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Posted by Sadie from D006033.N1.Vanderbilt.Edu ( on Wednesday, April 30, 2003 at 0:40AM :

In Reply to: THE article: "Economics of Empire" posted by Sadie from D006033.N1.Vanderbilt.Edu ( on Wednesday, April 30, 2003 at 0:40AM :

I was in Bolivia not long ago, and I noticed how every conversation there seemed to turn, inexorably, toward the topics of development and exploitation. Angel Villagomez, a retired state road inspector, told me, “It’s very sad. Here in Bolivia we are sitting on a chair of gold – oil, gas, minerals – and yet all the wealth goes to foreigners.” Villagomez was sitting outside his house, a simple adobe structure, on a chair of plastic. A vigorous, engaging man, he lives in a dusty barrio marginal near the Andean city of Cochabamba.

He was right about Bolivia. Although rich in natural resources, it is the poorest country in South America. Landlocked and thinly populated, it offers a less operatic example, perhaps, of a country struggling with neoliberalism than its neighbor, Argentina, but, in its deep-running underdevelopment and obscurity, a more typical one.

In the early 1980s, Bolivia emerged from many years of military rule in an economically impossible position. It had been looted by the generals. Its foreign debt was overwhelming. In 1985, inflation reached a surreal annual rate of 24,000 percent. The country had no choice but to consent to radical treatment. Advised by Jeffrey Sachs, the young American economist who later became known for designing “shock therapy” plans for countries emerging from Communism, the reformers in Bolivia were led by the minister of planning (later president), Gonzalo Sanchez de Lozada. To halt the inflationary death swoop, they drastically devalued currency, abolished the minimum wage, and cut state spending to the bone. These measures plunged the economy into severe recession. Wages fell and unemployment skyrocketed. Tin miners, teachers, nurses, and factory workers were especially hard hit. The shock treatment worked, though, in the sense that prices eventually stabilized and the Bolivian government’s good relations with its foreign creditors – and, most importantly, with their de facto enforcement arm, the International Monetary Fund – were restored.

There were conditions, of course. The I.M.F. and the World Bank (the Bank’s development loans helped keep the country afloat) took effective control of large areas of public policy. Like many poor countries, Bolivia was subjected to what is blandly known as structural adjustment – a set of standardized, far-reaching austerity and “openness” measures that typically include the removal of restrictions on foreign investment, the abolition of public subsidies and labor rights, reduced state spending, deregulation, lower tariffs, tighter credit, the encouragement of export-oriented industries, lower marginal tax rates, currency devaluation, and the sale of major public enterprises. In Bolivia’s case, the latter included the national railways, the national airlines, the telephone system, the country’s vast tin mines, and a long list of municipal utilities. Many indebted countries have had to be force-fed structural adjustment, but Bolivia turned out to be a model student. The country’s small, white, wealthy political class seemed to have come to a quiet understanding with the international bankers. The power of the workers and peasants, once organized and formidable, was clearly broken; all of the major parties were now business aligned. And so the parties began to trade the presidency around every election cycle, and their leaders found that they could collaborate profitably with the international corporations that came in to run the phone company or pump the oil and gas.

Angel Villagomez said, “The politicians here all campaign with their left hands up.” HE raised his left hand. “But once they get in office, they all turn out to have hearts that beat on the right!” He struck the right side of his chest sharply.

A newspaper editor in Cochabamba put it differently. “The World Bank IS the government of Bolivia,” he said.

Since the World Bank and the I.M.F. are based in Washington, D.C., and Bolivia’s primary overseer in the developed world has long been the United States, it’s not surprising that some Bolivians detected that old-time Yankee imperialism in this new globalization regime. It wasn’t to be sure, gunboat diplomacy (except when it came to the war on drugs, an entirely different sore subject in Bolivia), and it wasn’t a purely North American operation. The cheap foreign products that flooded the country after 1985 came from all directions, as did the foreign investors.

But the hundreds of local factories that went bankrupt, unable to compete, were, for the most part, Bolivian. And, contemplating what the anthropologist Lesley Gill calls the “imposed disorder” of post-shock Bolivia – the havoc and deep social pain caused by structural adjustment – contemplating, especially, the mysterious power of these faceless institutions, the World Bank and the I.M.F. – both ostensibly public agencies dedicated to the reduction of Third World poverty – many Bolivians must have asked one another, echoing those suave gringo outlaws Butch Cassidy and the Sundance Kid (who died, it may be remembered, after robbing a mining company in Bolivia), “Who ARE those guys?”

-- Sadie
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