19 Mar 2009
Council on Hemispheric Affairs
- Moscow is increasing its presence in South America, the latest being its development and military agreements with Bolivia
- Russian military helicopters to be used by Bolivian security forces for drug operations, sending a message to Washington that DEA aid is not needed in the Andes
- Bolivia becomes the equivalent of Saudi Arabia when it comes to the lithium market, but will it help abate the former’s high poverty rating?
- Bolivian leader Evo Morales seeking recognition as an autonomous figure and not a Chavez clone
- Obama administration bestowing priority to Middle East and Asia; conversely Russia, France, Iran and China, among others, rule the roast in the Americas
- The 5th Summit of the Americas to be held in April in Trinidad and Tobago will be the first meeting between Obama and all of the region’s leaders. Nevertheless, a month is a long time in politics and Washington continues to watch its influence drain in what increasingly must be viewed as its former “backyard”
The significance of these events could vary, but there is no question that these make up yet another message to Washington that extra-hemispheric powers have created new beachheads boosting influence throughout Latin America.
Morales looks to the International Markets
It appears that Morales wants to begin 2009 with panache. The purchase of Russian military helicopters for use in for counter-drug operations represents a very strong signal of contempt to Washington, which, during the Bush administration, accused La Paz of failing to effectively combat drug trafficking. Morales now is using his country’s bountiful natural resources to help project his country’s presence in international markets. It is yet to be seen, however, what positive benefits will trickle down to Bolivia’s average citizens.
Mr. Morales and Mr. Medvedev Meet
Russia’s ongoing diplomatic and business dickering in the region is now aggressively targeting Bolivia, a country whose leader, Evo Morales, is closely allied with his Venezuelan counterpart Hugo Chavez, who arguably is Moscow’s most important ally in the region today.
Russia has had a slow but steadily growing influence in Bolivia in recent years both through government agreements and private investment. A February 9 article in the Miami Herald highlighted a growing trend that much of Bolivia’s booming gaming industry, for example, has Russian owners. For instance, Russians own the Ritzo Entertainment Group, the key gaming enterprise in the country. The report explains that “today the [gambling] chain is the largest in Bolivia, with 15 gaming halls. There are [such] locales even in remote areas of the Amazon, and two mega-casinos are set to open in this year in the cities of El Alto and Santa Cruz.”
During the mid-February Moscow meeting between Morales and Medvedev, a memorandum was signed between the two leaders to cooperate in the development of the Andean country’s hydrocarbon resources, given that Bolivia has the second-largest gas reserves in South America (about 1.38 trillion cubic meters). Morales’ trip and the agreements that flowed from it came on the heels of the pact signed last September between Russian energy giant Gazprom and France’s Total regarding Bolivia. According to an Associated Press report, the two companies signed a natural-gas exploration agreement that was eventually expanded to eventually attract as much as $4.5 billion in investment which will be required to fully develop the Azero field located in southeastern Bolivia. The agreement is essentially a trilateral partnership, as the other company joining this venture is Bolivia’s state energy combine, Yacimientos Petroliferos Fiscales Bolivianos (YPFB).
Russia To Export Helicopters to Bolivia
Furthermore, agreements on military cooperation were also signed, aimed at Bolivia’s purchasing of Russian Mi-17 helicopters. Recent reports indicated that Bolivia could receive its first two helicopters as early as April. “As far as I know, two Russian helicopters will be shipped to Bolivia in the first weeks of April. They will be used to destroy cocaine plantations in the country,” Felipe Caceres, deputy minister for social defense said to reporters in early March.
The objective of the Mi-17 military helicopters’ purchase transaction is predicated on their mission in anti-drug operations. In reality, the decision to purchase Russian hardware is not surprising, as they are renowned for being very useful and effective at high altitudes, which is particularly important in a mountainous Andean country like Bolivia. Of note, the cornerstone of Peru’s helicopter fleet are Mi-helicopters. The tri-border region involving Bolivia, Brazil and Peru has a very limited presence when it comes to security forces, making it necessary to have helicopters for mobility, particularly for the quick movement of troops. The corollary of the purchase is that Bolivia is determinedly shunning from collaboration with Washington in anti-drug operations, highlighted by Morales’ decision last year to expel DEA agents and other U.S. officials who, he claimed, were improperly associated with the Bolivian military.
