IMF Policy Source Of Deep Unrest In Bolivia

by Emad Mekay

"What I found over the years is that when there's a current negotiation with the IMF (International Monetary Fund), that's when you have what I call the 'IMF riots,'" said Sara Grusky, an activist with the Washington-based consumer group Public Citizen and a long time watcher of Bolivia's economic changes.

Referring to an Oct. 6 deal in which the IMF approved the disbursement of $15 million as part of an agreement to give Bolivia a $4 billion loan, Grusky said that neo-liberal policies peddled by the two Washington-based institutions have had a "cumulative" effect on the increasingly angry population.

"Over the last year, there had been periodic broad popular mobilizations that really have their roots in opposition to neo-liberal policies. What provokes them (protests) has sometimes been U.S. anti-drug policies and their impact on coca growers; it has been the privatization of water; it has been extreme poverty... it's very cumulative I think," she said.

Thousands of Bolivians have been marching to the capital Le Paz since late last month to demand the resignation of right-wing President Gonzalo Sanchez de Lozada for imposing economic policies that they say impoverish locals while enriching elites and foreign companies.

At least 70 people have been killed and hundreds more injured, according to local human rights groups. (Authorities on Thursday put the number of dead near 40).

Sanchez de Lozada, who came to office in August 2002, survived a serious eruption of dissent in February over his austerity measures, encouraged by the IMF and the World Bank, and a contentious plan to eradicate more coca plantations.

As part of its "war on drugs," Washington has attacked the cultivation of coca, the raw material used to manufacture cocaine.

The experts also point to more than two decades of IMF and World Bank structural adjustment policies implemented by a succession of Bolivian governments, which they argue have undermined the livelihoods of workers and farmers, reduced social expenditures and public services, and intensified the exploitation of the natural environment.

Following the Oct. 6 decision, Anne Krueger, IMF first deputy managing director, complimented the authorities' "corrective steps" and urged "consistent implementation to achieve higher economic growth and lasting poverty reduction," according to a statement on the Fund website.

The IMF wants the country to reduce "low-priority" spending, introduce a new tax code, broaden the tax base, and apply a tax regularization scheme to stem the country's deficit (equal to nine percent of the gross domestic product in 2002).

Local protest groups worry this would mean further cuts on health and education spending.

Under the IMF program, Bolivia pledged to lower the cost of its pension plan, and to eliminate what the Fund labels "labor market rigidities," often interpreted by protest groups as a step on the path to fewer workers' rights.

The changes have all been widely unpopular among ordinary Bolivians, among Latin America's poorest people.

But the more immediate trigger of the current turmoil is public anger over a pipeline that would sell Bolivian natural gas to California and Mexico.

In August, the IMF encouraged authorities "to move quickly on large natural gas projects," saying that such mega ventures "would be important for realizing Bolivia's growth potential."

Leading protesters' demands is the abolition of the proposed $5 billion pipeline, which would send seven trillion cubic feet of gas outside the country over 20 years.

The IMF has said the project could spur Bolivia's economic growth by as much as one percent and be a huge boon to the cash-strapped country.

But activists say that Bolivians, given the record of international financial institutions and multinational corporations in their country, remain deeply suspicious.

"A good many average Bolivians, however, aren't buying the argument that those benefits will ever trickle down to them," said Jim Shultz, executive director of The Democracy Center, based in California and Bolivia, in an article to be published Sunday.

Angry Bolivians say the project will remove an important natural resource and part of the national wealth, cause environmental destruction and enrich U.S. and British transnational corporations while leaving only a small percentage of the profits in Bolivia.

That was expressed in a communique addressed to "the international community and the Bolivian people" by the Permanent Human Rights Assembly of Bolivia:

"We are letting [the Organization of American States and the United States] know that the democracy that you are defending has handed over strategic state enterprises to transnational corporations... [and] is implementing neo-liberal economic policies that bring wealth to a few and dire poverty for the majority," said the statement.

The pipeline has also provoked nationalistic sentiments as its proposed route runs through Chile, a long-time enemy of Bolivia that took away the country's access to the Pacific Ocean in a war fought more than a century ago.

Bolivians also detest U.S. pressure to end coca growing in the country. They say that if authorities persist, without offering farmers an economic alternative or substitute crops -- particularly in areas where coca growing is part of the local culture -- more farmers will not be able to survive.

The majority of Bolivia's 8.5 million people are low-income subsistence farmers, miners or small artisans. The country's average annual per capita income is about one thousand dollars, compared to more than 34 thousand dollars in the United States.

The country exports soybeans, zinc, silver, gold, and other metals, wood, and natural gas.

Hit in the 1980s by recession and high inflation, the government introduced austerity measures similar to those now being implemented, a new currency and tax reforms. Those moves partly succeeded in limiting inflation and restoring foreign investors' confidence.

But while the policy changes, implemented in exchange for World Bank and IMF support, succeeded in lowering inflation, activists charge that the results also included greater inequality of wealth and heightened social instability and unrest.