 15,640 hectares producing 9,000 tons in 1980 to 45,800
hectares producing 21,140 tons in 1984, and production continued to
expand in the late 1980s. High in fiber and rich in protein, quinoa was
a potential health food in industrialized countries.
Despite repeated attempts by the government's National Wheat
Institute (Instituto Nacional del Trigo) to make the nation
selfsufficient in wheat production, Bolivia produced only about 20
percent of the wheat that it consumed in the late 1980s. In 1988 about
88,000 hectares produced 60,000 tons of wheat. In the same year, 280,000
tons of wheat were imported. In 1988 the United States Agency for
International Development (AID) provided 180,000 tons of wheat through
its Public Law 480 (PL-480) Food for Peace Program. Western Europe and
Canada operated programs similar to the AID program but on a smaller
scale. Argentina provided wheat in exchange for Bolivian natural gas.
Smuggled wheat flour from Peru and Argentina represented a serious
menace to domestic wheat production. In 1988 analysts estimated that
60,000 tons of smuggled wheat had entered Bolivia annually. Small
traditional farmers in the highlands and large soybean farmers in Santa
Cruz provided most of the country's 1988 wheat harvest, which was
roughly equivalent to output in 1978, but only wheat from the Santa Cruz
area was used for commercial milling. Analysts believed that wheat would
produce higher yields when the proper tropical seeds, fertilizer, and
irrigation methods were used.
Bolivians produced a wide range of vegetables, fruits, and other food
crops, mostly for local consumption. The principal vegetable crops
included kidney beans, green beans, chick peas, green peas, lettuce,
cabbage, tomatoes, carrots, onions, garlic, and chili peppers. Also
common were alfalfa, rye, cassava, and sweet potatoes. Some of the most
popular fruits were oranges, limes, grapes, apples, quince, papayas,
peaches, plums, cherries, figs, avocadoes, pineapples, strawberries,
bananas, and plantains. Fruits increasingly competed with coca
cultivation in the 1980s.
Soybeans were the most lucrative legal cash crop in Bolivia in the
1980s. Soybean production began in earnest in the early 1970s, following
a substantial increase in the crop's world price. By the late 1980s,
soybeans represented the country's most important oilseed crop. In 1988
soybeans covered 65,000 hectares, and annual production amounted to
about 150,000 tons, compared with 19,430 hectares producing 26,000 tons
a decade earlier. About one-third of the soybean harvest was used
domestically in the form of soybean meal for the poultry industry. Other
soybean meal was shipped to Peru and Western Europe, and raw soybeans
were exported via rail to Brazil. In order to process soybean oil for
the local market, the country maintained a crushing capacity of 150,000
tons in 1988. Locally manufactured soybean oil also competed with
contraband products from neighboring countries. Most of Santa Cruz's
soybean farmers were members of the wellorganized and powerful National
Association of Soybean Producers (Asociación Nacional de Productores de
Soya--Anapo). Anapo, with assistance from AID, built new storage
facilities that permitted continued expansion of the crop. Because of
the dynamism of their crop, soybean farmers enjoyed the best
availability of credit for all legal cash-crop producers.
Coffee, another principal cash crop, was the second most important
agricultural export after timber. As the primary substitute crop offered
to coca growers under the eradication program, coffee was of particular
importance. Coffee production reached 13,000 tons in 1988, nearly double
the 1987 output, which was damaged by disease in western Bolivia. Over
20,000 hectares were devoted to coffee. Bolivia consumed 25 percent of
its coffee crop locally in 1988, with the balance exported both legally
and clandestinely. Legal exports of 102,000 bags, sixty kilograms each
as measured by the International Coffee Organization (ICO), were
equivalent to Bolivia's export quota for 1988, which was over US$15
million. An ICO member since 1968, Bolivia was permitted to export
170,000 of the sixty-kilogram bags in 1989. Approximately 25 percent of
coffee exports left the country illegally in the late 1980s. Most coffee
was grown by small farmers in the valleys or by large farmers in the
lowlands. Most commercial farmers were members of the Bolivian Coffee
Committee (Comité Boliviano del Café--Cobolca), which allocated ICO
quotas. The coffee industry also received technical assistance from the
Bolivian Institute of Coffee (Instituto Boliviano de Café), an
autonomous government agency established in 1965 to run model farms and
help control disease.
Bolivia had been self-sufficient in sugar production since 1963,
although sugarcane had been grown since the colonial era. Sugarcane in
the 1980s was a cash crop of significance for both the domestic and the
export markets. In 1988 cultivation of sugarcane on 62,000 hectares
produced 140,000 tons of sugar. These figures represented a sharp
decline from 1986 figures. The price of sugar had skyrocketed in the
mid-1970s, doubling the number of hectares under sugarcane cultivation
in a few years. As sugar prices declined, however, farmers opted for
more lucrative crops, such as soybeans. The decline in the sugar
industry also was caused by poor management, dwindling yields, and poor
quality control. In 1988 the country's six sugar mills operated at only
37 percent capacity. Sugarcane also was processed into methanol for the
domestic and export markets. Continued controls on imports of sugar
constituted one of the few exceptions to the import liberalization
policies of the late 1980s.
Although cotton was a boom crop in the early 1970s, production had
waned since 1975. Grown mostly in Santa Cruz, cotton covered 54,000
hectares in 1975 but only 9,000 hectares in 1988. Production declined
from 22,000 tons to 3,700 tons over the same period. Price was the
primary reason for the decline, but insect problems, disease, and the
lack of credit also contributed. Because Santa Cruz cotton farmers
represented an important constituency, they had traditionally received
highly favorable terms of credit. When cotton growing was no longer
profitable, however, many cotton farmers defaulted on their loans,
leaving the government's Agricultural Bank of Bolivia (Banco Agrícola
de Bolivia -- BAB) in a poor financial position in the late 1980s.
Because of the precipitous decline in the industry, the country's ten
cotton mills were operating at under one-half of their capacity by the
Cash crops of lesser importance included tobacco, tea, cocoa, and
oilseeds, such as sesame, peanuts, castor beans, and sunflowers.
Approximately 1,000 tons of tobacco for the Bolivian market were grown
on about 1,000 hectares. Tea was grown as a secondary crop in the
Yungas, Alto Beni (Upper Beni), and Santa Cruz areas. Eighty percent of
the country's cacao trees, from which cocoa is derived, were grown in
the Alto Beni by a network of cooperatives that were increasingly
involved in processing cocoa and exporting chocolate products. Oilseeds
were an important part of both the agricultural and the manufacturing
sectors. The growing dominance of soybeans, however, diminished the role
of other oilseeds in the economy.
Bolivia's most lucrative crop and economic activity in the 1980s was
coca, whose leaves were processed clandestinely into cocaine. The
country was the second largest grower of coca in the world, supplying
approximately 15 percent of the United States cocaine market in the late
1980s. Analysts believed that exports of coca paste or cocaine generated
from US$600 million to US$1 billion annually in the 1980s, depending on
prices and output. Based on these estimates, coca-related exports
equaled or surpassed the country's legal exports.
Coca has been grown in Bolivia for centuries. The coca plant, a
tea-like shrub, was cultivated mostly by small farmers in the Chapare
and Yungas regions. About 65 percent of all Bolivian coca was grown in
the Chapare region of Cochabamba Department; other significant
coca-growing areas consisted of the Yungas of La Paz Department and
various areas of Santa Cruz and Tarija departments.
Bolivian farmers rushed to grow coca in the 1980s as its price
climbed and the economy collapsed. Soaring unemployment also contributed
to the boom. In addition, farmers turned to coca for its quick economic
return, its light weight, its yield of four crops a year, and the
abundance of United States dollars available in the trade, a valuable
resource in a hyperinflated economy. The Bolivian government estimated
that coca production had expanded from 1.63 million kilograms of leaves
covering 4,100 hectares in 1977 to a minimum of 45 million kilograms
over an area of at least 48,000 hectares in 1987. The number of growers
expanded from 7,600 to at least 40,000 over the same period. Besides
growers, the coca networks employed numerous Bolivians, including
carriers (zepeadores), manufacturers of coca paste and cocaine, security
personnel, and a wide range of more nefarious positions. The
unparalleled revenues made the risk worthwhile for many.
