U.S. DEPARTMENT OF STATE
BACKGROUND NOTES:  BOLIVIA
PUBLISHED BY THE BUREAU OF PUBLIC AFFAIRS
NOVEMBER 1994

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. 
713,400); Sucre (judicial--131,800).  Other cities--Santa Cruz 
(697,000), Cochabamba (407,800).  
Terrain:  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:  6.95 million (1992 census).  Annual growth rate:  2%.  
Ethnic groups:  56% indigenous (primarily Aymara and Quechua) and mixed, 
42% European.  
Religions:  Predominantly Roman Catholic.  
Languages:  Spanish (official); Quechua, Aymara.  
Education:  Years compulsory--ages 7-14.  Literacy--20%.  
Health:  Infant mortality rate (1992)--92/1,000.  
Work force:  3.6 million.  Industry and commerce--22%.  Services 
(including government)--67%. 

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), Free Bolivia Movement 
(MBL), Civic Solidarity Union (UCS).
Suffrage:  Universal adult.

Economy 
GDP (1993):  $7.1 billion.  
Annual growth rate (1993):  4%.  
Per capita income (1993):  $1,017.  
Natural resources:  Tin, natural gas, petroleum, zinc, tungsten, 
antimony, silver, lead, gold, iron (lithium, potassium, and borax are 
not yet exploited).
Agriculture (17% 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 (1993):  Exports--$630 million.  Products--natural gas, tin, zinc, 
coffee, silver, tungsten.  Major markets--Latin American Integration 
Association (ALADI), U.S., European Union.  Imports--$1.1 billion.  
Products--machinery and transportation equipment, consumer products, 
construction and mining equipment.  Major suppliers--ALADI, U.S., Japan, 
Brazil.
Official exchange rate:  4.67 Bolivianos=U.S.$1.


PEOPLE

Bolivia's ethnic distribution is estimated to be 56% indigenous Aymara 
and Quechua peoples and mestizo, and 42% 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.  A number of immigrants recently have come from the 
former Yugoslavia.

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%.

La Paz is at the highest elevation of the world's capital cities--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 represented.  Many Indian communities 
interweave pre-Columbian and Christian symbols in their religious 
practices.  About 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:  pre-Columbian, colonial, and republican.  The 
pre-Columbian period produced 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 and 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.  An important body of baroque music of the period was 
discovered recently.

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 lesser known carnival 
at Tarabuco. 


HISTORY

People probably have been inhabiting the Andean region since 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 complex 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 (1879-83), 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.

Living conditions 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 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.  In 1964, a 
military junta overthrew President Paz Estenssoro at the outset of his 
third term.  The 1969 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 Gen.) 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 1985 elections, the Nationalist Democratic Action Party (ADN) of Gen. 
Banzer won a plurality of the popular vote, followed by former President 
Paz Estenssoro's MNR and former Vice President Jaime Paz Zamora's 
Movement of the Revolutionary Left (MIR).  But 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%.  Social 
unrest, chronic strikes, and unfettered operation by drug dealers were 
widespread.

In four years, Paz Estenssoro's 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 some unrest and temporary social dislocation.

President Jaime Paz Zamora took office August 6, 1989, following the 
fairest elections in recent Bolivian history.  Since no candidate 
received a majority of votes, under the constitution, the Congress voted 
to determine who would be president.  In negotiations preceding the 
vote, Paz Zamora negotiated with the second-place finisher, Gen. Banzer, 
to share the leadership.  Paz Zamora's 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.

Paz Zamora was a moderate, center-left president whose political 
pragmatism in office outweighed his Marxist origins.  Having seen the 
destructive hyper-inflation (24,000%) of the Siles Zuazo administration, 
he continued the neo-liberal economic reforms begun by Paz Estenssoro, 
codifying some of the reforms.  Paz Zamora took a fairly hard line 
against domestic terrorism, personally ordering the December 1990 attack 
on terrorists of the Nestor Paz Zamora Committee (CNP--named after his 
brother who died in the 1970 Teoponte insurgency) and authorizing the 
early 1992 crackdown against the Tupac Katari Guerrilla Army (EGTK).  

Paz Zamora's regime was less decisive against narcotics trafficking.  
The government broke up a number of trafficking networks but issued a 
1991 surrender decree giving lenient sentences to the biggest narcotics 
kingpins.  Also, his administration was extremely reluctant to 
vigorously eradicate illegal coca.  It did not sign an updated 
extradition treaty with the U.S., although one trafficker was extradited 
to the U.S. in 1992.  (In early 1994, the Bolivian Congress investigated 
Paz Zamora's personal ties to major trafficker Isaac Chavarria; Paz 
Zamora then retired from politics.)

