Bolivia & Ecuador – Shifting Power Relations between Social Movements and Private Capital

By Juan Andres Misle

What if someone told you that deep within Latin America’s open veins, more than two centuries after an end to Spanish colonial rule, reigns a government with a newly signed free trade agreement with the European Union and the Dollar as its currency for the last decade and a half? This government, not surprisingly, pursues an economic doctrine favorable to big agro-businesses that has resulted in the displacement of thousands of impoverished peasants, the criminalization of labor protests, and an oil-extraction policy that allows multinationals to exploit the most vulnerable biodiverse areas of the world at the expense of indigenous communities. This country’s head of state, a US-trained PhD economist, by most accounts perpetuates the periphery’s commodity-based economic relationship towards the global north that popular social movements have long-fought to overcome.

If by reading this you were thinking of Colombia, Peru, Chile, or any of the seemingly remaining neoliberal bastions of the Americas, then you should reconsider your understanding of the ‘pink tide’ that swept Latin America’s geopolitical map at the turn of the century. The country described above is none other than Rafael Correa’s Ecuador, one of the countries, alongside Bolivia and Venezuela, that depending on your view, can either be caricatured as the hard left bent on bringing Soviet-style tyranny to America’s backyard, or as the 21st century redeemers of Simon Bolivar’s dream of political and economic sovereignty from colonial empires.

Correa

But to the disappointment of the banal and simplistic notions of both of these camps, the reality on the ground is a lot more complex and convoluted, and not necessarily due to the needed contextualization of each of these countries’ political histories.

The political relationship between these governments and popular movements is however more linear amongst them: in many ways, they exemplify how these alliances brought many reformist tendencies across the continent to power and how they evolved over time. Indeed, all three countries stretched strong relationships with various grassroots movements – from indigenous groups, labor unions, to rural communities – that have had tremendous consequences to the evolving conception of democracy in the region.

However, Bolivia and Ecuador’s political and economic evolutions have over time set them aside from the basket case that has become Venezuela’s macroeconomic disaster that is severely damaging the development of grassroots groups and its most vulnerable social sectors.

The similar topography seen in Ecuador and Bolivia offers one possible explanation to their similar evolutions, such as their larger indigenous populations, but examining this alone would downplay the role that economic decisions have had on the two countries we currently see as of this writing.

Evo Correa

This analysis will focus predominantly on Bolivia, the unlikely new darling of international financial institutions. When Evo Morales, the country’s first indigenous president first came to power in 2006, a wave of nationalizations that included the country’s strategic energy and mining industries rocked the neoliberal course it had long undergone. Achieving this was possible through an alliance of the country’s indigenous majority population, coca trade unionists, grassroots environmental groups, among other popular movements that sought to strengthen the state’s role in the economy and weaken the leverage of those perceived to be neocolonial economic entities.

Suddenly, what first seemed to be a government of social movements aiming at refounding the continent’s poorest country into a plurinational state ruled by communal forms of political organization, has adapted to a more considerable centrist agenda that incorporates private capital into its mix.

“The World Bank does not blackmail, or impose conditions, not anymore … many thanks to the World Bank, we recognize it to be the World Bank of the new times, there is no mentality of conditioning” says an enthusiastic Morales at a World Bank-funded project to the southwest of Cochabamba.

The shift to a developmentalist approach appears widespread in the Andean country. When indigenous communities were angered over a 2011 plan to build an extensive road across the Isiboro Sécure National Park, an indigenous territory, protests were met with repressive backlash from security forces. Concessions made to big agricultural enterprises allowing the use of GMOs in soy production have also surprised many of Morales’ allies, as has the recent legalization of child labor. By the time Morales was reelected to a third term in late 2014, he announced the end of further nationalizations, despite continuous boasting of the “triumph of nationalization over privatization.”

Ironically enough, Bolivia’s pragmatic approach at incorporating impoverished sectors into productive labor units has become the envy of many of the more market-friendly governments throughout Latin America. In the Morales years, Bolivia has amassed an incredible amount of foreign currency totaling $14 billion (more than half of its GDP), a fact that should help them weather out future difficult economic times. According to an IMF report, Bolivia recently surpassed China as having the highest ratio of international reserves in the world relative to the size of its economy.

