Council On Hemispheric Affairs

Monitoring Political, Economic and Diplomatic Issues Affecting the Western Hemisphere

With Bolivia Still Seized by Unrest and Instability, there are Lessons to be Learned about Autonomy from Nicaragua’s Comparative Experience

• Bolivia’s political crisis somewhat subsided with President Carlos Mesa’s June resignation but efforts by the indigenous majority continue and are in part aimed at holding a constitutional assembly to re-write the constitution and re-nationalize the gas industry. Meanwhile the country’s eastern region continues to demand greater autonomy.

• The Department of Santa Cruz, the economic hub of Bolivia because of its abundance of natural resources (including the proximity of the nation’s huge hydrocarbon reserves), intends to hold a referendum on autonomy in order to protect its resources from being under the control of the central government, if plans to re-nationalize the gas reserves are carried through by the proposed constitutional assembly. The push for autonomy is creating an even more divided Bolivia, with an emphasis on race and class permeating Santa Cruz’s motivations for self-rule.

• Nicaragua which also had to deal with a divisive autonomy movement provides a comparative study to better comprehend the possible outcome of the current unrest rattling Bolivia.

• Bolivians need to re-evaluate the negative effects of the autonomy movement in order to be certain to treat all economic and social sectors fairly, so as to avert a major strife.

Bolivia’s ongoing political crisis seems to have subsided temporarily following President Carlos Mesa’s June 5 resignation. In the face of the protests and blockades that paralyzed the country’s economy, Mesa had failed to adequately respond to the seriousness of the indigenous-led manifestations. Although much of the Bolivian and U.S. press claim Evo Morales, the Movement toward Socialism (MAS) presidential party candidate was the instigator of the recent political upheaval, in fact he was a relative latecomer to the popular agitation that was led by numerous community-based organizations headed by indigenous leadership, with the participation of teachers, miners, coca growers in the Yungas and labor activists in El Alto and the Altiplano. There is no question, though, that Morales, whether or not deservedly, has become the iconic face of the indigenous movement to the outside press.

Among its demands, the dissidents also call for re-nationalization of the natural gas industry (while MAS called for a 50 percent tax on hydrocarbons for export), a reform of the constitution to include amplified rights for native people and a referendum on autonomy for the eastern region of the country. In Mesa’s place, the ex-head of Bolivia’s Supreme Court, Eduardo Rodriguez, assumed the presidency. On July 5, Congress and President Rodriguez announced that elections will be held by December 2005. As demands for a constitutional assembly continue and a conservative championed autonomy movement gains momentum in Santa Cruz, plans could be in the works for a constitutional assembly and a national vote on regional autonomy a year from December’s elections.

Santa Cruz Makes Its Move
The residents of the Department of Santa Cruz in Bolivia’s prosperous eastern region, known as cruceños, decided earlier this summer to hold a referendum on August 12, in order to achieve greater autonomy from the central government. According to the U.S. State Department and the Bolivian Embassy, the referendum has been pushed back until next July. According to the BBC, the region, also known as the media luna, accounts for 33 percent of Bolivia’s economic output, but, according to the National Institute of Statistics of Bolivia, accounts for only one quarter of Bolivia’s population. The area also contains the majority of Bolivia’s natural resources such as arable land, oil, soybeans, sugar and gas reserves, which, combined with the gas reserves in the Department of Tarija, are calculated as being the second largest in South America. Tarija has aligned itself with Santa Cruz in the push for greater autonomy.

Bolivia in Crisis
The conflict over who should control the gas revenues and how they should be divided between foreign companies and the national government has been a sensitive issue since the hydrocarbon industry was privatized in the 1990s at the urging of the IMF and the World Bank. Prior to this, Bolivia and foreign companies shared a 50/50 split of profit of gas revenues, with gas and oil sales accounting for 40 percent of the national government’s revenues. In October of 2003, then President Gonzalo Sánchez de Lozada (“Goni”) proposed a bill to accelerate privatizing the country’s natural gas reserves mainly for export through Chile to California, critics claimed that his scheme would only make some foreign investors and a few local politicians involved in the deal. The bill sparked a wave of protests by various groups, similar to those of last June, which called for a more balanced sharing of profits between foreign investors and the Bolivian government, while some of the indigenous and political left called for the re-nationalization of the entire hydrocarbon industry. To quell the protesters, Goni deployed the armed forces, resulting in sixty people killed in a conflict now known as the “gas war.” Now under extreme pressure, Lozada resigned the presidency and his vice president, Carlos Mesa assumed the post.

