U.S.-Bolivian Relations

U.S.-Bolivian Relations: Halting an Avalanche

Since the inauguration of President Evo Morales in 2006, relations between Bolivia and the United States have taken an unprecedented, although sometime episodic, turn for the worse. Issue after issue in which the countries are engaged has ended up as being abrasive, including trade, development, and coca regulation. Most of the public disagreements have begun on Bolivia’s side with criticisms of Washington’s policies, which La Paz is convinced are aimed at trying to undermine the Morales government and to impugn the sovereignty of the Bolivian state. Washington has routinely dismissed these charges as being unfounded, leaving diplomatic progress to lie stagnant, if not worsen.

The Bush Administration’s attitude of back burning and patronizing in its Latin American policy was often deemed offensive and at times threatening to many of the hemisphere’s leaders. However, President Obama has vowed to set a new path of autonomy for Latin American diplomacy and already has begun to do so. Nevertheless, in order to gain ground in its relations with Bolivia, Washington’s policy will have to focus on transparency in all aspects of its endeavors in order to ensure the Morales government is not being disrespected or that its sovereignty is being threatened.

Fraying Ties
Relations between the U.S. and Bolivia began to deteriorate almost immediately after Morales’ inauguration. The newly elected Bolivian president repeatedly accused the U.S. of attempting to undermine his authority through plotting a coup d’etat or hatching assassination attempts. Specifically, on May 28, 2007, Morales made both of these accusations against the U.S. embassy and warned the American Ambassador, Phillip Goldberg, to stay out of Bolivian affairs.

Allegations of misconduct by U.S. officials continued on August 29, 2007 when the Minister to the Presidency, Ramón Quintana, complained that the United States Agency for International Development (USAID) was using its funds to support opposition groups in an attempt to destabilize the Morales government. Bolivian officials also directed another round of criticism at Goldberg in November of 2007, after a photo surfaced of the ambassador standing next to Gabriel Dabdoub, president of the Santa Cruz Chamber of Industry and Commerce. The photo was taken at ExpoCruz, a large trade fair in Santa Cruz, a gas-rich province in southeast Bolivia, which has been the heart of anti-Morales sentiment as well as the basis for calls for provincial autonomy. U.S. Embassy officials confirmed that Goldberg attended the event, but dismissed any notions that this photo was different from the scores of others in which the ambassador had appeared throughout the night.

The Breaking Point
While Bolivia and Washington had not been on good terms for some time, hostilities reached a climax in late 2008, with the Morales administration accusing the U.S. embassy of trying to overthrow his government on eight different occasions in a period of over two years. On September 11, President Morales finally expelled Ambassador Goldberg from Bolivia, saying ‘‘We do not want people here who conspire against democracy.” The American ambassador was accused, yet again, of trying to undermine the Morales administration by allegedly supporting dissident groups in the gas-rich Tarija department. Earlier that week, anti-government protestors had been accused of damaging a gas pipeline there, causing millions of dollars in losses. Wild protests against Morales also broke out throughout Santa Cruz that week, with demonstrators storming numerous state-owned businesses such as the television station, the phone-company, and the tax agency. In a predictable response to Morales’ actions, Washington expelled the Bolivian Ambassador to Washington, Gustavo Guzman.

On September 16, Washington took a hostile step by placing Bolivia on a counter-narcotics blacklist for failing to do enough to prevent drug production and trafficking. Then in October, President Bush announced Bolivia’s suspension from trade preferences stipulated under the Andean Trade Promotion and Drug Eradication Act (ATPDEA) for failing “to cooperate with the United States on important efforts to fight drug trafficking.” Under the act, Bolivia had tariff-free access to import roughly $150 million worth of goods into the U.S., making it Bolivia’s second largest trading partner. Launched in 2002, the ATPDEA was designed to increase trade between the U.S. and the Andean nations of Bolivia, Colombia, Ecuador, and Peru, in the hopes that increased economic prosperity would help ease these countries’ financial reliance on drug production.

Bolivian officials denounced Washington’s decision to exclude Bolivia from the trade agreement as an uncalled for political move made in response to the expulsion of the American Ambassador. Such claims have been bolstered by comparisons of Bolivian drug production and steps to combat it, to that of other Andean nations such as Peru and Colombia which continue to benefit from the ATPDEA. According to the United Nations Office on Drugs and Crime, the amount of Andean land used for coca production jumped 16 percent between 2006 and 2007. The study shows a 27 percent increase in production in Colombia compared to only a 5 percent increase in Bolivia. Even this 5 percent increase in 2007 was an improvement over the 8 percent increase in coca cultivation that had transpired in Bolivia in 2006. Despite this progress, Bolivia was still singled out as the only Andean nation to lose its trade preferences under the ATPDEA.