Government efforts to eradicate the rampant expansion of coca
cultivation in Bolivia began in 1983, when Bolivia committed itself to a
five-year program to reduce coca production and created the Coca
Eradication Directorate (Dirección de la Reconversión de la
Coca--Direco) under the Ministry of Agriculture, Campesino Affairs, and
Livestock Affairs. Bolivia's National Directorate for the Control of
Dangerous Substances (Dirección Nacional para el Control de Substancias
Peligrosas-- DNCSP) was able to eradicate several thousand hectares of
coca. These efforts, however, put only a small dent in the coca industry
and were highly controversial among thousands of peasants. Under the
joint agreement signed by the United States and Bolivia in 1987, which
created DNCSP, Bolivia allocated US$72.2 million for the 1988 to 1991
period to eradication programs, including a wide-ranging rural
development program for the Chapare region. The program was aided by an
88 percent drop in the local price of coca caused by the fall in cocaine
prices in the United States.
The economics of eradication were particularly frustrating. As more
coca was destroyed, the local price increased, making it more attractive
to other growers. Bolivia, however, was seeking additional funds from
the United States and Western Europe to proceed with an eradication plan
that was supposed to provide peasants US$2,000 per hectare eradicated.
In 1988 coca growing became technically illegal outside a specially
mandated 12,000- hectare area in the Yungas. A four-year government
eradication campaign begun in 1989 sought to convert 55 percent of coca
areas into legal crops. Coffee and citrus fruits were offered as
alternative crops to coca despite the fact that their return was a
fraction of that of coca.
The cocaine industry had a generally deleterious effect on the
Bolivian economy. The cocaine trade greatly accelerated the predominance
of the United States dollar in the economy and the large black market
for currency, thereby helping to fuel inflation in the 1980s. The
escalation of coca cultivation also damaged the output of fruits and
coffee, which were mostly destined for local consumption. Coca's high
prices, besides being generally inflationary, also distorted other
sectors, especially labor markets. Manufacturers in the Cochabamba area
during the 1980s found it impossible to match the wages workers could
gain in coca, making their supply of labor unreliable and thus hurting
the formal economy.
Bolivia - Farming Technology
From 1557 to 1985, the mining industry dominated the Bolivian
economy. By 1985, however, the production of every significant mineral
in the country had failed to exceed the output registered in 1975.
Moreover, the international tin market crashed in 1985. The mining
sector in 1987 accounted for only 4 percent of GDP, 36 percent of
exports, 2.5 percent of government revenues, and 2 percent of the labor
force, compared with 8 percent of GDP, 65 percent of exports, 27 percent
of government revenues, and about 6 percent of the labor force in 1977.
Spurred by a massive increase in gold production, however, the mining
sector rebounded in 1988, returning to the top of the nation's list of
foreign exchange earners.
Structure of the Mining Industry
Comibol, created in 1952 and decentralzied into five semiautonomous
mining enterprises in 1986, was a huge multimineral corporation
controlled by organized labor and the second largest tin enterprise in
the world. In addition to operating twenty-one mining companies, several
spare-parts factories, various electricity plants, farms, a railroad,
and other agencies, Comibol also provided schooling for over 60,000
children, housing for mining families, health clinics, and popular
subsidized commissaries called pulperías. By 1986 Comibol employed more
nonminers than miners.
Observers severely criticized Comibol's mining policies. Comibol took
fifteen years to bring tin production to its prerevolutionary levels. In
addition, Comibol failed to invest sufficiently in mining technology and
existing mines, and it proved unable to open new mines. Indeed, except
for the mid-1960s Comibol did not engage in exploration. In terms of
administration, worker control eclipsed even technical and detailed
The decentralization of Comibol under the Rehabilitation Plan reduced
the company's payroll from 27,000 employees to under 7,000 in less than
a year. All of Comibol's mines, previously responsible for the bulk of
mining output, were shut down from September 1986 to May 1987 to examine
the economic feasibility of each mine; some never reopened. Comibol's
mining and service companies were restructured into five autonomous
mining subsidiaries (in Oruro, La Paz, Quechusa, Potosí, and Oriente)
and two autonomous smelting companies (the Vinto Smelting Company and
the still unopened Karachipampa smelter in Potosí), or they were
transferred to ministries such as the Ministry of Social Services and
Public Health or the Ministry of Education and Culture. The bureaucracy
also underwent major administrative changes.
For the first time since 1952, the country's medium miners, small
miners, cooperatives, and other producers, which made up the rest of the
mining sector, produced more minerals in 1987 than Comibol. The medium
miners consisted of Bolivian and foreign mining companies in the private
sector that were involved in the production of virtually every mineral,
especially silver, zinc, antimony, lead, cadmium, tungsten, gold, and
tin. Nevertheless, the collapse of tin and the decline in other
commodity prices in the mid-1980s also severely affected the private
mining sector. Nineteen mining companies with 4,020 employees
constituted the Medium Miners Association (Asociación de Minería
Mediana) in 1987, compared with twenty-eight companies and 8,000 workers
in 1985. Only 615 mines in 1987 were part of the National Chamber of
Mining (Cámara Nacional de Minería), the equivalent of a small miners
association, compared with 6,300 mines and 23,000 workers before the
crash. Traditionally, small miners had to market their mining output
through the Mining Bank of Bolivia (Bancco Minera de Bolivia -- Banin),
which was also restructured after 1985 into a joint venture of private
and public interests. Beginning in 1987, small miners no longer had to
sell their exports through Bamin, a policy shift that boosted that
group's output and foreign sales. Mining cooperatives and other
miscellaneous miners made up the rest of the producers in the mining
sector, although their output was aggregated with that of the small
mining sector. The National Federation of Mining Cooperatives of Bolivia
(Federación Nacional de Cooperativas Mineras de Bolivia) served as an
umbrella organization for the country's 434 mining cooperatives, 82
percent of which mined gold. Only a few of these groups, however, were
officially registered with the National Institute of Cooperatives
(Instituto Nacional para Cooperativas). Most cooperatives were small and
consisted of individual miners organized by mine or specific mineral and
using very little technology.
Tin and Related Metals
Bolivia's mines had produced cassiterite, the chief source of tin,
since 1861. Although long among the world's leading tin producers and
exporters, the industry faced numerous and complicated structural
problems by the early 1980s: the highestcost underground mines and
smelters in the world; inaccessibility of the ores because of high
altitudes and poor infrastructure; narrow, deep veins found in hard
rock; complex tin ores that had to be specially processed to extract
tin, antimony, lead, and other ores; depletion of high-grade ores;
almost continual labor unrest; deplorable conditions for miners;
extensive mineral theft or juqueo; poor macroeconomic conditions; lack
of foreign exchange for needed imports; unclear mining policies; few
export incentives; and decreasing international demand for tin. Between
1978 and 1985, Bolivia fell from the second to the fifth position among
In the late 1980s, however, tin still accounted for a third of all
Bolivian mineral exports because of the strong performance by the medium
and small mining sectors. The largest tin-mining company in the private
sector was Estalsa Boliviana, which dredged alluvial tin deposits in the
Antequera River in northeastern Potosí Department. The Mining Company
of Oruro operated the country's richest tin mine at Huanuni. The
country's tin reserves in 1988 were estimated at 453,700 tons, of which
250,000 tons were found in medium-sized mines, 143,700 tons in Comibol
mines, and 60,000 tons in small mines. In the late 1980s, tin was
exported mainly in concentrates for refining abroad. Eighty percent of
all exports went to the European Economic Community and the United
States, with the balance going to various Latin American countries and
Bolivia was a founding member of the International Tin Council (ITC),
a body of twenty-two consumer and producer countries that since 1930 had
attempted to regulate tin markets through buffer stocks. Bolivia,
however, did not sign the ITC's International Tin Agreements in the
1970s and 1980s. In 1983 Bolivia joined the newly formed Association of
Tin Producing Countries, which attempted--unsuccessfully--to control tin
prices through a cartel approach to commodity regulation. After a period
of decline, tin prices rebounded in the late 1980s.
Government policies since the early 1970s had sought to expand the
percentage of metallic or refined tin exports that offered greater
returns. As a result, smelting increased during the 1970s, but in the
1980s the excessive costs of the nation's highly underutilized smelting
operations contributed to the decision to restructure Comibol.
Silver, zinc, lead, bismuth, and other minerals were all found with
Bolivia's large tin reserves and, like tin, were considered strategic
minerals. Because of the common mixture of ores, tin mining frequently
encompassed the mining of other minerals as well. With the collapse of
tin, the government was increasingly interested in exploiting its large
reserves of other minerals, particularly silver and zinc. Three
centuries after being the world's largest producer of silver, Bolivia
still produced 225 tons of silver in 1988, as compared with about 140
tons in 1987. Zinc reserves were large, 530,000 tons, and the expansion
of zinc production enjoyed growing government support. Zinc output also
rose in the late 1980s from roughly 39,000 tons in 1987 to over 53,000
tons in 1988, compared with 47,000 tons in 1975. Nearly all zinc was
exported. In 1987 the government declared the construction of a new zinc
refinery in Potosí a national priority. Although the authorities
considered lead a minor metal, production increased from 9,000 tons in
1987 to 11,000 tons in 1988. Bismuth reserves were estimated at 4,100
tons, and production in 1987 reached two-thirds of a ton entirely by
small miners. Bolivia, the site of the International Bismuth Institute,
was once the sole producer of bismuth in the world.
