Bolivia is one of the least-developed countries 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 restricts the annual population growth rate to around 1.96% (1999).
La Paz is at the highest elevation of the world's capital cities--3,600 meters (11,800 ft.) above sea level. The adjacent city of El Alto, at 4,200 meters above sea level, is one of the fastest-growing in the hemisphere. Santa Cruz, the commercial and industrial hub of the eastern lowlands, also is experiencing rapid population and economic growth.
The great majority of Bolivians are Roman Catholic (the official religion), although Protestant denominations are expanding strongly. Many indigenous communities interweave pre-Columbian and Christian symbols in their religious practices. About half of the people speak Spanish as their first language. Approximately 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. Important archaeological ruins, gold and silver ornaments, stone monuments, ceramics, and weavings remain from several important pre-Columbian cultures. Major ruins include Tiwanaku, Samaipata, Incallajta, and Iskanwaya. The country abounds in other sites that are difficult to reach and hardly explored by archaeologists.
The Spanish brought their own tradition of religious art which, in the hands of local indigenous 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, woodcarvers, goldsmiths, and silversmiths. An important body of native baroque religious music of the colonial period was recovered in recent years and has been performed internationally to wide acclaim since 1994.
Bolivian artists of stature in the 20th century include, among others, Guzman de Rojas, Arturo Borda, Maria Luisa Pacheco, and Marina Nunez del Prado.
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.
During most of the Spanish colonial period, this territory was called "Upper Peru" or "Charcas" and was under the authority of the Viceroy of Lima. Local government came from the Audiencia de Charcas located in Chuquisaca (La Plata--modern Sucre). 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. A succession of governments controlled by the economic and social elites followed laissez-faire capitalist policies through the first third of the century.
Living conditions of the indigenous peoples, 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 indigenous people. 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. It also committed many serious violations of human rights.
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 General) 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. Later convicted in absentia for crimes, including murder, Garcia Meza was extradited from Brazil and began serving a 30-year sentence in 1995.
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 the 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 he 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 unchecked drug trafficking were widespread.
In 4 years, Paz Estenssoro's administration achieved economic and social stability. 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, his remarkable accomplishments were not won without sacrifice. The collapse of tin prices in October 1985, coming just as the government was moving to reassert its control of the mismanaged state mining enterprise, 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.
Although the MNR list headed by Gonzalo Sanchez de Lozada finished first in the 1989 elections, no candidate received a majority of popular votes and so in accordance with the constitution, a congressional vote determined who would be president. The Patriotic Accord (AP) coalition between Gen. Banzer's ADN and Jaime Paz Zamora's MIR, the second- and third-place finishers, respectively, won out. Paz Zamora assumed the presidency and the MIR took half the ministries. Banzer's center-right ADN took control of the National Political Council (CONAP) and the other ministries.
Paz Zamora was a moderate, center-left president whose political pragmatism in office outweighed his Marxist origins. Having seen the destructive hyperinflation of the Siles Zuazo Administration, he continued the neoliberal economic reforms begun by Paz Estenssoro, codifying some of them. Paz Zamora took a fairly hard line against domestic terrorism, personally ordering the December 1990 attack on terrorists of the Nestor Paz Zamora Committee (CNPZ--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 pursue net eradication of illegal coca. It did not agree to an updated extradition treaty with the U.S., although two traffickers have been extradited to the U.S. since 1992. Beginning in early 1994, the Bolivian Congress investigated Paz Zamora's personal ties to accused major trafficker Isaac Chavarria, who subsequently died in prison while awaiting trial. MIR deputy chief Oscar Eidwas was jailed in connection with similar ties in 1994; he was found guilty and sentenced to 4 years in prison in November 1996. Technically still under investigation, Paz Zamora became an active presidential candidate in 1996.
The 1993 elections continued the tradition of open, honest elections and peaceful democratic transitions of power. The MNR defeated the ADN/MIR coalition by a 34% to 20% margin, and the MNR's Gonzalo "Goni" Sanchez de Lozada was selected as president by an MNR/MBL/UCS coalition in the Congress.
Sanchez de Lozada pursued an aggressive economic and social reform agenda. He 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). The most dramatic change undertaken by the Sanchez de Lozada government was the capitalization program, under which investors acquired 50% ownership and management control of public enterprises, such as the state oil corporation, telecommunications system, electric utilities, and others. The reforms and economic restructuring were strongly opposed by certain segments of society, which instigated frequent social disturbances, particularly in La Paz and the Chaparecoca-growing region, from 1994 through 1996.
In the 1997 elections, Gen. Hugo Banzer, leader of the ADN, won 22% of the vote, while the MNR candidate won 18%. Gen. Banzer formed a coalition of the ADN, MIR, UCS, and CONDEPA parties which hold a majority of seats in the Bolivian Congress. The Congress elected him as president and he was inaugurated on August 6, 1997.