The autonomy movement has gained momentum in recent months due to the new hydrocarbons measure passed on May 17, 2005, which Congress passed without Mesa’s signature. The bill originally was introduced in a national referendum held last July. Under the law, foreign companies holding gas concessions in Bolivia would have to raise their payments on taxes and royalties from 18 percent to 50 percent paid to the government. The new law also called for the reestablishment of the state oil company, which earlier had been privatized. The higher payments would provide more revenue for the Bolivian government but as the indigenous have long experienced, more revenue for the government does not necessarily mean more funds spent on its citizens. The gas industry is still under the control of foreign interests, which has sparked cries for re-nationalization of the industry. At the same time, critics charge that the higher payments could deter new foreign investment in the region as some capital sources already have threatened to pull out of the country, much to the chagrin of many cruceños.

The new law also called for the reestablishment of the state oil company, Yacimientos Petrolíferos Fiscales de Bolivia (YPFB). The reestablishment had been delayed in recent weeks and residents in the town of Camiri in the Department of Santa Cruz held a general strike on August 3. The strike ended, with a pledge coming from the presidential palace to reinstate the oil company in the coming weeks. At the same time, the Federation of Municipal Associations (FAME) and the Executive Committee of Bolivian Universities (CEUB) are planning to stage yet another protest on August 15 if the government doesn’t agree to assign 20 percent of a new gas and oil tax to municipalities and 5 percent to higher education. Finance Minister Waldo Gutiérrez said this demand would be impossible to meet unless municipalities agree to take over completely paying for health and education services.

The Autonomy Movement Begins
The struggle for autonomy began as a movement by local cruceños business owners, farmers and landowners who complained that they were receiving too little from the central government in return for the foreign currency being earned by the country from the sale of natural resources found in the region and the disproportionate percentage of taxes paid by Santa Cruz to La Paz. According to the pro-autonomy movement, Nación Camba, cruceños are demanding an associate free state status that includes the right to self-determination and sovereignty over the economy, territory, culture and natural resources of the region. Nación Camba has the support of municipal governments in the immediate area, and institutions such as the Santa Cruz Civic Committee. State Department official David Boyle told COHA that the autonomy question resurfaced as a reaction to the recent protests and talk of gas nationalization. A recent poll by El Deber, a Santa Cruz newspaper, has found that 75 percent of Bolivians favor re-nationalization of the gas industry. If, in the constitutional assembly that has yet to be held, nationalization is put on the table and passes, then foreign investors could decide to pull their holdings out of the country, although others argue that this would be an unlikely scenario. Foreign direct investment (FDI) in Bolivia already has sagged in the last few years due to the country’s political instability. Some cruceños believe that if the region had greater autonomy, they would be better able to thwart nationalization and persuade foreign investors to remain in the region. One group of inhabitants of Santa Cruz, the Guaraní Indians, have aligned themselves with the indigenous movements in the Altiplano which are demanding nationalization of the gas industry.

A Divided Bolivia
Bolivia is to a shocking degree divided along ethnic lines with, according to State Department figures, about 62 percent of the population being indigenous (Aymara, Quechua and Guarani), with 38 percent being of European and Mestizo descent. Land and wealth is overwhelmingly concentrated in the hands of European elites, while two-thirds of the population lives in poverty. Since colonization through independence and into contemporary Bolivian history, the indigenous have existed as second class citizens who have been for the most part excluded from the country’s political and economic life. While Bolivia is a country rich in resources, and with the continued presence of major foreign investors, it remains still the poorest country in South America and the third poorest in the Western hemisphere. The present political turmoil stems from a desire to drastically reverse these conditions, with the indigenous people believing that nationalization is the critical first step.

