South Perspective

A weakened democracy in the throes of populism

22.03.2024, International cooperation

Bolivia is gripped by a severe political crisis and its economic situation is dire. But growing urbanisation also offers opportunities for sustainable poverty alleviation, says Martín del Castillo.

A weakened democracy in the throes of populism

Market in Coroico, Yungas, where many young people sell coca leaves.
© Meridith Kohut / The New York Times

Across Latin America, the pendulum is swinging back and forth between the radical discourses and populist demands of the Bukeles and Mileis, the Ortegas and Morales. But no longer is the pendulum swinging between ideological extremes, between the nationalisation of private companies and radical liberalism. The back-and-forth now seems to serve the geopolitical interests of certain strategic allies, namely, the United States, China, Russia and the European Union. They support the special interests and the concentration of power in the hands of "messianic leaders" by misusing their political discourses for their own ends.

At work over the past two decades, these dynamics display several common denominators, namely, weak States, presidential systems, concentration of power in the hands of a few, co-opted and corrupt judicial systems, limited legitimacy of the party system and national parliaments, and foreign economic dependence. Bolivia is no outlier, being on the cusp of 20 years of populism (17 of which were dominated by the Left, and two by the Right), with all of the above hallmarks, plus a few other country-specific ones.

As in most countries in the region, the political parties lack legitimacy. The political elite seek out other channels such as churches, civil society organisations, or trade unions that represent the coca farmers (Bolivia's most important social movement, from which Evo Morales derives his political base). The latter are mobilised on the basis of clientelist interests. Bolivians are organising, complaining and protesting, but are not putting forward any meaningful proposals.

Bolivia also has a weak, overwhelmingly corrupt and illegitimate judicial system. Other government entities have limited capabilities, high staff turnover, excessive red tape, and produce dubious management outcomes. At the turn of the millennium, 25 per cent of the funds for public investment was in the hands of the central government, and 75 per cent in the hands of local governments; the latter figure is now down to 20 per cent. The centralisation of public decision-making and budgets is a clear indication of Bolivia's institutional shortcomings.


The long reach of Swiss development cooperation

Ventilators were in short supply during the pandemic, and poorer countries in particular were unable to access these life-saving machines. In Bolivia, for example, medical staff had to perform ventilations by hand. Driven by necessity, a Bolivian university developed an automatic ventilator that was inexpensive and could be quickly built. It was sold at cost to remote communities, and to other countries. This was only possible thanks to the support of Swiss development cooperation, which funded the work and forged ties between the various stakeholders.


The region’s most stable economy?

Since the presidency of Evo Morales (2005 to 2019), Bolivia's poverty rate has fallen significantly: extreme poverty is down from 38 per cent to less than 15 per cent, and moderate poverty from 60 per cent to 39 per cent. There has been relative macroeconomic stability, with inflation in the single digits, and economic growth averaging almost 4 per cent.

Despite these promising figures, Bolivia's current economic situation gives little cause for optimism. The informal economy encompasses almost 80 per cent of the population. These people have no access to social security systems, they receive no employee benefits and are not taxed. Moreover, proven gas reserves – the country's principal source of income and exports – have diminished sharply, the public sector has become bloated, and the national budget can no longer sustain fuel subsidies.

The upshot has been years of budget deficits since 2014, and dwindling foreign exchange reserves. Both external and domestic public indebtedness has increased exponentially. Bolivians are now grappling with an extreme foreign currency shortage especially those engaged in imports. This has spawned a black market and is generating considerable devaluation and inflationary pressure.
Yet another factor is accelerated urban sprawl. Huge swathes of urban dwellers live in precarious circumstances in the big cities and towns, or migrate to agricultural areas during the planting and harvesting seasons. This expands the country's agricultural zones and puts pressure on the provision of basic services in urban and suburban areas.

In this context, the central government is pursuing an ambivalent environmental policy. Under the pretext of encouraging the settlement of large uninhabited areas, it is facilitating migration to the lowlands. This is helping to push back the agricultural frontiers and to increase the production of coca leaves – mostly for illegal use. At the same time, the government is resorting to slash-and-burn techniques to secure more land for cultivation. This is damaging both fauna and flora. Deforestation and forest fires are a constant feature in the Amazon and the Chiquitano dry forest. Besides, national climate protection commitments are far from being met.

Political crisis as an opportunity

In the meantime, the governing party (MAS – Movimiento al Socialismo) is disintegrating. The current President Luis Arce – former Minister for the Economy to Evo Morales – has secured the loyalty of a large share of party-affiliated organisations. Evo Morales, in turn, controls the most important pro-government figures in the Parliament and is the current party chairman and also the most important leader of the coca farmers. This power struggle has spawned divisions across all government agencies and slowed down the public administration. This situation is likely to persist until the elections in 2025.

In this problematic setting, opportunities are rare, but they do exist and should be seized. Urban concentration is a driver of innovation and entrepreneurship. The role of the private sector and of academia can be enhanced for the purposes of finding solidarity-based and participatory development solutions. The favourable age structure and its potential for boosting the workforce constitute a significant factor that is concentrated in medium-size cities and fast-growing conurbations. The ecological diversity, huge forests and mountains offer interesting opportunities.
Exploiting the opportunities will require efforts in the realms of natural resource management, inclusive economic development, sustainable urban development, or sewage and waste management. International cooperation must support these endeavours and provide technical assistance. Lastly, it is incumbent on citizens to demand that decisions and measures are implemented. This can help ensure that those who have emerged from poverty do not fall back into poverty.


Foto von Martín Del Castillo

Martín del Castillo is an economist and political scientist and holds a Master's degree in public management and decentralisation from the Universidad Andina Simón Bolívar in Sucre, Bolivia, and a Master's degree in development from the University of Geneva. He has been working for Helvetas since 2007.