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Pressure Jeopardizes Survival of Bolivian Pres.

Memorandum to the Press
For Immediate Release
Monday, February 24, 2003

Washington Pressure on Drugs Jeopardizes Survival of Battered Bolivian President

1. President Sanchez de Lozada about to announce expansion of “legal” coca crop
2. Political stability sometimes comes before drug eradication
3. The heavy price of U.S. intervention
4. Bolivia’s civil society becoming increasingly potent
5. Viability of Sanchez de Lozada presidency at stake

The administration of Gonzalo Sanchez de Lozada is balanced on a knife’s edge, as after less than seven months into his presidency, violent protests, calls for his resignation, and rumors of coup plots have been circling through the streets of La Paz, Bolivia’s capital. Tension has been gathering in the country since the beginning of the year when a widening throng of voices from all walks of life began calling on the Bolivian leader to reform or resign. But, in reality, Sanchez de Lozada’s fate will be as much determined in Washington as La Paz, as the Bush administration decides whether Bolivian national interests are as important to respect as its own.

Among those who have been challenging Sanchez de Lozada’s competency has been cocalero leader and congressman, Evo Morales, who narrowly lost to him in the presidential runoff last August. That race took place against the backdrop of the direct intervention of then-U.S. ambassador to Bolivia, Manuel Rocha, who threatened more than once, publicly as well as privately, to cut off all U.S. aid to the impoverished nation if Morales won the election. The citizenry was so deeply offended by Rocha’s ill-advised statements that it almost cost Sanchez de Lozada his victory. Morales leads the Chapare-based union of coca-growers, and was calling upon the government to increase the amount of legal coca leaves which can be grown in Bolivia, and which traditionally have been consumed for generations by many Bolivians through being chewed as an appetite suppressant, a preventative for altitude sickness and a mild stimulant. In order to have their demands met, the cocaleros (the cultivators of the folkloric coca plant), launched a war of economic sabotage against the government, centering on closing down the main Santa Cruz–Cochabamba highway to all commercial traffic while surrounding the government’s coca eradication camps.

Several days ago, Sanchez de Lozada suspended a tax program, which he had introduced on the advice of the IMF; that program had resulted in a score of rioting Bolivians and security forces being gunned down by an army unit. Weeks before, the Bolivian president also suspended the fumigation of drugs in the Chapare after several cocalero advocates had been killed and others detained.

La Paz’s Many Enemies

Morales and the cocaleros have not been alone in their vilification of the government, however. Various other sectors of society, such as Bolivia’s retired community, the peasant farmers union and the COB, the country’s largest labor union, have not only been staging their own series of protests and work stoppages against the government, but increasingly, are working collectively to meet their respective goals.

Can Sanchez de Lozada Hold On

As the weeks went by, the Sanchez de Lozada government added to the nation’s discontent with controversial tax increases; as a result, a dangerously explosive level of confrontation increasingly appeared on the streets of La Paz. Earlier this month, the capital hovered at the precipice of lawlessness when local police took arms against the government to protest unpaid wages and a rescinded promise of a forty percent salary increase. This became a catalyst for spirited demonstrations, protests, riots, acts of vandalism and violence throughout the nation’s capital. The firestorm reached its climax when unidentified snipers positioned on several La Paz rooftops opened fire on protesters who were throwing rocks at the presidential palace, reportedly killing 17 civilians, soldiers and police officers. Sanchez de Lozada himself was smuggled out of the palace in a bullet-proof ambulance as chaos erupted on his doorstep.

Faced with these acts of civil disobedience, Sanchez de Lozada has been forced to mollify his opponents by rescinding the taxation measures which he had only recently put into place, and agreeing to a temporary halt in the fumigation of the nation’s coca crops. While he had shown some willingness to review the nation’s coca policy – which indeed he had promised to do in his presidential campaign platform – the recent mass resignation of his cabinet put all negotiations on hold.

Recently, Undersecretary of Social Defense, Ernesto Justiniano, has indicated that the present legal crop of coca, grown on 30,000 acres, will now be expanded to 45,000. Each cocalero family will be permitted, during a six-month period, to grow an additional catu (one fifth of an acre). Justiniano told Knight Ridder this past week that he believes that many farmers will be content with growing a limited amount of legal coca and therefore will be less likely to grow larger amounts of the crop for illicit purposes. The Bolivian minister also believes that the new initiative would give the government greater control over what is currently an illicit industry. The U.S. is very much against this expanded acreage being set aside for additional cultivation.