Nación Camba accuses the central government and the western part of the country of exerting its power through outdated colonial traditions which allow “internal colonies” like Santa Cruz to be exploited for their natural resources. Nación Camba claims that the people of Santa Cruz have inherited a four hundred year struggle for self-determination starting with the invasion and control of the territory by the Spanish conquistadores.

The Santa Cruz region, the most developed part of Bolivia, has the highest Human Development Index in Bolivia, with a literacy rate above 93 percent. The relatively high concentration of those with European backgrounds may explain these impressive rates since its residents historically have been far better off than the indigenous population. Recently, Santa Cruz has been able to rapidly develop due to the presence of foreign investors involved in extractive and other commercial activities.

As often is the case, race issues underlie the autonomy debate. There has been a push throughout the entire country to reform the constitution to include a proclamation that Bolivia is a multi-ethnic state that gurantees fundamental rights to the indigenous population. Although Nación Camba acknowledges this concern, it is clear that the small, elite-controlled part of the country does not want to continue to bear what it regards as the unfair burden of having to subsidize the impoverished majority. Most of the country supports re-nationalization, yet cruceños are opposed not only to re-nationalization of energy sources but also to higher payment increases on foreign investors. However, if some lasting formula can be found for a balance to be struck between nationalization and higher payments on foreign investments, Bolivia’s natural resources could provide a valuable opportunity for access to the global market and in the process help alleviate the high poverty levels normally afflicting the country.

The Department of Santa Cruz strongly supports an autonomy referendum, either on a departmental or national level. The question remains, however, if the referendum passes, will the minority voice of the Gauaraní population who opposes it feel extremely alienated? What happens to Bolivian unity then? It may be true that many cruceños feel exploited due to the draining of resources by the central government which, they insist, disproportionately uses them to subsidize the population of the far less productive, more heavily populated western part of the nation. But the cruceños indignation is somewhat self-inflicted; it is not possible for one region of the country to claim the nation’s patrimony, which happens to be located on its terrain, as exclusively its own. Every country, for that matter, contains parts of the natural domain more favored than others.

The nation of Bolivia, not just the Department of Santa Cruz, was formed under a brutal, colonial agenda in which people and resources were and still are unceremoniously manipulated. An easy argument can be made that the state’s natural resources belong to the Bolivian population collectively, who, historically, has been subjected to the full spectrum of the volatile geo-political forces at work in the nation, such as colonialism, imperialism, free-market reforms and globalization.

Lesson’s learned from Nicaragua’s Autonomy Movement
Bolivia is not the only country in Latin America to be confronted with autonomy issues. Throughout recent decades, Nicaragua also has struggled with questions of separatism, and comprehending Nicaragua’s autonomy movement possibly could help gain insight into Bolivia’s current political strife. In 1987, under the new Sandinista constitution, the country’s Atlantic/Caribbean coastal region was granted autonomy from the central government. The coastal region’s diverse population, known as costeños, is a mix of Afro-descendents, Mestizos and various indigenous groups. For most of Nicaragua’s colonial history, the coast was under the control of the indigenous Miskito. In 1894, the country’s authoritarian president, General Zelaya harshly re-incorporated the region into the rest of the country, when it came under the control of the national government. Since that time, costeños have waged an intermittent struggle to regain control of their territory, culture, natural resources and economy.

The Costeños
In the 1980s, amid fighting a civil war against the U.S.-trained, armed and financed opposition group, the Contras, the Sandinista government was desperately in need of costeño support. To win our allegiance, the Sandinistas re-wrote the constitution, proclaiming Nicaragua as the first multi-ethnic state in Latin America. The constitution’s Law 28, known as the autonomy provision, divided the coastal region into two parts and granted them the right to self-governance. According to John Hodgson, an autonomy movement leader and local scholar, in his article, Issues that Limit the Development of Coastal Autonomy, the law embraced the concept of “unity through diversity,” ensuring that all coastal ethnic groups maintained the right to representation on the Regional Council, the coastal area’s highest governing body, regardless of the nature of its population, size or level of development.

