Exclusively in the new print issue of CounterPunch
SHOCK AND AWE OVER GAZA — Jonathan Cook reports from the West Bank on How the Media and Human Rights Groups Cover for Israel’s War Crimes; Jeffrey St. Clair on Why Israel is Losing; Nick Alexandrov on Honduras Five Years After the Coup; Joshua Frank on California’s Water Crisis; Ismael Hossein-Zadeh on Finance Capital and Inequality; Kathy Deacon on The Center for the Whole Person; Kim Nicolini on the Aesthetics of Jim Jarmusch. PLUS: Mike Whitney on the Faltering Economic Recovery; Chris Floyd on Being Trapped in a Mad World; and Kristin Kolb on Cancer Without Melodrama.
A Bizarre Beginning in Bolivia

Inside Evo Morales’s Cabinet

by JAMES PETRAS

Major trade union federations, the biggest neighborhood social movements (in the combative city of El Alto) and rural landless movements are expressing consternation and hostility over several of newly elected President Morales’ cabinet appointments and their initial policy priorities, which go counter to the campaign promises of candidate Morales.

One of the worst predictors of most governments’ policies is their campaign rhetoric. This is especially the case of presidential candidates moving from the left toward the center. Much more reliable indicators of the actual policies of a newly elected regime come in the form of the Cabinet ministers appointed to key ministries.

President Morales has named sixteen Cabinet ministers, of which 7 have been called into question by the mass movements which brought Morales to the presidency. While overseas commentators and publicists praise the presence of several "Indians" and four women in the Cabinet, the popular movements in Bolivia are dismayed by the policies and past trajectories of nearly half of the new ministers. Salvador Ric Riera, a conservative Santa Cruz businessman and reputed multi-millionaire, accused by the local trade union leaders of money laundering and other shady activities, has been appointed Minister of Public Works and Services. In all previous regimes, Public Works was one of the most notorious for its corruption, especially in allocating public highway construction contracts. Given the importance that Morales has given to fighting corruption, most activists were appalled by the appointment of Riera, who was a last-minute financial contributor to Morales’ campaign. His appointment is seen as a concession to a section of the Santa Cruz oligarchy.

The key Ministry of Mines was handed to Walter Villarroel who defected from the rightwing UCS to jump on the Morales bandwagon. His appointment was denounced by mining leader Cesar Lugo because of Villarroel’s previous stint in government in which he helped to dismantle the Bolivian Mining Corporation (COMOBOL) and for privatizing one of the biggest iron mines in the world. He has also been attacked for supporting previous neo-liberal President Carlos Mesa and promoting private co-operatives rather than strengthening state enterprises under worker control.

The Ministry of Defense was assigned to Walker San Miguel Rodriguez, a lawyer and former director of Lloyd Bolivian Airlines (LBA), accused of covering up the illegal privatization of the former state airlines. Currently the Pilots Association has asked the state to intervene in the firm to investigate crimes and irregularities. The new Minister of Defense is a long-time member of the right-wing MNR and a former supporter of ex-President Sanchez de Losada, the President who massacred scores of protestors in 2003 before he fled into exile to the US. Hardly an "incorruptible" and proper selection to head up the military!

The Teachers Confederation has rejected Morales’ appointment of Felix Patzi Paco as Minister of Education because he has no background in the profession, has no knowledge of the field and is clearly unqualified to confront the current crisis in education.

The Labor Confederation (COB) has strongly criticized the appointment of Luis Alberto Arce to head the Finance Ministry. He has long been connected with international financial institutions such as the IMF, World Bank and Inter-American Development Bank. He is a long-term supporter of their regressive structural adjustment programs. The Finance Ministry is responsible for establishing the economic parameters for the rest of the ministries, including investments, revenues and social expenditures.

The Foreign Ministry will be run by a former City Councilor for El Alto, David Choquehuanca. He has been a close collaborator of corrupt neo-liberal ex-President Jaime Paz Zamora. He can defend his free market policies in both Spanish and Aymara.

Evo Morales’ appointment of Abel Mamani to the Ministry of Water was strongly contested by the leaders of the Federation of Neighborhood Councils (FEJUVE) in El Alto, the key organization that ignited the insurrections that toppled two former neo-liberal presidents and gave Morales a resounding 70 per cent majority in El Alto. Morales and Mamani acted without consulting the popular assemblies of FEJUVE despite the centrality of the water issue in El Alto. Moreover, Mamani, a former leader of FEJUVE was criticized for mishandling funds and failing to pursue the universal demand for nationalization of foreign-owned water distribution rights in El Alto. The neighborhood groups were less impressed by Mamani’s facility in speaking Quechua than by his lack of militancy and his abundant political opportunism.

