Background Notes: Bolivia

PA/PC Source: Office of Public Communication, Bureau of Public Affairs Date: Sep 28, 19919/28/91 Category: Country Data Region: South America Country: Bolivia Subject: Military Affairs, Cultural Exchange, Travel, Trade/Economics, History, International Organizations [TEXT] Official Name: Republic of Bolivia

PROFILE

Geography
Area: 1.1 million sq. km. (425,000 sq. mi.); about the size of Texas and California. Cities: Capital--La Paz (administrative--pop. 976,000); Sucre (judicial--105,000). Other cities--Santa Cruz (529,000), Cochabamba (403,000). Terrain: Major geographic zones: High plateau (altiplano), temperate and semitropical valleys, and the tropical lowlands. Climate: Varies with altitude--from humid and tropical to semi-arid and cold.
People
Nationality: Noun and adjective--Bolivian(s). Population: 7.3 million (1990 est.). Annual growth rate: 2.6%. Ethnic groups: 60% indigenous (primarily Aymara and Quechua), 20-30% mestizo (mixed European and Indian ancestry), 5-15% European. Religions: Predominantly Roman Catholic; some Protestant. Languages: Spanish (official); Quechua, Aymara. Education: Years compulsory-- ages 7-14. Health: Infant mortality rate--(1990): 102/1,000. Work force: 1.8 million. Agriculture--47%. Industry and commerce--16%. Services (including government)--36%.
Government
Type: Republic. Independence: August 6, 1825. Constitution: 1967. Branches: Executive--president and cabinet. Legislative--bicameral Congress. Judicial--five levels of jurisdiction, headed by Supreme Court. Subdivisions: Nine departments. Major political parties: Nationalist Revolutionary Movement (MNR), Nationalist Democratic Action (ADN), Movement of the Revolutionary Left (MIR), Conscience of the Fatherland (CONDEPA). Suffrage: Universal adult. Central government budget: Receipts--29% of 1989 GDP. Flag: Red, yellow, and green horizontal bands from top to bottom; coat of arms is centered on the yellow band.
Economy
GDP (1990): $5.6 billion. Annual growth rate (1990): 2.6%. Per capita income (1989): $760. Inflation rate (1990): 18%. Natural resources: Tin, natural gas, petroleum, zinc, tungsten, antimony, silver, lead, gold, iron, (also lithium, potassium and borax are not yet exploited). Agriculture (21% of GDP): Products--potatoes, corn, sugarcane, rice, wheat, coffee, beef, barley, and quinine. Arable land--27%. Industry: Types--manufacturing, commerce, extraction of minerals and hydrocarbons, textiles, food processing, chemicals, plastics, mineral smelting and petroleum refining. Trade (1990): Exports--$926 million. Products--natural gas, tin, zinc, coffee, silver, tungsten. Major markets--Latin American Integration Association (ALADI), US, European Community. Imports- -$716 million. Products--machinery and transportation equipment, consumer products, construction and mining equipment. Major suppliers--ALADI, US, Japan, Brazil. Official exchange rate (December 1990): 3.37 Bolivianos=US$1. Fiscal year: Calendar year. US assistance (FY 1990): $88.1 million (economic), $48.4 million (military), $15.7 million (law enforcement).
International Affiliations
UN and some specialized agencies and related programs, Organization of American States (OAS), Andean Pact, INTELSAT, Non-Aligned Movement, International Parliamentary Union, Latin American Integration Association (ALADI), General Agreement on Tariffs and Trade (GATT), Rio Treaty.

