Bolivian President Resigns

In the early hours of Monday morning, hundreds, perhaps thousands, of the right-wing of La Paz’s middle class are mobilized outside the president’s palace in the Murillo Plaza chanting slogans in support of Carlos Mesa Gisbert who has just announced that he will resign from the presidency before Congress later today.

In October 2003, Mesa, the former vice-president under the hated and murderous regime of Gonzalo Sánchez de Lozada (“Goni”), rode to the presidential palace on a popular wave of mobilization emanating out of the altiplano (western high-plains), and the massive shantytown of El Alto. The protests eventually reached their apogee with more than 500,000 people in the streets of the capital, La Paz.

Goni fled the country as a result, and is still exiled in the United States. Mesa, meanwhile, assumed the presidency, promising to fulfill the central demands of what came to be known as the October Agenda: (a) a new hydrocarbons law to reclaim the sovereignty of the Bolivian state over the second largest reserves of natural gas in Latin America, which aims to enable an national industrialization project that will benefit the poor indigenous majority rather than the transnational corporations and their local bourgeois affiliates; (b) a Constituent Assembly, still vaguely defined, but which promised to threaten centres of power in the areas of indigenous autonomy, land distribution, and the future of natural resources, among other areas of social, political and economic reform; and finally, (c) a trial of responsibilities which would see Goni and the closest members of his ministerial team brought to justice for ordering the military to open fire on unarmed civilian protesters in October of 2003, the “Gas War” of Bolivia.

Above all, however, October symbolized both the popular rejection of the neoliberal model first introduced in 1985, and the forceful demand of the indigenous majority for an end to centuries of apartheid-like social and political life.

Much has transpired in the country in the year and five months of Mesa’s rule, but the demands of the October Agenda have scarcely moved forward. Various social movements aligned with the demands of October have literally shut down much of the country through road blockades in recent weeks, while a general strike in El Alto has paralyzed much of the access to the capital. At the same time, the Right, centred in the department of Santa Cruz, has in recent months mounted its first halting, yet significant, rearticulation in the Bolivian political scene since the October rebellion.

In order to contextualize Mesa’s resignation and to offer a few speculations on what might come about in the following days, weeks, and months, we need first to understand a series of recent political events: (1) the second “Water War”, which serves an example of the difficulties faced by social movements resisting imperialism; (2) the origins and demands of the October Agenda; (3) the January Agenda of the Cruceño Right; (4) the role of the Mesa government; (5) the current conjuncture of a still-divided but highly mobilized and radicalized Left, and a regionalized but powerful, and threatening Right; and, finally, (6) the imperial dimension, which perhaps represents the central threat to any hope of a progressive outcome, and the one most subject to popular pressure from within the imperialist countries.

FEJUVE and the El Alto Water War

At the apex of the struggle in the Andean capital, El Alto, is the resistance movement to reverse the privatization of the public water and sewerage system. Pressured by a peaceful general strike that paralysed the city of El Alto for three days, the Bolivian government announced the termination of the contract held by private consortium Aguas del Illimani on January 13, 2005. This is the second contract with a transnational water corporation to be cancelled by the Bolivian government, recalling events five years ago in Cochabamba when several weeks of violent conflicts between protestors and the military led to the expulsion of a consortium controlled by the American transnational corporation, Bechtel. The cancellation of the Aguas del Illimani contract signed back in 1997 comes as a great disappointment to international donors who have invested great effort into promoting the image that the contract was “pro poor”. The victory in El Alto is therefore an important for the struggle for the nationalization of natural resources, but one that must be qualified.

Despite promotions made by international donors, the government, and privatisation ideologues, the citizens of El Alto have long understood that Aguas del Illimani does not hold their best interests to heart. For the past eight years, vendors from El Alto carrying their wares to markets in La Paz pass a daily reminder of the colonisation of their public water system. The billboard that stands in front of the water treatment plant features a Caucasian baby with curly blond locks swimming in a pool below the slogan “Más agua, más vida” (“More water, more life.”) While the slogan indicates that Aguas del Illimani understands the connection between this vital resource and life itself, the image below it reveals that it does not comprehend the needs or aspirations of the population it purports to serve. The baby’s pearly white skin contrasts with that of the majority of citizens of a country in which over 60% of the population claim indigenous heritage. Indeed, the recent mobilisations are rooted in a historical indigenous struggle against imperialist forms of development, which have brought little benefit to the indigenous population, particularly the poor people of El Alto.