The 1967 constitution, revised in 1994, provides for balanced 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, consisting of the Supreme Court and departmental and lower courts, has long been riddled with corruption and inefficiency. Through revisions to the constitution in 1994, and subsequent laws, the government has initiated potentially far-reaching reforms in the judicial system and processes.
Bolivia's nine departments received greater autonomy under the Administrative Decentralization law of 1995, although principal departmental officials are still appointed by the central government. Bolivian cities and towns are governed by elected mayors and councils. The most recent municipal elections took place in December 1999. The Popular Participation Law of April 1994, which distributes a significant portion of national revenues to municipalities for discretionary use, has enabled previously neglected communities to make striking improvements in their facilities and services.
Bolivia maintains an embassy in the U.S. at 3014 Massachusetts Ave., NW, Washington, DC 20008 (tel. 202-483-4410); consulates in San Francisco, Miami, and New York; and honorary consulates in Atlanta, Boston, Chicago, Cincinnati, Dallas, Houston, Minneapolis, Mobile, Phoenix, and Seattle.
Since 1985, the Government of Bolivia has been implementing a far-reaching program of macroeconomic stabilization and structural reform aimed at restoring price stability, creating conditions for sustained growth, and alleviating poverty. Important components of these structural reform measures include the capitalization of state enterprises and strengthening of the country's financial system.
The most important recent structural changes in the Bolivian economy have involved the capitalization of numerous public sector enterprises. (Capitalization in the Bolivian context is a form of privatization where investors acquire a 50% stake and management control of public enterprises in return for a commitment to undertake capital expenditures equivalent to the enterprise's net worth). Parallel legislative reforms have locked into place market-oriented policies, especially in the hydrocarbon and mining sectors, that have encouraged private investment. Foreign investors are accorded national treatment, and foreign ownership of companies enjoys virtually no restrictions in Bolivia. As a consequence of these measures, 1996 private investment surged by 25% to an estimated $225 million, and in 1999 it exceeded $1 billion. The privatization program has generated commitments of $1.7 billion in foreign direct investment over the period 1996-2002.
In 1996, three units of the Bolivian state oil corporation (YPFB) involved in hydrocarbon exploration, production, and transportation were capitalized. The capitalization of YPFB allowed agreement to be reached on the construction of a gas pipeline to Brazil. A priority in the development strategy for the sector is the expansion of export markets for natural gas. The contract to construct a pipeline to Brazil projects natural gas exports of 8 million cubic meters per day (cmd) by 1999, increasing to 16 million cmd by the eighth year of operation. The Brazil pipeline contract projects natural gas exports of 9 million metric cubic meters per day (mmcmd) by the end of 2000, increasing to over 30 mmcmd by 2004. The government plans to position Bolivia as a regional hub for exporting hydrocarbons. The pipeline to Brazil was inaugurated in July 1999.
Six smaller public enterprises were sold during 1996, and the Government of Bolivia has taken steps to improve the efficiency of some public services through concession contracts with private sector managers. All three major airports were transferred to private managers in March 1997, and a water supply company was transferred to a private operator in June 1997.
By May 1996, three of the four Bolivian banks that had experienced difficulties in 1995 were recapitalized and restructured under new ownership with support from the Bolivian Government's Special Fund for Strengthening the Financial System (FONDESIF), which helped restore confidence in the banking system. In November 1996,the Bolivian Congress approved a comprehensive pension reform that replaces the old pay-as-you-go system by a system of privately managed, individually funded retirement accounts, and the new system began operations in May 1997. The reform represents a major step toward lasting fiscal consolidation in Bolivia.
Bolivian exports were $1.1 billion in 1998, from a low of $652 million in 1991. Imports grew in 1998 to a level of $1.7 billion, with import growth facilitated by the gradual reduction of Bolivian tariffs to a flat 10% (except for capital equipment, which has a 5% rate). Bolivia's trade deficit rose from $419 million in 1996 to $620 million in 1997.
Bolivia's trade with neighboring countries has grown, in part because of several regional preferential trade agreements it has negotiated. Bolivia is a member of the Andean Community and has free trade with other member countries (Peru, Ecuador, Colombia, and Venezuela). Bolivia began to implement an association agreement with MERCOSUR (Southern Cone Common Market) in March 1997. The agreement provides for the gradual creation of a free trade area covering at least 80% of the trade between the parties over a 10-year period. The U.S. Andean Trade Preference Act (ATPA) allows numerous Bolivian products to enter the United States free of duty on a unilateral basis.