PEOPLE AND CULTURE

Bolivia's ethnic distribution is estimated to be 60% indigenous Aymara and Quechua peoples, 25-30% mixed Indian and Spanish (mestizo), and 5-15% European (primarily Spanish). Among the limited number of foreign residents are about 700 Japanese and Okinawan families, who emigrated to Bolivia after World War II and settled in the Santa Cruz area. A small Mennonite community resides in the same region. Bolivia is the least developed country in South America. About two-thirds of its people, many of whom are subsistence farmers, live in poverty. Population density ranges from less than one person per square kilometer in the southeastern plains to about 10 per square km. (25 per sq. mi.) in the central highlands. Bolivia's high mortality rate prevents the annual population growth rate from exceeding 2.8%. La Paz is the highest capital city in the world--3,600 meters (11,800 ft.) above sea level. The fastest growing major city is Santa Cruz, the commercial and industrial hub of the eastern lowlands. Almost 95% of Bolivians are Roman Catholic, although a number of Protestant denominations are also well represented. Many Indian communities interweave pre-Columbian and Christian symbols in their religious practices. Approximately half of the people speak Spanish as their first language. About 90% of the children attend primary school but often for a year or less. The literacy rate is low in many rural areas. The cultural development of what is present-day Bolivia is divided into three distinct periods: the pre-Columbian, the colonial, and the republican. From the pre-Columbian period, there are important archeological ruins, gold and silver ornaments, and ceramics and weavings of the great Aymara civilization at Tiahuanacu. The later Inca conquest of the highlands left important ruins at Samaipata and Incallajta. The Quechua (or Inca) culture originated a beautiful style in ceramics and weavings that has been preserved. The Spanish brought their own tradition of religious art which, in the hands of local Indian or mestizo builders and artisans, developed into a rich and distinctive style of architecture, painting, and sculpture known as "Mestizo Baroque." The colonial period produced not only the paintings of Perez de Holguin, Flores, Bitti, and others but also the works of skilled, but unknown, stonecutters, goldsmiths, and silversmiths. In recent years, an important body of baroque music of the period was discovered. Bolivian artists of stature in the 20th century include Guzman de Rojas, Arturo Borda, and Maria Luisa Pacheco. Marina Nunez del Prado is an internationally known sculptor. Bolivia has rich folklore. Its regional folk music is distinctive and varied. The devil dances at the annual carnival of Oruro are one of the great folkloric events of South America as is the less well-known carnival at Tarabuco.

