Like Water for Capitalists

Understanding authoritarianism, privatization and capitalism in Bolivia

American corporate media and American hegemony want you to believe that many socialist governments are authoritarian.  But none of the socialist governments, past and present, are as violent or as repressive as a capitalistic government captured by for-profit corporations.

When Americans look at trickle down capitalism, they often compare standards in America to, say, an emerging socialist third world country and they are too eager to believe that socialism is the cause of the misery.  But, what Americans don't realize is that America occupies a special place in the food chain.  If we want to see the truly horrific, anti-democratic, authoritarian nature of capitalism, we need to examine countries further downstream.

Recently, coup leader, Fernando Camacho wrote to OAS asking for their help in stopping Democracy.  Bolivia is a great example of the authoritarian nature of capitalism.  

After the devastation wrought by Reagan and Bush’s “War on Drugs,” Bolivia’s economy was struggling in every imaginable way.  By 1992, the life-expectancy of an average Bolivian was only 52 years old.  Rural areas that were so well-cared for in the era of the Incas lost their roads, healthcare, potable water and sewage--all casualties of a systematic campaign of terror. In a textbook case of what Naomi Klein refers to as "the Shock Doctrine," the US government had created a crisis for the Bolivian people...and an opportunity for the capitalist class.

Bolivia had two presidential candidates Max Fernandez and Gonzalez Sanchez de Lozarda (“Goni”) who were the richest two candidates in Bolivia.  Max was a beer magnate, and Goni was a son of a mining magnate.  According to the rules in 1993, if a candidate does not get at least 50% +1 vote in the first round of elections,  the top-two candidates have a run-off.   Goni, with the help of his US team, won the election despite receiving only 36% of the popular vote. However, there was no run-off in August, as he reached a deal with some opposition parties where they conceded before the second round.  

Goni, a graduate of the University of Chicago who grew up in Iowa and spoke Spanish with a midwestern accent, was thoroughly drunk on the Washington consensus—he even brought with him his own team of “Chicago boys.”  He was already independently wealthy, so he didn’t even have to be bribed for him to sell out his country.  Just a few words of flattery from the world’s most “respectable” economists was sufficient.  

In his infinite, University of Chicago-approved wisdom, he concluded that the lack of basic public services was due to “corruption” and government “waste.” But Goni had a plan! He called it "Plan De Todos" which was supposed to fix all of Bolivia's ills. It was called capitalization.  During the election season, he kept it vague and no one actually knew what it meant.  This was probably done on purpose because no remotely rational person would consent to such a ludicrous plan.

According to the December 1993, World Bank meeting minutes, Minister Manes presented "the capitalization program as an innovative and dynamic process." Privatization is when a public enterprise is sold to a private entity in exchange for money.  Capitalization is when a public enterprise is given to a private entity and then the private entity also keeps the money. It's basically a gift.  If you think I am being facetious, here is the original World Bank document explaining to us the "innovative" plan of capitalization.

Capitalization was to be done in four phases.  They started with the electricity, moved to the hydrocarbons and by 1996, they even privatized the water. In the city of Cochabomba, The sole bidder was Aguas del Tunari—a subsidiary of Bechtel—a US-based contractor and construction giant. For $2.5 billion, Bechtel was given a contract “to provide water and sanitation services to the residents of Cochabamba, as well as generate electricity and irrigation for agriculture."  The contract also guaranteed the consortium a minimum of 16% return on investment, which was to be annually adjusted to the US consumer price index. The federal congress did this without consideration of the pueblo or the autonomy of the indigenous people who lived there.

Within the first month of taking over, Bechtel raised the water rates for the poorest of the poorest Bolivians by over 60%. Worst of all, the people could not even collect rainwater because Goni and his American cronies had also given the rights to rainwater to the consortium.  

The people of Bolivia protested, the military was called to repress these protests.  Many people were killed, but ultimately, the protest forced even the neoliberal government of Bolivia to cancel the water contract. Bechtel responded by suing Bolivia in a private arbitration court where they get to select the judges and rig the rules in their favor.

In response to this and many other dysfunctionalities, indigenous groups, multiple times tried to mediate national dialogue and all of these instances of the dialogue failed to address any of the problems. Without response from the elites, in 2001, the indigenous movements held 5 members of President Quiroga’s cabinet in the Aymara municipality of Ayo Ayo, which finally made President Quiroga realize that there was a massive uprising.  His cabinet members drew up a proposal for a constitutional assembly which would draft a new constitution.

However, Quiroga's term was coming to an end. In 2002, Evo Morales ran for President as an insurgent candidate.  Gonazalo Sanchez de Lozada—a graduate of the University of Chicago who grew up in Iowa—hired James Carville’s consulting firm to swing the election in his favor.  Goni didn't have an outright majority. According to the 2002 constitution, when a candidate doesn't have an outright majority, congress would vote for the winner.  

The Bush administration started actively campaigning for Goni.  US ambassador Manuel Rocha threatened “if you elect those who want Bolivia to become a major cocaine exporter again, this will endanger the future of US assistance to Bolivia.” Behind the scenes, they brokered an “anti-MAS” alliance, which then incentivized a coalition government that voted for the Goni.

When he took the Presidency, Lozada cancelled the previous agreement, without a tinge of self-awareness, claimed that he didn’t want to give voice to those who were undemocratic.  He was ousted a few months later after much bloodshed.

When Goni was in office, the US establishment showed both contempt and fear towards Evo Morales. A USAID document referred to Morales as an "illegal, coca, agitator." NED documents also mentioned the need for creating a centrist, business-friendly opposition to counterbalance MAS.

But the populist anger towards commodifying Bolivia could not be soothed with more centrists offering more market-based solutions. After multiple changes in the presidency because of the water wars, in 2005, Morales platform had three main components:

  1. drafting a new constitution with a constituency assembly that was truly representative of all groups.

  2. Nationalize the hydrocarbon industry

  3. Redistribute the land.

Evo Morales won the presidency on a landslide where MAS was a few seats short of having a ⅔ majority.