Death of Che

            Bolivia’s 1952 agrarian reform led by Victor Paz Estenssoro allowed peasants who participated in the Bolivian land reform to receive individual titles to redistributed lands.  These titles were not retained by the state.  This concept of individual property rights was strongly reinforced as Bolivian peasants were turned into landowners.  This contributed indirectly to Che’s failure in the 1960’s when he tried to convince the Bolivian Farmers of the benefits of state-owned agriculture.[1]

            In 1959 Fidel Castro came to power and Che left Cuba to support other revolutionaries and spread guerilla warfare throughout Latin America.  By this time, Che had already gained a name for himself by serving as Cuba’s industry minister, national bank president, and emissary of armed revolution.[2]  One of the places he tried to accomplish his goal was Bolivia.  This trip, however, was his last.  In 1967 Che was captured in Bolivia and executed after a failed attempt to start a revolution in that country.  His body lay in public view in the laundry room of a rural hospital for 24 hours before it “disappeared.” 

To Learn More About The Chain Of Events Surrounding Che’s Murder And Mysterious Disappearance Try These Websites:

For Declassified Documents

http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB5/

For Detailed Timeline Of Events Leading Up To And Surrounding The Death

http://www.geocities.com/Hollywood/8702/death.html

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1982 – Siles Zuazo

On October 10, 1982, Siles Zuazo was called out of his exile in Peru to take his oath of office and become President of Bolivia.  When Zuazo came into power he announced several improvements he intended to make in Bolivia, but unfortunately for him and the people of Bolivia, these never became a reality.  In fact, his presidency brought many hardships to the Bolivians and these eventually led to his termination in office. 

Zuazo promised civilian democratic rule and fast action taken to improve the worsening economic condition if Bolivia.  The economy, however, was not helped during his presidency.  In fact, in addition to the already bad economy, this government faced many partially self-induced economic problems.  Zuazo had gone through four cabinets and according to Everett Martin, the government seemed “incapable of taking strong action on the economy.”[3]  This incompetent government faced many labor problems including those who worked in the tin mines which had been hurt by low world prices and widespread overstocking.  During the years of 1983-1985 the power of the unions increased and their demands for higher wages became more frequent.  These demands were approved by the government - no questions asked.[4]  By the end, the union workers had gotten a 57% wage increase out of the government.  This contributed to the sky-rocketing of government spending, the money supply and the public deficit causing a record breaking annual inflation rate of 24,000%.[5]  In addition prices climbed more than 600%, the treasury was emptied and Bolivia was indebted to foreign creditor banks who were concerned with Bolivia’s 2.5 billion dollar foreign debt.[6]

Much more than inflation, foreign debt, an empty treasury and labor unrest plagued Bolivia during Zuazo’s term.  Bolivia also endured natural disasters that brought famine and food riots.  During this decade Bolivia had endured the worst drought in its history, which cut the harvest by 60%, ruined more than a million farms, killed livestock, and came close to wiping out the potato crop.  In the east, it was a floods in the tropics that caused problems in Bolivia.  Water damaged more than 100,000 acres of prime agriculture lands just as the time for the harvest of sugar, rice and soybeans was occurring.  Bolivia also endured terrorist bombings, kidnappings and other assorted turmoil as well.[7]

This mess led to the election of Paz Estenssoro, who implemented drastic economic measures of reform that received much public support.

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1985 – Paz Estenssoro

Estenssoro was elected after the economic disaster of Siles Zuazo’s presidential term.  Estenssoro implemented drastic economic measures to fix the problematic economy he faced and for it he gained much public support.  As stated by John Hewko, “the reforms were immunized from the classic nationalist arguments that they [Bolivians] had been imposed by an illegitimate dictatorship at the bidding of foreign imperialists.”[8]  Under Estenssoro’s programs the budget deficit was cut by more than 10% of the GNP, prices for public services were increased, prices for public services were increased, most forms of government subsidies were abolished, and devices to limit corruption were strengthened.  There was also an increase in tax collections, but even with this increase in the collection of revenues, a more simplified tax structure was put into place.  As a result of Estenssoro’s plan the income tax was reduced to a flat 10% rate and a 20% flat tariff was placed on most items.[9] 

            As far as the labor front goes, according to Hewko, Estenssoro’s call for “government belt-tightening, spurred in large measure by the collapse of the international tin, oil, and natural-gas markets, has led to the firing of almost half the employees of the country’s two largest state-run enterprises.”[10]  Many of Bolivia’s laborers were involved in the production of coca which, despite even the presence of a drug mafia that had continuously posed problems, did not bring huge levels of violence.