For Sanchez de Lozada, the current crisis will be the ultimate test of his presidency. Except for the ill-reputed former Bolivian President Jaime Paz Zamora, whom Clinton administration officials had accused of receiving drug payoffs, and who had developed into an uninhibited deal-maker, Sanchez de Lozada is a completely isolated politician whose very survival is now being openly discussed as unlikely.

The Coca Protests

One of the major stimulants of Sanchez de Lozada’s political troubles has been his chronic inability to form an effective agreement with Evo Morales and the protesting cocalero movement. This group is vehemently opposed to the forceful implementation of U.S.-imposed coca eradication programs, which they maintain is the cause of widespread poverty, suffering and human rights abuses throughout Bolivia. Within the past six years, the U.S. has spent upwards of $1.3 billion on a remarkably successful, if harshly applied, drug eradication program. This program has, however, gone hand in hand with military aid programs providing for a significant role for the country’s armed forces, which has led to violent clashes and unrest.

The cocaleros are not against limiting or temporarily halting coca production, provided that a study be undertaken to establish the traditional level of production of the plant, which once again would become the norm if the experiment spells out the need for augmented production.

Morales’s adamant support of the legalization of augmented coca leaf cultivation stems from the fact that the chief cultivators of the crop are indigenous peasants, who have few other options available to sustain their livelihood and preserve their communities. Also of importance is that the crop has been an integral part of their society and culture for centuries. Although coca has been demonized and heavily affected by the fumigation and eradication practices of the U.S.-backed local anti-narcotics unit – at whose hands more than 170,000 acres of coca have been destroyed since the late 1990’s – U.S. aid policies and Andean free trade proposals have yet to provide viable alternative agricultural crops that could provide an income for former cocaleroswho voluntarily decide to give up their coca plantings.

Alternative Crops: A Failure

Morales’ group maintains that alternative development projects aimed at offering disenfranchised former coca growers a means of income through the cultivation of substitute crops such as pineapple, citrus and timber, are poorly conceptualized and provide no real substitute means of income for peasant farmers forced to implement them. As a result, much of the land diverted from coca production to alternative agricultural crops and products has since slipped back to being used in the cultivation of the illicit crop, as campesinos found themselves unable to eke out a living from the new regimen.

The demands of the cocalerosare simple: the demilitarization of the Chapare and an increase in the current limit of 30,000 acres of legal coca cultivation for medicinal and traditional purposes. This would satisfy what they say is an underserved domestic market. The U.S., on the other hand, is on record opposing these measures, insisting that any increase in Bolivian coca cultivation can only mean one thing – more cocaine on the streets of America. A vocal advocate of reviving Bolivia's historically bountiful coca leaf industry, Morales has seen his agenda widen in recent months. He wants to end two decades of free-market reforms in order to rid Bolivia of external influence, like that of the U.S. embassy whose often raucous voice is regarded by many Bolivians as an intolerable infringement upon the country’s sovereignty. The cocalerosmay be jeopardizing their chances of obtaining their primary concessions, by adding the somewhat extraneous demands: that Bolivian authorities must agree not to sign the proposed Free Trade Area of the Americas agreement with the U.S. and that Sanchez de Lozada must resign. While these latter demands may appear legitimate to the cocaleros, they endanger their cause by spelling out priorities that no government could easily accept.

Since 2001, the high level of internal militarization, the poverty inflicted by forced eradication efforts, and a lack of viable alternative development projects have fostered growing despair in the Chapare, one of Bolivia’s predominant coca-growing regions, where about half of the nation’s production takes place. Alienated, malnourished and poverty-stricken former cocaleros began surrounding eradication camps, obstructing the work of officials fumigating crops and periodically blockading the Santa Cruz–Cochabamba highway, one of the main economic arteries of the country. Relatively peaceful protests soon turned violent; in one such incident on December 6, 2001, local cocaleroleader, Casimiro Huanco was killed by security forces as he and his fellow protestors were peacefully stacking rotting, unsold alternative fruits by the roadside. Security forces suffered their own casualties as well. Booby traps were discovered in areas staked out for eradication, and unidentified snipers fired upon anti-drug personnel. Ironically, it appears that strong-arm tactics being employed by Bolivian authorities on the advice of U.S. officials may well be precipitating the very conditions that Washington wishes to avoid: armed and organized resistance to coca-eradication efforts on the part of the cocaleros.

