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Santa Cruz de la Sierra legitimizes institutional crisis

Article by Foreign Policy Centre

May 12, 2008

Nobody should be surprised at the result of the referendum on autonomy held on Sunday, May 04, in the province of Santa Cruz de la Sierra, Bolivia. The highly anticipated “Yes” victory, to be confirmed by the end of the week when the vote’s official results are due to be released, has led to reactions by Bolivia’s central government and by the Santa Cruz government too, which did not expect a different result.

The legitimization granted by popular vote –around 86 per cent of the Santa Cruz population approved of the autonomy– will entail significant political changes in the nation. Among the foreseen changes, the province will start collecting its own taxes, controlling oil and gas extraction and sales, and controlling its administration without the need for previous authorization from the central government in La Paz.

The aspects surrounding oil and gas extraction and sales are the biggest igniters of fights between provincial and central government. Highly dependent on gas explored in Santa Cruz, the Bolivian government would not be able to bear its expenses if the provincial government were to revaluate the administrative maintenance of these commodities.

The economic side of the fight between separatists and central government is undoubtedly the most important aspect in this institutional crisis. This is due to a matter of survival, as La Paz will not be able to bear the financial losses that an autonomy process would unfold in the country. All the policies planned by president Evo Morales and, most of all, by his MAS (Movement towards Socialism) party, would fall down and hardly be able to develop.

Dialogue is the first weapon Morales intends to use to nullify the impact of Sunday’s vote. The president will try to lean on a relatively low turnout during the election to bring the opposition back to the negotiation table.

The recurring failure to find a negotiated way out suggests how difficult it will be for the government to resume conversations with autonomists. Apparently, both sides are tired of talks and, at each new round, differences become sharper and the unfriendly climate exacerbates. Morales has been held hostage by the radicalization imposed by his MAS party. Sandwiched between an extremist party and an organized and articulated opposition, the president constantly resorts to a dialogue that has been unfruitful.

From now on, Santa Cruz will act as an example of Bolivia’s new political map. The overwhelming electoral victory in favor of autonomy will spread to the three other provinces upholding the same ideals – Beni, Pando and Tarija. The problem is really likely to aggravate even further.

Risk of civil war is not a new threat in Bolivia. This risk is becoming increasingly stronger, especially when political events such as Sunday’s referendum are not responded to by the central government in a likewise fashion. From now on, the following aspects will be critical: the willingness of Santa Cruz leaders to engage in dialogue; the MAS stance, as Morales is highly influenced by his party; and the impact from the Santa Cruz referendum result on the provinces of Beni, Pando and Tarija.

By reviewing these aspects, one can draw a more likely forecast of what can happen in the country in the short and medium term. In a certain way, an institutional damage has been done. It will be very difficult for Morales to remedy this damage if you take into account his history of solving conflicts with the opposition. However, the Bolivian president has all the information necessary to prevent this movement from spreading and becoming even stronger. Above all, he will count on mediation (until now not effective) by the Organization of American States (OAS) and the so-called “friends of Bolivia” (Argentina, Brazil and Colombia) against total rupture and in favor of maintaining territorial integrity and the rule of law

Even though uncertainty looms, some conclusions can already be drawn. National unity will remain seriously affected for a long time; the nation’s economy will become even more vulnerable due to the dispute over the ownership of its main natural resource; and the nationalization process will be changed for companies based in the Santa Cruz province. The local government will claim its authority to decide on whether to legitimize such nationalizations.

For Brazil, the deterioration of governability in Bolivia tends to bring about at least two adverse impacts: natural gas supplies will be severely harmed, as the gas imported by Brazil originates mostly from Santa Cruz; and the amount of refugees crossing the border to get shelter in Brazil would be a matter of concern. Any participation by Venezuela, which has a military support agreement in place with Bolivia, is another aspect increasing tensions in the region and likely to have a decisive weight upon how the situation escalates.

It is certain that the approval of the autonomy proposal in Santa Cruz has caused reactions outside Bolivia too. Worried with the potential consequences of the Santa Cruz referendum, Argentina, Brazil and Colombia (the “friends of Bolivia”) have released a note on Monday (May 05) expressing their “certainty that, more than ever, it is necessary to readily put in place a frank and comprehensive dialogue among Bolivia’s main political actors, aiming at preserving Bolivia’s democratic institutionalism and territorial integrity, as well as facing the difficulties affecting the nation.” In line with the OAS efforts, the three nations will work during the following weeks in order for any implementation of the autonomy statute approved on the weekend to occur “with full respect to the rule of law and the nation’s unity.”

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