The 1993 elections continued the tradition of open, honest elections and 
peaceful democratic transitions of power.  Gonzalo "Goni" Sanchez de 
Lozada's MNR defeated Gen. Banzer's ADN/MIR coalition by a 34% to 20% 
margin and was selected as President by the Congress.  


GOVERNMENT AND POLITICAL CONDITIONS

Since assuming office in August 1993, Sanchez de Lozada has pursued an 
aggressive economic and social reform agenda.  He has relied heavily on 
successful entrepreneurs-turned-politicians like himself and on fellow 
veterans of the Paz Estenssoro administration (during which Sanchez de 
Lozada was planning minister).  There have been some political 
difficulties, however, within Sanchez de Lozada's MNR party, his 
coalition, and the sectors most affected by his reforms, e.g., labor.  
There was considerable labor-instigated social unrest in parts of 
Bolivia in early 1994.

The 1967 constitution 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.

Since July 14, 1985, Bolivian cities and towns have been governed by 
elected mayors and councils.  The most recent municipal elections took 
place in December 1993. 

Principal Government Officials

President--Gonzalo SANCHEZ DE LOZADA
Vice President--Victor Hugo CARDENAS
Minister of Foreign Affairs--Antonio ARANIBAR
Ambassador to the U.S.--Andres PETRICEVIC
Ambassador to the UN--Edgar CAMACHO Omiste
Ambassador to the OAS--Carlos CASSAP

Bolivia maintains an embassy in the U.S. at 3014 Massachusetts Ave., NW, 
Washington, DC 20008 (tel. 202-483-4410); consulates in Los Angeles, San 
Francisco, Miami, New Orleans, and New York; and honorary consulates in 
Atlanta, Chicago, Cincinnati, Houston, Seattle, St. Louis, and San Juan. 


ECONOMY

Gross domestic product (GDP) reached around $7 billion in 1993, with a 
per capita GDP of about $1,000.  This is one of the lowest per capita 
rates in Latin America, an indication of Bolivia's relative poverty.  
Other indications can be seen in Bolivia's illiteracy rate, about 20% of 
the adult population, and in the infant mortality rate, about 92 per 
1,000 live births.  Only 9% of children starting school complete high 
school.  Bolivia also has very limited infrastructure, with only about 
1,000 miles of paved highways.  There are no fully paved roads to any of 
the neighboring countries, although external loans have been pledged to 
pave the routes to the Chilean and Peruvian borders.

The economic growth experienced since 1986 is the result of a series of 
market-oriented economic reforms that were initiated in 1985 to stop 
inflation and economic decline.  Hyperinflation stopped almost 
immediately and private sector confidence in the economy was restored.  
Deposits in the commercial banks grew from only $50 million in 1985 to 
nearly $2 billion by 1993.

A 1993 banking law allows banks to hold deposits and make loans in 
foreign currencies.  Other laws passed in the early 1990s governing 
foreign investment, the mining industry, the hydrocarbons industry, and 
the environment have all locked into place market-oriented policies and 
have encouraged private investment.  Foreign investors are accorded 
national treatment, and foreign ownership of companies enjoys virtually 
no restrictions in Bolivia.

Agriculture accounts for about 17% of GDP, with the amount of land 
cultivated by modern farming techniques increasing rapidly in the Santa 
Cruz area, where weather allows for two crops a year and soybean is the 
major cash crop.  The extraction of mineral and hydrocarbons accounts 
for another 8% of GDP.  Bolivia is self-sufficient in oil and exports 
natural gas to Argentina.  Manufacturing represents only 16% of GDP. 

External Financing

The Government of Bolivia remains heavily dependent on foreign 
assistance to finance development projects.  At the end of 1993, the 
government owed almost $3.8 billion to its foreign creditors.  About 
$1.6 billion of this amount was owed to other governments, with the 
balance owed to multilateral development banks.  Most of the payments to 
other governments have been rescheduled on four separate occasions since 
1987 through the Paris Club mechanism.  External creditors have been 
willing to do this because the Bolivian Government has generally 
achieved the monetary and fiscal targets set by IMF programs since 1987.  
The current IMF program, which consists of soft balance-of-payments 
loans from the enhanced structural adjustment facility as the government 
achieves certain targets, was extended until May 31, 1994.  The 
government is in the process of negotiating another agreement with the 
IMF.

Rescheduling agreements granted by the Paris Club have allowed the 
individual creditor countries to apply very soft terms to the 
rescheduled debt.  As a result, some countries have forgiven substantial 
amounts of Bolivia's bilateral debt.

The Bolivian Government continues to pay its debts to the multilateral 
development banks on time and to receive soft loans.  Since 1986, loan 
disbursements have slightly exceeded repayments each year.  