HISTORY AND POLITICS

Man probably arrived in the Andean region about 20,000 BC. Between 100 BC and AD 900, an advanced culture developed at the southern end of Lake Titicaca. This culture, centered around Tiahuanacu, developed advanced agricultural and irrigation techniques. It spread to surrounding areas and formed the Aymara empire. In about 1450, the Quechua-speaking Incas entered the area of modern highland Bolivia and added it to their empire. They controlled the area until the Spanish conquest in 1525. During most of the Spanish colonial period, this territory was called "Upper Peru" or "Charcas" and was governed from Lima. The principal cities were Chuquisaca (modern Sucre) and Potosi. Bolivian silver mines produced much of the Spanish empire's wealth, and Potosi, site of the famed "cerro rico" (rich mountain), was for many years the largest city in the Western Hemisphere. As Spanish royal authority weakened during the Napoleonic wars, sentiment against colonial rule grew. Independence was proclaimed in 1809, but 16 years of struggle followed before the establishment of the republic, named for Simon Bolivar, on August 6, 1825. Independence did not bring stability. For nearly 60 years, coups and short-lived constitutions dominated Bolivian politics. Bolivia's weakness was demonstrated during the War of the Pacific (1879-84) when it lost its seacoast and the adjoining rich nitrate fields to Chile. An increase in the world price of silver brought Bolivia a measure of relative prosperity and political stability in the late 1800s. During the early part of the 20th century, tin replaced silver as the country's most important source of wealth. Political parties that reflected the interests of the mine owners ruled until the 1930s with few outbreaks of violence. The lot of the Indians, who constituted most of the population, remained deplorable. Forced to work under primitive conditions in the mines and in nearly feudal status on large estates, they were denied access to education, economic opportunity, or political participation. Bolivia's defeat by Paraguay in the Chaco War (1932-35) marked a turning point. Great loss of life and territory discredited the traditional ruling classes, while service in the army produced stirrings of political awareness among the Indians. From the end of the Chaco War until the 1952 revolution, the emergence of contending ideologies and the demands of new groups convulsed Bolivian politics. The Nationalist Revolutionary Movement (MNR) emerged from the ferment as a broadly based party. Denied its victory in the 1951 presidential elections, the MNR lead the successful 1952 revolution. Under President Victor Paz Estenssoro, the MNR introduced universal adult suffrage, carried out a sweeping land reform, promoted rural education, and nationalized the country's largest tin mines. Twelve years of tumultuous rule left the MNR divided, and in 1964, a military junta overthrew President Paz at the outset of his third term. In 1969, the death of President Rene Barrientos, a former member of the junta elected president in 1966, led to a succession of weak governments. Alarmed by public disorder, the military, the MNR, and others installed Col. (later general) Hugo Banzer Suarez as president in 1971. Banzer ruled with MNR support from 1971 to 1974. Then, impatient with schisms in the coalition, he replaced civilians with members of the armed forces and suspended political activities. The economy grew impressively during Banzer's presidency, but demands for greater political freedom undercut his support. His call for elections in 1978 plunged Bolivia into turmoil once again. Elections in 1978, 1979, and 1980 were inconclusive and marked by fraud. There were coups, counter-coups, and caretaker governments. In 1980, Gen. Luis Garcia Meza carried out a ruthless and violent coup. His government was notorious for human rights abuses, narcotics trafficking, and economic mismanagement. After a military rebellion forced out Garcia Meza in 1981, three other military governments in 14 months struggled with Bolivia's growing problems. Unrest forced the military to convoke the Congress elected in 1980 and allow it to choose a new chief executive. In October 1982--22 years after the end of his first term of office (1956-60)--Hernan Siles Zuazo again became president. Severe social tension, exacerbated by economic mismanagement and weak leadership, forced him to call early elections and relinquish power a year before the end of his constitutional term. In the 1985 elections, the Nationalist Democratic Action Party (ADN) of Gen. Banzer won a plurality of the popular vote, followed by Victor Paz Estenssoro's MNR and former Vice President Jaime Paz Zamora's Movement of the Revolutionary Left (MIR). However, in the congressional run-off, the MIR sided with MNR, and Paz Estenssoro was chosen for a fourth term as president. When Paz Estenssoro took office in 1985, he faced a staggering economic crisis. Economic output and exports had been declining for several years. Hyperinflation had reached an annual rate of 24,000%. There was widespread social unrest, chronic strikes, and unfettered operation by drug dealers. In 4 years, his administration achieved an economic and social stability that remains the envy of Bolivia's neighbors. The military stayed out of politics, and all major political parties publicly and institutionally committed themselves to democracy. Human rights violations, which badly tainted some governments earlier in the decade, were not a problem. However, Paz Estenssoro's remarkable accomplishments were not won without sacrifice. The collapse of tin prices in October 1985, coming just as the government was moving to nationalize its mismanaged mining company, forced the government to lay off over 20,000 miners. The highly successful shock treatment that restored Bolivia's financial system also led to unrest and temporary social dislocation in some cases. His government's achievements remain fragile in the face of Bolivia's poverty and the country's history of political instability, but they are no less remarkable for that. President Jaime Paz Zamora took office August 6, 1989, following an electoral contest whose results were only determined early in the morning of the previous day. Election results were: MNR 23.1%; ADN 22.7%; MIR 19.6%. (Paz finished third in the May 7, 1989, elections.) Bolivia's constitution, however, mandates congressional determination of the victor in presidential races where no candidate obtains a majority vote. In negotiations preceding congressional voting, Paz hammered out a deal with the second place finisher, Gen. Hugo Banzer, to share the leadership. Paz' center-left MIR assumed the presidency and half the ministries. Banzer's center-right ADN gained control of the National Political Council (CONAP), in addition to its ministries. The 1989 elections were the cleanest in recent Bolivian history. Nonetheless, the MNR asserted that electoral court invalidation of key voting tables gave the ADN/MIR three of its congressional seats. Paz Zamora has been a moderate president who, despite his Marxist origins and his self-proclaimed "leftist nationalism," has learned from experience that pragmatic approaches to problems are those most likely to bring solutions. Having seen Bolivia experience the hyper-inflation (24,000%) of the Siles Zuazo administration as vice president, he now supports orthodox economics. Paz has taken a hard line against domestic terrorism, personally ordering the December 1990 attack on terrorists of the Nestor Paz Zamora Committee (named after his brother who died in the 1970 Teoponte insurgency). The terrorists killed their kidnap victim when surrounded by the police. The police then killed three terrorists and arrested three others.

GOVERNMENT

The constitution promulgated in February 1967 provides for traditional executive, legislative, and judicial powers. The traditionally strong executive, however, tends to overshadow the Congress, whose role is generally limited to debating and approving legislation initiated by the executive. The judiciary consists of the Supreme Court and departmental and lower courts. Bolivia's nine departments have limited autonomy, although departmental officials have been appointed by the central government for many years. As a result of the July 14, 1985, elections, Bolivian cities and towns are now governed by elected majors and councils for the first time since 1951.
Principal Government Officials
President--Jaime PAZ Zamora Vice President--Luis OSSIO Sanjines Minister of Foreign Affairs--Carlos ITURRALDE Ambassador to the US--Jorge CRESPO Velasco Ambassador to the UN--Hugo NAVAJAS Mogro Ambassador to the OAS--Mario ROLON Anaya Bolivia maintains an embassy in the US at 3014 Massachusetts Ave., NW, Washington, DC 20008 (tel. 202-483- 4410), consulates in Los Angeles, San Francisco, Miami, New Orleans, New York, and honorary consulates in Atlanta, Chicago, Cincinnati, Houston, Seattle, St. Louis, and San Juan.

