Protests, Instability Rattle Bolivia's Six-Month-Old Government

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Written by Amir Richani for IIR News Intelligence (Sugar Land, Texas)

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Summary

Bolivia's new government has faced weeks of protests over salaries, austerity measures and economic stagnation. Persistent unrest has disrupted transport around La Paz, and the resulting instability could undermine the investment climate necessary for the president's free-market agenda.

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Anger Boils Over Nationwide

The government of Rodrigo Paz, sworn into power in November, has faced four consecutive weeks of protests that have escalated to blockades around Bolivia's major cities La Paz and El Alto.

The protests broke out in early May with demands for higher salaries, increased government spending on social programs, and measures to curb rising inflation. Since then, the movement has broadened to include multiple groups calling for the reversal of austerity policies, action on fuel prices, protection of indigenous land rights, and broader economic relief.

Protesters now include labor unions, miners, farmers, indigenous groups and supporters of former president Evo Morales.

Protesters have blockaded access to La Paz, prompting a government response aimed at opening a humanitarian corridor to the city. Over the weekend of May 23, the government launched a security operation to open roads to La Paz and El Alto, though security vehicles were met with clashes around roadblocks.

According to local and regional news outlets, 150 blockade points were active across Bolivia on May 26.

Paz's government has called for dialogue to ease tensions with protesters, though efforts have remained ineffective, as groups are asking for the president's resignation. He also has backtracked on controversial land-related policies opposed by indigenous groups.

Edgar Morales, Paz's former Minister of Labor, announced his resignation on May 22.

On May 26, the Bolivian Congress backed changes that eased the process for Paz to request a state of emergency. The change would allow him to mobilize the armed forces and could restrict demonstrations to regain control of the nation's security situation.

Dwindling Natural Gas

For years, Bolivia has experienced declining production of natural gas, which is crucial for both domestic energy consumption and as a leading export revenue stream.

Amid reduced output from Bolivia, neighboring Argentina and Brazil, key importers of Bolivian natural gas, have boosted their own production capacity, further diminishing Bolivia's export earnings and foreign currency reserves, and exacerbating economic challenges.

According to Industrial Info Resources data, Bolivia is home to 23 facilities dedicated to the production or processing of natural gas. Industrial Info Resources offers more information on these facilities in its Global Market Intelligence (GMI) Oil & Gas Production Plant Database, where readers can find details in a list of plant profiles.

Lithium Resources

Paz pledged to draw foreign investment into Bolivia's lithium sector, aiming to create a substantial export market and diversify the economy. Bolivia holds the world's largest lithium resources, but its industry remains underdeveloped and unable to contribute meaningfully to export revenues.

Industrial Info Resources is tracking eight lithium projects in Bolivia, amounting to investments of US$4 billion. Readers can learn more from a detailed list of project reports.

Previous government deals with Chinese and Russian companies have stalled and face hightened political scrutiny, delaying capital inflows and technological transfer.

Paz and Morales

Rodrigo Paz, a centrist and market-friendly politician, is Bolivia's first non-socialist president since 2005. In that year, Movimiento al Socialismo (MAS) rose to power for two decades. Paz campaigned on market-friendly policies aimed at attracting foreign investments to Bolivia's economy, in an effort to rekindle domestic production and boost exports in segments such as lithium and natural gas.

However, the ongoing protests could dissuade investors interested in the country, along with Bolivia's overall political instability from the last few years.

One of Paz's biggest rivals is Evo Morales, Bolivia's president from 2006 to 2019 and the founder of MAS. Morales is one of the strongest opponents of Paz and has called for the resignation of the government, while Morales-linked groups have joined the protests.

"The people do not conspire against democracy," said Morales on X. "Those who conspire are inside the Executive... The people are not coup-mongers. Paz's government is the one that strikes at democracy with unconstitutional decrees and by imposing a de facto governor for La Paz."

Morales is facing legal proceedings in a trafficking case and recently was held in contempt after failing to appear in court.

Key Takeaways

• Bolivians have taken to the streets since early May to protest against President Paz.
• Former President Morales is one of the strongest opponents of Paz, calling for his resignation.
• Dwindling natural gas production and unfinished lithium projects contribute to Bolivia's weak economic activity.

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