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Summary

Bolivia is one of the poorest countries in Latin America. It has a sizeable and active indigenous population, a long history of coca cultivation, weak political institutions, and continuing political unrest. The country has become increasingly polarized in recent years with regard to disputes over oil and gas revenues, coca eradication programs, and calls for regional autonomy from some parts of the country. Despite these challenges, the country has made some social and economic progress over the last several decades. Coca cultivation has decreased from its peak production years in the 1990s, but is still a source of conflict between the government and coca growers. While political institutions are considered weak, a change in government took place in 2003 according to constitutional provisions. U.S. interest in Bolivia centers on its role as a coca producer, and its relationship to Colombia and Peru, the two other major coca- and cocaine-producing countries. Some observers have criticized this focus for neglecting economic and social development issues, but the State Department defends it as necessary to promote licit economic development and democracy. Bolivia has the second-largest natural gas reserves in Latin America after Venezuela. The Bolivian government has plans, which have generated considerable controversy, to export gas to the United States and Mexico, necessitating the construction of a pipeline to a coastal port of a neighboring country. Political protests during 2003 led to the resignation of President Gonzalo Sánchez de Lozada on October 17, 2003, fifteen months after he was elected. Succeeding him as President was his former vice president, Carlos Mesa, a popular former television journalist, historian, and political independent. This change in leadership came about after months of protests led by indigenous groups and workers who carried out strikes and road blockages that resulted in up to 80 deaths in confrontations with government troops. The focus of the protests was the continued economic marginalization of the poorer segments of society, especially in response to government budget cutbacks and proposals to raise taxes. The final spark, which immediately preceded Sánchez de Lozada's resignation, was his plan to export natural gas via a port in Chile, an historic adversary of Bolivia. The new president has faced many difficulties in governing a politically fractured society, within a context of a highly mobilized indigenous community, continuing street protests, and his inability to obtain consensus on natural gas exports as a basis for the country's future economic development. The change in government and the role that indigenous groups played in it represents challenges for U.S. policy, which is seen as focusing almost exclusively on coca eradication and less on equitable economic development policies. For additional information, see CRS Report RL32337, Andean Counterdrug Initiative (ACI) and Related Funding Programs: FY2005 Assistance, by Connie Veillette. This report will be updated as events warrant.

Related Reports:
• RL32580

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