Gasolinazo Challenges Bolivia's 'Process of Change'
February 28, 2011 - North American Congress on Lain America (NACLA)

Emily Achtenberg

Christmas in Bolivia was short-lived last year, as tens of thousands thronged to the streets to protest the gasolinazo, a massive increase in gasoline prices provoked by the MAS (Movement Towards Socialism) government's abrupt cancellation of fuel subsidies on December 26. Five days later, the government was forced to rescind the decree. 

As shockwaves from the gasolinazo continue to roil Bolivia's social movements, politics, and economy, urgent questions are being raised about the direction of the "process of change." Political analyst Raúl Zibechi calls the episode "an unprecedented event in recent Latin American history: the first massive popular uprising against a leftist government."

To be sure, popular revolts over government hydrocarbons policy are nothing new in Bolivia. During the "gas wars" of 2003-5, two neoliberal presidents were toppled by social movements demanding an end to public giveaways of Bolivia's vast gas and oil resources to transnational corporations. Evo Morales, then a radical leader of the coca growers' union, played a prominent role in these struggles, which eventually catapulted him into the presidency.

In 2006, Morales put the hydrocarbons industry largely under state control. Since then, Bolivia has benefitted from a vast increase in royalties and tax revenues from natural gas exports (now exceeding $1.5 billion annually) to fund social and economic programs. Largely as a result, Bolivia's economy has been among the most vibrant in the region, with annual fiscal surpluses and impressive reserves.

Accordingly, the government's decree raising gasoline prices by 73%, and diesel prices by 82%—the largest increase in 30 years—came as a shock to most Bolivians. At $3.42 per gallon, gas would now cost more in impoverished Bolivia than in the United States.

Overnight, bus and taxi fares doubled, food prices soared, and panic buying caused long lines for disappearing staples at state-run markets. Some $200 million in bank deposits was withdrawn, sparked by rumors of imminent government restrictions.

The government pledged compensatory measures to soften the impact, including a freeze on utility rates, a 20% pay increase for public sector and minimum wage workers, and emergency jobs for the unemployed. Funds were also promised for rural infrastructure projects and agricultural price supports. The army baked and distributed bread at pre-gasolinazo prices to counter a bakers' union strike, and provided free transportation.

The government explained that the decree was necessary to prevent the rapid growth of gasoline subsidies and contraband from "bleeding the economy." While exporting abundant natural gas, since the late 1990s Bolivia has imported gasoline and diesel (mostly from Venezuela and Argentina) at the market price, reselling it at a discount to Bolivian consumers. This "neoliberal" fuel subsidy, Morales argued, cost the state $380 million last year, but primarily benefitted Santa Cruz-based agribusiness and smugglers who resold the gas at double or triple the price across the border (wasting $150 million of the subsidy in the process). With the subsidy, gasoline in Bolivia has been cheaper than beer or water.

The decree would also promote energy sovereignty by stimulating domestic gasoline and diesel production, ending Bolivia's dependency on foreign imports. With crude oil prices frozen at $27 per barrel, less than a third of today's world price, the transnational companies that Bolivia still depends on for new production are unwilling to invest in exploration. With the near-depletion of existing oil reserves, Bolivia's crude oil production has dropped more than 50% since 2006.

Unlike similar fuel price hikes imposed by prior neoliberal governments to enrich transnational corporations, Morales argued, the decree was a patriotic measure designed to protect the economy and redirect wasteful subsidies into social and economic programs. Morales blamed "unscrupulous" sectors (such as the taxi owners who control Bolivia's public transportation system) and local elected officials affiliated with the center-left political opposition (who set local taxi rates) for escalating prices more than necessary after the decree was announced.

But few were satisfied by either the compensatory measures or the explanations. Critics noted that informal sector workers, who constitute 70% of Bolivia's economically active population and would be hard hit by soaring transportation and food prices, would receive little protection. The government's approach was "classic shock therapy, right from the IMF playbook," said energy analyst Carlos Alberto López. The daily BolPress editorialized: "The MAS government has succeeded in doing what no neoliberal government was able to do for 25 years."