The Aguas del Illimani contract has been considered to be “pro poor” because it focused on expanding the number of new connections rather than reducing tariffs. Indeed, Aguas del Illimani made enough new connections to allow the government to claim that the company achieved 100% coverage for potable water in both La Paz and El Alto within the first four years of the contract, one year before schedule. What is seldom mentioned within the same context, however, is that this statistic refers to an area within the total area of the concession known as the “served area.” The AISA contract is a classic example of “ring fencing,” the practice of focusing service provision on profitable customers and removing obligation from extending service to the newest and most marginal settlements—the areas most in need of improvements. According to the Federación de Juntas Vecinales (FEJUVE, or the Association of Neighbourhood Associations), that was the central protagonist in the recent conflict, approximately 200,000 people in El Alto currently live outside the “served area” and this number continues to grow. It is also difficult to believe the claim that Aguas del Illimani is committed to serving the poor when the price of a new water and sewerage connection has been raised to the equivalent of $445, in a country where the minimum wage is $60, that is, for the 30% who have a job in the formal economy. Due to excessive hikes to the costs of services since privatization, FEJUVE reports that around 70,000 people who live within the service cannot afford to pay for basic services offered by Aguas del Illimani. These problems with the contract were just two of the many factors which led to the uprising in January 2005, which has been dubbed Bolivia´s “Second Water War.”

Six weeks later, however, there has been little progress and growing frustration with the lack of progress in this central struggle. For example, while the Superintendent officially notified Aguas del Illimani on February 23 that its contract will be terminated and its investments audited for a period of six months, no date has been set for its exit and no commitment made that it will be replaced by something better. Frustrated with the government’s failure to satisfy their demands, FEJUVE called a second indefinite general strike that started on Wednesday, March 2 to pressure the government to comply with promises made back in January. The second time around, FEJUVE has had to combat the scare tactics and dis-information campaigns launched by Bolivian politicians and various imperialist powers, who are doing everything in their power to protect the neoliberal project to keep the country’s natural resources at the service of international capital.

Indeed, it can only be claimed that the “Second Water War” is a victory once the terms of Agua del Illimani´s exit and the transition period have been settled. In his resignation speech, Mesa stated last night that it is impossible to satisfy FEJUVE´s demand for the immediate transfer of the water and sanitation system to SAMAPA, the municipal utility that ran the water system before privatization, because it lacks capacity. The failure to meet FEJUVE’s demand is clearly a question of political will, not timing or capacity. When SAMAPA was privatized in 1997, it only took about six weeks between the initial presentation of offers (June 26) and the handing over of the keys to Aguas del Illimani (August 8). Seven weeks have already passed since Mesa issued the Presidential Decree signalling the end of the contract.

As President Mesa clearly articulated, Bolivia is victim to the whims of international financial institutions, in particular, the World Bank. He argued that should the government cancel the contract on terms unfavourable to Aguas del Illimani, the Bolivian government will have to pay US$17 million to the World Bank. After the Water War in Cochabamba, the World Bank became an associate of Aguas del Illimani through its private sector lending arm, the International Finance Corporation, which owns 8% of shares. This move has put the Bolivian government in a very vulnerable position, because now the World Bank has direct interest in guaranteeing the investment and is judge and jury of the likely forthcoming lawsuit. Suez has threatened to sue the Bolivian government for $90 million dollars in the International Centre for the Settlement of Investment Disputes (ICSID) for lost investments and future profits, similar to the lawsuit pursued by Becthel and Abengoa for the termination of the Aguas del Tunari´s concession contract following the “Water War” in Cochabamba in 2000. The ICSID is a little-known arm of the World Bank Group founded in the 1960s to facilitate the settlement of investment disputes between governments and foreign investors. It operates from World Bank premises and is run by the World Bank’s Senior Legal Counsel who oversees the creation of ad hoc panels of experts to decide on each case brought before it.