            As Hewko stated “Bolivias domestic efforts were reinforced by innovative debt-management policies” and “with the help of friendly donor nations, Bolivia was able to eliminate nearly half its commerce debt at a cost of only 11 cents on the dollar.”[11]  

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1971 – Hugo Banzer Suarez

            Hugo Banzer Suarez ruled Bolivia as a military dictator.  Between the years of 1971 and 1978 the general’s supporters argue that during that period of Banzer’s rule, he brought “much needed stability and unprecedented economic growth,” while others point out “unsustainable growth, being based on loans, American aid and high oil prices.”[12]  Although what he did for the economy of Bolivia has been debated, the things he did to the Bolivian people is not.  In fact, it is a matter of public that thousands were tortured, exiled or murdered under his dictatorship.

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1989 – Jaime Paz Zamora

President Paz Zamora was not exactly chosen by the people to be Bolivia’s president.  In fact, he was their third choice coming in behind both Gonzalo Sanchez de Lozada and Hugo Banzer.  It was the Bolivian congress, who decides who gets the presidency if no clear majority exists, that placed Zamora into office.  Banzer, however, did not disappear.  He instead became president of a two-party commission that played a major role and possessed much of the power behind the scenes.  His deal with the president was that the two parties (his and the president’s) share the top jobs.  For example a minister form one of the two’s parties must be paired with a vice-minister from the others.  According to Economist article “Giving It Away,” this type of situation “brings incoherence and bureaucratic drag.”[13]

President Paz Zamora faced unrest among the Bolivian people when he came into power.  Despite the fact that since the end of the military dictatorship in 1982 Bolivia saw enormous economic improvements including a good growth rate and decrease in inflation, it was not enough.  Bolivia was still South America’s poorest country.[14]  During his term, the annual growth rate averaged 3.9%, but the population was rising over 2% each year.[15]  Bolivians were still poor and were conducting demonstrations to let the government know they wanted more.  One specific problem the people faced was that many mines were closed.  This left many jobless and forced them to build mud shacks near the river where they panned for escaped gold that would float from the mine down the river and were lucky to make $40 a month.[16]  The army, including several middle-ranking and senior officers, was another group not pleased.  Because of the financial problems, defense spending had been cut by one third since 1980.[17] 

In response to these demands of the people and the overall economic situation in Bolivia, President Zamora took actions to improve the economy and appease the people.  He moved eight of his ministers to form a “new-look” cabinet set up to “buy off” discontent.  One of the first groups to receive attention was also the most vocal of the demonstrators, the teachers, who received a 20% wage increase and bonus payments.[18]  By 1990, President Zamora had the government collecting 14% GDP in taxes and balancing its books.  He had also taken steps to negotiate Bolivia’s huge foreign debt.  He attempted to attract more foreign investors by creating a new law that protected their investments.  Congress also worked on laws to encourage foreign investment to particular Bolivian exports including mining, oil, and gas.  All the while, Bolivia’s other exports such as copper, tin, and natural gas greatly increased.[19] 

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1993 – Gonzalo Sanchez de Lozada

President Gonzalo Sanchez de Lozada did much to help Bolivia during his term in office.  It was due to his reforms that Bolivia “made a bold and innovative effort to deepen its commitment both to the market and to democratic governance.”[20]  Lozada’s reforms included large-scale privatization, educational reforms, decentralization of government and free market reforms.  These were seen as “vital if Latin America is to complement its new economic stability with faster growth and greater equity.”[21]  The average income was only about $800, about 20% of the adults were illiterate, and the average life expectancy was only 60 years.  Bolivians economic growth was held back by low savings and investment.  This was the situation in which President Lozada tried to better with his reforms.  He wanted to “jump-start private investment through an unorthodox method of privatization which he christened ‘capitalisation.’”[22]  In this system foreign investors were given a 50% shareholding and management control of one of Bolivia’s five main state companies (telecoms, electricity, transport, oil, and gas) in return for investment pledges that were to be spent within the company within seven years.  This lead to an increase in foreign investment in Bolivia at the same time that privatization and agriculture, particularly soya products were bringing more money to Bolivia’s economy as well.  Although the money being brought in did not come in huge amounts, it was big in relation to Bolivia’s economy.[23]