In an interview with COHA, an analyst of the La Paz-based research center Centro de Estudios sobre Justicia y Participacion (Center for the Studies on Justice and Participation – CEJIP) maintained that the DEA was in charge of paying off local informants. “The government said that it will cover the costs but this is difficult since there isn’t a budget specifically assigned to this operation,” said the analyst. He went on to explain that, “in any case, in the almost two decades of the application of Law 1008 against the illegal use of drugs, there hasn’t been much of an increase in effectiveness. Meanwhile 80% of Bolivian jails are full of inmates accused of drug trafficking-charges.” He also noted that “the American agencies have paid bonuses and incentives to the Bolivian police and members of the public ministry, which signifies a more or less brisk job of capturing petty criminals (usually the impoverished youth) but without even beginning to tackle the real causes of drug trafficking.”
Bolivia is presently the third largest producer of cocaine in the world, trailing only Colombia and Peru. A recent annual report by the United Nations’ Junta Internacional de Fiscalización de Estupefacientes (JIFE) stated that cocaine production, which is derived from coca plants, in the aforementioned three countries, increased by an average of 16% in the past year alone. According to the JIFE, however, the production of cocaine itself is estimated at 994 tons, only 10 tons more than last year. Therefore, it is unclear how well JIFE’s estimates can be trusted without actually asking each drug cartel in Colombia, Peru and Bolivia how much cocaine they produced. At this point, JIFE’s data should best be applied with a degree of caution.
Morales’ recent European tour and the subsequent agreements signed indicate that the Bolivian leader wants to be regarded by the international community as exactly that – a leader. In addition to this, Morales has now returned to Bolivia and now, for the trip to be completely successful, he must ensure that his European tour has a positive effect on Bolivia’s daily life and the democratic viability of its political institutions.
Evo Morales’ Mission: Putting Bolivia On the World Map While Creating a Decent Society At Home
Last year was a difficult one for Bolivia as yet another round of street protests swept through the nation which included calls for a referendum on autonomy by the nation’s eastern separatist provinces (which the government labeled as illegal). The September massacre in which around 30 peasants died in one such province prompted Morales to replace the governor of Pando and appoint a military officer in charge. This step served to increase already existing concerns about the military’s worrisome pervasive role in Bolivia’s domestic political affairs. In spite of such setbacks and repeated crises, Morales has remained in power, which is no small feat in a chroniccaly country like Bolivia, which has one of the highest rates of coups on the continent.
It seems that in 2009, Morales is attempting to be more pro-active by aggressively seeking new alliances outside of South America. There may be a personal reason for this strategy, as Morales (and to an extent Ecuador’s Rafael Correa) are widely perceived as being something like Hugo Chavez’s protégées. During the latest wave of violent protest in Bolivia, Chavez went as far as declaring that if Morales was overthrown by such shenanigans, Venezuelan troops would be deployed to the landlocked country to maintain him in power. This statement was not well-received by the Bolivian military.
Through trips to Moscow and Paris and by plying his country’s enormous deposits natural resources, Morales is asserting himself as an important potential client when it comes to commodities, who deserves to be courted as much as the leadership Venezuela and neighboring Brazil. During his very successful stopover in France, Morales met with representatives of the French industrial conglomerate Bollore, among other commercial interests, interested in exploiting Bolivia’s newly plumbed lithium reserves for use in batteries for use in extended-life electric cars as well as for computers. Morales’ government has also been involved in talks with the Japanese companies Mitsubishi and Sumitomo about possible lithium extraction and refining investments.
Morales’ trip appears to have paid off, particularly because gas and lithium are two resources which are right now in high demand for current and the next generation usage of many devices. “There are salt lakes in Chile and Argentina, and a promising lithium deposit in Tibet, but the prize is clearly in Bolivia,” Oji Baba, a Mitsubishi’s Base Metals Unit executive, asserted in La Paz. “If we want to be a force in the next wave of automobiles and the batteries that power them, then we must be here,” added the official. In an interview with COHA, Bolivian geologist and business entrepreneur Jose Guillermo Torrez argued that the exploitation of Bolivia’s lithium should be given to the most capable company, regardless of its country of origin. “It should not limited to picking from French or Russian companies, but also from companies other from industrialized countries,” explains Torrez.
Will Lithium be Good for Bolivians?
The question then becomes how much wealth, if any, will trickle down from these billion-dollars contracts now being signed. If Bolivia become the Saudi Arabia of lithium, only a small clique of government officials and rich investors are likely to profit from the lithium as well as a new generation of gas contracts unless corrupt practices in the nation are severely constrained.
As the country has seen over the past years, Bolivia’s gas-rich eastern provinces have repeatedly attempted to achieve some degree of separatism from the poorer, more populated high-plateau regions of the country in order to retain the bulk of the wealth derived from gas exports. Bolivia’s lithium reserves are located in the salt flat of Uyuni (also known as Salar de Tunupa), which is located in the province of Potosi. The province is dominated by Morales’ party, Movimiento Al Socialismo (MAS) and its population voted for the “NO” to autonomy in the latest referendum.
