Beware a Leftist Landslide in Bolivia

Another four years of Morales might be the worst news for Bolivian democracy.
Feeling confident.

Bolivia's President Evo Morales has gone on record saying he aims to win reelection this Sunday with 74 percent of the popular vote. Whether that was a prediction or an order, he didn't say. Yet even Morales's harshest detractors allow that the only doubt about the Oct. 12 election is the size of his landslide.

Whatever else can be said about the charismatic Andean leader -- he's authoritarian, obsessively anti-American and brooks no criticism -- his skills as a political operator are unmatched among the region's accident-prone populists. He has ruled Bolivia since 2006, longer than any president since the 19th-century caudillo Andres de Santa Cruz, who was in office from 1829 to 1839. In a country known better for coups d'etats than elections, and which saw six presidents in the decade before Morales, that's all the more remarkable.

Leave aside that another four years of Morales might be the worst news for Bolivian democracy. Skip the persecutions that have driven dissenters into exile and criminalized those who served prior administrations. Internationally-acclaimed former Central Bank president Juan Antonio Morales (no relation to Evo) may be under house arrest with no formal charges against him, but he's still free to walk his Samoyed.

And never mind all those media takeovers by government-friendly investors that have turned the press into sheep. Cocaine, you say? Take it up with Pachamama, the Andean earth goddess, who blessed the hills with coca leaf, not all of which fits into tea bags.

In the company of caudillos, none of this is especially remarkable. What's noteworthy is how one of South America's poorest and most politically volatile nations has fallen for an authoritarian charmer who's mingled intimidation with sober economics to deliver growth and well-being.

Morales was elected in 2006, when Bolivia was barely growing, paralyzed by labor unrest and poisoned by class and ethnic divisions. A former coca farmer of Aymara Indian descent, he parlayed his campesino and indigenous bona fides into political capital and swept into office on his Movement Toward Socialism ticket.

He took his cues from Hugo Chavez's so-called Bolivarian revolution for "21st-century socialism," rewriting the constitution, stacking the courts and centralizing power, but did a far better job of co-opting enemies and filling stomachs.

Like Venezuela, Bolivia sits atop a heap of natural wealth: tin and silver in the highlands, oil and natural gas in the lowlands and soy on the fertile savanna bordering Brazil. Oil and gas revenues, up seven-fold since 2002, now kick in over half of Bolivia's export earnings.

Unlike Venezuela's Chavez, who sprayed oil wealth into compassless social programs and pet political projects, Morales has used his bounty more prudently. He knows Bolivians haven't forgotten hyperinflation, when prices rose by 60,000 percent a year in the mid-1980s, merchants once weighed money instead of counting it and a visitor needed a shopping bag full of pesos to settle a hotel bill.

"Morales knows how politically damaging uncontrolled inflation can be," says Jaime Aparicio, former Bolivian ambassador to Washington. Today, inflation is in single digits and the Bolivian economy has been averaging 5 percent growth annually.

With Bolivia flush, Morales has pumped money into welfare and soft loans for consumers and select businesses. As a result, the streets of La Paz are thick with traffic jams and studded with building cranes.

And therein lies the populist time bomb. Riding the commodities high, Morales has spent more than he has saved. A new banking law capped interest rates. If inflation rises, banks will have to eat the difference, setting up a crisis. Now the commodities boom is waning. Natural gas prices are falling while Brazil and Argentina, Bolivia's biggest clients, both in recession, are tapping their own reserves.

It hardly helps that Morales nationalized "strategic" industries, such as energy, telecommunications, mining and cement, replacing private brands with 23 state companies, "about which we know nothing," said the former Central Banker Morales in an interview.

The result: Private capital has balked and investment dropped to a paltry 17 to 18 percent of gross domestic product.

If commodity prices drop further, Bolivia's fortunes will follow. For now the danger looks distant. But Latin America is full of turnarounds. Morales should know.

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    Mac Margolis at

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