What was done with this money?  A citizen’s trust fund was started and the large minority holdings in the “capitalized” firms were placed there.  It was the hope that the gradual sale of the holdings in the trust fund would stimulate a local capital market.  Lozada eventually decided to use the trust fund to pay Bolivians over 65 a “solidarity bond,” which he said gave back to the people what belonged to them.  This program was part of a larger attempt to redistribute income and opportunity.[24]

            In addition to increasing foreign investment with his capitalized firms and creating a peoples’ trust fund that gave out solidarity bonds, Lozada also made some other positive changes.  One very popular change was the decentralization of government responsibilities and revenues, which created 311 municipalities (some based on Indian communities) that increasingly gained shares of government revenues.  Mayors were put in charge of health and education and councils were put in place to as a check on the spending of regional authorities.  In addition, educational reforms improved teaching and introduced bi-lingual primary schooling.[25]

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1997 Banzer

            After losing the presidential election four times, Bolivia’s now 71-year-old ex dictator General Banzer Suarez finally receives the office.  As Jonathan Friedland points out Banzer stated that he wanted to “save the country from ‘anarchy and chaos.’”[26]  One of Banzer’s main focuses was the Bolivian economy, which at this point had seen 190 new governments in the country’s 188 year history but had in the few previous years enjoyed a measure of political stability and in those years had worked toward market reforms.  When elected, Bazer promised to keep Bolivia going in this direction by keeping his predecessors policies in tact and moving forward.  Banzer also stressed to the people that his primary goal was to ensure that these policies along with any other that he implemented would help the 7 out of 10 Bolivian’s still living in poverty.[27]

            As far as economic investment is concerned, Banzer wished to take a closer look and possibly reform Bolivia’s handlings in this area as well.  Although Banzer promised to pursue the free-market policies of Gonzalo Sanchez de Lozada, his predecessor, he also stated that he would review contracts signed with US energy giant Enron Corporation and all others that invested in the recently privatized government companies.[28]  Banzer, along with his top economic advisor Jorge Quiroga who was an ex-International Business Machine Corporation executive, worked to continue to welcome and encourage foreign investments but admitted that the new government was unsure if the Bolivia was the best deal possible out Lozada’s uniquely designed partnership with the foreign investors.  The two also believed in introducing more competition for the capitalized companies.[29]

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Banzer, the US and the War On Drugs

            Bolivia’s excessive growing of coca was something that every president had to deal with during his term in office.  Banzer’s presidency was no different.  In fact, he vowed to have the problem solved by the year 2002.  This plan, however, did not go over well with the people of Bolivia who grew coca and depended on its profits to survive.  Bolivia at this time was still a poor country, and although the economy and inflation had been improved by past presidents, Bolivia still contained many poor people.  Many protests including marches, hunger strikes and demonstrations were carried out in order to let Banzer know that he did not have the people’s support.  They wanted to make it known that they had a right to make a living and they were not pleased with his plans to take that away from them. 

Even though Banzer’s attempt to solve the coca problem was not met with total support and backing by the people of Bolivia, it was supported by the United States and the United Nations.  It was believed that if any Latin America company could eliminate the growing of coca, it would be Bolivia.  This was because “unlike Peru or Columbia, it has only two significant coca-producing regions, and most of the crop that ends up as cocaine comes from only one, the inland region across the Andes.”[30]

This attempt to eliminate the illegal growth of coca had been an ongoing struggle for many years not only because it was a way for the poor of Bolivia to make money to feed themselves and their families, but also because the demand for it was so high.  This demand was not only high, but promised to be ongoing.  As long as the drug, cocaine, produced from coca is illegal, people will pay high prices to get it, making it a good way for the Bolivian farmers to grow it.  In fact, farmers made about $2,500 per two acres of land growing coca.[31]