Forced Eradication Brings Abuses

Negotiations between concession-minded opposing factions were initiated in November 2001, but quickly collapsed as the U.S. began increasing pressure on Bolivian authorities to continue their previous eradication efforts, if need be by force. Washington and cooperating Bolivian authorities wanted to achieve dramatic eradication results by the January, 2002 drug certification date, upon which future U.S. aid would be based. At this point, the State Department seemed less concerned with complying with its own Leahy Amendment, which links the release of U.S. military aid to human rights certification, than in producing solid eradication results. Despite widespread and well-documented evidence of human rights abuses occurring almost daily in the Chapare (including a number of violent deaths and the arbitrary detention of scores of suspects), one international rights group noted that U.S. officials were inclined to “dismiss or downplay abuses by U.S.-supported counternarcotics forces,” and almost always fell back to citing the Bolivian authorities’ version of controversial events, however tendentious, when challenged.

As a result of Washington’s pressure, the Bolivian government stepped up the eradication process in time to get the sought-after enthusiastic rating in the annual release of the U.S. certification findings. But the price for this was increased tensions in the Chapare. Thankfully, however, a truce followed at that time. On February 9, 2002, La Paz signed an agreement with cocalero groups, rescinding its executive orders, which had criminalized the use of coca even for traditional and medicinal purposes. Despite U.S. protests that the then-Quiroga administration was being overly “sensitive” to its domestic troubles, a relatively peaceful period ensued, during which time the full extent of public support for the struggle of the cocaleros became more evident.

The Heat is on Sanchez de Lozada

The new government of Gonzalo Sanchez de Lozada has come under renewed pressure from U.S. officials to meet ambitious drug eradication goals. As a result, local authorities have reinvigorated their efforts and tensions once again resurfaced in the Chapare. Blockades were again set up along major cross–country highways beginning on January 14 of this year, once more shutting down the Santa Cruz–Cochabamba highway. The AP reported that this blockade alone cost the nation $80 million in lost trade during the period that it was in effect. Subsequent clashes between protestors and security forces continued to claim lives. This time, however, the cocaleros gained the influential support and solidarity of peasant leader, Felipe Quispe. His group, as well as Bolivia’s Organization of Retired Personnel, indigenous groups, and other sectors of society who see themselves as being deprived by the system, have been staging their own series of independent protests and strikes.

The White House has remained steadfastly opposed to any concessions which Sanchez de Lozada might be inclined to make in order to diffuse the recent unrest, as well as live up to his campaign promise of reviewing the nation’s coca policy. Washington’s new ambassador to Bolivia, David Greenlee, recently stated that the U.S. strongly opposes any increase in cultivation for any means, and reiterated the barely veiled threat of his predecessor, Rocha, that U.S. aid and also, perhaps, Bolivia’s inclusion in the proposed Free Trade Area of the Americas, remains contingent on absolute cooperation with the U.S. goal of “zero coca.” A U.S. official told the AP: “Any proposal that would legitimize or legalize any coca in the Chapare – which is illegal – would be a violation of Bolivian law and a violation of international treaties to which Bolivia is a signatory.” What Washington mainly fears is that any increase in production, legal or otherwise, will do enormous damage to what has been its only successful South American drug eradication campaign, at least in terms of statistics.

Meanwhile, cocalero leader Morales told Knight Ridder that he believes that the U.S. aim of “zero coca” is now dead. Morales has also vociferously criticized the appointment of Greenlee, whom he accuses of being a tool of repression in Bolivia in the 1980s. He has also accused Greenlee of having been involved in the Villa Tunari massacre in 1988 when 8 cocaleros were shot and killed. According to Morales, the ambassador’s questionable past does not bode well for the future: “We cannot forget that Greenleeis a CIA agent and his mission is to lead the repression which President Gonzalo Sanchez de Lozada's administration plans to carry out against those who take part in the mobilizations.”

It’s Economics, Stupid

The role of economics in the most recent period of volatility is certainly a standout. Landlocked and isolated, Bolivia is one of the most impoverished nations in the Americas. USAID estimates that over 60 percent of the population is mired in poverty. What income is earned in Bolivia is concentrated in the hands of the most affluent members of society; close to 58 percent of national wealth is already claimed by the richest 20 percent of the population, whereas a paltry 3.1 percent is held by the poorest quintile.

