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USAID/OTI Bolivia Field Report
May 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
This month brought a number of challenges for the Mesa government as the passage of the long-awaited hydrocarbons law provoked discontent and protests from both left and right. By the end of the month, La Paz was approaching isolation from the rest of the country, with protesters marching down from El Alto and rural centers, preventing any transport from leaving or entering the city.
Hydrocarbons Law – In early May, Congress approved and sent to President Carlos Mesa new legislation to regulate Bolivia's hydrocarbons law, replacing the relatively investor-friendly legislation approved during Gonzalo Sanchez de Lozada's tenure. The new legislation has been described by the business sector, the International Monetary Fund and others as a deterrent to future foreign investment and therefore as economically unviable for Bolivia. Among its most controversial provisions are the obligatory migration of current contracts, the indigenous consultations on new contracts and exploration, and the raising of taxes and royalties. President Mesa, who was given 10 days to veto, line- item veto or approve the bill, chose instead to "observe conceptually," a term that does not exist in Bolivian law. He labeled the legislation as divisive and called for a national unity meeting among all sectors, an invitation that was promptly rejected by many of the key players. When this meeting did not come to fruition, Mesa returned the law to Congress with no observations, which allowed Congress to promulgate the law.
Protest Movements – As predicted, massive social protests erupted immediately after the bill's passage. Despite the widespread cry for nationalization, most observers believe the protests are designed to destabilize the government and seek concessions on other fronts, rather than to see the law changed. The nationalization demand by unions and campesino groups has been accompanied by calls for the immediate organization of a Constituent Assembly, and, on occasion, the rejection of a referendum on autonomy, which is seen as an anti-highlands Santa Cruz demand. In addition, a number of groups, including miners, teachers and health workers, used the momentum generated to seek their own sectors' demands, such as an increase in wages. Blockades and marches originating in various parts of the altiplano and El Alto resulted in the isolation of La Paz as all transport to other cities was suspended and airline flights were temporarily canceled.
Congress – While the public continues to be unhappy with President Mesa's performance, as demonstrated by the fact that he received the lowest approval rating of his presidency in May, Congress is also suffering public scorn. After protesters nearly stormed the legislative building, the President of Congress called for a recess during which legislators could return to their regions to consult their voters. The media criticized Congress for recessing before making decisions on the referendum and Constituent Assembly and called for Congress to help mediate between competing demands by determining a framework that would allow for the referendum and the Assembly. Congress did not respond to these demands, and rather called on the church to help reconcile opposing interests. In the meantime, the pro-autonomy committee of Santa Cruz bypassed Congress altogether, declaring a referendum on autonomy for the same date as the prefectural elections, currently slated for Aug. 12.
Economic Repercussions – The largest foreign investors in the hydrocarbons sector announced that they would maintain their operations in Bolivia despite changes to the law. It is the protests resulting from the hydrocarbons legislation, rather than the legislation itself, that have had the biggest negative impact on the Bolivian economy. Daily economic losses for La Paz are estimated at $10 million. These losses, combined with the resignation of Bolvia's Free Trade Agreement negotiator, Juan Carlos Iturri, and government-released statistics on an increasing external debt, paint a grim picture of the country's short-term economic future.
USAID/OTI Highlights
A. Grants Activity Summary
May 2005 was OTI/Bolivia's largest month since the program's inception in March 2004 in terms of commitments, with a total of 13 grants for $533,200. Seven of OTI's grants were conflict-resolution projects prioritized by the Mesa government and coordinated directly with individual ministries, while the others focused on improving economic opportunities and the quality of information in El Alto, and school rehabilitation in the altiplano.
| Community Development and Economic Opportunity |
5 |
$ 221,000 |
58 |
$1,645,115 |
| Civic Education for Emerging Leaders |
1 |
$ 47,800 |
27 |
$ 925,625 |
| Information Diffusion and Dialogue |
2 |
$ 40,400 |
66 |
$2,460,807 |
| School Reconstruction and Education |
5 |
$ 224,000 |
31 |
$ 823,367 |
| Total |
13 |
$533,200 |
182 |
$5,854,914 |
OTI's grants to help the Bolivian government included the following projects:
- A $25,400 community-development and reconciliation project in the southern part of the Department of Oruro. Following the recent signing by the Ministry of Indigenous Affairs of an agreement to end a community dispute over provincial borders, OTI will help groups work together on a livestock-raising project.
- In the border town of Yacuiba, OTI's $60,000 grant will pay 600 families for temporary work to improve their neighborhood, while the government is putting into place several long-term job-placement plans. These stevedores who used to transport goods back and forth from Argentina have been out of work because of changes in border regulations.
- OTI continues to support the work of the state hydrocarbons company, YPFB, and the neighborhood association in El Alto in installing a tertiary natural-gas network throughout El Alto. This multi-district year-long effort will eventually result in access to hot showers and cooking facilities for more than 500,000 Altenos. During May, OTI signed a grant with a private engineering company and 13 institutions (including schools, a health clinic and public markets) to install the pipeline and rehabilitate facilities to benefit almost 100,000 people in District 5 of El Alto.
Two other OTI grants in May were geared to helping jumpstart El Alto's significant economic potential as an export city. One $9,000 OTI project will help the city's civic committee educate Alteno micro enterprises on the new economic development law and what opportunities it offers them. The second project for $40,000 is a private-public partnership in which the municipality of El Alto will train 400 workers to do embroidery for Ametex, the largest textile exporter in the country. This project offers tremendous possibilities for replication because export businesses in El Alto have a significant demand for qualified workers that cannot be met with the skills of the current labor market.
B. Indicators of Success
Timely Public Infrastructure Delivery – An OTI grant for water and sewage pipes allowed the Ministry of Public Works to deliver on a promise to El Alto and to defuse radical sectors' demands for nationalization of water services. The $31,000 grant helped the government install pipelines to benefit more than 2,000 families in District 8 of El Alto, an area that has suffered from lack of basic services. The ceremony to install the pipelines was attended by thousands of community members and received extensive press coverage. An indication of the importance of the government delivering on this basic need was the statement by Fejuve leader Abel Mamani noted that "the government has answered the demands of citizens of District 8." In addition, the government of Bolivia was able to use this success to help secure further commitments for assistance from European donors.
President Mesa attends OTI School Project in Sucre – On the May 25 anniversary of the founding of the Department of Chuquisaca, President Mesa visited the capital of Sucre and personally inaugurated the computer lab that OTI had installed at the vocational school Mariscal Sucre. In his speech to hundreds of students and parents at this school, which serves 180 students, he noted that the equipment was an indication of his government's and the U.S. government's interest in improving livelihoods in Bolivia. This $9,000 grant is an example of the small-scale but symbolically important assistance that OTI can provide to help the Mesa government demonstrate progress, despite political turmoil.
Next Steps/Immediate Priorities
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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