Bolivia

[Louis Proyect <lnp3@xxxxxxxxx>]

The IMF and the Bolivian Crisis
 by Tom Kruse

BOLIVIA WATCH (znet.org)

The current crisis in Bolivia is social, economic and political. Socially,
despite improvement in service coverage, poverty and vulnerability have
been increasing. The vulnerability of families to shocks and displacement,
especially among the rural poor, has worsened dramatically. Economically,
growth has been poor, and accompanied by growing structural unemployment
and underemployment. Over 7 of 10 new jobs created in the past 15 years
have been in the "informal" sector. And politically, Bolivia faces a
dramatic crisis: as never before, governments and the "political class" -
as it is referred to here - face a deep crisis of legitimacy.

These three areas of crisis are clearly linked to policies imposed by the
international financial institutions, in particular the International
Monetary Fund. Research shows clearly that the policies prescribed by the
IMF have, among other things, not produced strong or sustainable growth;
opened countries, communities and families to new vulnerabilities;
exacerbated inequalities, which puts a brake on growth, stresses political
systems to the breaking point, and engenders new and powerful forms of
criminality and social tension.

Bolivia has been a model student of such "reforms", and is now also a
showcase for the contradictions and crisis these policies engender. After
almost 2 decades or "reform" and structural adjustment, Bolivia is growing
slowly if at all; Bolivians are increasingly vulnerable and poor; while
society n general is increasingly inequitable and patently unjust. Mention
should be made of the political aspect. IMF policy prescriptions have
systematically removed essential economic policy decisions from political
process. This "emptying out" of substantive political has much to do with
the crisis of legitimacy of the "political class". Successive governments
are limited to administering policy prescriptions. The IMF has recognized
the call by Civil society organization to include "macroeconomic issues" in
PRSP dialogs, but disingenuously (cynically?) suggest that such issues must
be taken up by national governments - the same governments whose hands are
tied by IMF conditionalties.

The current crisis in Bolivia bears the imprint of IMF policies, both in
terms of background conditions and immediate causes. Anemic growth due to
factors both internal and external to Bolivia have resulted in a dramatic
fiscal crisis; the deficit is now estimated at over 8%. IMF prescriptions
have been for more austerity and belt tightening: on the expenditure side
the IMF calls for "flexibilizing" government spending, which means
adjusting public sector salaries to national economic performance; and
permitting the devaluations to erode the value of pension payouts. The
anti-poor nature of these measures should be clear.

On the income side more and more effective taxation, which in essence means
getting more people, largely poor and middle class, to pay more taxes; and
the effective start of natural gas exports. Bolivia has enormous reserves
of natural gas. However, how the gas is to be exploited, and who the
benefits will accrue to, are heated political issues in Bolivia. There is
good reason fro the heated debate: Bolivia has passed through 3 major
cycles of non-renewable commodity exports: silver through the 19th century,
guano and rubber later that century, tin in the 20th century. These cycles
for exports never laid the basis for a prosperous, productive and just
society. On the contrary, Bolivia is one of the least prosperous and most
unjust societies in Latin America. The question Bolivians are rightly
asking is, "how will this next round of non-renewable commodity exports be
turned into real development?"

Two things are clear to Bolivians: politicians, under the stewardship and
dictates the IMF, have proven they are absolutely untrustworthy in managing
the economic affairs of the country. In this context, the IMF has been
consistently applauding and/or promoting the political class' rush to
export gas under conditions and agreements that are destined to turn this
next cycle of exports into another sad chapter of squandered wealth and
underdevelopment. This can be seen in the last Stand By Agreement with
Bolivia signed in mid 2003, and subsequent reviews of the same in August
and September of 2003.

The "gas issue" is perhaps the single most important political and
development issue in Bolivia today. Some sectors in Bolivia say first value
added activities should be created in Bolivian and no to exports; others
call for going slow to ensure exports will in fact benefit the country,
contributing to the productive capacity, productivity and reducing poverty.
In all cases, there call is for transparency and voice in a process that
will have enormous impacts on Bolivia's future. But the IMF's position
works in the opposite direction, supporting the rapid conclusion of obscure
deals made by un-transparent multinationals and unaccountable politicians,
impossible for people to know about, much less evaluate or have voice over.
It is clear that the IMF's position on this issue - and antidemocratic
practices generally over the last decades - has only exacerbated the lack
or transparency and structural absence of voice, in turn adding fuel to the
fire that today consumes Bolivia.



Louis Proyect, Marxism mailing list: http://www.marxmail.org


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