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.(###)