It appears that from whatever revenue the Bolivian government may currently be earning from incipient lithium exports, the quality of life and work standards of local workers actually involved in the extraction has yet to improve. A February report by the McClatchy newspaper’s South American correspondent, Tyler Bridges, mentions the case of the lithium facility at Uyuni, where workers of the state-mining company COMIBOL (Corporación Minera de Bolivia) are currently constructing barracks and will subsequently create evaporation ponds to begin the process of separating the lithium from the brine of the salt flat. One of the workers, speaking about how the government treats its own workers, said that “we work 21 days, and then get seven days off […] they take us to Uyuni in the back of a dump truck, packed together like sardines.” Another added that “private companies treat us better than the state company.”
A February 2006 editorial by the economist Juan Cariaga appearing in the Bolivian daily La Razon noted that “no one in the world can understand how Bolivia begs for international aid to be able to pay its state employees.” The article notes that Bolivia already has tried before to export its lithium reserves and failed. In the 1990s, the American Lithium Corp. halted its attempt to exploit the Uyuni salt flats and then decided instead to invest in Argentina’s lithium reserves, located in Hombre Muerto.
The aforementioned geologist Torrez, author of the 1986 major work entitled Mineria e integracion Boliviana is hopeful about this new opportunity for exploiting Bolivian lithium. He observed that “indigenous groups have lived for years in the Uyuni area, and now they will have new job opportunities while the regional governments will receive income to promote development projects.” He adds that there are plans to ensure that exploiting Uyuni and other salt flats will not compromise the environment or the health of workers and local inhabitants.
The aforementioned CEJIP analyst explained to COHA that the failed Lithium Corp. venture in Bolivia is regarded as an opportunity lost by the inhabitants of Potosi. “We don’t believe that the local inhabitants will protest as, right now, the department is at a loss due to the price of minerals which is the principal source of employment and resources,” explained the CEJIP researcher.
The Morales administration seem to be focusing on exploiting this natural resource, however, despite whatever popularity the president has gained abroad in terms of renewing the importance of Bolivian in world export markets, the president has much to do at home regarding domestic policies.
A Bolivian “Good Neighbor” Policy
In spite of the economic factors and prospects for obtaining the required new investments, Morales will have to try improving relations with both the country’s domestic political opposition and neighboring countries, mainly Peru. Regarding domestic politics, the separatist provinces continue to be an issue that can trace its lineage back to long before Morales came to power.
At the regional level, Bolivia should pursue a “good neighbor” policy its immediate neighbors, most notably, Peru. The two countries have a long historical relationship, including partnership in a 19th century confederation. In the last several years, highlighted by the election of Alan Garcia to the Peruvian presidency, the two countries have drifted apart at the government level. The latest round of tensions came in early February when some Peruvian congressmen entered Bolivia to investigate the international links of the “Alba houses” that, in the past several years, have been set up in Peru. “Alba houses” are humanitarian organizations which are ostensibly linked to Hugo Chavez’ regional movement known as Alternativa Bolivariana para las Américas (ALBA) – Peru is not a member of this group as are Bolivia, Cuba, and Nicaragua, Honduras and Dominica in addition to Venezuela
The irritating factor was that Morales did not endorse the visit, particularly as the Peruvian legislators met with opposition leaders and not with government officials. The Bolivian leader also has alleged that the U.S. has secretly built a military base in Southern Peru, a claim which has been dismissed by both Lima and Washington. Because Ecuador’s President Correa does not plan to renew the lease on the military base in Manta which Quito is renting to the U.S., Washington-friendly Peru is being talked about as being the choice for a replacement military facility, something that Morales does not want to see happen.
Nevertheless, Morales must recognize that drug trafficking in Bolivia will not be solved by twenty new Russian helicopters and must therefore also promote dialogue and inter-state operations between law enforcement agencies to effectively tackle drug trafficking gangs to be found in the Peruvian-Brazilian-Bolivian tri-border region. A former high-ranking Peruvian military official interviewed by COHA researchers explained that “Morales cannot handle and defeat drug trafficking in his country single-handedly; the nature of the problem does not allow it.”