While Mesa has painted himself a hero for cancelling the contract with Aguas del Illimani, one of the reasons that he caved in so quickly to FEJUVE´s demands is that Aguas del Illimani actually wants to leave. In 2002, Suez, which owns 55% of the company’s shares, announced its explicit policy of pulling investments from “risky markets.” Suez has found that they can simply not make enough money selling water to poor people in El Alto to recuperate their investments at an agreeable rate of return. The new General Manager, Antoine Kuhn, is believed to be the “exit specialist” for Suez. Before assuming his post in Bolivia, Kuhn handled the cancellation of the concession contract in Puerto Rico in April 2004.

One of the biggest issues yet to be decided is the amount of profit versus the amount of investment made by Aguas del Illimani. Given a privacy clause in the concession contract the company has the right to keep this and much other information secret. In an interview with Business News America, General Manager Kuhn, stated that Aguas del Illimani did not distribute any profits to its shareholders in the first seven years of the concession. By contrast, Suez reports on its website that it made US$4 million in profits in Bolivia last year. In general, Aguas del Illimani has aimed to reduce their risk by shifting costs onto users and building infrastructure with other people’s money. Aguas del Illimani claims that it has invested $63.5 million in La Paz and El Alto, at least $52 million of this money consists of “soft loans” from international financial agencies: US$15 million from the Inter-American Development Bank; $15 million from the International Financial Corporation, the private lending arm of the World Bank; $10 million from the Andean Development Fund; and $12 million from other international sources.

The international and bi-lateral lending agencies have also exercised their power to thwart Alteños’ (residents of El Alto) desire for a publicly controlled water system. Given the distrust of the current mayors of La Paz and El Alto, who have both proposed a slight reformulation of the current “public-private partnership” with Suez, FEJUVE is demanding that the new utility be controlled by citizens, rather than politicians or private companies, national or international. FEJUVE is elaborating a proposal in consultation with the neighbourhood committees for a new water company that would be controlled by a board of 60 representatives, democratically elected from all the districts in La Paz and El Alto. The hopes are that by guaranteeing popular participation within the utility, citizens will be able to guarantee the transparency and efficiency in management through “social control.” In response to this proposal, international donors have announced their intentions to strangle the new water utility by cutting its access to international finance.

The World Bank, and the German and Swiss development agencies have told President Mesa that should a democratically run water company be put in Aguas del Illimani´s place, they will refuse to extend loans. Since more than 200,000 people currently do not have connections to the formal water network, and even more lack sewerage connections, finance will be needed to expand the water and sewerage networks to poor and marginal barrios. Indeed, threats from international donors is why the Bolivian government privatized its water utilities against the democratic will of Bolivians in the first place—in the mid 1990s, the World Bank refused to renew structural adjustment loans unless the public municipal utilities in La Paz-El Alto and Cochabamba were privatized.

If it is has proven to be difficult to get rid of a company that actually wants to leave, it will be even more difficult to get rid of those that would prefer to stay, such as the transnational gas companies. According to Mesa, these transnational companies “are finished with the era in which they only enjoyed advantages.” These companies are making super profits thanks to favourable contracts signed by the Bolivian government that set their tax rates at only 18%.

Various movements that often press for conflicting sectoral demands are thus once again uniting around a common agenda—to nationalize natural resources. They want to kick out the transnational corporations that have been given licence by neoliberal governments to exploit Bolivia’s natural resources which have lined the pockets of capitalists and leaving behind environmental destruction and human misery.

The Origins and threat of the October Agenda

As the president of El Alto’s district 8 so presciently noted in his speech at the general assembly of FEJUVE on February 25, the second Water War is not simply a fight over water but one important step in an overarching struggle for social control of Bolivia’s natural resources and an end to the exploitative practices of transnational and domestic capital. “If we lose the water war,” he noted, “it will be a blow to the larger struggle, and one small step if we win.”