The lead and silver Karachipampa facility in Potosí was the nation's
largest smelter. Completed in 1984, Karachipampa employed Soviet
technology but was constructed by a Federal Republic of Germany (West
Germany) company. The smelter's gross capacity was an enormous 51,000
tons a year. Widely criticized for its overcapacity, the plant was not
scheduled to open until 1992 at the earliest because of insufficient
Bolivia mined about a fifth of the world's antimony in the late 1980s
and was the leading producer among market economies. Private companies
were responsible for all antimony production. The largest output came
from the United Mining Company (Empresa Minera Unificada), which
controlled the two largest antimony mines, located at Chilcobija and
Caracota, both in Potosí Department. Medium and small miners generated
an average of 9,500 tons of antimony a year in the mid-to late-1980s,
all of which was exported. Antimony, a strategic mineral used in
flameproofing compounds and semiconductors, was exported in
concentrates, trioxides, and alloys to all regions of the world, with
most sales going to Britain and Brazil. Antimony reserves in 1988 stood
at 350,000 tons.
Bolivia was also the leading producer of tungsten among market
economies. But the dramatic decline in tungsten prices in the 1980s
severely hurt production, despite the fact that reserves stood at 60,000
tons. Medium and small producers accounted for over 80 percent of the
country's tungsten production in the late 1980s. The International
Mining Company's Chojilla mine was the source of most tungsten output.
Tungsten production sank from 2,300 tons in 1984 to barely more than 800
tons in 1987 because of falling international prices. Tungsten was sold
to West European, East European, and Latin American countries, as well
as to the United States.
Other Metals and Minerals
Gold prospecting in the country's rivers and mines was brisk in the
late 1980s. Because of Bolivia's vast territory and the high value of
gold, contraband gold accounted for approximately 80 percent of exports.
Official gold exports were approximately five tons in 1988, up sharply
from less than one ton in 1985. In order to capture gold as a reserve
for the Central Bank, in 1988 the government offered a 5 percent bonus
over the international price of gold on local sales to the Central Bank.
Gold was mined almost exclusively by over 300 cooperatives throughout
the country, along with about 10,000 prospectors. A large percentage of
the cooperatives worked in Tipuani, Guanay, Mapiri, Huayti, and Teoponte
in a 21,000-hectare region set aside for gold digging and located 120
kilometers north of La Paz. Mining cooperatives in the late 1980s had
requested an additional 53,000 hectares from the government for gold
prospecting. Others panned for their fortunes in remote villages like
Araras along the Brazilian border in Beni. Small-scale operations were
very traditional and wasteful. Analysts predicted that more commercial
production, such as the dredging of alluvial deposits, would maximize
gold output. A few medium-sized mining operations, as well as the Armed
Forces National Development Corporation (Corporación de las Fuerzas
Armadas para el Desarrollo Nacional--Cofadena) became involved in the
gold rush in the 1980s. Government policy favored augmenting gold
reserves as a means of leveraging more external finance for development
The government's mineral policy also gave a high priority to
exploiting the lithium and potassium deposits located in the brines of
the southern Altiplano's Uyuni saltpan, estimated to be the largest of
their kind in the world. The United States Geological Survey, the
Bolivian Geological Survey (Servicio Geológico de Bolivia), and others
discovered large reserves of lithium in 1976. By 1985 Bolivia's National
Congress had made lithium extraction a national priority and created the
Industrial Complex of the of Uyuni Saltpan (Complejo Industrial de los
Recursos Evaporíticos del Salar de Uyuni) to explore, exploit, and
market lithium. Because the extraction of lithium is an expensive,
technically complex process, the government sought bids for some foreign
investment in lithium in the late 1980s. In addition to an estimated 5.5
million tons of lithium reserves, Bolivia also had approximately 110
million tons of potassium, 3.2 tons of boron, and an unknown amount of
magnesium associated with lithium.
After years of planning, the Mutún iron mine was scheduled to open
its first of two plants in 1989. The Mutún mine, the sole
responsibility of the Mining Company of the Oriente, was expected to
yield 592,000 tons of iron in its first five years of operation. Mutún
was also expected to produce manganese. The prospects for the steel
industry, which was controlled by Bolivian Iron and Steel (Unidad
Promotora de La Siderurgia Boliviana, formerly known as Siderúrgica
Boliviana), however, were bleak. After more than a decade of planning a
national steel plant, Bolivia was still unable to obtain financing for
such a project, especially given international overcapacity in steel.
The possibility of a national steel plant appeared unlikely at the end
of the 1980s.
Bolivia - MANUFACTURING AND CONSTRUCTION
The manufacturing sector played a minor role in the economy, and
virtually all of its activity was linked to the three major sectors of
the economy: agriculture, hydrocarbons, and mining. Since 1952
manufacturing had contributed generally 15 percent of GDP, but the deep
recession of the 1980s severely weakened the sector, making it contract
by 35 percent from 1980 to 1987. In that same period, manufacturing's
share of GDP dropped to about 10 percent, and its share of the labor
force fell from 177,000 to 117,000, or about 7 percent of all workers.
The sector focused primarily on the domestic market, but in 1987
nontraditional exports, those other than hydrocarbons, agriculture, or
mining, amounted to over 18 percent of total exports. In the late 1980s,
manufacturers continued to face onerous structural constraints: a small
domestic market, tight credit policies, high transportation costs, a
lack of infrastructure, insufficient skilled labor and managers,
excessive contraband, low import tariffs, dependence on imported inputs,
and the declining production of domestic inputs, such as agricultural
goods, petroleum, and minerals. In addition, the NPE promoted greater
export orientation and diversity for the sector, goals that few
manufacturers were capable of reaching in 1985. Similarly, the NPE's
policies of import liberalization and tight credit, low consumer demand,
high utility costs, and a new VAT hurt most manufacturers accustomed to
operating in a protectionist environment. From 1985 to 1987, more than
130 manufacturing firms collapsed, and the industry as a whole operated
at only about half of its capacity.
Manufacturing grew at a pace of approximately 5 percent annually
during the 1960s and 1970s, with slightly faster growth in the second
decade. Until the 1970s, the government limited itself to the
promotional and funding activities of the Bolivian Development
Corporation, which was dissolved in 1985 in favor of regional
development corporations in each department. In 1971, however, the
Industrial Incentives Law granted varying import duty exceptions on
capital and intermediate goods, accelerated depreciation allowances,
deduction of indirect taxes, and a tenyear income exemption in the case
of firms establishing themselves in the departments of Pando, Beni,
Chuquisaca, and Tarija. To manage the law, the government created the
National Investment Institute (Instituto Nacional de Inversiones) to
screen and set priorities for investment. Investment in manufacturing
increased as a result of these measures, including a surge in public
sector spending from 15 percent of all manufacturing investment to 40
percent during the 1970s. The state's investment consisted of industrial
plants in milk processing, cement, sugar, rubber, ceramics, metals,
glass, petroleum, gas, and others, some of which were eventually sold to
the private sector. The 1971 investment law was revised in 1981, but by
1986 both had been supplanted by the NPE's uniform import tariffs and
tax reform. Government policy in the late 1980s focused on developing a
new investment code to stimulate increased foreign investment in export
industries. Nevertheless, Bolivia's history of political instability,
labor unrest, and structural bottlenecks made the task of luring foreign
The manufacturing industry consisted of nine subsectors--food,
beverages, and tobacco; textiles, garments, and leather goods; chemicals
and plastics; timber, wood products, and furniture; paper products;
nonmetallic minerals; basic metal industries; metal production,
equipment, and machinery; and other manufacturing. Many producers who
were involved in manufacturing and related activities were classified as
part of the informal sector. The food, textile, and metal industries
contributed over 80 percent of all manufacturing output and over half of
the sector's labor force. Except for the manufacturing of hydrocarbons
and minerals, there was little heavy industry. Except for agricultural
processing, many manufacturers imported as much as 90 percent of their
final product, making much of the sector more commercial than
industrial. Many manufacturers ran only small artisan shops, and most
employed fewer than ten workers.
The agricultural processing subsector consisted of milling wheat into
flour, crushing oilseeds, refining sugar, blending coffee, milling
cotton into textiles, canning fruits and vegetables, packing meat, and
processing dairy products. Most agro-industries were located in Santa
Cruz Department. Domestically made beverages, such as soft drinks, beer,
and chicha, were also popular. A domestic cigarette and cigar industry
also existed. In 1988 the government considered the possibility of
legally exporting cocaine to the international pharmaceutical industry.