The social movements praised Morales’ appointments to Hydrocarbons (Andre Soliz Rada) who promises to promote the nationalization of gas and petroleum, Justice (Casmira Rodriguez Romerom) a leader in the Domestic Workers Union, Labor (Alex Galvez Mamani) a former leader in the Factory Workers Confederation. Regarding the rest of the Ministers, there is neither serious opposition nor praise for the moment. However it should be noted that Soliz Rada of Hydrocarbons was a former leader of the center-right CONDEPA party which co-habitated with former neo-liberal presidents, even as he polemicized against the illegal sell-off of state petroleum resources. The head of Peasant and Agrarian Affairs is a Santa Cruz intellectual with no ties to the major peasant movements in the Andes or Cochabamba. The key economic posts are strongly tilted toward technocrats and liberals while the ‘social ministries’ are in the hands of leftists. While this gives the impression of diversity of representation, in fact it is the economic ministry (Finance), which will establish the economic parameters for budget allocations, which will profoundly influence any social changes.

In his inaugural address to Congress Evo Morales was categorical in his defense of big plantation owners and his opposition to any redistribution of fertile and productive lands. "I want to tell you, distinguished Congress people, my policy toward land policy. I want to tell you that productive land, whether it is producing or lends itself to a social economic use, will be respected, whether it is 1000 hectares, 2000 hectares, 3000 or 5000 hectares. But those lands which are used for speculative purposes will revert to the state in order to redistribute the land to the people without land" (January 22, 2006). Morales also condemned slavery in the Eastern regions of Bolivia.

Morales’ exclusion of all the biggest landholdings, plantations and latifundios fulfills his pre-election promises to the wealthy Santa Cruz agro-business oligarchs, but it is a repudiation of his promises of agrarian reform to the landless and peasant movements. Government-promoted land settlements in remote public lands with precarious soil, distant from markets, transport and credit facilities will doom recipients to failure, as has occurred in the past.

In his address to Congress Morales highlighted "austerity" in government salaries for legislators and himself. However personal morality was harnessed to austerity in the state budget–a position clearly articulated by his newly appointed Finance Minister Luis Arce. As soon as Arce took office, he convoked a meeting of the heads of the Central Bank, the Tax and Revenue Office, the Planning and Development Ministries and others to announce that Bolivia would follow four ‘axes’ of policy: maintaining macro-economic stability, generating a new tax-paying consciousness, encouraging consumers to buy Bolivian-made products and encourage the use of Bolivian currency instead of the dollar.

Arce’s defense of the IMF-backed macro-economic stability pact is a guarantee that government-sponsored social programs will be severely limited, that no major or minor structural changes (expropriations of land, factories, banks and mines) will be undertaken. Arce’s four priorities exclude any redistributive programs and favor trivial measures, which in absolute terms will have zero impact in lessening inequalities or reducing poverty and–at best — only minimally increasing social services.

Encouraging consumers to "buy Bolivian" has been tried before and failed because contraband provides a decent livelihood in the absence of large-scale publicly funded job programs (which is unthinkable with Arce’s fiscal austerity strategy). Moreover without any substantial increase in the $50 dollar a month minimum wage, consumers will prefer cheaper contraband Chinese goods to local manufactures goods. Finally given the enormous army of ‘informal’ street venders who depend on selling cheap imports, anything short of public investment in alternative employment will doom a "nationalist" consumer campaign. The new Aymara-speaking Foreign Minister, David Choquehuanca, hasd affirmed that Bolivia is open to discussing a free trade agreement with the US , something previous neo-liberal regime were not able to advance. As he took over at the Foreign Ministry, he declared "We do not reject entering the Free Trade Area of the Americas".

He elaborated further "We are going to have relations with everyone, we have to talk about free trade agreements, with various nations and analyze the situation with the Andean Community, the Southern Cone Market (MERCOSUR), blocs with which Bolivia has commercial accords." He went on to cite Morales’ overseas trip to several Latin American and European countries and South Africa prior to his taking office. "When Evo traveled abroad he said he learned how to do good business". Indeed Evo’s trip abroad and his conversations with the US Ambassador to Bolivia ( David Greenlee) and US Assistant Secretary of State for Western Hemispheric Affairs, (Thomas Shannon) , were essentially to assure Europe and the US of his economic orthodoxy, to encourage more and bigger investments in the mineral sector and to secure their certification of good conduct.

While Morales’ key cabinet appointments may appear to overseas observers as "contradictory" to his campaign rhetoric, and his enthusiastic support among Indian communities, it is in reality compatible with the less public side of his political wheeling and dealing with established economic and political elites prior to and during his election campaign.

President Morales has opposed many of the demands of the mass social movements for the past several years, in fact since he first ran for the presidency in 2002. He did not support nor participate in the popular insurrectionary movements which overthrew neo-liberal President Sanchez de Losada in October 2003, and the popular uprising, which ousted President Carlos Mesa in May-June 2005. He supported President Mesa’s 2004 referendum in increasing the royalty payments on gas and petroleum, which explicitly excluded nationalization. During the electoral campaign Morales expressed support for "nationalization" in mass meetings, while assuring foreign oil and gas companies that he would guarantee their assets, investments and profits on the condition that they increased their royalty payments. On his trip to Brazil, Argentina, Spain and France he reaffirmed his commitment to protecting existing investments in petroleum and gas, and went further asking them to increase and expand their investments in mineral exploitation and processing. His appointment of the liberal Walter Villarroel to the Mining Ministry, over the vehement objections and threats of job action from the mining unions (which brought him to power) is indicative of his determination to pursue an orthodox foreign investment-based mineral exploitation model.