Since the drafting of a new constitution in 1987, the autonomy movement has moved slowly, as the law has been only episodically enforced. While some of its successes include the creation of multi-lingual schools and an autonomous university, as well as the carrying out of elections for Regional Council representatives, its failures unfortunately far outweigh its achievements. Though the coastal region contains the highest concentration of natural resources (fisheries, forests, hydrocarbons and minerals) in Nicaragua, the costeños’ weak presence on the Regional Council have kept it the country’s poorest, most under-developed area. National political parties dominate the body pushing the costeños and their local interests to the sidelines. Coastal people historically have had a very low level of participation in civil society, which has lead to extremely weak local parties that are unable to stage successful electoral campaigns representing their self-interests against national political parties. Hodgson observes that since the concept of autonomy undermines the notion of national interests, the country’s big political parties are unlikely to agree to strictly enforce an autonomy measure. Without more support from the national government, the struggle to make coastal autonomy a living reality will crawl rather than race.

Unlike in Nicaragua, where the autonomy movement ostensibly has operated within the parameters outlined by the national government, and essentially with popular support, Bolivian cruceños intend to gain autonomy regardless of popular support. However, as is clear from Nicaragua’s experience, without the support of the central government, autonomy and its supposed benefits will be very difficult to attain. Even if Santa Cruz achieved its own autonomy, it is unclear whether the department could politically insulate itself from Bolivia’s influential national parties, especially given the intensification of migration from other parts of Bolivia to Santa Cruz.

The Challenge of Autonomy
An autonomous Santa Cruz would also have to face up to the difficulty of obtaining international recognition as an independent state entity. In the case of Nicaragua, though the coast was granted legal autonomy and local control of its natural resources, the international community has failed to acknowledge its independent status. Foreign investors interested in coastal resources still work through the central government, not the Regional Council, as a medium to secure their economic interests. Even more so, if Santa Cruz’s autonomy is not considered to be legitimate by the Bolivian state, it will likely be accorded even less recognition by foreign companies and foreign countries, than its Nicaraguan counterpart. It seems clear that to be recognized as a legitimate sovereign entity, a region must begin with the support of the central governing body in which the territory falls. The people of Santa Cruz would be well advised to acknowledge that successful nation-building requires the support of not just a handful of private entities, but of the central government as well as the community of nations, along with local entities, which autonomy-minded local commercial interests are not likely to easily attract.

National parties do not present the only challenge to autonomy; internal conflicts within an autonomy movement can also derail efforts to achieve success. An important observation made by the aforementioned Hogdson is that the various Nicaraguan coastal groups have been unable to make themselves into an influential force because several of them remain deeply divided. The seeds of the division were planted in 1987 in the form of conflicting visions of autonomy. While some supported the pluralist idea of autonomy whose motto was “unity through diversity,”- other groups wanted the condition to apply exclusively to indigenous costeños. Inter-cultural autonomy eventually triumphed, but various costal groups still interpret autonomy in a way that is exclusive and self-serving, including many Miskitos who equate autonomy with the rebirth of the hegemonic rule they exercised from the 17th to 19th centuries. At the same time, some Mestizos claim that an autonomous status naturally belongs to them, which only ended with the annexation of their territory in 1894. Furthermore, some costeños desire complete succession, while others want complete integration with the central government.

The problem of competing notions of autonomy has also surfaced in Bolivia. Some indigenous groups oppose any push for autonomy that would incidentally provide more revenue to foreign investors. As more and more indigenous residents of the Altiplano migrate to Santa Cruz, it will become more and more difficult to decipher the demands of this rapidly evolving multi-faceted segment of society, as distinguished from those members of the elite who clearly would economically benefit from a change of status.

Cruceños need to find a way to unify conflicting factions in order to arrange for a soft landing on the autonomy issue. In Nicaragua, the demands of such elements were reconciled by guaranteeing each ethnic group at least one seat on the Regional Council. While well-intentioned, this system has accomplished very little. For example, one member of the Garifuna population’s representation on the council has done nothing to balance the Mestizo’s overwhelming elected majority, who typically support the national parties. If autonomy is granted to Santa Cruz, in order to be successful, it will have to create a new system that does more than only guarantees a minimal degree of token representation to dissenting factions.

