Left-leaning president, an Aymara Indian and a former coca farmer, becomes the longest serving leader and incumbent head of state in the Andean country
October 17,2014:Since his first election in 2005, Evo Morales has propelled economic growth in what was once one of the worst performing economies in Latin America, and enacted redistributive policies thanks to soaring gas prices.
About 60% of Bolivia’s 10 million voters approved the policies of incumbent President Evo Morales, who thus coasted to a third consecutive term as Bolivia’s first indigenous leader on October 12, the national Day of Decolonization.
He avoided a run-off by winning 50% of valid votes from his “brothers and sisters”. His closest rival won one-fourth of the vote.
The left-leaning president, an Aymara Indian and a former coca farmer, becomes the longest serving leader and incumbent head of state in the Andean country.
With cheering supporters filling up Murillo Square in the capital La Paz, President Morales said his re-election was a “triumph of the Bolivian people”. He also stressed how important it is “to govern for the benefits of the people.”
“We are going to make Bolivia the energetic centre of South America,” he said, as the crowd chanted “ole, ole, ole”.
President Morales’ conquest of the highest seat is significant as it is the first time all registered Bolivian voters (including about 280,000 nationals living in 33 countries) could cast their ballots.
Originally from a rural community in Sud Carangas – a province suffering from a dearth of electricity and sanitary facilities in the 1990s – President Morales has been popular amongst indigenous people and trade unions.
In the past eight years, he has boosted economic growth thanks to soaring hydrocarbon exports and booming private consumption. He has also significantly improved the lives of long-suffering indigenous people. More than two-thirds of Bolivia’s population is of indigenous origin.
The platform of President Morales’ political party, the Movement Toward Socialism, revolves around reducing extreme poverty, fostering nuclear energy to ensure Bolivia’s energetic independence and developing infrastructure.
Victory no surprise
President Morales’ landslide victory does not come as a surprise.
A June 2014 survey released by the market research company IPSOS set out that his approval rating reached 73% – up from 60% the previous month.
It found that 40% of his proponents endorsed the Morales administration because of its efforts to build roads, airports and schools as well as deliver gas to Bolivians’ homes. They acknowledged that nationalising hydrocarbon riches has enabled redistribution of wealth.
Opponents said his administration did “not govern for all” and has antagonised many middle-class Bolivians. They constitute the core of the right.
Opposition parties criticised President Morales’ candidacy on the ground that he has defied the 2009 constitution, which sets a two-consecutive term limit.
Bolivia’s Supreme Court ruled in April 2013 that President Morales’ first presidency – from 2006 to 2009 – did not qualify as a full term because it was interrupted when the 2009 constitution was adopted. Hence, it allowed him to run again.
A fragmented opposition
President Morales trounced centre-left candidate Samuel Doria Medina, his main rival in this election.
Mr. Medina, a cement magnate who graduated from the London School of Economics, failed to lead the country in 2005 and 2009. He has called for austerity measures to reduce “excessive” government spending.
The centre-right tycoon has also proposed to split half of national revenues from the gas industry with foreign investors.
President Morales also alienated former conservative president Jorge “Tuto” Quiroga who took over from August 2001 to August 2002 after a popular uprising ousted the former president Sanchez de Lozada.
Mr. Quiroga’s platform focuses on neoliberal policies, namely ensuring an open market.
From slow growth to high performance
President Morales reaped the benefits of Bolivia’s strong economic performance. The country had one of the worst performing economies in Latin America at the beginning of the century.
Yet, the United Nations Economic Commission for Latin America and the Caribbean forecasted in August 2014 that the Bolivian economy will expand by 5.5% in 2014. In comparison, the region is expected to grow by 2.2% on average this year.
Thanks to “prudent” macroeconomic policies that kept inflation in check and cut down public debt, Bolivia’s gross domestic product (GDP) grew from 3.4% in 2009 to 6.8% in 2013, according to the World Bank.
This is the highest growth rate of the last thirty years. GDP has grown by an annual average of 5.2%, one of the highest in the region.
As a result, Standard & Poor’s raised Bolivia’s long-term debt rating to BB in May 2014. “Many years of good economic growth and fiscal and current account surpluses have reduced Bolivia’s debt burden, strengthened external liquidity, and increased economic resilience against negative shocks,” reads the statement.
Following neoliberal governments, President Morales has fostered state-led economic policies. He re-nationalised strategic sectors, namely hydrocarbons, telecommunications, electricity and some mines.
The head of state regularly lambasts the United States’ economic model. He said that “predatory capitalism” impoverishes people, especially indigenous cultures, at the United Nations General Assembly in New York on September 24.
It is the most isolated country in the region, but landlocked Bolivia sits atop the second-largest gas reserves in Latin America after Venezuela.
Natural gas has been the state’s main income, especially during the past years of high commodity prices. “El gas es nuestro” (“the gas is ours” in Spanish) said President Morales when he was first elected in 2006.
The new Bolivian Hydrocarbons Law voted the same year declared national ownership of natural resources. The law also required companies to consult with indigenous communities living on land containing gas bonanza.
President Morales benefited from high international commodity prices and increased exports of natural gas.
In addition, he considerably increased public spending whilst maintaining a balanced budget to improve infrastructure and provide social services.
Since the mid-2000s Bolivia nearly tripled its income per capita and reduced poverty, according to the International Monetary Fund (IMF).
“Large salary increases, bonuses and public expenditure have propelled domestic consumption to record levels and a fixed peg to the dollar that in turn [gave an] incentive to consumption domestically and have risen imports,” said Guillermo Alborta, consultant for the Inter-American Development Bank and IMF in Washington D.C.
He explained that in the past four years, real estate asset prices have risen significantly in the main cities. Besides, the streets of La Paz seem to be always in construction as new buildings are being erected.
“Coupled with twin surpluses in the fiscal and external accounts, net international reserves have increased to almost 50% of GDP, providing ample buffers against external shocks,” concluded the IMF Executive Board in February 2014.
Yet, “I think that the Bolivian people particularly appreciate the socio-political changes that are happening,” explains Beatriz Muriel H., Doctor of Economics and Senior Researcher at the INESAD Foundation, a think tank in La Paz.
“Economic policies are much less understood,” she said.
Despite being hailed as a champion of the poor – the minimum wage rose by 20% from 2013 – President Morales has still to close the income gap with the rest of the region. He also has to develop labour-intensive sectors, especially agriculture, which lags behind extractive activities.
In addition, “public investment in infrastructure and state own companies need to be formally appraised and evaluated,” said Mr. Alborta.
“There are contract announcements of new state companies but no one has presented financial statements or results of those investments. Investment results must be shown to make this new model sustainable,” he added.
Finally, commitment to state ownership of natural resources – President Morales’ linchpin – could compromise the country’s attractiveness from investors’ standpoint. Private sector investments remain weak in Bolivia as the head of state has pushed for heavy state intervention in all sectors of the economy.
The newly elected president “should focus on long-term growth to improve the quality of jobs,” said Ms. Muriel.
“This involves working in a closer and broader way with the private sector, mainly the industrial sector, and facilitate the activities of these actors so that economic change is structural and not in the short-term only,” she added as she warned of a potential Dutch disease.