The textile industry, another major subsector, had played a declining
role in the economy since 1970 as mining and hydrocarbons occupied a
more prominent place. The country's ten textile mills purchased local
cotton and wool for their products, but the poor quality of garments,
leather goods, and footwear, as well as the competition from smuggled
goods, undermined growth.
Industry also produced a significant supply of local chemicals,
plastics, medicines, industrial chemicals, gases, and insecticides. The
subsector's output was expected to increase vigorously as the gas
pipeline project with Brazil became operative and the manufacture of
fertilizers and other petrochemicals increased. Although the cutting of
timber accelerated and scores of small sawmills became active in the
1980s, the wood and furniture industry remained well under its
potential. The wood industry was completely unregulated, and as the
contraband wood trade thrived, Brazil benefited most from the increased
felling of Bolivian trees. Timber also fed the country's paper industry,
which consisted of several dozen mostly urban firms producing a limited
product line of paper products, newsprint, and cardboard. The
construction industry was primarily fed by the manufacturing of
nonmetallic minerals, notably limestone, clays, and salts, all of which
were found in abundant quantities. The metal industries fabricated a
wide range of ferrous and nonferrous metal alloys, iron, steel, tubing,
vehicles, some appliances, batteries, electrical transformers, sewing
machines, farm equipment, bicycles, and transport equipment. In
addition, Cofadena assembled automobiles in Santiváñez in Cochabamba
Department, as part of an agreement with the Andean Common Market
(ANCOM, also known as the Andean Pact).
The country's construction industry consisted of approximately 600
mostly small companies operating primarily in the cities of La Paz,
Santa Cruz, Cochabamba, and Oruro. Construction activity soared in the
1960s and 1970s because of renewed investment in public works and a
residential housing boom in the larger cities. Most Bolivians, however,
continued to build their own homes by more traditional means. The deep
recession of the early 1980s and the extremely tight credit policies of
the late 1980s slowed construction activity greatly. In the late 1980s,
construction contributed an average 3 percent of GDP. As part of the
reactivation policies of 1987, the government created the National
Housing Fund (Fondo Nacional de Vivienda--Fonvi) to inject credit into
the housing industry and to foster housing construction and home
With the exception of steel, the construction industry received most
of its inputs from domestic industry: limestone, cement, wood products,
and metal products. The cement industry in particular was very large,
the four cement plants providing an installed cement capacity in 1989 of
700,000 tons per year. The three state-owned cement factories were run
by their respective regional development corporations in Tarija,
Cochabamba, and Chuquisaca departments and contributed 70 percent of
total cement production. The only private company, the Bolivian Cement
Company (Sociedad Boliviana de Cementos) in Viacha in La Paz Department
provided the balance. In the late 1980s, about 400,000 tons per year of
local limestone fed cement production.
Bolivia - Banking and Financial Services
Inadequate and costly transportation, a result of the country's
rugged terrain and scattered population, persisted as a major obstacle
to faster growth and development in the late 1980s. Bolivia's access to
foreign markets has been hampered since the loss of its Pacific Ocean
ports in the War of the Pacific (1879- 80). The country's various
geographical obstacles and inadequate transportation infrastructure also
have hindered economic activity, especially after the latter shifted
from the highlands to the lowlands. Although the infrastructure has
grown significantly since the 1952 Revolution, an adequate network of
integrated transportation systems was still distant in the late 1980s,
as was the large external financing it would require.
Bolivia's road system accounted for the overwhelming share of
domestic transportation. In 1988 the nation had over 41,000 kilometers
of roads, 3 percent of which were paved, 16 percent generally gravel,
and 81 percent dirt. La Paz's steep and narrow streets were primarily
cobblestone. The National Road Service (Servicio Nacional de
Caminos--Senac), established in 1964 when there were only 3,000
kilometers of roads, supervised road construction and maintenance.
Observers criticized Senac for haphazard road development and
substandard road maintenance, especially along the backbone of the paved
system, the 560- kilometer Cochabamba-Santa Cruz highway. In the late 1980s, Senac received funding from the
Inter-American Development Bank (IDB) to repave this highway, the main
access to the agricultural frontier. In addition, the winding mountain
roads were poorly maintained and lacked such safety features as guard
rails. Mountain and lowland roads were often impassable during the rainy
season. Many blamed the rapid deterioration of roads on too-heavy,
poorly maintained trucks and buses. Government policies were aimed at
enlarging and improving the network of roads in the lowlands,
particularly the Chapare, and connecting La Paz with Santos, Brazil, by
At least 110,000 vehicles were registered in the late 1980s,
including about 71,000 automobiles or light vehicles, 30,000 heavy
trucks, and 9,000 buses. In addition, the government reported about
50,000 motorbikes, 18,000 jeeps, 27,000 vans, and 37,000 light or
flatbed trucks. Flotas (large buses) operated primarily in rural areas,
and micros (small buses) operated throughout the country; taxis existed
in larger cities. Many Indians in the highlands, however, still used
llamas as a main means of transporting loads, such as market produce.
The most important transport system for external trade, excluding gas
and oil pipelines, was the railroad. The country's rail system grew in
stride with the tin industry, and the first railroad from Oruro to
Antofagasta, Chile, opened in the 1880s. The railroad later
extended from Oruro to the cities of La Paz, Cochabamba, and Potosí. In
1913 a railroad from La Paz to Arica, Chile, also was opened, and by the
1950s the last major rail system from Santa Cruz to São Paulo, Brazil,
was completed. By the late 1980s, Bolivia possessed an extensive but
aging rail system that operated over 3,700 kilometers of rail and
carried over 535 million tons of freight and 2.4 million passengers a
year. The National Railroad Enterprise (Empresa Nacional de
Ferrocarriles--Enfe) operated the dilapidated system, which had been
subject to World Bank rehabilitation schemes since 1970. Government
policies emphasized the continued upgrading of the railroad and plans to
join the Atlantic and Pacific coasts by rail. In 1988 the Argentine
Railroad Company (Ferrocarriles Argentinos) began work on the Expreso
del Sud railline, which would connect Buenos Aires with La Paz and
eventually Matarani, Peru, to form the Liberators of America Corridor
(Corredor Libertadores de América), the first Atlantic-Pacific railroad
in South America. The Bolivian government also contemplated another
transoceanic railroad linking Santa Cruz to Cochabamba and thus
integrating its Andean and lowland railroads.
Air travel was common in Bolivia because of the great physical
barriers that partitioned the country. The government's Administration
of Airports and Aerial Navigation Auxiliary Services (Administración de
Aeropuertos y Servicios Auxiliares de la Navegación Aérea--AASANA)
managed the country's thirty-two official airports, only six of which
had paved runways. Bolivia had two international airports: Kennedy
International Airport outside La Paz (the highest commercial airport in
the world) and Viru-Viru in Santa Cruz. There were also an estimated 800
unofficial airstrips, particularly in the lowlands. Many of these were
clandestine airstrips used in narcotics trafficking.
Most air activity consisted of domestic and international travel and
freight, such as beef exports. The frequent need to rely on air
transportation for both domestic and international freight explained the
high cost of transportation in general. Lloyd Bolivian Airline (Lloyd Aéreo
Boliviano--LAB), owned both by the government and by private interests,
was the country's main airline and carried over 70 percent of all
domestic passengers-- over 1 million passengers a year--in the 1980s.
LAB serviced most Bolivian cities, most major Latin American cities, and
many other international destinations. Argentine, Brazilian, Chilean,
Colombian, Paraguayan, United States, and West German airlines
maintained flights to and from Bolivia. Military Air Transports
(Transportes Aéreos Militares--TAM) also served as a carrier for about
50,000 domestic passengers a year. In addition, 170 small taxi airplanes
supplemented LAB's domestic service. There were two major air taxi
companies. Rivers also served as a common means of transportation,
especially in the underpopulated eastern plains. Bolivia possessed more
than 14,000 kilometers of inland waterways, including Lake Titicaca, the
highest navigable lake in the world. Over thirty rivers from the Amazon
system flowed through Bolivia. The major river systems used for
transport were the Ichilo-Mamoré, Beni-Madre de DiosOrton , and Iténez-Paraguay.
Capitanías (river stations) in Trinidad, Riberalta, and Guayaramerín
oversaw the 360 craft that used the nation's rivers. Most vessels were
under fifty tons. In 1988 Bolivia signed an agreement--also approved by
Argentina, Brazil, Paraguay, and Uruguay--that guaranteed the free
passage of ships on the Paraná and Paraguay rivers.