Although previous presidents’ reforms have cut this number down, the high-profit crop left Banzer facing the task of eliminating about 100,000 acres of coca.  In order to accomplish this, the government came up with a plan they titled “Dignity Plan.”  The plan called for the use of new techniques to not only a reduction in the land producing the crop, but also aimed at the supply of the precursor chemicals used to refine the drug and at money laundering.[32]

The Dignity Plan was closely monitored and heavily enforced.  Satellite technology was used to observe the amount of land still being used to cultivate coca.  In addition to this new technological way to keep a watchful eye, a greater amount of police and even the army were given the task of ensuring that those still growing the illegal crop suffered the consequences.  As a result of these efforts, within the first year, over 3,000 people were detained for coca-related or other drug-related offences and about 14,000 acres of coca crops were uprooted.[33]

The plan was not only about the destruction of the crop and the imprisonment of the offenders.  The plan also allowed for the government to inform the farmers of alternative ways in which they could make money to feed their families.  The people were encouraged to grow alternative crops and were informed about new technology in order to make the growing easier and more profitable.  Banzer also had roads and bridges built, electricity installed, schools, as well as other infrastructures put into place as further means to help these former coca-dependent families move away from the crop.[34]

Despite the fact that the government was willing to do what it could to help the people get back on there feet after they abandoned the coca crop, many were very unhappy, making the War on Drugs a dangerous one as some take up arms to let their voices be heard.  Could this opposition lead to more violence and even a second revolution???

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Bolivia, Natural Gas and Development

            The idea of exporting natural gas has made many Bolivians angry.  In fact, it has moved them to acts of violent protest so numerous and intense that it forced President Gonzalo Sanchez de Lozada to step down and allow his vice-president to assume power.  Why all this fuss over gas?  The answer is in the economy of Bolivia.  Bolivia is one of the poorest countries in Latin America, but it is also home to the second largest natural gas reserves.  Former President Sanchez de Lozada had planned on exporting the gas to the United States and Mexico as a method of bringing cash into the struggling Bolivian economy.  As BBC News Online stated, “economists say that since Bolivia has an annual trade deficit between $300 million and $500 million, the gas export plan is the only way the country can balance its books.”[35]  In addition, the International Monetary Fund believes exporting the gas could increase Bolivia’s growth rate by an entire percentage point over the next five years.[36]

            If exporting this gas would be so beneficial to the economy of Bolivia, why did violent protests paralyze the capital city for nearly a month at the news of this plan?  The answer to this question lies in a deep knowledge of the economic history of the Bolivian nation, the perception of that history by the indigenous people of Bolivia, and the actual economic ramifications of the course of action advocated by Sanchez and the IMF.

            The Bolivian economy is part of a larger group of developing national economies that have been described by various scholars as dependent, neocolonial, and peripheral.  Many scholars contend that the Bolivian economy cannot be examined in a vacuum, but must be viewed with the broader global economy in mind.  With this viewpoint, one may see that the position of Bolivia in the global economy has traditionally been that of a supplier of primary unfinished commodities.  Since this has been Bolivia’s traditional role, it is argued that Bolivia will be unable to significantly determine its own economic course by remaining part of that very world system which beggared the nation to begin with.

            The indigenous peoples of Bolivia and specifically the poor have arrived at a very acute awareness of these lines of thought.[37]  The Indians have seen resources flow freely out of their country for centuries while they have remained in poverty.  These peoples certainly identify with the sentiments of Lowry Nelson when he remarked about Cuba: “The land was rich, the people poor.”[38]  This awareness and mindset led directly to the mass riots.  The indigenous people have heard the rhetoric before but the results have always failed to materialize.

            However, it is not only the Indians of rural Bolivia who have lost faith in the classical economic schemes of this type.  Export oriented developmental policies, of the type condoned and often mandated by the IMF, have consistently failed to develop economies based on a single primary export commodity.  In sum, while the macroeconomic indicators of the nation may be significantly affected by the sale of these natural gas deposits, the poor would likely see little benefit.  In other words, the rich get richer and the poor get poorer.