On December 30, massive protests, including civic strikes, road blockades, and marches, paralyzed virtually every major city. The mobilizations were led by sectors that have been traditional bastions of MAS support—neighborhood groups and informal sector workers in El Alto, miners in Potosí, even coca farmers in Cochabamba--joined by political opposition parties and conservative civic groups in a rare display of unity, demanding that Morales either annul the decree or resign.

National mobilizations were scheduled for January 3 by the COB (Bolivian Workers Central, the national trade union federation) and CONAMAQ, representing highland indigenous groups. However, the major national peasant union organizations continued to back the government.
In his New Year's Eve announcement abrogating the decree, Morales recalled his inauguration promise to "lead by obeying" the Bolivian people. "The measure was necessary," he stated, "but the timing was not right."

The government remains committed to ending the fuel subsidy, he emphasized, but will develop a revised policy "in consultation with the people." Reportedly, the military demanded authorization to repress the protesters as a condition of its continued support for the gasolinazo, a step that Morales was unwilling to undertake.

The gasolinazo has opened a new chapter in Bolivia's "process of change." The social movements historically aligned with MAS have shown renewed strength and independence, effectively renegotiating their relationship with the government. At the same time, the loyalty to Morales demonstrated by organized peasant groups—arguably those most negatively impacted by the gasolinazo—signifies a new cleavage in the popular alliance that brought him to power.

The mobilizations featured a resurgence of grassroots autonomy, often at the expense of traditional social movement leadership. El Alto protesters stormed the headquarters of FEJUVE and COR, chief protagonists of the "gas wars," whose leaders were perceived as co-opted by the government. Dissident coca farmers in the Chapare blocked highways without official authorization. "With the December uprising,"  says Oscar Olivera, a leader of the 2000 "water wars," "the people recovered their voice, their memory of struggle."

Most analysts agree that the gasolinazo represents a significant setback for the MAS. Protestors attacked sites and ideological symbols closely associated with the government, including Morales's coca federation headquarters in Cochabamba, the Venezuelan flag in La Paz, and the Che Guevara statue in El Alto. For ex-MAS cabinet minister Félix Patzi, these incidents underscore the popular outrage at "a supposedly socialist government issuing a neoliberal decree." Many wonder how Morales—an astute politician who acknowledges that in his former role as union leader, he, too, would have opposed the gasolinazo-—could have failed to anticipate the breadth of opposition to the fuel price hike. While some fault a growing "arrogance of power" that disconnects the MAS leadership from its bases, many popular organizations blame particular ministers for undermining the "process of change." Morales' recent cabinet announcements, which keep the economic team intact have not satisfied the expectations of groups looking for a new policy direction.

A recent poll puts Morales' approval rate in the four largest cities at just 30%, in sharp contrast to his 64% electoral mandate in December 2009. Still, few are willing to predict his political defeat, given his strong support in the countryside, the lack of any formidable political rival, and the continued vitality of the economy.

The gasolinazo has exposed significant problems and contradictions in Bolivia's energy and hydrocarbons policies. Many who criticized the abruptness of the price hike agree that the escalating fuel subsidy is unsustainable  and should be eliminated over time.

For others, the episode reveals the limitations of the 2006 hydrocarbons "nationalization," which has brought neither energy sovereignty nor sustainability to Bolivia while maintaining its dependence on oil and gas transnationals. "There wasn't a true nationalization," says El Alto activist Carlos Rojas. "The foreign companies have retained control, and pressured the government to dictate the gasolinazo."

UNADERENA, a coalition of popular organizations seeking alternatives to the gasolinazo, thinks the government should beef up the state oil company's productive capacity and allow it to take full control of the hydrocarbons sector. They propose eliminating other wasteful energy subsidies, such as the $700 million annual giveaway to Brazil when Bolivia sells its natural gas without separating out liquids that can be converted to petroleum products.

The government could reduce dependency on petroleum, they argue, by securing new natural gas reserves solely for the domestic market and developing pipelines to advance regional and local industrialization projects. Groups like CONAMAQ want a moratorium on all new extractive projects, which are primarily located in indigenous territories.

The gasolinazo has opened up a broad debate about Bolivia's political and economic future, creating new tensions and opportunities for the "process of change." Whether the MAS government will accept this challenge as a "wake-up call" for a new, more participatory direction remains to be seen.

Emily Achtenberg is an urban planner and a NACLA Research Associate.