ECONOMY

Real economic growth resumed in 1987 after 5 years of decline. While the annual output of goods and services has grown in real terms between 2% and 3% starting in 1987, it has not yet regained the level achieved in 1981. GDP is estimated to have grown another 2.6% in 1990, with inflation increasing to around 18% for the year. Economic growth has been mainly from new investment by the private sector which has benefited by the elimination of price controls, import permits, and currency controls. The Bolivian government successfully completed in 1990 the second year of a 3-year International Monetary Fund (IMF) "Economic Structural Adjustment Facility Program" and managed to keep the budget deficit to less than 3.5% of GDP. Agriculture still accounts for about 21% of GDP and employs almost half of the 1.8 million people in the labor force. Total agricultural production declined slightly in 1989 and 1990 due to drought, but cultivation of wheat, barley, cotton, sunflower, and other non-traditional crops all expanded in the Santa Cruz area. The extraction of minerals and hydrocarbons accounts for more than 15% of GDP, followed by manufacturing and commerce, each with 13%. New contracts for oil exploration by several foreign firms should spur the economy, especially if one of them discovers oil (as opposed to gas) so that oil exports can be renewed. Exploitation of Bolivia's large salt flats of the altiplano should also increase export earnings.
External Financing
The government of Bolivia remains heavily dependent on foreign assistance to finance development projects. As of September 1990, the government owed over $3.6 billion to its foreign creditors. However, most of those loans have very low interest rates with long repayment schedules. The government owed more than $1.6 billion to the multilateral development banks and was servicing those debts on schedule. It owed almost $2 billion to other governments, but those governments agreed, at the March 1990 Paris Club meeting, to reschedule all of the bilateral debt payments falling due in 1990 and 1991 under the concessional "Toronto terms." Most of the payments that should have been made in 1990 and 1991 instead will be paid in installments between the years 2005-15. The USG reduced 80% of Bolivia's bilateral debt on food assistance loans and all the debt ($341 million owed to the US Agency for International Development (USAID). France and the Netherlands also have canceled one-third of the debt owed by Bolivia. The government stopped making payments on its debts to foreign banks in the early 1980s. In 1987, those banks agreed to allow the government to buy back its commercial debt claims at 11 cents on the dollar. Through this procedure and the exchange of investment bonds for debt claims, the Bolivian government was able to reduce its commercial debt from $678 million at the end of 1987 to $209 million by September 1990. The government reduced its debt further through a debt swap with Argentina and by renegotiating its debt with Brazil. Debt payments are a burden, but every year since 1985, disbursements of new loans have exceeded repayments. In 1989, the government paid $221 million on its external debts, almost 28% of registered export earnings, but received $327 million of new loans plus a significant amount of grant assistance.
Foreign Trade
Registered exports exceeded $1 billion in 1980 and then declined for 7 years in a row reflecting the collapse of the economy and falling mineral prices. From a low of $570 million in 1987, exports have grown steadily and exceeded $900 million in 1990. Registered imports fell from over $900 million in 1981 to $490 million in 1984. Imports have grown slowly, ($716 million in 1990) leaving Bolivia with a positive trade balance in 1989 and 1990. The IMF estimated that an additional $250 million of goods were smuggled into Bolivia in 1989. This was probably offset by smuggled exports of coca paste, cocaine, and gold. Up until the early 1970s, most of Bolivia's trade was with the United States. As Bolivia's economy has diversified and opened during the past two decades, trade with other countries has grown sharply. The United States remained Bolivia's major supplier in 1990 providing $139 million, or 19%, of Bolivia's imports. The United States was the second largest market for Bolivia, buying $203 million, or 22%, of Bolivia's exports. Bolivia's major exports to the United States are tin, gold jewelry, and wood products. Its major imports from the United States are wheat, flour, motor vehicles, and all sorts of machinery.