The U.S. remains Bolivia's largest trading partner. In 1998, the U.S. exported $626 million of merchandise to Bolivia and imported $149 million, according to the World Trade Atlas of the Global Trade Information Service. 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 machinery. A Bilateral Investment Treaty has been signed but has not yet been ratified by the U.S.
Agriculture accounts for roughly 15% of Bolivia's GDP. The amount of land cultivated by modern farming techniques is increasing rapidly in the Santa Cruz area, where weather allows for two crops a year and soybeans are the major cash crop. The extraction of minerals and hydrocarbons accounts for another 10% of GDP. Bolivia exports natural gas to Brazil. Manufacturing represents less than 17% of GDP.
The Government of Bolivia remains heavily dependent on foreign assistance to finance development projects. At the end of 1998,the government owed $4.3 billion to its foreign creditors, with $1.6 billion of this amount owed to other governments and most of the balance owed to multilateral development banks. Most payments to other governments have been rescheduled on several 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. 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 U.S. Government reached an agreement at the Paris Club meeting in December 1995 which reduced by 67% Bolivia's existing debt stock. The Bolivian Government continues to pay its debts to the multilateral development banks on time and to receive soft loans. Bolivia has qualified for the Highly Indebted Poor Countries (HIPC) and HIPC II debt relief programs.
Bolivia pursues a foreign policy with a heavy economic component. Bolivia has become more active in the OAS, the Rio Group, and in MERCOSUR, with which it signed an association agreement in 1996. Bolivia promotes its policies on sustainable development and the empowerment of indigenous people.
Bolivia is a member of the UN and some specialized agencies and related programs; Organization of American States (OAS); Andean Community; INTELSAT; Non-Aligned Movement; International Parliamentary Union; Latin American Integration Association (ALADI); World Trade Organization; Rio Treaty; Rio Group; MERCOSUR; and Uruguay, Paraguay, Bolivia (URUPABOL, restarted in 1993). As an outgrowth of the 1994 Summit of the Americas, Bolivia hosted a hemispheric summit conference on sustainable development in December 1996. A First Ladies' hemispheric summit was also hosted by Bolivia that same month.
Bolivian President Hugo Banzer has pledged to wipe out illicit coca production and drug trafficking in Bolivia by the end of his term in 2002. His administration unveiled its 5-year counternarcotics strategy in December 1997. The plan calls for significant funding from international donors. President Clinton certified to the Congress in 2000 that Bolivia is cooperating fully with the U.S. on counternarcotics matters or has taken steps on its own to achieve full compliance with the 1988 UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. The U.S. Government is seeking Bolivia's cooperation in achieving a net reduction in the amount of coca under cultivation and in enacting legislation to criminalize money laundering. In 1996, the United States and Bolivia ratified anew extradition treaty which makes it easier for both nations to more effectively prosecute drug traffickers and other criminals. It replaces the previous extradition treaty, which came into force in 1990. The new treaty is significant because, unlike its predecessor, it requires both countries to extradite their own nationals for serious criminal offenses.
In 1991, the U.S. Government forgave all of the debt owed by Bolivia 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 designed to reinforce democracy, to ensure sustainable economic development, and to make Bolivia less dependent on the cocaine industry. U.S. economic and development assistance totaled $53 million in FY 1999, in addition to military and counternarcotics assistance.
U.S. Embassy Functions
In addition to working closely with Bolivian Government officials to strengthen our bilateral relationship, the U.S. Embassy provides a wide range of services to U.S. citizens and business. Political and economic officers deal directly with the Bolivian Government in advancing U.S. interests, but also are available to provide information to American citizens on general conditions in the country. Commercial officers work closely with dozens of U.S. companies which operate direct subsidiaries in the country. These officers provide information on Bolivian trade and industry regulations and administer several programs intended to aid U.S. companies starting or maintaining business ventures in Bolivia.
The consular section of the embassy provides vital services to the estimated 14,000 American citizens resident in Bolivia. Among other services, the consular section assists Americans who wish to participate in U.S. elections while abroad and provides U.S. tax information. Besides the American citizens living in Bolivia, some 20,000 U.S. citizens visit annually. The consular section offers passport and emergency services to these tourists as needed during their stay in Bolivia.
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. 591-42-56714). Embassy Home Page: http://www/megalink.com/usemblapaz.
Other Contact Information
U.S. Department of Commerce
International Trade Administration
Trade Information Center
14th and Constitution Avenue, NW
Washington, D.C. 20230
Home Page: http://www.ita.doc.gov
American Chamber of Commerce in Bolivia
Edificio Hilda, Oficina 3
Avenida 6 de Agosto
Apartado Postal 8268
La Paz, Bolivia
Tel: (591) 2-43-25-73
Fax: (591) 2-43-24-72
Home Page: http://www.bolivianet.com/amcham