Foreign Trade

From a low of $570 million in 1987, exports rose, then fell again to 
$630 million in 1993.  Export earnings have been hurt by lower prices 
for most minerals and for Bolivia's natural gas.  When the original 20-
year gas purchase contract by the Argentine Government expired in 1992, 
the price of the gas fell by two-thirds.  Bolivia plans to export gas to 
Brazil and northern Chile, but there is no financing for the 
construction of pipelines.

Imports have grown quickly, reaching $1.1 billion in 1993.  This growth 
has been caused by the gradual reduction of tariffs to a flat 10% 
(except for capital equipment, which has a 5% rate) and the economic 
recovery.  Only 19% of registered imports in 1993 were consumer 
products, with machinery and intermediate products making up the 
balance.  This suggests substantial new investment which will translate 
to new exports in the future.  Nonetheless, trade deficits of around 
$500 million, as in 1992 and 1993, are not sustainable.

Bolivia's trade with its neighboring countries is growing, in part, 
because of several preferential trade agreements.  Bolivia is a member 
of the Andean Pact and has free trade with the other member countries 
(Peru, Ecuador, Colombia, and Venezuela).  Bolivia also has bilateral 
agreements with Brazil, Chile, Argentina, Paraguay, and Uruguay that 
eliminate or reduce tariffs on lists of products.  The Andean Trade 
Preference Act (ATPA) allows most Bolivian products to enter the U.S. 
free of duty on a unilateral basis.  Tariffs have to be paid on clothing 
and leather products only.

In 1993, the U.S. exported $216 million of merchandise to Bolivia and 
imported $191 million, according to the U.S. Department of Commerce.  
The U.S. accounts for about 30% of Bolivia's exports and 20% of its 
imports.  Bolivia's major exports to the U.S. are tin, gold, jewelry, 
and wood products.  Its major imports from the United States are 
computers, vehicles, wheat, and all sorts of machinery. 


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.

Sanchez de Lozada's administration pursues an active foreign policy, 
which has a heavy economic component.  He visited the U.S. even before 
assuming office and has concentrated in the region on thawing 
historically cool relations with Chile and Paraguay.  Bolivia has become 
more active in the OAS, the Rio Group, and in MERCOSUR (Southern Cone 
Common Market), where it is an observer.  Like other leaders in the 
region, Sanchez de Lozada aims to participate in the North American Free 
Trade Agreement (NAFTA).  In addition, he promotes Bolivia's policies on 
sustainable development and the empowerment of indigenous peoples as 
models for the hemisphere.

Bolivia strongly backed efforts by the United States to implement UN 
Security Council Resolution 940, designed to facilitate the departure of 
Haiti's de facto authorities from power.  Bolivia agreed to contribute 
personnel to the Multinational Force, which restored the democratically 
elected Government of Haiti in October 1994.

Bolivia is a member of the 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; Rio Group; MERCOSUR (observer status); Uruguay, 
Paraguay, Bolivia (URUPABOL--restarted in 1993). 


U.S.-BOLIVIAN RELATIONS

In 1991, the U.S. Government forgave all of the debt owed to the U.S. 
Agency for International Development ($341 million) as well as 80% (or 
$31 million) of the amount owed to the Department of Agriculture for 
food assistance.  Increased U.S. assistance since the late 1980s has 
been on a grant basis and aims to make Bolivia less dependent on the 
cocaine industry.

U.S. economic and development assistance reached $110 million in FY 
1994, in addition to another $42 million for military and 
counternarcotics assistance. 

The major issue in bilateral relations is illegal narcotics control.  
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.  The U.S. Andean strategy announced in February 1990 started 
cooperative programs in Bolivia and with neighbors Peru and Colombia to 
help combat the menace of narcotics production and trafficking.  The 
Sanchez de Lozada administration has continued bilateral cooperation on 
counternarcotics issues and has begun to tackle related domestic 
corruption in the court and political systems. 

Principal U.S. Officials 

Ambassador--Curtis W. Kamman
Deputy Chief of Mission--David B. Dlouhy
Political Counselor--W. Lewis Anselem
Economic Counselor--Paul B. Larsen
Consul General--Jeanne Schulz
Director, USAID Mission--Carl Leonard
Public Affairs Officer, USIS--John S. Williams
Defense Attache--Col. Terry Obermiller, USAF
Commander, U.S. Military Group--Col. Claude Shelverton, USA

The U.S. embassy is located at Avenida Arce #2780, La Paz (tel. 591-2-
430251).  There are consular agents in the cities of Santa Cruz (tel. 
591-3-330725) and Cochabamba (tel. 591-42-43216).

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