In the late 1980s, Bolivia used the ports and warehousing facilities
at Arica and Antofagasta in Chile, Matarani and Ilo in Peru, and Santos
in Brazil as its major outlets to the sea. In addition, Bolivia was
granted free port facilities in Rosario, Argentina; Nueva Palmira,
Uruguay; and Belém, Brazil. Nevertheless, Bolivia continued to
negotiate with its neighbors about access to its former seaports, long a
matter of national pride for the country.
Bolivia - Tourism
The Constituent Assembly that founded Bolivia in 1825 wrote the
nation's first constitution establishing a centralized government with
executive, legislative, and judicial branches. Based on the United
States Constitution and borrowing a few premises from the French
Republic, the first charter adopted liberal and representative democracy
granting the congress autonomy and policy-making prerogatives. This
constitution, however, was never adopted.
On November 26, 1826, the Bolivarian constitution, written in Lima by
the liberator Simón Bolívar Palacio, replaced the original document
and instituted a fourfold separation of powers among a lifetime
presidency, an independent judiciary, a tricameral congress, and an
electoral body. The tricameral congress comprised the Senate and the
Chamber of Tribunes, whose members had fixed terms, as well as a Chamber
of Censors, whose members served for life. Theoretically, the Senate was
responsible for codifying laws and reorienting church and court
officials, the Chamber of Tribunes possessed general legislative powers,
and the Chamber of Censors had oversight powers that included
impeachment of members of the executive. In reality, the legislature's
key functions were to name the president and to approve a list of
successors submitted by the president. One of the long-lasting effects
of the Bolivarian constitution was the establishment of an
executive-based system. The Bolivarian constitution reflected the
Spanish tradition of bureaucratic patrimonialism in which power rested
in the executive branch. Historians have argued retrospectively that Bolívar's
constitution suited the nation's political structure better than the
liberal constitutions that followed.
In many ways, the Bolivarian constitution reflected Bolívar's
uneasiness about mob rule. Like the founding fathers of the United
States, Bolívar considered necessary the prevention of rule by the
masses. As a result, the franchise was extended only to those literate
in Spanish who either possessed property then worth 400 bolivianos or
engaged in an art, in a science, or in some other remunerative position.
Domestic and personal servants were also denied the franchise. In short,
voting rights were limited to a very small and privileged elite. Voting
qualifications and restrictions remained until universal suffrage was
adopted during the 1952 Revolution.
Mostly, however, the Bolivarian constitution reflected Bolívar's
distrust of the privileged elite that inherited Upper (Alto) Peru from
Spain. Bolívar feared that rival elite factions would wage battle
against each other for control over the new nation and became convinced
that the best way to prevent instability and chaos was to
institutionalize a strong, centralized, and lifetime presidency.
In spite of Bolívar's foresight, the Bolivarian constitution did not
last long because of the great disparity that existed between the
national aspirations of the state and its effective power over Bolivia's
disparate regions and population. Between 1825 and 1880, Bolivian
political life was dominated by a series of quasi- military leaders,
known as caudillos, who had emerged with the collapse of the Spanish
Empire. Within the context of economic crisis, warring caudillos, and a
semifeudal social structure, constitutions and the national government
became prizes to be captured by one or another caudillo.
Under the presidency of General Andrés de Santa Cruz y Calahumana, a
new constitution was adopted on August 31, 1831. The new constitution
introduced bicameralism, dividing the body between the Chamber of
Senators (Senate) and the Chamber of Deputies elected by proportional
representation. Annual sessions for the Nationsl Congress (hereafter,
Congress) were to run between sixty and ninety days. Although the
president was given the power to dissolve congress, the new constitution
abolished the lifetime presidency and limited the president to renewable
four-year terms. Despite these limitations, however, presidential power
actually increased during the presidency of Santa Cruz, and the trend
toward greater concentration of power in the executive continued
throughout Bolivia's history.
Under the short-lived Peru-Bolivian Confederation of 1836-39, Santa
Cruz promulgated a new constitution that basically applied the
principles of the 1831 charter to the alliance. The end of the
confederation motivated Santa Cruz to institutionalize the strong
executive model embodied in the 1831 charter. Because the president was
given the power to dissolve the legislature, Congress was condemned to a
passive and submissive role.
For the next forty-two years, Bolivia was subjected to the whims of
caudillos who dictated constitutional charters almost as regularly as
changes of government occurred. Between 1839 and 1880, six constitutions
were approved by the legislative power. Except for the constitution of
1839, which limited presidential power, the constitutions promulgated
under José Ballivián y Segurola (1843), Manuel Isidoro Belzú Humérez
(1851), José María Achá Valiente (1861), Mariano Melgarejo Valencia
(1868), and Agustín Morales Hernández (1871) further concentrated
power in the hands of the executive. As a rule, during this era Congress
responded to the demands of whatever caudillo was in power.
Caudillo politics came to an end after the War of the Pacific
(1879-80), in which the combined forces of Bolivia and Peru suffered a
humiliating defeat against Chile's armed forces. The end of the war gave
rise to a new mining elite oriented to laissez-faire capitalism. Aided
by the failure of Bolivia's armed forces in the war effort, this new
elite was able to design a new civilian regime of "order and
In 1880 Bolivia's most durable constitution was approved; it was to
remain in effect for the next fifty-eight years. Under this
constitution, bicameralism was fully adopted, and the legislative power
became an important arena for political debate. During this period,
Bolivia achieved a functioning constitutional order complete with
political parties, interest groups, and an active legislature. The
country was also a prime example of a formal democracy with legally
limited participation. Literacy and property requirements were still
enforced to exclude the Indian population and the urban working class
from politics. Political life was reserved for the privileged and a
minuscule upper class.
The basic premises of representative democracy introduced in 1880
still prevailed in 1989. Specifically, congressional oversight
prerogatives over executive behavior were introduced by law in 1884 when
Bolivia emerged from the War of the Pacific. The Law Governing Trials of
Responsibilities was to become an integral part of Bolivia's restricted
The era of political stability, which paralleled the integration of
Bolivia into the world economy through the export of tin, ceased with
the end of the tin-export boom and the overthrow of President Daniel
Salamanca Urey (1931-34). One of the legacies of this period was an
extremely stratified pattern of social relations that was to affect
Bolivia's political structure. In particular, the middle class became
dependent on the state for employment as the upper class monopolized
hard sources of wealth. As the economy plummeted, competition for scarce
jobs increased. The result was a discontented and jobless middle class.
In this context, political conflict became a struggle between factions
led by elite leaders and middle-class followers.
The economic crisis of the 1930s and the disastrous Chaco War
(1932-35) exacerbated social tensions. The effects of the war would in
turn have a dramatic effect on Bolivian political life and its
institutions. Between 1935 and 1952, middle-class reformist efforts
converged into populist movements led by both military officers and
middle-class civilian intellectuals. Under Colonel Germán Busch Becerra
(1937-39), a constituent assembly approved reforms in 1938 that were to
have a lasting and profound impact on Bolivian society. Of greatest
significance were changes that altered the pattern of relations between
state and society. According to its provisions, human rights outweighed
property rights, the national interest in the subsoil and its riches
predominated, the state had a right to intervene in economic life and to
regulate commerce, workers could organize and bargain collectively, and
educational facilities for all children were mandated. The labor
provision helped establish the basis for political parties by allowing
the formation of miners' and peasants' unions that eventually played
central roles in the 1952 Revolution.
Bolivia's constitution was again reformed in 1944 during the
presidency of Colonel Gualberto Villarroel López (1943-46), another
populist reformer. The principal changes included suffrage rights for
women, but only in municipal elections, and the establishment of
presidential and vice presidential terms of six years without immediate
reelection. Reforms undertaken by military-populist governments,
however, were partially rolled back following the overthrow and
assassination of Villarroel in 1946. In 1947 a new constitution reduced
the presidential term to four years and increased the powers of the
In retrospect, it is clear that the post-Chaco War reformist efforts
increased the role of the state, especially in terms of redressing
social and economic grievances. The constitutions of this period
reflected the rise of movements and groups that were to dominate
Bolivian politics for the next forty years. For example, the Nationalist
Revolutionary Movement (Movimiento Nacionalista Revolucionario--MNR)
espoused a broad multiclass alliance of workers, peasants, and
middle-class elements to do battle with the antinational forces of the
mining oligarchy and its foreign allies. It went on to conduct the 1952
Revolution, and in 1988 the MNR was back in power with Paz Estenssoro,
its founder and leader, as president. Although the 1952 Revolution
fundamentally transformed Bolivian society, a new political order was
never fully implemented. Between 1952 and 1956, factions of the MNR
debated alternative and novel modes of political organization, including
proposals to implement a worker's assembly. By 1956, however, the 1947
constitution had been ratified. Apart from a powerful labor movement,
organized as the Bolivian Labor Federation (Central Obrera
Boliviana--COB), the MNR failed to create new institutions capable of
channeling and controlling the demands of the groups mobilized by the
The 1961 constitution institutionalized the gains of the 1952
Revolution by adopting universal suffrage, the nationalization of the
mines, and agrarian reform. Factional disputes within the MNR, rooted in
demands for access to state employment, undermined the party's capacity
to carry out further reforms. In fact, the 1961 constitution served
mainly the interests of Paz Estenssoro's faction of the MNR by providing
for his reelection in 1964.