The prescient insights of this compañero established how deeply rooted in the demands of October are the details of the current general strike over water. Against an even broader backdrop, we might consider this current struggle as an important step in determining the viability of a halting new Bolivian Left project that first saw the light of day in the Cochabamba Water War of 2000.

With the 1985 imposition of the neoliberal model, the Bolivian Workers Central (COB), rooted in the tin-mines, Trotskyist/anarcho-syndicalist in ideology, and long established as the vanguard of the Bolivian Left – suffered an incredible blow and effectively proved impotent in the face of the onslaught of the Right, which received its economic model from the guidelines of the International Monetary Fund. While the coca growers (cocaleros) of the Chapare region struggled valiantly against the American imperial designs of the “War on Drugs,” and assumed a position in the vacuum left by the COB’s departure, the Left was weak and ineffective throughout the 1990s.

In 2000, however, social movements re-gained momentum with the Water War and the Aymara-indigenous road blockades in the altiplano. In the 2002 presidential elections the new-Leftist/indigenous parties, Movimiento al Socialismo (MAS), led by Evo Morales, and Movimentio Indígena Pachakuti, led by Felipe Quispe, made important inroads and effectively ruptured the traditional party system, responsible for the introduction of neoliberalism. Morales, an Aymara coca grower leader, came within a hair of becoming the president of Bolivia, due in part to the belligerent anti-Evo statements of then American ambassador Manuel Rocha in the lead-up to the elections. In the December, 2004 municipal elections the old traditionalist parties were shown to be broken still, even as MAS didn’t do as well as hoped.

This Left re-emergence after roughly 15 years of relative dormancy reached its climax in the October revolt of 2003 and the demands encapsulated in the October Agenda. Of course the Right would not for long sit by complacently as their private power and control of the state and natural resources were threatened, by dirty Indians no less.

A Rearticulated Right: The Santa Cruz Response

The landed aristocracy and internationally-oriented business elite of Santa Cruz responded to the October Agenda with their own January Agenda.

In January, 2005 three weeks of hunger strikes, occupations of public buildings, and a blockade of the international airport in Santa Cruz, led eventually to a mobilization of 300,000 cruceños ostensibly demanding “autonomy” in the face of abusive “centralism” coming from the government based in La Paz. The theme of “autonomy” in Santa Cruz is now a far-right, populist discourse with deep historical resonance, utilized by the economic elite to bring into the streets students, unions and other members of the popular sectors behind their regressive, often racist, agenda.

The Santa Cruz events – led and financed primarily by the Civic Committee and the House of Industry, Commerce, Service and Tourism of Santa Cruz (CAINCO) – aimed to order the local elite to defend their ill-gotten gains of years of subsidies and land grants under the military regimes of the 1960s and 1970s, most notably during the Banzer dictatorship (1971-78). Today Santa Cruz enjoys a massive concentration of land and valuable natural resources in the hands of a few, and the most dynamic and capital rich regional economy in the country. The masses of October and their dream of a different Bolivia directly threatened this concentration of wealth, and so the Cruceño elite responded.

The Role of the Mesa Government

The Mesa government can best be described as neoliberal reformist. There has been no rupture with the legacy of Goni in the economic sphere, though the assault on the popular economy has slowed pace. As Walter Chávez has noted in a review of Mesa’s discourse and practice, after a short episode of promises to the October masses that lifted Mesa to power, his speeches and practice soon came to emphasize the following: “to govern with austerity;” “to create incentives for foreign investment;” “to provide legal security to the transnationals;” “to sign free trade agreements;” and “to move toward a free trade agreement with the United States.” Moreover, none of the privatizations of the neoliberal era were threatened, and the model imposed by the IMF was dutifully maintained. Mesa used his considerable oratory skills, attained through years of experience as historian, journalist, and public intellectual, to reassure the October bases just enough to temporarily temper their then near-revolutionary sentiments.

