Policy Insanity Unleashes Economic Chaos in Bolivia

Dec. 31—The situation in Bolivia appears to be spiraling out of control after President Rodrigo Paz Pereira’s removal of subsidies on gasoline and diesel fuel Dec. 18, causing the prices to soar beyond most people's ability to pay. Because of years of lack of investment in energy infrastructure—Bolivia once produced oil, diesel, and natural gas to meet its own needs and export—the country now imports 100% of its gasoline and 60% of diesel, paying international market prices.

Although Paz offered some mitigating measures—a moderate wage increase and some additional social services—his revoking of fuel subsidies enraged Bolivia’s working population, which has suffered economic hardship for the last several years. Miners, the Bolivian Workers Confederation (COB), peasant organizations, teachers, and coca producers continue to protest. Some members of the national teachers union are on a hunger strike in La Paz, and these and other unions are calling for major road blockades and other protest actions to “paralyze the economy.”

This is not the nice, orderly transition to a new right-wing government that U.S. Secretary of State Marco Rubio had envisioned when he sent a high-powered nine-person delegation to attend Paz’s inauguration on Nov. 8, to map out draconian economic reforms and guarantee close alignment with Washington. Raising the possibility of civil war, Vice President Edmund Lara, a former police captain, announced that he fully supports the protests, breaking with President Paz and predicting that mass protests will “cause the tyrants to fall.”