Among La Paz’s improved efforts to quell coca output, Bolivian drug forces, funded heavily in the past by the DEA, worked to eradicate 6,269 hectares of illegal coca plants in 2007, surpassing their goal of eliminating 5,000-hectares of the crop. The Bolivian government has also begun to implement progressive anti-narcotics initiatives such as “crop diversification,” a system of replacing illegal excess coca plants with other, legal crops.

Drug prevention continued to be a divisive issue between the two countries throughout the rest of the year, and in November, Morales caused little surprise by announcing the expulsion of DEA operations in the country, proclaiming that “there were DEA agents who worked to conduct political espionage and to fund criminal groups so they could launch attacks on the lives of Bolivian officials, if not the President.” Morales once again cited violations of Bolivian sovereignty and the lack of respect on the part of U.S. authorities as an explanation of the agency’s expulsion. American officials responded once again by asserting that La Paz’s accusations were baseless.

A New Opportunity
With the inauguration of Barack Obama, there was robust hope for change in Washington’s foreign policy stance towards Bolivia. During a speech delivered on January 25, 2009, President Morales warmly congratulated the new U.S. president, describing a commonality of interests that he felt between them, based on similarities between the African-American struggle in the U.S. and that of the indigenous people in Bolivia. He went on to say, “I harbor such great hope with this new president so we can improve diplomatic, trade, and why not say cooperation ties.”

While scant attention was paid to Bolivia in the first months of the Obama administration, in late May 2009, Bush holdover Assistant Secretary of State for Western Hemisphere Affairs Thomas Shannon traveled to Bolivia for two days of talks with high-ranking officials including President Morales. Shannon arrived with words of optimism, saying, “We need to improve our cooperation in a way that benefits both countries, and we’re here with goodwill.” Following these sessions, both sides made positive statements, giving hope for future improvements in relations between Washington and La Paz.

However, despite the mutually enthusiastic rhetoric, the bilateral talks failed to achieve a single concrete agreement on any of the contentious issues, such as reinstating the DEA, La Paz’s call to extradite Gonzalo Sanchez de Lozada, the former Bolivian President accused of genocide against Bolivia’s indigenous, or Bolivia’s objection to U.S. involvement in domestic Bolivian politics.

Looking Forward
There remain a number of core issues relating to respect for Bolivian sovereignty that must be addressed before the U.S. and Bolivia are able to reengage in a normal diplomatic setting that will hopefully culminate in an exchange of ambassadors. Whether their accusations are legitimate or not, Bolivia has felt threatened on numerous occasions by almost every U.S.-based organization operating in the Andean nation, including the embassy, the DEA, USAID, and even the Peace Corps. If the U.S. wants to prove that their vigorous denials of any wrongdoing are entirely legitimate, Washington must establish a more transparent operation on all its fronts in order to prevent Bolivia from interpreting the State Department’s actions as threatening.

As the poorest country in South America, the Bolivian government should enthusiastically welcome development aid from Washington. However, if, as the Morales administration has continuously asserted, the American Embassy and USAID are using development funds to instigate political upheaval in the country, diplomatic ties will be further strained, and the Bolivian people’s suffering will not be alleviated by helpful flows of U.S assistance. Due to recent major discoveries of natural gas and oil deposits, and already huge amounts of lithium being utilized, Bolivia is destined to be an immensely wealthy nation. It is only a question of La Paz being able to have access to bridge-loan funds to develop its resources by jump-starting its economy.

One of USAID’s explicitly stated goals is democracy building, and the U.S. development organization has designated millions of dollars each year to this objective in Bolivia. In fact, it appears that democracy-building programs are growing in importance, as exhibited by the ever-increasing amount of funding being dedicated to this project in the past few years. Funds allocated to the USAID budget category “Governing justly and democratically,” have more than doubled in the 2009 budget, going from roughly $10 million in 2008 to $28.5 million for 2009. But the question remains: How high-minded are these developments?

