The Political Consensus of Extractivism in Bolivia
By Huáscar Salazar Lohman. Extractivism is the only economic horizon of the Bolivian state, even if the narratives change depending on those in power.
Extractivism is the only economic horizon of the Bolivian state, even if the narratives change depending on those in power. In its productive and redistributive matrix of capital surplus, Bolivia today does not hold great differences from the country inherited from the colony, the republic and, also, from the neoliberal one.
By Huáscar Salazar Lohman
Since 2005 and, with greater intensity since 2010, the Bolivian economy has been strongly driven by the sharp increase in international commodity prices, raw materials — such as oil, minerals, soybeans — that are traded on, or in reference to, international financial markets.
Bolivia is an important supplier of natural gas for the region, although less and less, especially for Brazil and Argentina. When the international prices of commodities increased at the beginning of the last decade, the value of gas exports went from 619 million dollars in 2004 to 6.113 billion dollars in 2013. In other words, the value of Bolivian fuel exports multiplied by ten, although the amount exported only doubled in the same period.
The fiscal dynamics can be scrutinized to gauge the importance of this price increase on Bolivia’s economy. By 2013 — the climax of the heyday — half of Bolivia’s public revenue came to depend on gas exports. It was during those years that the government, then headed by Evo Morales, began to place much emphasis on a leftist discourse legitimizing extractivism, also seeking to discredit, and reduce to a simplistic environmentalist position, any criticism or questioning of extractivist processes of depredation and dispossession, of being surely sponsored by imperialism.
The other problem is that extractivism is addictive. The promise from the left is that extractivism will make it possible to generate a significant fiscal surplus that will then be made available for the common good. That, they argue, will lead to the transformation of the country’s productive matrix, which will in turn allow extractivism to be left behind. But experience shows us otherwise.
An illustrative example is the “Investment Projection of the Bolivian State 2010–2015” –presented in 2010 by the then Minister of Economy, Luis Arce, now president– which, in the midst of the boom in commodity prices, allocated 81 percent of public investment to the same extractive sectors or activities linked to them. Meanwhile, health, education, rural development (not agro-industrial), science and technology, among many other sectors that can be considered essential to improve social welfare, did not exceed one percent of total public investment each.
Thus, when raw materials had higher prices, the objective seems to have been –in the words of a dear friend– “to fill the country with holes to get everything possible and sell it off”. This logic is not very different from the neoliberal one. They have in common the notion of uninterrupted economic growth with a short-term vision, without considering the multiple forms of economic and non-economic dispossession that are set in motion when growth becomes an end in itself.
Both left-wing and right-wing governments in the region use the increase in gross domestic product (GDP) as the central indicator to demonstrate the effectiveness of their policies. And no one seems to care about the consequences.
Continuity in Times of Crisis
Since 2016, international commodity prices have plummeted. Given the logic described above, this had a negative impact on the Bolivian trade balance: exports decreased dramatically and this balance became a deficit. Trade imbalance began to reduce international reserves and gave rise to a greater indebtedness of the country. The dollars had to come from somewhere to maintain the level of imports. By 2019, signs of an economic recession were more than evident. And subsequently, the post-election political crisis and the coronavirus pandemic pushed the country towards an economic crisis that has not yet bottomed out.
As in most countries in the world, GDP growth in Bolivia was negative in 2020. However, the previous deterioration of economic indicators, which not only included a decrease in exports, but also an increase in unemployment and a high fiscal deficit meant that the country had to increase its level of indebtedness to face the crisis.
Bolivian external debt, mainly with multilateral organizations, has been systematically increasing in recent years, so much so that between 2014 and 2021 it doubled, reaching historic records. On the other hand, the internal debt –of which the Central Bank is the main creditor– doubled between 2019 and 2021 alone, going from US$6 billion to more than US$13 billion, according to the latest data published by the Fundación Jubilee.
All in all, the impacts of the crisis are wide-ranging. But there are two dimensions that are worth highlighting: the one that has to do with the decrease in fiscal revenue and the other, which has to do with the increase in job insecurity and informality. Both dimensions are accompanied by the reiteration of justifications to give continuity to economic processes related to extractivism.
Falling fiscal revenue is no small problem for a corporatist state. Since last year, the Bolivian state has increased resources to finance hydrocarbon exploration in the country by hundreds of millions of dollars. At this time, the possibility is also being discussed of modifying hydrocarbon regulations to encourage the entry of transnational capital. Apart from its well-known environmental impacts, the expansion of the hydrocarbon frontier is attacking indigenous and peasant community organizations, as is the case in Tariquía, in the south of the country; in the North Amazon, in the department of Pando and in other regions rich in natural gas.
But the Bolivian state is not only concerned with its income. It also has to manage the social unrest derived from the economic crisis and the increase in job insecurity. While Bolivia is a country characterized by a high level of informality, in recent years, informal activities linked to extractive processes have increased substantially. The Bolivian state encourages and allows irregular extractive activities that generate income for social sectors that would otherwise have difficulty obtaining economic income.
Cooperative mining provides us with a very clear example. Mining cooperatives, a group that use socialist symbols and discourses of struggle, have transformed into true mineral extraction companies –mainly gold– in different regions of the country. In contravention of mining regulations, they fill Bolivian rivers with mercury, and overwhelm nature reserves, such as the Madidi National Park, with armed groups.
In mining cooperatives, hundreds of thousands of workers are employed (an exact number is not known), in addition to upper leadership echelons that benefit in millions, which has increased in recent years as a result of the economic crisis.
Agribusiness, understood as a neo-extractive activity, has also increased its operations in recent years and, hence, its consequences as well. The expansion of the agricultural frontier for the production of transgenic oilseeds has become the main cause of forest fires that ravage the Amazon region of Bolivia every year. The different governments of recent years have had a fairly similar policy in this regard: promote this activity with lenient regulations and economic support, even with funds that should have been used to face the health emergency.
It is thus clear that natural predation and its consequent socioeconomic effects are becoming a means of managing the economic crisis and consequent social unrest. In its productive and redistributive matrix of capital surplus, Bolivia today does not hold great differences from the country inherited from the colony, the republic and, also, from the neoliberal one.
The narratives can vary depending on the circumstances, emphasizing elements of liberalism or progressivism, depending on who is in power. But no matter who holds the presidency, extractivism is the only economic horizon of the Bolivian state. Questioning extractivism in general is urgent and necessary: it is not an environmentalist cliché, but rather a profound critique of the way inequalities and hierarchies are built and reproduced on a planet in crisis.
Huascar is a member of the Centro de Estudios Populares, Bolivia
Originally published in Zur. Translated and published with permission of the author.