•Press Release Bolivia COVID Economic Crisis and Recovery Latin America and the Caribbean Organization of American States
Pre-pandemic austerity hurt the economy; shows the need to prevent similar coups, authors argue
Washington, DC — Bolivia’s post-coup de facto government enacted policies that harmed the economy even before the pandemic hit, according to a new paper from the Center for Economic and Policy Research (CEPR) in Washington, DC.
“This was part of a program to change the politics and economic policy of Bolivia from that of the democratically elected government that was overthrown by the military in November of 2019,” said CEPR Co-Director, and coauthor of the paper, Mark Weisbrot. “This attempt to transform the country was quite violent and destructive of democratic institutions.”
The coup also had a lasting impact on the Bolivian economy. The de facto government cut public sector spending drastically in the fourth quarter of 2019, by 7 percent of quarterly GDP. This included massive cuts in public investment, which was one of the hallmarks of the prior government of President Evo Morales. Public investment under Morales more than doubled as a percentage of GDP, and real income per person grew by more than 50 percent. During the 13 years of the Morales administration, poverty fell by 42 percent, and extreme poverty by 60 percent.
The de facto government also failed to increase the nominal value of the minimum wage for the first time since 2006, and sharply reduced public sector wages.
The paper notes:
The Harvard Law School’s International Human Rights Clinic (IHRC) and the University Network for Human Rights (UNHR) found that the killing of civilians by state forces in November 2019 was the second-highest it had been in any month for nearly 40 years. Two massacres committed by security forces within a week of the de facto government taking power killed at least 22 people, and injured at least 230.
The IHRC/UNHR report emphasizes the racist nature of the violence, including that all of the victims of these massacres were Indigenous. Bolivia has the largest percentage of Indigenous people in the Americas, and Evo Morales was the country’s first Indigenous president. His government had undertaken numerous reforms and economic policies that had benefited Bolivia’s Indigenous people, who are economically disadvantaged relative to the rest of the population.
The de facto government was unable to keep to its austerity program after the pandemic hit, with the fiscal deficit hitting 12.3 percent for 2020. The opposition Movement Toward Socialism (MAS) party had a majority in the legislature, and pushed for more spending for relief from the pandemic, as well as for economic stimulus. After the pandemic hit, the de facto government adopted income transfer programs, reduced utility tariffs, and reduced or postponed tax payments, interest, and principal payments on loans. It also maintained an expansionary monetary policy.
However, these programs were not enough to counteract the impact of the pandemic/recession, with real GDP falling by 7.7 percent in 2020.
The paper also calls attention, with documentation, to the “major, perhaps indispensable role” of the Organization of American States (OAS), backed by the Trump administration, in the November 2019 coup. The OAS helped to create a false narrative that the October 2019 election was stolen by incumbent president Evo Morales. It repeated these false allegations, while serving as official election observers, and these allegations were promoted by the OAS Secretary General Luis Almagro. This narrative served as the main justification for the coup.
The authors also describe the more than year-long efforts by dozens of members of the US Congress, as well as by Latin American leaders and former presidents, for an investigation of the OAS role in the coup.
“The OAS story of a ‘stolen’ election was never any more credible than Donald Trump’s ‘stop the steal’ campaign in the United States. Yet it prevailed, with disastrous results for Bolivia,” said Weisbrot. “In order to prevent repetition of such assaults on democracy and human rights, the OAS — most importantly Secretary General Almagro — must be held accountable for its role in the Bolivian coup.”