Free Market Backlash in Bolivia

RAY SUAREZ:

The Tibet of the Americas– that's what many call Bolivia– where many towns sit two miles high in the Andes mountains. But Bolivia's at the bottom of South America when it comes to wealth: Two-thirds of its 9 million people live on less than $2 a day.

The country has long teetered from one political crisis to the next. The latest came in October, when its president was forced from office after weeks of mass demonstrations. (Gunfire) The issue: Large-scale discontent with U.S.-style free market policies, the same rejection that galvanized recent movements in Argentina, Venezuela and Brazil.

There have been similar backlashes in Peru and Ecuador, where leaders now fear additional instability. Shouting "Bolivia is not for sale," tens of thousands turned out this fall to denounce President Gonzalo Sanchez de Lozada and his U.S.-supported free-market vision. Specifically, they opposed his plan for a pipeline to export natural gas.

It would be the second such pipeline. The first was funded in part by Enron and Exxon, companies that demonstrators said are exploiting their natural resources. They say sending gas overseas will hurt, rather than benefit, everyday Bolivians. It's a sensitive issue that goes back to the 1500s, when colonial Spain extracted Bolivia's silver and eventually took it overseas.

SPOKESMAN ( Translated ):

This march is to defend the resources of the Bolivian people. It is to defend natural gas, to stop the multinationals.

WOMAN ( Translated ):

I'm ready to die for the future of my son and grandson. I'm ready to die until we get rid of the traitor and murderer of Gonzalo Sanchez de Losada.

RAY SUAREZ:

At times, the protesters clashed with security forces, leaving 80 people dead. Each side gives conflicting stories as to how the bloodshed started. Several weeks of demonstrations led to Sanchez de Lozada's resignation in mid-October, handing power to vice president, Carlos Mesa. Bolivia's majority Indians, who have long expressed animosity toward the ruling, largely white elite, celebrated the president's ouster.

He fled to the U.S., where he was raised. Sanchez de Lozada, son of a Bolivian diplomat and mining entrepreneur, is now in Washington. He blames his downfall on nonprofit groups and anti- globalization activists– the same people, he says, who oppose world economic summits and who are spreading a left-wing agenda in much of South America.

GONZALO SANCHEZ DE LOZADA, Former President, Bolivia:

They don't believe in democracy. Very radical elements that can't believe the Berlin Wall came down, and two, very identified with the poor and with ethnic groups that have been marginalized over centuries. And what happened to me in October was simply the classic Soviet coup. They blocked the roads. They did barricades and violent manifestations.

RAY SUAREZ:

Sanchez de Lozada says his enemies distorted the gas issue.

GONZALO SANCHEZ DE LOZADA:

We have a great deal of gas and we have for hundreds of years what we could need for our domestic consumption. And we have a wonderful possibility of solving our economic problems by exporting this market, this gas, to California. But to say to a country that it shouldn't export its gas is like saying, "look, the only way we can defeat hunger is to put a padlock on the refrigerator."

RAY SUAREZ:

But the leadership change was about more than that, says Eduardo Gamarra, director of the Latin America and Caribbean Center at Florida International University. Gamarra says part of the mistrust in Sanchez de Lozada is because his American-accented Spanish reinforces his image as an outsider.

EDUARDO GAMARRA, Florida International University:

He's been in Bolivia for all of his adult life and he still speaks with an accent. But I think primarily the rejection of him is rooted in the fact that he's a multimillionaire, and he's a multimillionaire who is perceived as arrogant.

RAY SUAREZ:

Many opponents of Sanchez de Lozada are longtime growers of coca. It's a historic part of life in the Andes where people chew coca leaf. It's a mild stimulant, staves off hunger, and helps deal with the high altitude. Of course, coca also makes cocaine.

Two decades ago, Bolivia was one of the world's leading exporters of the drug, second only to Colombia. But in the late 1990s, the Bolivian government, with U.S. backing, moved aggressively to wipe out coca. It succeeded in 80 percent of the country, despite resistance from growers. They're led by Evo Morales. He ran against Sanchez de Lozada in the last election and almost won– and he may run again.

SPOKESMAN (Translated):

Coca is a natural product. For 5,000 years we've grown it. It's part of our culture. It's the industrialized countries which are living off the profit from cocaine trade. The local farmers here aren't getting rich off of it. But even so, for them, coca is more profitable than any other crop.

RAY SUAREZ:

Coca was supposed to be replaced by alternative crops, like pineapple. The success has been modest, at best.

FORMER COCA GROWER ( Translated ):

There used to be coca everywhere in here. But in the end, we have lots of problems changing crops. It doesn't work, because there's no market for export. There's no comparison to coca.

RAY SUAREZ:

Eduardo Gamarra says coca destruction wiped out an economic base for 50,000 families.

EDUARDO GAMARRA:

It provided an economic cushion. But along came the government and eradicated coca, and by most conservative calculations, somewhere between $500 million and $700 million of revenue was taken right out of the Bolivian economy.

RAY SUAREZ:

Still, the U.S. government has urged Bolivia to continue destroying coca. Robert Charles, assistant secretary of state for narcotics, told a recent Senate hearing he expects eradication to continue despite political uncertainty.

ROBERT CHARLES:

I remain of the view that while we have to be watching very closely, I have not seen any explicit back-sliding yet, although I think we have to make it very clear that we have expectations. Those expectations are high, they are mutually self-supporting, and I think that, you know, we have seen recently success up to that point.

RAY SUAREZ:

Charles says he expects Bolivia to continue its free-market reforms pushed by Sanchez de Lozada: Privatizing government industries, reducing trade barriers and investing in education. It's a formula the former president says worked for Ireland and can work in Bolivia, too.

GONZALO SANCHEZ DE LOZADA:

I studied philosophy and English literature, and I remember how poor and how tragic the history of Ireland was and how conflicted, but today it has bigger exports than Brazil. It's a high technology country based on integration, based on access to markets, science, technology, and above all education.

RAY SUAREZ:

Education levels are high for many of Bolivia's urban elite, but the rural majority works in decidedly low-tech jobs like farming and mining. And many say the Western model holds no promise for them and amounts to U.S. economic colonialism. Again, Evo Morales of the Coca Growers' Union.

EVO MORALES ( Translated ):

Concentrating resources in the hands of a few is not a solution for the majority of nations. There is a confrontation between the two cultures– the culture of death, represented by the culture of the West, and the culture of life, represented by the indigenous people.

RAY SUAREZ:

Morales and his allies say they'll continue to oppose the gas pipeline. The new president has promised a referendum on the issue. But if it fails, Professor Gamarra fears the country's economic woes would continue. What's more, he says, Bolivia may have the deepest social divisions in South America. One pits the rural poor in the western Andes against the East, where the natural gas is.

EDUARDO GAMARRA:

The western part of the country could, in fact, become an independent country, broken apart from the eastern part of Bolivia, where all of the natural gas and the hydrocarbons are produced.

RAY SUAREZ:

To smooth over those conflicts and prevent more violence, South American leaders are considering aid to Bolivia to keep the country and the region stable. As Peru's President Alejandro Toledo warned, the Bolivian turmoil suggests people across Latin America "are beginning to lose faith in government."

As for Bolivia's government, indigenous leaders have given new President Carlos Mesa 90 days to meet their demands. Otherwise, they promise the same protests that doomed his predecessor. That deadline comes next month.