DEFENSE

Bolivia's armed forces have played a major and often controversial role in the country's history. Defeated in the 1952 revolution, the army was at first drastically reduced in size and influence. Later, however, the MNR rebuilt the armed forces to counter the power of unruly military leaders. The corrupt, albeit short-lived, tenure of Gen. Luis Garcia Meza from 1980 to 1981 did much to discredit military rule. The armed forces adhered strictly to their constitutional role during the term of elected President Hernan Siles Zuazo (1982-85) and supported fully the constitutional transition to elected presidents, Dr. Paz Estenssoro (1985) and Jaime Paz Zamora (1989). Despite the country's occasionally uncertain political climate, Bolivia's military in recent years has contributed responsibly to strengthening the country's still fragile democrac. Estimates of Bolivian armed forces troop strength are 22,000 army, 4,000 air force, and 4,000 navy, which patrols Lake Titicaca (the world's highest navigable lake) and various rivers. In addition to its mission of external defense and internal security, the military participates in civic action programs and provides transportation services. Bolivia is a signatory of the Inter- American Treaty of Reciprocal Assistance (Rio Treaty), an agreement among the American states for mutual support against aggression.

FOREIGN RELATIONS

Bolivia traditionally has maintained normal diplomatic relations with all hemispheric states except Chile. Relations with Chile, strained since Bolivia's defeat in the War of the Pacific (1879-83) and its loss of the coastal province of Atacama, were severed from 1962 to 1975 in a dispute over the use of the waters of the Lauca River. Relations were resumed in 1975 but broken again in 1978 over the inability of the two countries to reach an agreement that might have granted Bolivia a sovereign access to the sea. In the 1960s, relations with Cuba were broken following Castro's rise to power but resumed under the Paz Estenssoro administration in 1985. During the Garcia Meza regime, Bolivia's relations with many countries, including the United States, were strained. Principal concerns focused on the narcotics problem, human rights abuses, and interruption of the democratic process. The restoration of constitutional democracy in 1982 alleviated some of these concerns and greatly improved Bolivia's diplomatic standing. Since 1970, Bolivia has expanded its links with the Soviet Union, various East European nations, and the People's Republic of China. (Note: Taiwan maintains a trade/commercial office in La Paz.) These include diplomatic relations, trade, cultural exchanges, and limited economic assistance. President Paz is an active participant in the formulation and execution of Bolivia's foreign policy. He has shown interest in improving Bolivia's historically poor relationship with Chile.

US-BOLIVIAN RELATIONS

The normally friendly relations between the United States and Bolivia were interrupted during the Garcia Meza regime. Following the unusually violent and repressive coup of July 17, 1980, the United States withdrew its ambassador, cut off security assistance and arms sales, and suspended a substantial portion of economic assistance. In November 1981, after Garcia Meza's replacement by a more moderate military leader, the US ambassador returned to La Paz. US economic and security assistance programs resumed after Bolivia's return to constitutional democracy. The United States has a longstanding aid relationship with Bolivia. Between 1945 and 1990, economic assistance totaled more than $1.5 billion; grants made up almost half this sum. The current major issue in bilateral relations is that Bolivia produces 30-40% of the world's coca and is second only to Colombia in production of cocaine. For generations, the traditional practice of chewing coca leaves served to alleviate the rigors of life on the altiplano, but during the past decades, an increasing percentage of coca cultivation has been diverted to the illegal market for the production of cocaine. The corruption and disregard for law that accompanied the growth of the illegal trade have made narcotics trafficking not only a major domestic but an international problem for Bolivia. President Bush's Andean strategy, announced in February 1990, has started cooperative programs in Bolivia and with neighbors Peru and Colombia to help combat the menace of narcotics production and trafficking.
Principal US Officials
Ambassador--Charles R. Bowers Deputy Chief of Mission--Marilyn McAfee Political Counselor--Stephen G. McFarland Economic Counselor--J. Michael Shelton Consul General--Kevin Herbert Director, USAID Mission--Carl Leonard Public Affairs Officer, USIS--Robert J. Callahan Defense Attache--Col. David Hunt (USAF) Commander, US Military Group--Col. James D. Hallums (USA) The US embassy is located in the Banco Popular del Peru Building, corner of Calles Mercado y Colon, La Paz (tel. 591-2- 350251). There are consular agents in the cities of Santa Cruz (tel. 591-3-330725) and Cochabamba (tel. 591-42-43216). Published by the United States Department of State -- Bureau of Public Affairs -- Office of Public Communication -- Washington, DC --Series Editor: Peter Knecht--Department of State Publication Background Notes Series. This material is in the public domain and may be reprinted without permission; citation of this source is appreciated. For sale by the Superintendent of Documents, US Government Printing Office, Washington, DC 20402.(###)