The current political turmoil in Bolivia is part of a wider movement in Latin America, of people rejecting not only corrupt politicians, but also – and more importantly – the neoliberal economic policy paradigm that enriched a few at the expense of the vast majority.

Bolivia is the poorest country in Latin America, with more than 70 per cent of its population estimated to be living below the official poverty line. In rural Bolivia the incidence of poverty is reckoned to be as much as 90 per cent of the population, and there is almost no access to basic amenities such as electricity and sanitation. For most farmers in the country, until recently, the only thing that stood between them and starvation was cocaine cultivation, which was banned under pressure from the United States. Urban areas have been impoverished by massive job cuts because of privatisation and more mechanisation in the mining industries.

Paradoxically, Bolivia is also one of the richest countries in Latin America, in terms of its natural resources. The huge natural gas reserves are second only to those of Venezuela in the region, and the country also has large deposits of tin, silver and gold. The story in Bolivia, as in many other countries similarly rich in natural resources, is of decades of plunder by a small elite, ably assisted by multinational mining corporations and watched over by US imperialism.

Again like much of Latin America, the economic reality has its counterparts in social, political and even racial divisions. The ruling elite is inevitably white, belligerently right-wing and closely intertwined with imperialism, as well as openly contemptuous of democracy when it does not serve its own interests.

More than 60 per cent of the population, however, is of "indigenous" origin, while another per cent can be described as of "mixed race". These groups constitute the political base of the increasingly more radicalised left, which is currently making demands for public ownership of natural resources and public responsibility for basic services that strike at the very heart of the imperialist neo-liberal model.

To understand the current crisis, a little background is necessary. Two crucial issues have dominated the contested terrain in Bolivia, as indeed they are likely to do in the world as a whole in the years to come: energy and water. The neoliberal model was imposed in a drastic form in Bolivia from around the mid-1980s under the close supervision of the IMF and World Bank. This involved not only the usual elements of fiscal contraction and high interest rates, but also privatisation of energy extraction and distribution but also of water and other utilities, resulting in huge increases in prices and disconnecting supplies to poor people who could not pay.

However, around five years ago, social movements and protestors, led among others by the indigenous peoples’ leader Evo Morales, began to reassert their position. The Cochabamba Water War of 2000 became internationally famous 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 government of Bolivia has been forced to pay heavy compensation to Bechtel.

Now there is another such war under way, in the shanty town of El Alto close to the capital La Paz. From late last year, similar protests against the privatization of the public water and sewerage system paralysed the city and led to the termination of the contract held by the private consortium Aguas del Illimani on January 13, 2005. This was a particular blow to international donors, who had actively pushed this contract as being "pro-poor". However, the issues is still not finally resolved and the conflict has even intensified.

This is because there is still tremendous pressure upon the Bolivian government from the World Bank, which became an associate of Aguas del Illimani through its private sector lending arm, the International Finance Corporation, which owns 8 per cent of shares. If the contract is cancelled, the Bolivian government will have to pay a large compensation, and now the World Bank has direct interest in guaranteeing the investment and will be the judge of the likely forthcoming lawsuit through its agency the International Centre for the Settlement of Investment Disputes.

One of the major demands of the current struggle is nationalization of the oil and gas extraction industry, since the practice of the past and currently is to export the country’s gas to the benefit of a small local elite and the large MNCs. This was a promise made in the "October Agenda" of former President Carlos Mesa, who took power in 2003 after the hated and murderous regime of Gonzalo Sánchez de Lozada was displaced by public uprising. That Agenda also promised a new Constituent Assembly providing for more regional autonomy and representation to indigenous peoples. This immediately came up against a strong rightwing reaction, especially from the region of Santa Cruz which enjoys a massive concentration of land and valuable natural resources in the hands of a few. Now Mesa has himself been evicted by mass protests, because of failure to keep to these promises.

The new Acting President Enrico Rodriguez is the former head of the Supreme Court, who has so far been unable to stop the chaos. He has promised fresh elections within six months, and these are definitely likely to provide more power to the Left, which now has several leaders of rapidly growing public stature.

President Hugo Chavez of Venezuela has described the current crisis in Bolivia as one more sign that the "poisoned medicine" of free-market democracy imposed by the US is being rejected by Latin America. But of course US imperialism, however, distracted it may be by its travails in Iraq and Afghanistan, is unlikely to let so much popular upsurge in its backyard go completely unchallenged. What happens next in that region is of great concern to everyone in the developing world, not only for the ability to confront imperialism, but also in terms of building feasible social and economic alternatives.

June 22, 2005.