Moreover, on February 3, in direct response to the Rightist Santa Cruz advance, Mesa reconfigured his cabinet in a more thoroughly neoliberal, Gonista direction. MAS, for much of the period of Mesa’s administration, remained notably distant from the social movement bases, supporting numerous Mesa initiatives, and gearing itself toward a run at electoral success in the 2007 presidential elections. Rather than a wise, pragmatic move, the MAS missed out on running with the historical momentum of October.

The Current Conjuncture

There is really very little that’s clear about what may happen in the near future as a result of Mesa’s resignation. But a sketch of the balance of social forces in the weeks leading up to Sunday night’s surprising announcement can shed light on the current impasse.

First, a glance at the Left. One of the reasons for the limits of the Left’s advance has been the newly electoralist party politics adopted by the MAS and MIP, in contradiction with their historically close relations to their social bases. Meanwhile, the social movements, while often effective at mobilizing their bases, have often been shy at articulating their relationship to wider national, political projects and Left parties. This can, and has historically, left them vulnerable to submission to the government’s divide-and-conquer clientelist politics of providing minimal, once-off handouts, or promises, to specific sectors, precipitating divisions and the failure of unity between different social movements.

While the picture of the current crisis in the Bolivian state is still wildly unclear and subject to rapid change, there is some basis of hope in that the Left, in its social movement and party forms, is showing evidence of unity, radicalization, and capacity to mobilize its bases in a number of regions simultaneously.

After a weak start, the latest phase of the FEJUVE-led general strike seems to be gaining momentum and radicalizing. Blockades throughout numerous areas of the country are explicitly linking themselves to the October Agenda, and in a lesser though serious way, to solidarity with the Alteño strikers.

Very interesting, too, has been the seeming radicalization of Evo Morales (MAS) and Oscar Olivera (leader of the Coordinator of Gas and Water, key in the 2000 Cochabamba Water War), who together announced on Saturday a call to blockade highways in defence of a more radical and far-reaching hydrocarbons law that would socialize the benefits from and secure control of natural gas reserves. At the same time they have specifically declared their solidarity with the movement of FEJUVE in El Alto. Jaime Solares, leader of the Bolivian Workers Central, publicly joined the FEJUVE Water War in the last week as well. Less encouraging, but still unclear in its rigidity, has been the lack of response on the part of the FEJUVE leadership to the outreach efforts of Morales and Olivera. It’s too soon to tell what will become of things, but this is at least part of the panorama of the Left in the days before Mesa’s announcement.

The Right, meanwhile, has been demanding the end of road blockades (code-speech for the use of force), something that Mesa has been substantially less willing to act on than was Goni. The refusal to use force in a major way accounts in part for Mesa’s departure from the presidential office. The possibility of violence in the following days is not out of the question.

The Imperial Dimension

Condoleeza Rice, the new Secretary of State in the Bush II regime, announced publicly several weeks ago that she and the American government were concerned with the growing popularity of the cocalero-based party in Bolivia, obviously referring to MAS and its leader Morales. American imperialism has made itself plainly evident in Bolivian politics over the last few years through coca-eradication, the “War on Drugs”, and the imposition of neoliberal economic restructuring mediated by the IMF and the World Bank. Other European imperial powers have been threatening to withhold aid if the FEJUVE Water War succeeds in socializing control of water in El Alto and La Paz. The local viceroys of Empire – many NGOs and the internationally connected bourgeoisie – also frequently employ the threats from outside in their struggle for power locally. Anti-imperialists outside of Bolivia could play a key role in ensuring the sustainability of a progressive end to the current situation, if domestic forces are first able to steer the country in this direction. Unfortunately, if Evo toes Mesa’s line, Bolivia still lacks a solid alternative political project in the event that new elections are called.

*With reports from Le Monde Diplomatique (Bolivian edition); Business News America; El Juguete Rabioso; La Prensa; Pulso; and La Razon

Susan Spronk is a PhD candidate in political science at York University in Toronto; Jeffery R. Webber is a PhD candidate in political science at the University of Toronto and a member of the Canadian New Socialist Group. Both are currently in La Paz, Bolivia.

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