The overthrow of the MNR by General René Barrientos Ortuño
(president, 1964-65; copresident, May 1965-January 1966; and president,
1966-69) in 1964 initiated the contemporary era in Bolivian
constitutional development. After calling elections in 1966
and invoking the 1947 constitution, Barrientos attempted to force
through Congress a new corporatist charter. Because he sought democratic
legitimacy, however, he was forced to give up his original project in
favor of a constitution rooted firmly in the liberal democratic
tradition that had inspired the authors of the 1880 charter.
Under the terms of the Constitution of 1967, Bolivia is a unitary
republic that retains a democratic and representative democracy. Article
2 stipulates that sovereignty resides in the people, that it is
inalienable, and that its exercise is delegated to the legislative,
executive, and judicial powers. The functions of the public
power--executive, legislative, and judicial--cannot be united in a
single branch of government. Although the Constitution of 1967
recognizes Roman Catholicism as the official state religion, it also
guarantees to all faiths the right to worship publicly. In theory, the
people govern through their representatives and through other
authorities established by law. The Constitution of 1967 became known to
most Bolivians only in the 1980s because, for all practical purposes, it
was in effect only until 1969 when a coup by General Alfredo Ovando
Candia (copresident, May 1965-January 1966, and president,
January-August 1966 and 1969-70) overthrew the civilian regime. Between
then and 1979, the Constitution of 1967 was given only lip service by
the military rulers who governed Bolivia.
Between 1978 and 1989, four general elections were held, and Bolivia
enjoyed a stable, elected, civilian democratic government under the
terms of the Constitution of 1967. Nevertheless, although the
Constitution of 1967 had continued the strong executive tradition, the
political system had not yet developed strong party organizations
capable of establishing viable and long-term ruling coalitions.
Bolivia - GOVERNMENTAL STRUCTURE
Although Congress generally played a passive policy-making role, it
was a major actor in national politics. Indeed, Congress had elected
every civilian ruler to take office from the late 1970s to 1985.
Historically, Congress had been subordinated to the executive; the
intention of the Constitution of 1967 was to consolidate a strong
presidential system. Nonetheless, within the context of a multiparty
system, the Constitution of 1967 provides important mechanisms that
allow for a more influential and active Congress. Congress has the right
to pass, abrogate, interpret, and modify all laws. A bill must be passed
by the legislature and must be signed by the president to become a law.
Although the president may veto a bill, Congress may override the veto
with a two-thirds majority vote.
The Constitution provides for a bicameral legislature: a Chamber of
Deputies and a Senate. Every year, beginning on August 6 (Independence
Day), Congress meets in La Paz for 90 sessions; the number of sessions
may be expanded to 120 if requested by the executive or if favored by a
majority of members. Congress may also meet for extraordinary sessions
to debate specific bills if requested by the executive and if favored by
a majority of its members.
Congress has twenty-two prerogatives, which can be divided broadly
into its economic policy, foreign policy, and political powers.
Congress's principal economic policy function is approval of the annual
budget that the executive must submit to Congress before the thirtieth
session. This constitutional requirement for approval has rarely been
respected, however. In 1987 and 1988, Congress approved the budget for
the first time since 1967, although not within the first thirty
sessions. Because budgets often faced opposition in Congress,
governments usually approved them through executive decree. Congress
also has the power to establish the monetary system and is responsible,
in theory, for approving all economic policy. Development programs, for
example, must be submitted to Congress, and any loans contracted by the
government must also be approved by the legislature.
Congress's foreign policy prerogatives primarily concerned its power
to approve all treaties, accords, and international agreements. Although
this practice was not always respected in the late 1980s, Congress must
also decide whether or not to allow foreign troops to travel through or
operate in Bolivian territory. Moreover, Congress decides when Bolivian
troops may travel abroad.
Congress's political powers include the naming of justices of the
Supreme Court of Justice and members of the National Electoral Court, as
well as the right to create new provinces, cantones (cantons), and
municipal districts. One of its most important prerogatives is to
declare amnesty for political crimes. Its most significant power,
however, is to resolve elections in which the winning candidate has not
garnered a majority of the vote.
Congress possesses wide-ranging oversight powers over executive
behavior. A single senator or deputy may call ministers and other
members of the executive to testify through a procedure known as petición
de informe oral (request for an oral report). If the report is
unsatisfactory, the senator or deputy may convert a simple request into
an interpellation, which may be resolved only through a vote of
confidence or a vote for censure. In Bolivian parliamentary tradition, a
censured minister must resign and be replaced by the executive. A petición
de informe escrito (request for a written report) may also be sent to
the executive regarding specific policies, events, and actions. The
Senate or Chamber of Deputies may also call attention to problems and
current issues through minutas de comunicación (minutes of
Congress also has the power of specific indictment. For a juicio de
responsabilidades (malfeasance trial) before the Supreme Court of
Justice, a two-thirds majority vote is required to indict individuals
accused of wrongdoing while in office. In 1986 Congress indicted former
dictator General Luis García Meza Tejada (1980-81); in early 1989, he
was being tried in absentia by the Supreme Court of Justice.
In addition to shared powers, each chamber has specific
responsibilities. The Chamber of Deputies elects justices of the Supreme
Court of Justice from a list submitted by the Senate, approves the
executive's requests for the declaration of a state of siege, and
transmits to the president of the republic a list of names from which
the latter must select the heads of social and economic institutions in
which the state participates. The Senate hears accusations against
members of the Supreme Court of Justice raised by the Chamber of
Deputies; submits to the president a list of candidates for comptroller
general, attorney general, and superintendent of the national banking
system; approves ambassadors; and approves rank promotions in the armed
forces every year.
Elected deputies and senators enjoy immunity from prosecution for the
duration of their term; however, a two-thirds majority may retract this
privilege from a specific legislator. In 1969, for example, owing to
pressure from President Barrientos, Congress lifted the immunity from
two deputies who had initiated a "responsibilities trial"
against the president. This clearly confirmed the primacy of
Deputies are elected through universal suffrage based on a complex
proportional representation system. A 1986 electoral law, used for the
first time in 1989, calls for the election of 130 deputies. Bolivia has adopted the Spanish tradition of electing
suplentes (alternates) as well. Hence, every elected deputy has an
alternate in the event of his or her death, resignation, or disability.
Based on population density in 1980, the Chamber's 130 seats were
divided as follows among Bolivia's nine departments: La Paz, 28; Potosí,
19; Cochabamba, 18; Santa Cruz, 17; Chuquisaca, 13; Oruro, 10; Tarija,
9; Beni, 9; and Pando, 7.
Deputies are elected for four-year terms, with the entire membership
facing election every fourth year. To become a deputy, a person must be
at least twenty-five years of age, a Bolivian by birth, a registered
voter, have no outstanding penal charges, and not be a government
employee, a member of the clergy, or a contractor for public works.
Every legislative year the Chamber of Deputies elects a new
leadership. Its leadership comprises a president, two vice presidents,
and five secretaries. The day-to-day operations of the chamber are the
responsibility of an oficial mayor, or high official. Since 1982 the
leadership has reflected the chamber's party composition, although the
political parties with the greatest number of seats control the top
Every new legislative year also carries with it the reordering of
committee memberships. In 1989 the Chamber of Deputies had seventeen
committees that reflected broadly the structure of the executive
cabinet. Since 1982 the committees, which have five members each, also
have reflected (with some exceptions) the political subdivisions of the
chamber as a whole. Usually, committee chairs are reserved for members
of the party in control of the chamber, but they may be used as
bargaining tools. Because committee memberships are reorganized each
year, seniority is a not a factor. Owing to the large number of
political parties represented in the lower chamber, the process of
approving bills in committee and in the house as a whole is a protracted
The vice president of the nation is president of the Senate, as well
as president of Congress. The Senate is composed of twenty- seven
senators, three per department. The winning party in each department
secures two senators, and the runner-up controls the third. This
arrangement ensures minority representation in the upper house. Like the
deputies, senators are elected for four- year terms. To become a
senator, one must be at least thirty-five years old, a Bolivian by
birth, a registered voter, and must not be a government employee, a
member of the clergy, or a contractor for public works. As in the lower
chamber, alternates are also elected.