Carlos Villegas, Minister of Sustainable Development and Development Planning, upon taking office stated that Repsol (the Spanish MNC) and Total (French Gas Giant) "had signaled they were willing to re-negotiate their contracts to give a greater share of profits to Bolivia" (Financial Times 1/23/2006). "Nationalization" according to the Morales administration is little more than an increase in tax revenue and nothing more. Given Bolivia’s commitment to "maintaining macro-economic stability" that means essentially that more new tax revenues will continue to flow into foreign and public debt payments, all incurred by previous corrupt regimes and very little of which was ever invested in productive activities.

Morales’ overseas trip to Cuba and Venezuela and the promise of socio-economic assistance served to provide him with ‘leftist’ legitimacy. His travels to Spain, France, Holland, Belgium, South Africa and Brazil to discuss political and economic agreements will lock Bolivia into its conventional role as energy and mineral exporter. More significant than his much-publicized travels abroad was his meeting in La Paz with US Ambassador Greenlee at the Ambassador’s residence prior to his travel to Cuba and Venezuela. While no details of the conversation were released it is understood by both sides that no significant conflicts surfaced. Vice-President Garcia Linera announced the meeting was cordial and the basis for future agreements.

One of the most lucrative mineral exploitation projects confronting the Morales regime is the publicly owned iron and manganese mines of Mutun in Santa Cruz, with 40 billions tons of iron deposits. The value of the raw iron is estimated by Bolivian experts at $400 billion dollars at current prices; converted to steel or iron construction rods, it is valued at $30 trillion dollars, less the cost of production and investment. Mutun is up for bidding, with several multi-nationals competing. The bidding prior to Morales taking office was based on excavating and exporting the raw iron ores with no intention of adding value through conversion to steel. In order for the Morales regime to "industrialize" raw materials to add value and increase national revenues, it would require channeling natural gas toward fueling the steel refineries. That in turn requires nationalizing gas production because the Brazilian multi-national, Petrobras, would certainly not co-operate, as the returns on sale within Bolivia would be far below its prices in Sao Paulo.

Morales’ claim to want to "industrialize" raw material production comes into direct conflict with his policy of guaranteeing foreign ownership of hydrocarbon resources in exchange for higher tax rates. Morales uses a double discourse: his opposition to "neo-liberalism" is contradicted by his support for orthodox "stabilization of macro-economic policies"; his defense of budgetary austerity and his Finance Minister’s refusal to triple or even raise the minimum wage ("a raise is being studied to see if it is compatible with stable macro-economic policies" according to the Finance Minister) is in contradiction to his promise to reduce poverty; his guarantees to the owners of vast plantations is in contradiction to the demands of millions of landless and subsistence peasants and his guarantees to the export-oriented multinationals’ control of hydrocarbons conflicts with national demands to harness energy to local consumption and industrialization.

Sooner rather than later, polarized differences of interest between Morales’ foreign and local business allies and oligarchs and the masses who struggled and sacrificed to elect him to power will lead to a new round of confrontations and conflicts. Morales is riding two horses going in opposite directions. The photogenic traditional Andean rituals, the color and pageantry of the electoral inauguration will quickly fade in the face of the continuing poverty, inequality and gross concentrations of wealth. Over time a profound disenchantment will spread with a President who spoke to the people but works for the rich, including the foreign rich. For now the Bolivian Workers Confederation (Central Obrera Boliviana) and the leaders of all the major mining, teachers and neighborhood movements have sent a clear and forthright message to all their affiliates to prepare for direct action if Morales reneges on three central demands of the people: nationalization of gas and petroleum and expulsion of the multi-national petroleum companies; the expropriation of the large landed estates and the redistribution of 25 million acres of land to the landless peasants; and an immediate raise of the national minimum wage. The great majority of movement leaders and activists (Indians and Mestizos) are not impressed by the Indian rituals and the cultural theater organized by Morales entourage. They are prepared to re-launch mass mobilizations when it become clear to the poor that Morales has embraced the agenda of the bankers, trans-national corporations and agro-business owners.

Bolivia is not Brazil nor Argentina nor Uruguay nor Chile where the center-left regimes were in control of the trade unions and sectors of the social movements. The most important trade unions are totally independent of the state, Evo’s party, the Movement to Socialist (or MAS) and his cabinet. The transition from mass peasant leader to accommodating statesman for the multi-national corporations will not be easy or a smooth operation: more likely Evo will soon face the challenges and political instability which sent his two predecessors into early retirement.

JAMES PETRAS, a former Professor of Sociology at Binghamton University, New York, owns a 50 year membership in the class struggle, is an adviser to the landless and jobless in brazil and argentina and is co-author of Globalization Unmasked (Zed). His new book with Henry Veltmeyer, Social Movements and the State: Brazil, Ecuador, Bolivia and Argentina, will be published in October 2005. He can be reached at: jpetras@binghamton.edu