USAID/OTI Bolivia Field Report
April 2005
Program Description
The USAID Office of Transition Initiatives (OTI) Bolivia program promotes peaceful participation in El Alto and other marginalized communities and increases access to balanced information on issues of national importance. OTI also expands economic opportunity by supporting short-term, community-based activities in distressed areas, such as El Alto and the altiplano, which are designed to increase self-reliance. Issues affecting youth and indigenous groups are cross-cutting themes in all of OTI/Bolivia's work. OTI's implementing partner is Casals & Associates. The budget in fiscal year 2004 was $6.3 million and in fiscal year 2005 is $5.5 million.
Country Situation
During April, the situation in Bolivia remained relatively calm in comparison with the widespread unrest in the first quarter of 2005. The lull appears to be in anticipation of the new hydrocarbons law, which is expected to cause significant protest from sectors that desire complete nationalization of the industry. Isolated demonstrations did take place, however, in Potosi and Cochabamba over land access and titling, and in Yacuiba over black-market and cross-border trade.
The Ministry of the Treasury announced that the "Buy Bolivia" program has generated $11.5 million in revenue for the country's economy during its first year. The program, which is designed to open up government procurement processes to small and micro enterprises and stimulate national production, also created 3,579 new contracts for Bolivian businesses. OTI has supported Buy Bolivia with information campaigns and training for small and micro enterprises interested in participating in the program.
Hydrocarbons Law – During the last week of April, the Senate finally agreed on a draft hydrocarbons law that would set guidelines and revenue tax rates for firms that extract and export petroleum from the country's vast reserves. The bill, returned to the House of Deputies for final Congressional approval, was expected to be sent to the President for his signature during the first week of May. The country remains in suspense over whether President Carlos Mesa will sign a law with several controversial provisions that are expected to deter future foreign investment in the petroleum industry, or veto the law, risking the widespread demonstrations and blockades that have been threatened by social organizations and some political movements. After announcing earlier in April that he would veto the law, Mesa backtracked to say that he would wait to see what changes the Senate would make to the House of Deputies' less investor-friendly version of the bill.
The most heated disagreements regarding the new law center on the complicated formula of taxes and royalties that businesses will be charged under the current version of the bill. As expected, the Senate did not include a provision that would have set the ceiling of taxes and royalties at 50 percent. Instead, the amount of revenue that petroleum firms will have to return to Bolivia could now reach as high as 65 percent.
A second highly debated issue is how to address the 76 existing, shared-risk contracts between government and private sector under the new law. Earlier in April, Bolivia's Constitutional Tribunal declared that all of the existing contracts must be reviewed and approved by Congress, generating further conflict between the legislature and the executive. Legislators from the four major political parties responded by threatening to invalidate the agreements and redraw them with terms considered more favorable for Bolivia. Ultimately, the Senate inserted a new provision invalidating the old contracts and requiring that petroleum firms negotiate new terms, which is likely to further discourage foreign investment. Meanwhile, Movement Toward Socialism (MAS), the political party headed by Evo Morales, announced that it would initiate an indictment against the last three presidents, Carlos Mesa, Gonzalo Sanchez de Lozada and Jorge Quiroga, for signing the shared-risk petroleum contracts without first requesting Congress' sign-off on terms of the agreements.
Decentralization – - The National Electoral Court approved a referendum on regional autonomy that was first demanded by Santa Cruz in January. The court ratified the nearly 300,000 signatures, 6 percent of the national electorate, gathered by the Civic Committee of Santa Cruz and required for a citizen initiative referendum. Congress is still required to issue legislation to determine the date and precise questions included in the referendum. Following Congress' decision to hold elections for prefects on Aug. 12, the National Electoral Court has determined a timetable for voter and candidate registration. Citizens were allowed to register for a three-week period beginning in late April, while political parties and civic groups are required to present their candidates by June 13. Since the announcement, members of the traditional political parties have engaged in very public posturing and alliance-making in attempts to better position themselves and improve on their showing since December's municipal elections.