In August, at the beginning of a new legislative year, the Senate
elects a president, two vice presidents, and four secretaries. Because
fewer parties are represented in this chamber, electing the leadership
is usually a rapid and smooth process.
Like the Chamber of Deputies, the Senate has seventeen committees,
and every legislative year a complete membership turnover takes place.
Each committee must have five members drawn from every party represented
in the chamber. In general, bills spend less time in committee in the
Senate (and they are also approved more rapidly by the whole chamber)
than in the Chamber of Deputies. This is largely because fewer political
parties are represented in the Senate.
Committees in both the Chamber of Deputies and the Senate are not
specialized bodies, and attempts were not made to secure competent
legislative support staff until the late 1980s. Advisers to the
committees were selected more on the basis of political affiliation than
on expertise. Committees were also plagued by the lack of an adequate
library and reference service. The Senate library, which theoretically
serves Congress, was woefully inadequate. Although every session was
recorded on tape, an efficient congressional record service did not
exist. The transcripts of the 1982-85 sessions, for example, did not
become available until the late 1980s.
A recurring problem in both chambers was the prevalence of obsolete
rules of procedure dating back to the 1904-05 legislative year.
Procedural rules have slowed the approval of bills and have contributed
in large measure to making Congress's legislative function obsolete.
During congressional recesses, the Constitution provides for a comisión
de congreso (congressional commission) to be elected by the members of
each chamber. Nine senators and eighteen deputies, including the
president of each chamber and the vice president of the republic, are
elected to this commission.
The congressional commission ensures that the Constitution and civil
rights are respected while Congress is not in session. It is also
provided with the same executive oversight capacity as Congress. Through
a two-thirds majority vote, the commission may convoke an extraordinary
session of Congress. Moreover, in the case of a national emergency, it
may authorize the president, by a two-thirds vote, to issue decrees that
carry the full force of law. Finally, the commission may design bills to
be submitted to Congress during the regular legislative year.
Bolivia - The Judiciary
The succession of elections and coups that followed the military's
withdrawal from politics in 1978 revealed the deterioration of Bolivian
institutional life. In the absence of military leadership for the process
of transition, parties, factions, and other groups searched for a
formula to carry them to the presidency. Nearly seventy political
parties registered for the general elections in 1978, including at least
thirty MNR factions.
In this context, it became evident that elections would not solve the
structural problems facing Bolivia. In 1979, 1980, and 1985, the winning
party could only muster a plurality of votes during the elections. As a
result, the legislature became the focal point of political activity as
parties and tiny factions maneuvered to influence the final outcome of
the general elections. For example, in 1980 Congress elected as
president Hernán Siles Zuazo, who had won a plurality of votes.
Simultaneously, factions of the military linked to narcotics and other
illicit activities were unwilling to surrender control of the state to
civilian politicians who threatened to investigate charges of human
rights violations and corruption during the Banzer years.
The July 17, 1980, coup by General Luis García Meza Tejada
represented a two-year interruption of the transition to democracy. García
Meza's military regime was one of the most corrupt in Bolivian history;
García Meza and his collaborators maintained close links with cocaine
traffickers and neofascist terrorists. Faced with international
isolation and repudiation from nearly every political and social group,
García Meza and the generals that succeeded him ruled with brute force.
By 1982 disputes among rival officers and pressure from abroad,
political parties, the private sector, and labor eventually led to the
convocation of Congress that had been elected in 1980.
Siles Zuazo of the Democratic and Popular Unity (Unidad Democrática
y Popular--UDP) coalition, was again elected president by Congress on
October 10, 1982. The UDP was an amorphous entity that grouped Siles
Zuazo's own Nationalist Revolutionary Movement of the Left (Movimiento
Nacionalista Revolucionario de Izquierda--MNRI), the Bolivian Communist
Party (Partido Comunista Boliviano--PCB), and the relatively young
Movement of the Revolutionary Left (Movimiento de la Izquierda
Revolucionaria--MIR). Having been denied the presidency in three
consecutive elections, Siles Zuazo's rise to power was an auspicious
occasion. He enjoyed overwhelming popular support and appeared to have a
mandate to implement populist reforms. The military and its civilian
allies were completely discredited and were no longer a threat or an
alternative to rule Bolivia.
By 1982, however, Bolivia faced the most severe economic and
political crisis of the preceding three decades. The economy was beset
by chronic balance of payments and fiscal deficits. The most immediate
manifestation of the crisis was an inability to service payments on its
foreign debt of nearly US$3 billion. By 1982 the gross domestic
product had dropped by nearly 10 percent. Siles Zuazo thus faced the
dilemma of trying to democratize the country in the context of economic
scarcity and crisis. The UDP promised to enact a more equitable
development program that would address labor's demands for higher wages
and other benefits. As the crisis deepened, however, labor became
The economic plight exacerbated tensions between populist and
antipopulist wings of the MNR and other political parties that had been
latent since the revolution. Because the UDP controlled only the
executive, political conflict was heightened. Congress remained firmly
in control of a de facto alliance between Paz Estenssoro's MNR (the
faction that retained the party's name) and Banzer's Nationalist
Democratic Action (Acción Democrática Nacionalista--ADN).
Conflict between branches of government had been manifest since the
beginning of the transition process. Legislators formed complex
coalitional blocs to choose executives, whom they promptly turned on and
sought to subvert. Congressionally sanctioned coups, labeled
"constitutional coups," were only one example of the
prevailing political instability.
Under Siles Zuazo, the full complexity of the crisis emerged. From
the outset, the government was weakened by a serious confrontation
between the legislature and the executive over alternative solutions to
the economic predicament. Responsibility for resolving the crisis rested
with the executive, whereas Congress exercised its oversight powers.
Additionally, the presence of minuscule parties in Congress exacerbated
the confrontation between the UDP and the parties in the legislature.
As a result of the government's inability to deal with Congress,
Siles Zuazo relied on executive decrees. Congress, in turn, charged the
president with unconstitutional behavior and threatened to impeach or
overthrow him in a constitutional coup. During the three years of his
presidency, Siles Zuazo was unable to put down the congressional threat,
directed by opposition parties but bolstered by groups from his own UDP.
Between 1982 and 1985, the Siles Zuazo government attempted to
address Bolivia's economic crisis by negotiating several tentative
paquetes económicos (stabilization programs) with the International
Monetary Fund. Each was the center of a recurring political battle that put
Siles Zuazo in the middle of a class struggle between the powerful COB,
which represented labor, peasants, and sectors of the middle class, and
the relatively small but organized private sector led by the
Confederation of Private Entrepreneurs of Bolivia (Confederación de
Empresarios Privados de Bolivia -- CEPB). This conflict reflected a
recurring debate in Bolivia between models of development and the
question of what class should bear its costs. It also revealed the
extent of Bolivia's reliance on foreign aid.
Between 1982 and 1985, the CEPB and COB attempted to pressure the
government to enact policies favorable to their interests. Siles Zuazo
would decree a stabilization program designed to satisfy the IMF and the
United States internationally and the CEPB domestically. The COB would
respond with strikes and demonstrations, often backed by peasants and
regional civic associations. Lacking congressional support, the
government would modify the program to the point of annulling its
effectiveness through wage increases and subsidies, thereby provoking
the wrath of the CEPB and IMF.
By 1984 the government was completely immobilized and incapable of
defining effective economic policies. The result was the transformation
of a severe economic crisis into a catastrophe of historic proportions.
During the first half of 1985, inflation reached an annual rate of over
24,000 percent. In addition, Bolivia's debt-servicing payments reached
70 percent of export earnings. In December 1984, lacking any authority
to govern because of the conflict with Congress, labor, the private
sector, and regional groups, the Siles Zuazo government reached the
point of collapse. As the crisis intensified, the opposition forced
Siles Zuazo to give up power through a new round of elections held in
The 1985 elections reflected the complex nature of the Bolivian
political process. Banzer, who had stepped down in disgrace in 1978, won
a slight plurality with 28.5 percent; the old titan of the MNR, Paz
Estenssoro, finished a close second with 26.4 percent. A faction of the
MIR, headed by Vice President Jaime Paz Zamora, took third. An
indication of the left's fall from the grace of the electorate was the
MNRI's showing of only 5 percent.
In Congress the MNR moved quickly to form a coalition that would
enable Paz Estenssoro to gain the presidency. After luring the MIR with
promises of state patronage, a coalition was formed, and Paz Estenssoro
was elected president of Bolivia for the fourth time since 1952.