Many of the objectives of the democracy-building program, such as educating the media on democratic principles, scholarship programs for the indigenous poor, and training for new judges, are far from reassuring. USAID also explicitly supports and funds decentralized departmental governments and municipalities. U.S. support for a decentralized government in order to promote democracy is perceived by Bolivia, perhaps more accurately, as an effort to support the autonomy seeking, gas-rich, and anti-Morales provinces of the Southeast. Washington will have a hard time justifying its claims of non-interference as long as it is supporting opposition groups in contentious regions. Given the Cold War reputation of USAID and its precarious missions of “democracy building,” Morales can be excused for being wary over this.

The Fight Against Drugs
Coca has been a staple of Bolivian culture for centuries and it will remain that way regardless of any anti-narcotics policy initiated in Washington, especially now that Evo Morales, a former coca farmer, is Bolivia’s president. Morales has spoken at length about his opposition to eradicating the coca plant and has worked to embolden coca growers with strengthened unions.

Morales has also been working strategically to limit coca production in order to keep prices stable for the growers and also to inhibit the process of turning the otherwise harmless leaves into cocaine. However, while his efforts to limit coca production have been relatively successful, with the annual increase of coca production decreasing from 2006-2007, the production of coca leaf into cocaine has surged to a ten year high.

Bolivia will have an increasingly difficult time fighting drugs if relations with the U.S. do not dramatically improve. Without the presence of the DEA, most anti-narcotics aid now comes from USAID, which has decreased its assistance for such activities from $28 million in 2007, to a projected $15.256 million in 2009. This figure is rather small compared to the annual $30 million average that Bolivia had become accustomed to, along with the additional equipment, training, and intelligence benefits granted by the DEA. The positive gains Bolivia has begun to make in controlling the drug trade will be difficult to maintain without sustained U.S. aid, while emphasizing the importance of restoring ties with the U.S., but not to a high price in terms of its national prestige, which Bolivia is unprepared to pay.

While little cocaine originating in Bolivia actually ends up in the U.S. market, any further deterioration of the relationship between these countries will highlight the ever-declining American influence in Latin America. A lack of American presence will also encourage rival powers to step in and further limit Washington’s influence in terms of geopolitical strategy and access to precious energy and other commodities. On September 19, 2008, just a little more than a week after the expulsion of the American Ambassador, Russian officials formally requested the presence of a Bolivian government delegation in Moscow to “discuss cooperation in anti-drug efforts,” according to Bolivian drug czar, Felipe Caceres. An agreement was later signed in Moscow on October 28, uniting the countries in joint anti-narcotics efforts in Bolivia.

Russia is not the only state that is threatening to undermine U.S. influence in Bolivia., Iran and China have also increased economic and political ties there in recent years. But none of these countries approach the massive amount of aid and investment that Hugo Chavez’s oil-rich government in Venezuela pumps into Bolivia every year. From 2006 through 2008, Venezuela spent over US$132 million on anti-drug and humanitarian projects in Bolivia, with over US$100million more pledged for future projects. Both the Bolivian government and many of its citizens warmly welcome Venezuela’s aid not only because of that county’s generous attitude, but also for its versatility and light-handed approach compared to that of Washington. For example, while American anti-drug efforts work to completely eradicate Bolivian coca, Venezuela supports the movement to eliminate cocaine without demonizing the coca plant itself. One way Caracas has sought to do this is by funding alternative use projects such as dedicating US$250,000 to build coca tea-processing plants.

Washington will have to create a new and transparent system of modeling the DEA’s approach in Bolivia to ensure that any future operations there neither have nor appear to have deleterious ulterior motives aimed at undermining what the Morales administration wants for the country and what methods it wants to use to reach its goal. In turn, Bolivia should welcome a reformatted DEA presence, because as the deputy of Morales’ Movement for Socialism (MAS) party recently noted, “Bolivia is a tremendously poor country, any help we can get is positive.”

Time is of the Essence
Washington needs to reform its policies if it wishes to maintain its status in Bolivia and fend off its rivals. While Bolivia’s economy is contracting, suffering a 29 percent decrease in exports in the first quarter, exports to the United States actually have increased by $10 million during this recessionary period. This figure hardly puts pressure on the Morales government to concede to Washington’s demands, but rather demonstrates Bolivia’s economic strength even without the ATPDEA trade preferences. Granted, as Bolivia’s other export markets suffer, especially with the decrease in the price of natural gas, a commodity that makes up 46 percent of all of its exports, any resulting economic advantages will become increasingly valuable. But it is the U.S. that is facing more immediate and direct, as well as intangible losses from this impasse, and thus it is the U.S. that may have to make the first broad gesture towards amity and reconciliation.

This analysis was prepared by Research Associate William Mathis
June 15th, 2009
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