USAID/OTI Highlights
A. Grants Activity Summary
OTI focused on priority activities identified by the Mesa administration, conducted in partnership with government bodies and coordinated through the Ministry of the Presidency. OTI approved six grants during the month for a total commitment of $547,300.
| Community Development and Economic Opportunity |
2 |
$143,300 |
53 |
$1,424,115 |
| Civic Education for Emerging Leaders |
0 |
|
26 |
$ 877,825 |
| Information Diffusion and Dialogue |
3 |
$310,600 |
64 |
$2,420,407 |
| School Reconstruction and Education |
1 |
$ 93,400 |
26 |
$ 599,367 |
| Total |
6 |
$547,300 |
169 |
$5,321,714 |
OTI approved a grant to the Ministry of Popular Participation for $180,000. The Ministry was tasked by the President to design a process to enhance coordination between the ministries and the prefects and provide for the possible transfer of certain functions to the prefects following the Aug. 12 elections. This project will allow the Ministry to carry out a range of activities aimed at consensus-building on the decentralization process. With OTI support, the Ministry will organize consultation processes with civil society and authorities in each department, set up workshops with journalists in rural areas, and produce instructional materials and a nationwide media campaign in preparation for the election.
During the month, OTI launched two large-scale projects to provide undocumented Bolivian citizens with birth certificates and ID's that will allow them to vote and access other rights. Ambassador David N. Greenlee, Mission Director Liliana Ayalde, and OTI Representative Katie Prudhomme participated in a ceremony to announce the citizen registration projects, which will be carried out in partnership with the CNE and the Ministry of the Government. Through a $215,000 grant (approved in March 2005) to the CNE, which maintains Bolivia's civil registry, OTI is providing birth certificates to more than 20,000 undocumented citizens in the seven La Paz provinces. This month OTI approved a $138,000 grant to the Ministry of the Government to provide identification cards for 50,000 Bolivians.
In a ceremony attended by President Mesa and the U.S. ambassador, OTI provided a computer lab and equipment for a public school of 500 in a poor neighborhood of the city of Tarija. This project represents OTI's agreement to help the government with small-scale, education projects in conflict areas throughout the country.
OTI Bolivia staff also briefed and accompanied the deputy assistant administrator for Latin America, Mike Magan, and the deputy office director for South America, Sarah Ann Lynch, on visits to several OTI projects in El Alto and Tarija.
OTI provided a new grant to a women's foundation that supports the production and export of artisan-made household handicrafts. The project facilitates access to materials used by participating El Alto artisans to meet greater demand for their handicrafts, and also developed a workshop to train youths in making the highly sought-after pewter handicraft. An earlier OTI grant resulted in a 60 percent increase in profits by offering technical assistance to design a catalogue and establish the group as a not-for-profit foundation under the above name.
B. Indicators of Success
Building a Culture of Economic Growth – Inciativas democráticas staff attended a public ceremony for an indigenous organization that helps support underprivileged families in rural areas. OTI funded the organization to train 200 unemployed youths on how to start their own businesses. During the course of the training, each youth developed a business plan, earning an official business certification upon completion of the training. The certifications were handed out at the ceremony. The students whose business plans show the greatest possibility for success will receive limited in-kind support from OTI that will be up to the equivalent of 25 percent of the cost of beginning their business.
On April 12, an OTI grantee helped the Ministry of Defense inaugurate the largest state-organized trade fair in Bolivia. The fair is part of the government's Buy Bolivia program. OTI has been supporting aspects of the Buy Bolivia campaign since the decree was issued last year, and its current support will allow the Defense Ministry to publish its demands for goods and services. Statistics published by the government demonstrate that Buy Bolivia has generated over $11.5 million for Bolivian small business, a group that traditionally had a conflictive relationship with government.
Mitigating Conflict Between Local Farmers and Municipal Officials – Aroma Province in the southern part of the Department of La Paz has a highly conflictive history, with last year's assassination of the Mayor of Ayo Ayo being the most recent event of concern. Building consensus on economic activities is a primary means to reduce conflict in this region because disputes often focus on the use of resources. Working in partnership with the Association of Municipalities of La Paz (AMDEPAZ) and an international NGO, OTI provided $70,000 in support of increased production for small farmers in the province and economic-development training for newly elected municipal authorities to help them facilitate local agricultural production. Due to the concerted efforts of AMDEPAZ and its partner, farmers are now working alongside municipal officials to develop the annual municipal budget and increase the productive capacity of rural indigenous organizations. The increasing transparency has been one of the factors that led the national government to unfreeze Ayo Ayo's municipal budget for the first time in four years. AMDEPAZ is now expanding its efforts in six other Aroma municipalities.
Next Steps/Immediate Priorities
In May, OTI will continue to explore new avenues for responding to Bolivia's political crisis, including expansion of its support to the government for conflict mitigation and information diffusion initiatives.
For further information, please contact:
In Washington, D.C: Amy Frumin, LAC Program Manager, 202-712-4231, afrumin@usaid.gov
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