Pervasive poverty and unequal distribution of wealth remain a fact of life despite the efforts of Bolivian governments since 1985 to produce a stable macroeconomic environment by means of neo-liberal reforms. Many of the most notable polices implemented during this period can be attributed to the embattled Sanchez de Lozada. During his first stint as president, he relied heavily on a free-market orientation to spearhead his schemes, including the controversial “capitalization program,” whereby the government sold 50 percent stakes in state telecommunications, railroads, and oil companies to foreign investors, and funneled the proceeds into pension funds.

In some respects, Sanchez de Lozada’s efforts as planning minister in the 1980’s and president in the early 1990’s could be deemed a success; inflation, running at an annualized rate of 24,000 percent in 1985, was reduced to less than 5 percent in 2001 and GDP growth was solid in the mid-1990’s.

Nonetheless, several profound economic problems continue to plague Bolivian policy-makers. Foremost is the inextricable link between coca and the well being of the economy. This oft-demonized commodity accounts for nearly 10 percent of GDP registered in the official figures and generates otherwise unavailable income for large segments of the informal economy. Since the implementation of a concerted coca eradication program in 1998, some economists estimate that rural communities have been deprived of as much as $200m annually by the anti-drug war. In turn, this disruption of traditional agrarian practices has precipitated the influx of rural dwellers into the urban centers, swelling the ranks of the unemployed and those in the already teeming informal economy. Only a trifling sum of money has been earmarked by the U.S. and the Bolivian government to facilitate agricultural diversification schemes, while Washington is adamant in its demands for the destruction of Bolivia’s most valuable export, coca leaves.

Financial Fealty

In a bizarre economic scenario, the Bolivian government has been coerced into ceasing production of its most valuable commodity in order to sustain its finances by internal bailouts. Burdened by an external debt eclipsing $4.5 billion, the country finds itself at the mercy of its lenders, most of which are sovereign states or multilateral lending institutions. Bolivia’s utter dependency on the benevolence of its creditors necessitates the imposition of orthodox economic prescriptions and nearly forecloses upon any experimentation.

Nowhere is the foregoing observation better underscored than in Bolivia’s relations with the U.S. Washington has explicitly made continued assistance contingent on Bolivian compliance to U.S. directives, particularly when it comes to drug policy. The former U.S. ambassador to Bolivia, Manuel Rocha, articulated this sentiment during the run up to last summer’s presidential elections when he said, “I want to remind the Bolivian electorate that if they vote for those who want Bolivia to return to exporting cocaine, that will seriously jeopardize any future aid to Bolivia from the U.S.” This sentiment has been forcefully reiterated in recent weeks by his successor, David Greenlee.

The economic dilemma that confronts Bolivia recently again reared its head. At the behest of the IMF, President Sanchez de Lozada began to draw up plans to pare the country’s burgeoning deficit from 8.6 percent to 5.5 percent of GDP. After floating a gasoline tax proposal, the president struck upon the idea of instituting a reconfigured income tax in conjunction with a 10 percent reduction in spending. The Confederation of Private Businessmen and the Bolivian Workers Union immediately balked at the proposal, claiming it would stunt economic growth and fall disproportionately on the poor. Some economic estimates show that close to 61 percent of the new revenue generated by the proposed income tax would be paid by people earning less than $530/month.

Already riled by the government’s dismissal of its demands for a 40 percent pay increase and for unpaid wages, police joined throngs of protesters in the administrative capital of La Paz to voice their dissent. Violent clashes ensued as the demonstrators engaged soldiers on the city’s streets. Due to the widespread opposition and mounting chaos, the president scrapped his income tax proposal. In its stead, he abolished five ministries and reshuffled eight ministerial portfolios in the wake of mass cabinet resignations in the preceding days.

President Sanchez de Lozada hopes these cost-cutting measures coupled with leniency from the IMF will secure the monetary assistance his country desperately needs. Even if the IMF does make the desired disbursements, the payoffs will be but a passing reprieve. If Bolivia is to extricate itself from its fealty to Western governments, it must either revert to enhanced illicit or legitimate coca production or embrace a new export like natural gas. Without a doubt, the country has several contentious economic choices to make if it is to prevent the reoccurrence of chaos in La Paz.

The Doomed Presidency of Gonzalo Sanchez de Lozada?