In the June 19th edition of the Santa Cruz newspaper, El Deber, former President de Lozada commented on the autonomy struggle and admitted that there is a social and ethnic problem in Bolivia: “I think that would be the end of Bolivia. Now, of course its [autonomy] is feasible: with a third of the population, they [Santa Cruz] have hydrocarbon resources and soy production and cattle-raising, with attractive markets for its products in neighboring countries.” In other words, Santa Cruz’s self sufficiency and its blessings in the form of its natural resources, makes independence a conceivable possibility. As such, Bolivia’s current political crisis necessitates far greater compromise amongst the different ethnic groups of the country, which is especially true considering the not-so-distant possibility of civil war, in the case of Santa Cruz opts in that direction.

According to the Interpress News Agency, Bolivia’s armed forces have publicly stated that they would not accept any division of the country. Thankfully, as the State Department’s Boyle observed, during the unrest in June, the armed forces sided with the constitutional government in seeking to negotiate a peaceful and legitimate political solution to the recent instability, unlike the uncontrolled escalation of events that unfolded during the “gas war.” Nevertheless, Latin America’s armed forces, including Bolivia’s, have a long history of maintaining national stability and security through, if need be, resorting to extremely violent measures. According to the Bolivian constitution, the armed forces’ “fundamental mission is to defend and conserve the independence of the nation and the security and stability of the state.” If Santa Cruz’s autonomy referendum passes and comes to be forcibly implemented, a civil war in Bolivia could very well follow. As for now, the struggle being seen is who will decide who will control the country’s resources continues. The outcome of a possible civil strife due to autonomy demands and an inability to compromise on the issue of re-nationalization, payments of foreign investors and indigenous rights would not only be detrimental to the population and economy of Bolivia, but inevitably to the cruceños’ cause as well.

This analysis was prepared by COHA Research Associate Melissa Nepomiachi.

August 10, 2005

For More Information

Ballvé Teo. "Far from Over: Bolivia on the Brink of Civil War—or Revolution." Americas.org
10 June 2005.
http://www.americas.org/item_19790

"Bolivian Right Declares Virtual War." Scoop Independent News. 3 June 2004
http://www.scoop.co.nz/stories/HL0506/S00063.htm

"Camiri Strikes Over Oil Deal." Americas.org. August 7 2005.
http://www.americas.org/item_21120

Gomez, Luis. "Santa Cruz and Its Sedition: Power and Autonomy in Bolivia." Counterpunch.org. 29 January 2005.
http://www.counterpunch.org/gomez01292005.html

"Goni asegura que una división sería el final de Bolivia."El Deber 20 June 2005.
http://www.eldeber.com.bo/20050620/nacional_4.html

Nacion Camba: http://www.nacioncamba.org/quienesomos.htm

Nicaragua and Autonomy: http://www.yorku.ca/cerlac/URACCAN/Nov24-97.html

Schultz, Jim. "Political Crisis Erupts in Bolivia Over Oil Ownership." Pacific News Service.19 May 2005.
http://news.pacificnews.org/news/view_article.html?article_id=4805a676cefd60167d027f0472dfcccb

Schultz, Jim. Oct 17, 2003 "Behind Bolivia's Gas War."Pacific News Service. 17 October 2003.
http://news.pacificnews.org/news/view_article.html?article_id=8e7890e37f836788252aaac364cf501d

The Council on Hemispheric Affairs, founded in 1975, is an independent, non-profit, non-partisan, tax-exempt research and information organization. It has been described on the Senate floor as being “one of the nation’s most respected bodies of scholars and policy makers.” For more information, please see our web page at www.coha.org; or contact our Washington offices by phone (202) 223-4975, fax (202) 223-4979, or email coha@coha.org.

To subscribe to our free press releases, send an email to coha@coha.org with "subscribe" as the subject. 1

Memorandum to the Press 05.91

Word Count: 3650