In South America there are Bears, Dragons, Iranians and the French, but hardly any Eagles
Within the past year, different extra-hemispheric powers have made a pitch at South American countries, and the same is true in reverse. After travelling to Russia, Morales visited France to sign an agreement with the Bollore Group to exploit Bolivia’s potentially profitable lithium reserves. Diverse reports point to a burgeoning Bolivian and Iranian ties. The new investments include Tehran funding the construction of a $2.5 million hospital in the Bolivian city of El Alto, and donating $1 million to fund the construction of a milk factory.
Almost parallel to Morales’ European trip, high-level Chinese officials, including Vice President Xi Jinping, embarked on a Latin American tour which included visits to Argentina, Brazil and Barbados. During a stopover in Venezuela, Jinping met with Chavez; where the two officials signed an agreement for Chinese investment in the South American country’s oil reserves that would add up to around $4 billion.
Meanwhile, Washington also sent a congressional delegation to Peru (which included Nita Lowey, D-NY; Kay Granger, R-TX; and Marion Berry, D-AK) though not as high level or significant as China’s delegation to Venezuela. As such, the American visit was not even viewed as being a priority event by the Peruvian media. The same week the U.S. officials visited Lima, local newspapers reported that Garcia held an hour-long telephone discussion with Japanese Prime Minister Taro Aso, which focused on economic cooperation between the two countries. The daily La Republica also had given a lot of play to meetings to promote cooperation between Peru and Spain.
An Unclear Approach to Obama’s Washington
In early March, there were reports that Morales might be interested in repairing relations with the United States, now under the Barack Obama presidency. “We’re ready to resume and redirect our relations, and from State Department information we have we know they are also ready,” Deputy Foreign Minister Hugo Fernandez told a press conference in La Paz, according to AP.
Nevertheless, Morales and continue to send mixed signals about their intentions. In January, Kris Ur, the highest-ranking U.S. diplomat in Bolivia after Morales expelled the Ambassador Goldberg last year, walked out of a meeting while Morales was giving a speech. The reason for this abrupt departure because the Bolivian leader declared that the U.S. embassy was conspiring with the country’s political opposition to “foment the disintegration of the country.” As part of the deteriorating trend in bilateral ties, the last DEA agents left Bolivia in January.
Looking towards April
Latin America and the Caribbean are expectantly waiting for April 17-19, when the 5th summit of the Americas will be held in Port of Spain, capital of Trinidad and Tobago. Expectations are high over what new grand design, that President Obama might bring to the gathering. In his initial month in office, Obama has conducted his first major interview with Arab TV network Al Arabya, travelled to Canada as his first foreign visit and sent Secretary of State Clinton to Asia. At the same time, Latin America is anticipating how much priority the region will receive from the new administration. Obama met with Mexican President Felipe Calderon in early January, before the new president was inaugurated, albeit this visit was regarded as being perfunctory.
Current Assistant Secretary for the Western Hemisphere Thomas A. Shannon is expected to remain in his post at least until the summit, and it remains unknown at this time who his replacement will be, or if he will remain in charge for the foreseeable future. Obama’s speech at the Summit and Shannon’s replacement (or continuity) will, to a significant extent, signal if Latin America will have some priority with the new administration, the nature of initiatives towards the region during the early phase of the administration. As rapprochements with Cuba increasingly has been looked upon with approving eyes by influential individuals and institutions throughout the private and public sphere in the U.S. Nevertheless, more is still expected for a region which was all but denigrated during the Bush years.
Morales’ trip to Moscow and Paris becomes a case of adding more “wood to the fire;” meaning that, during the Bush administration Latin America began to seriously beginning to defect from Washington’s sphere of influence, and the pace and direction have kept to that course. In addition, Morales’ decision to expel American DEA agents from Bolivia who were aiding his country’s anti-drug operations, while simultaneously acquiring Russian military helicopters to do the same, indicates that Morales wants to demonstrate Bolivia’s effective authority over its affairs without the need of outside assistance, particularly from Washington.
After surviving last year’s round of protests and confrontations over sought-after provincial autonomy, Morales wants to be regarded as an authentic true leader of his people, in control of the country’s sovereignty and respected outside its borders. Accordingly, Washington’s negligence of the region combined with renewed economic interests from its international counterparts, has enabled Morales to pursue a more autonomous approach to foreign and domestic affairs. While the Bolivian president has galvanized economic cooperation projects with strategic countries abroad, it is also imperative that Morales recognize the importance of sustaining constructive diplomatic relations with neighboring countries like Peru, particularly on matters of counternarcotics and trade, no matter how personally odious he finds this task. Nevertheless, Morales’ trip to Europe reflects a palpable shift away from capitulation and toward defiance of Washington’s historic influence in the region and thus presents a formidable challenge to President Obama’s Latin American policy, if or when it is finally formulated.