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Chavez-style Economics Fail Miserably in Bolivia

Indeed, through nationalization schemes, price controls, and other anti-business measures, Morales has chased away both domestic and foreign investors. As Bolivian economist Waldo López said last year, “The government has a foreign-investment phobia, and its nationalization processes and the lack of clear rules are creating lack of confidence.” The World Bank’s 2011 “Doing Business” survey ranks Bolivia 149 out of 183 economies, behind even Sierra Leone and Syria. It is the poorest nation in South America, and among the very poorest in the entire Western Hemisphere.

Yet in both his personal lifestyle and his public spending, Morales has behaved as if his country were much richer. In 2010, for example, he bought a $39 million presidential plane and agreed to purchase a $300 million Chinese satellite. Not surprisingly, corruption is rampant in his government. In February, a Morales intelligence adviser named René Sanabria, who had previously served as Bolivian drug czar, was arrested in Panama on drug-trafficking charges. Sanabria allegedly orchestrated a 317-pound cocaine shipment last November. His arrest was a huge embarrassment for Morales, whose administration has been rocked by numerous high-profile scandals.

Bolivia desperately needs a unifying leader who can bridge its many ethnic, geographic, and economic divides. It has long been a fractured society. Indeed, it is really two societies, one consisting of poor indigenous Bolivians, who are concentrated in the western highlands, the other made up of mixed-race mestizos and whites, who dominate the eastern lowlands. While eastern Bolivia is the more prosperous region, most Bolivians live in the west, and a majority of the population is indigenous.

Morales is the country’s first indigenous president. When he was elected in 2005, the Chávez acolyte boasted fairly broad support across different racial and economic groups. Yet he has pursued discriminatory and exclusionary policies designed to benefit Bolivia’s Indians at the expense of its mestizos and whites. He has also weakened Bolivia’s democratic institutions and attempted to reduce both the political and economic power of its wealthy eastern states. As a result, Bolivia today is far more divided and polarized than it was when Morales took office.

The United States has more than a passing interest in Bolivia’s future. After all, the country is a major cocaine producer. Morales expelled the Drug Enforcement Administration from his country back in 2008, and a new U.S. government report says that Bolivia has “failed demonstrably” to combat drug trafficking and meet its international obligations. It has also strengthened relations with the Iranian theocracy. According to the Associated Press, a 2009 Israeli foreign ministry document accused Bolivia (and Venezuela) of providing Tehran with uranium.

As public support for Morales continues to erode, the democratic opposition has a golden opportunity to unify around shared principles and position itself to reclaim power in the next election. That would be immensely good for both Bolivia and the cause of democracy in the Americas.