The omens do not seem to bode well for the embattled Sanchez de Lozada. With his presidency in tatters (with still four and a half possible years of tenure ahead of him) his fate could emulate that of several Ecuadorian presidents whose terms were aborted by popular protests. Moreover, he has more or less been forced to face this crisis alone, with his entire cabinet having resigned on February 11. Meanwhile, he must be ready to respond to increased protests from a profoundly alienated indigenous-led opposition, which has proclaimed its intention to reclaim the country’s patrimony that it accuses previous administrations of having sold out to foreign interests.

Part of Sanchez de Lozada’s problem has been due to his shallow support in most of Bolivia’s national sectors and the relative strength and numbers of his enemies. The nation recently experienced a disturbing presidential electoral process, which culminated in the selection of him by the Bolivian congress on August 4. The winning margin for the mining mogul and former president (1993-1997) was by a vote of 84-43. Several months before, in the general elections, Bolivian voters had gone to the polls to choose among four main candidates: the victorious Gonzalo Sánchez de Lozada of the National Revolutionary Movement (MNR), Evo Morales of the Movement Towards Socialism (MAS), Manfred Reyes Villa of the New Revolutionary Force (NFR) and Jaime Paz Zamora of the Revolutionary Leftist Movement (MIR). The result was a virtual tie in the general election between U.S.-backed Lozada, with 22.46 percent of the vote, and Morales, with 20.94 percent, with the winning margin only being 43,000 votes. Because neither presidential candidate mustered more than the required 51 percent of the total votes cast, the Bolivian constitution mandated that the nation’s congress select the new president between the two leading vote-getters.

The elections took on another unexpected twist when Sanchez de Lozada forged a surprising coalition with his old rival Jaime Paz Zamora (with his spreading reputation for political opportunism and cynical deal-making), an arrangement which the former hoped would return him to the executive office in La Paz after a five-year hiatus. Many critics argued that this coalition was hastily formed once it was clear that Evo Morales presented a formidable threat to Sánchez de Lozada’s eventual confirmation as president by a congressional vote. A unique division of executive power between Sánchez de Lozada and Paz Zamora was worked out that gave the latter’s confederates seven out of the cabinet’s 18 positions. Now, after the recent uprisings, Paz Zamora’s followers were awarded even more cabinet seats.

Indigenous Political Surge

These electoral events occurred amid an unprecedented spike of political activism on the part of the indigenous community. The end of Spanish colonial rule in the early 19thcentury merely saw a continuation of the tradition in which Bolivia’s white and mestizo minority controlled the government despite the fact that the country’s population of 8.3 million is mainly composed of Aymara and Quechua-speaking populations. As a result, a virtual racial and socio-economic pyramid remains in Bolivia, in which the nation’s indigenous groups have traditionally been found at the bottom where they have suffered greatly, and been afforded very little political representation. However, these indigenous groups are now filled with rising expectations as they exhibit a growing involvement and sensitivity to public issues, under the leadership of Morales, more now than perhaps at any period before in Bolivia’s modern history. The effectiveness of his leadership of the cocaleros is reflected in the fact that his movement now controls a third of the seats in congress.

Sanchez de Lozada, meanwhile, represents an older and more conservative style of governance, which is very much at odds with the new wave of populist presidencies currently being voted into office throughout Latin America. During the new president’s earlier term in office (1993-1997), he pursued an aggressive economic and social reform agenda, which produced mixed results. On the one hand, Bolivia, under Sánchez de Lozada, was one the region’s first nations to be successful in stopping hyperinflation in relative social peace. During this period, Bolivia’s economy experienced a steady annual growth rate of four percent. Nevertheless, he was under constant criticism for the neo-liberal reforms that he introduced while in office. This opposition mainly came from indigenous peasants whose leadership argued that the president’s highly touted reforms kept them in poverty, while catering to foreign corporations and investors.

With the forces arrayed against him being so strong, and all of his support bases collapsing around him, it seems unlikely that Sanchez de Lozada can survive for long in such a hostile political climate. Aside from the pivotal role to be played by the U.S., what remains to be seen in Bolivia is what form his downfall will take and who will fill the vacuum left in his wake.

This analysis was prepared by Matthew Ward, Research Fellow, and Grant M. Nulle, Research Associate at the Council on Hemispheric Affairs. Issued Monday, February 24, 2003.

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;or contact our Washington offices by phone (202) 216-9261, fax (202) 223-6035, or email

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