But one of the most compelling criticisms uniting environmentalists and economists alike is the Morales government’s reliance on resource extraction for growth. These groups agree that reliance on resource extraction not only does tremendous damage to the (now constitutionally-protected) environment, but also destines the economy to the international fluctuations of commodity windfalls by failing to industrialize its vastly undiversified economy.

Ecuador too has undergone its share of transformations since first ascending the ‘Citizens’ Revolution’ into power in 2007. Like Bolivia under Morales, Rafael Correa launched to power with the backing of a thorough coalition of similar grassroots groups that catapulted Morales in Bolivia. Yet, as early as 2009, the Correa government began pursuing similar market-oriented developmentalist policies, fostering contradictions within its own movement. But unlike Bolivia, a strengthening dollar risks putting Correa’s developmentalist project into an abrupt halt, as Ecuador’s dollarized economy faces rising export costs amidst low oil prices.

No case has garnered as much international attention as the recent concessions given to companies to drill for oil in the Yasuni National Park, a vastly biodiverse region in Ecuador where a significant indigenous population resides. In late 2013, Correa announced it would reverse a policy that sought to abstain extracting oil from the highly concentrated region, much to the disappointment of Correa’s electoral indigenous base. Some have suggested the policy u-turn was necessary in order to compensate the country’s loss of revenue from lower oil and commodities prices. Correa has nevertheless remained cautious, maintaining the focus of this controversial reversal by insisting that the initial proposal of rejecting oil exploitation in the area did not gather enough international support needed to support the lack of oil investment.

Correa’s response? Demonizing indigenous and environmental groups as destabilizers playing into the interests of the country’s traditional right wing opponents. In other words, prioritizing permanence in power seems to have overtaken the need of protecting vulnerable sectors of society, or so it seems. It should be noted that this is a prevalent theme by the incumbent left throughout Latin America – see Nicaragua – a dangerous trait that can only damage the left’s credibility and the leverage of movements to maintain governments accountable.

Conservative and reactionary forces should be however wary of the implications of what these changes in power relations mean. If the polls for the upcoming presidential election in Argentina are to be believed, incumbent president Cristina Kirchner will see her Front for Victory coalition stay in power for yet another four years, despite the dire economic conditions the country faces, and the distancing of popular movements from kirchnerismo. Recent opposition protests in Ecuador over a proposed tax on capital gains and inheritance also have done little to nothing in persuading indigenous and leftist movements dissatisfied with Correa to unite with the government’s more conservative rivals.

Discontent with the current political elites of the left might not necessarily translate into acceptance or embrace of right wing political and economic governance. The same logic is valid in Brazil, Chile, Nicaragua, and other countries ruled by the different variants of the Latin American left. Political transitions in almost all of the region’s countries will depend to a large extent to the ability of political forces to credibly channel and offer solutions to the demands of popular social movements. Merely banking on opportunism and positioning themselves as the default alternative to discontent – as most traditional right wing parties operate in the region – will not suffice unless the right is able to drop the arrogant and at times condescending manner of approaching grassroots movements. Understanding these shifts in power relations and the changes necessary to adapt to new realities is very quickly becoming a key ingredient to the acquisition of power, and the same is true for the right as it is for the incumbent left and third-way movements.

Are the Correa and Morales governments becoming too permissive with power transfers to capital markets? Could they be on the same bait-and-switch trajectory that eventually led to the collapse of 20th century populist parties in Latin America as it was the case for Mexico’s PRI (Partido Revolucionario Institucional) and Venezuela’s AD (Acción Democrática)? Perhaps. Or maybe these changes signal a deeper understanding of the need to effectively lift the livelihoods of millions still entrenched in endemic poverty without stubborn ideological barriers that prevent the realization of these goals. As much as these governments should contemplate the long-term feasibility of continuously pursuing resource exploitation without a clear path forward towards a fully industrialized economy, popular movements should also deeply reflect on the way in which poverty and inequality should most effectively be tackled in the long term in order to achieve the set goals of sustainable development accompanied with incorporated methods of political participation.

The purpose of grassroots activism has always been setting the tone of national debates within the general public in order to mediate the governing agenda at all levels of civil society. What ultimately remains clear is that increasingly authoritarian tactics that sideline popular movements before and after election season will only drive these governments into repeating the mistakes of past governing elites and eventually pave the way for their inevitable replacement by future social forces, and governments all across the region should take note.

Protesta