Although enraged by the outcome of the congressional vote, Banzer and
the ADN made the calculated decision to accept it. In so doing, the
former dictator protected his long-term political interests.
Bolivia - Democracy and Economic Stabilization
In the 1980s, the growth of Bolivia's narcotics industry dominated
United States-Bolivia relations. Drug enforcement programs in Bolivia
were begun in the mid-1970s and gathered strength in the early part of
the 1980s. Concern over military officers' growing ties to cocaine
trafficking led to a tense relationship that culminated in June 1980 in
the military's expulsion of the ambassador of the United States, Marvin
Weisman, as a persona non grata. The "cocaine coup" of July
1980 led to a total breakdown of relations; the Carter administration
refused to recognize General García Meza's government because of its
clear ties to the drug trade. President Ronald Reagan continued the
nonrecognition policy of his predecessor. Between July 1980 and November
1981, United States-Bolivian relations were suspended.
In November 1981, Edwin Corr was named as the new ambassador, thus
certifying Bolivian progress in narcotics control. Ambassador Corr
played a key role in forcing the military to step down. In the
subsequent democratic period, Corr helped shape the drug enforcement
efforts of the weak UDP government. In 1983 President Siles Zuazo signed
an agreement through which Bolivia promised to eradicate 4,000 hectares
of coca over a three-year period in return for a US$14.2 million aid
package. Siles Zuazo also promised to push through legislation to combat
the booming drug industry.
With United States funding and training, an elite antinarcotics force
known as the Rural Area Police Patrol Unit (Unidad Móvil Policial para
Áreas Rurales--Umopar) was created. Siles Zuazo's government, however, was
incapable of carrying out an effective antinarcotics program. Opposition
from social groups, the significance of traditional coca use in Bolivia,
and the absence of a major drug law were the most commonly cited
explanations for this failure. Between 1982 and 1985, the total number
of hectares under cultivation doubled, and the flow of cocaine out of
Bolivia increased accordingly. In May 1985, in a final effort to save
face with Washington, the Siles Zuazo government approved a decree
calling for extensive drug enforcement programs; the United States
perceived this effort as too little and too late, however.
Under Paz Estenssoro's government (1985-89), which made sincere
efforts to combat the drug trade, relations with the United States
improved significantly. As a result, aid to support economic reforms
increased dramatically. In 1989 Bolivia received the greatest amount of
United States aid in South America and the third highest total in Latin
America, behind El Salvador and Honduras. The major obstacle to
harmonious relations, however, remained the prevalence of drug
During the Paz Estenssoro government, United States policy toward
Bolivia was split between congressional efforts to enforce the 1985
Foreign Assistance Act, limiting aid to countries that engaged in drug
trafficking, and the Reagan administration's stated objective of helping
consolidate and strengthen democratic institutions in Latin America.
Both aspects of United States policy were responsible for setting the
course of relations with Bolivia.
In August 1985, Corr was replaced by Edward Rowell, who worked
closely with the new Paz Estenssoro government to combat Bolivia's
economic crisis and the flourishing drug trade. Rowell arrived in La Paz
shortly after a visit of members of the Select Committee on Narcotics
Abuse and Control of the United States House of Representatives. The
committee's report revealed a deep distrust for Paz Estenssoro's stated
intention to carry on with the drug battle and to implement fully the
provisions of the May 1985 decree. In June 1986, owing to pressures from
the United States Congress, Washington announced the suspension of
US$7.1 million in aid because Bolivia had not satisfied the coca
eradication requirements of the 1983 agreement.
Simultaneously, however, the Bolivian government secretly entered
into Operation Blast Furnace, a joint Bolivian-United States effort
aimed at destroying cocaine laboratories in Beni Department and
arresting drug traffickers. Despite the outcry from political party
leaders on the left, who argued that the operation required Bolivian
congressional approval because it involved foreign troop movements
through the nation's territory, Operation Blast Furnace began in July
1986 with the presence of over 150 United States troops. Paz
Estenssoro's government survived the tide of opposition because of the
support forthcoming from the ADN-MNR pacto.
Despite Bolivia's evident willingness to fight the drug war, the
United States Congress remained reluctant to certify the country's
compliance with the Foreign Assistance Act. In October 1986, the
Bolivian envoy to Washington, Fernando Illanes, appeared before the
United States Senate to report on the progress made under Operation
Blast Furnace and on the intention of the Bolivian government to approve
an effective drug law to both eradicate the coca leaf and control the
proliferation of cocaine production. Revelations of continued
involvement in the drug trade by Bolivian government officials, however,
undermined the efforts of Paz Estenssoro's administration to satisfy the
demands of the United States Congress.
Congressional efforts in the United States to sanction Bolivia
contributed to the degree of frustration felt by the Paz Estenssoro
government. Ambassador Rowell, however, was able to convince the Reagan
administration that the Bolivian government was a trustworthy partner in
the drug war. In spite of another reduction in United States aid in late
1987, the Reagan administration certified that Bolivia had met the
requirements of Section 481(h) of the Foreign Assistance Act. Still, the
United States Congress was dissatisfied and, in early 1988, decertified
Bolivia's efforts met with some encouragement from the Reagan
administration. The United States supported Bolivia's negotiations with
international banks for debt reduction and provided substantial aid
increases in terms of both drug assistance and development programs.
United States aid to Bolivia, which totaled US$65 million in 1987,
reached US$90 million in 1988. Although the Reagan administration
requested almost US$100 million for fiscal year 1989, disbursement was
contingent on the congressional certification of Bolivian progress on
eradication programs. Despite this increase in assistance, it paled in
comparison with total cocaine production revenues, conservatively
estimated at US$600 million. Bolivian opponents to the drug enforcement
focus therefore argued that although the United States advocated drug
enforcement and interdiction programs, it was unwilling to fund them.
United States satisfaction with Bolivian efforts in terms of
stabilizing the economy, consolidating democracy, and fighting the drug
war, however, was evidenced in 1987-88 with the announcement of several
AID programs. Specifically, assistance was targeted to rural development
projects in the Chapare region of Cochabamba Department, the center of
the cocaine industry. Other AID programs in health, education, and
privatization of state enterprises were also initiated. More ambitious
projects aimed at strengthening democratic institutions, such as
legislative assistance and administration of justice, were scheduled for
initiation in 1989. AID also proposed the creation of an independent
center for democracy. Future AID disbursements, however, were contingent
on Bolivia's meeting of the terms of the Foreign Assistance Act and
agreements signed with the United States government for the eradication
of 5,000 to 8,000 hectares of coca plantations between January and
In 1988 Bolivia moved closer toward satisfying United State demands
for more stringent drug laws. In July the Bolivian Congress passed, and
Paz Estenssoro signed, a controversial bill known as the Law of
Regulations for Coca and Controlled Substances.
The bombing incident during Secretary of State George P. Shultz's
visit to Bolivia in early August 1988, attributed to narcoterrorists,
raised concern that a wave of Colombian-style terrorism would follow. Shultz's visit was intended to praise
Bolivia's effort in the drug trade; however, in certain Bolivian
political circles it was perceived as a direct message about pressing
ahead with coca eradication efforts.
Nevertheless, with the approval of the 1988 antinarcotics law and a
new mood in Washington about Bolivia, Ambassador Robert S. Gelbard's
arrival in La Paz in early October 1988 was an auspicious event. The
ambassador headed efforts to confer "special case" status for
Bolivia in order to allow for a more rapid disbursement of aid. In
return, Bolivian government officials pointed out that United
States-Bolivian relations were at their highest level ever.
Gelbard's honeymoon, however, was short lived. On October 26, Umopar
troops killed one person and injured several others in the town of
Guayaramerín in Beni. As was the case with another violent incident in
Villa Tunari in June 1988, the left and the COB perceived Umopar's
actions as the byproduct of a zealous and misguided antidrug policy. The
presence of United States Drug Enforcement Administration (DEA) agents
in Guayaramerín also renewed questions about the role of United States
drug enforcement agents. As 1988 ended, controversy also surrounded the
announcement that, under United States Army civic-action programs,
United States technicians would help remodel and expand the airports in
the cities of Potosí and Sucre.
United States support for the Bolivian government was expected to
continue. In large measure, however, United States policy depended on
the perception in the United States Congress of Bolivia's progress in
controlling the drug trade. Operation Blast Furnace, the 1988
antinarcotics law, and the arrest of several drug lords demonstrated
that Bolivia had become a loyal and useful partner in the United States
war on drugs. Washington expected Bolivian cooperation to continue after
the May 1989 elections.
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CITATION: Federal Research Division of the Library of Congress. The Country Studies Series. Published 1988-1999.
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