Bolivia (09/18/09)

September 18, 2009

For the most current version of this Note, see Background Notes A-Z.


Area: 1.1 million sq. km. (425,000 sq. mi.); about the size of Texas and California combined.
Cities: Capital--La Paz (administrative--pop. 800,385); Sucre (constitutional--292,080). Other major cities--Santa Cruz (1,486,115), Cochabamba (587,220), El Alto (858,716). (Population est. 2004.) La Paz is the highest of the world’s capital cities--3,600 meters (11,800 ft.) above sea level. The adjacent city of El Alto, at 4,200 meters (13,800 ft.), is one of the fastest-growing in the hemisphere. Santa Cruz, the nation’s industrial and commercial hub in the eastern lowlands, is also experiencing rapid population and economic growth.
Terrain: High plateau (altiplano), temperate and semi-tropical valleys, and tropical lowlands.
Climate: Varies with altitude--from humid and tropical to semi-arid and cold.

Nationality: Noun and adjective--Bolivian(s).
Population (July 2009 est.): 9,775,246.
Annual population growth rate: 1.77%.
Religions: Predominantly Roman Catholic; minority Protestant.
Languages: Spanish, Quechua, Aymara, Guarani.
Education (2001): Years compulsory--ages 7-14. Literacy--86.7%.
Health (2008): Infant mortality rate--44.6 per 1,000 births.
Work force (2008, 4.46 million): Nonagricultural employment--2.48 million; services, including government--42%; industry and commerce--58%.
Ethnic groups (2001): 55% indigenous (primarily Aymara and Quechua), 30% mestizo or mixed, 15% European.

Type: Republic.
Independence: August 6, 1825.
Constitution: 1967; revised 1994; voters approved a new constitution on January 25, 2009.
Branches: Executive--president and cabinet. Legislative--bicameral. Judicial--five levels of jurisdiction, headed by Supreme Court with a separate Constitutional Tribunal, and a National Electoral Court which rules on matters related to the electoral process.
Subdivisions: Nine departments (similar to states), headed by elected governors.
Major political parties: Movement Toward Socialism (MAS), Social Democratic Power (PODEMOS), Nationalist Revolutionary Movement (MNR), National Unity (UN), Social Alliance (AS).
Suffrage: Universal adult (age 18), compulsory.

Economy (2008 est.)
GDP: $18.94 billion.
Annual growth rate: 5.6%.
Per capita income: $4,500.
Natural resources: Hydrocarbons (natural gas, petroleum); minerals (zinc, silver, lead, gold, and iron).
Agriculture (11.3% of GDP): Major products--Soybeans, cotton, potatoes, corn, sugarcane, rice, wheat, coffee, beef, barley, and quinoa. Arable land--27%.
Industry (36.9% of GDP): Types--Mineral and hydrocarbon extraction, manufacturing, commerce, textiles, food processing, chemicals, plastics, mineral smelting, and petroleum refining.
Services, including government: 51.8% of GDP.
Trade: Exports (2008 est.)--$6.8 billion. Major export products--natural gas, tin, zinc, coffee, silver, wood, gold, jewelry, soybeans, and soy products. Major export markets (2007)--U.S. (9.8%), Brazil (46%), Argentina (5.8%), Republic of Korea (4.8%), Peru (4.1%), and Japan (7.6%). Imports (2008 est.)--$4.9 billion. Major products--machinery and transportation equipment, consumer products, construction and mining equipment. Major suppliers (2007)--U.S. (9.8%), Argentina (16.2%), Brazil (29.9%), Chile (10.5%), Peru (8.1%).

According to the 2001 census, Bolivia’s ethnic distribution is estimated to be 55% indigenous, 15% European, and 30% mixed or mestizo (all categories are self-identified and answers vary widely depending on how questions are phrased). The largest of the approximately three dozen indigenous groups are the Quechua (29% or 2.5 million), Aymara (24% or 2 million), Chiquitano (1% or 180,000), and Guarani (1% or 125,000). No other indigenous groups represent more than 0.5% of the population. German, Croatian, Serbian, Asian, Middle Eastern, and other minorities also live in Bolivia. Many of these minorities descend from families that have lived in Bolivia for several generations.

Bolivia is one of the least developed countries in South America. Almost two-thirds of its people, many of whom are subsistence farmers, live in poverty. Population density ranges from less than one person per square kilometer in the southeastern plains to about 10 per square kilometer (25 per sq. mi.) in the central highlands. The annual population growth rate is about 1.77%.

The great majority of Bolivians are Roman Catholic, although Protestant denominations are expanding rapidly. Many indigenous communities interweave pre-Columbian and Christian symbols in their religious practices.

Approximately 90% of the children attend primary school but often for a year or less. The literacy rate is low in many rural areas. Under President Morales, a number of areas have been declared “illiteracy free” but the level of literacy is often quite basic, restricted to writing one’s name and recognizing numbers.

The socio-political development of Bolivia can be divided into three distinct periods: pre-Columbian, colonial, and republican. Important archaeological ruins, gold and silver ornaments, stone monuments, ceramics, and weavings remain from several important pre-Columbian cultures. Major ruins include Tiwanaku, Samaipata, Incallajta, and Iskanwaya. The country abounds in other sites that are difficult to reach and have seen little archaeological exploration.

The Spanish brought a tradition of religious art which, in the hands of local indigenous and mestizo builders and artisans, developed into a rich and distinctive style of architecture, painting, and sculpture known as “Mestizo Baroque.” The colonial period produced the paintings of Perez de Holguin, Flores, Bitti, and others as well as the skilled work of unknown stonecutters, woodcarvers, goldsmiths, and silversmiths. An important body of native baroque religious music from the colonial period was recovered and has been performed internationally to wide acclaim since 1994.

Important 20th century Bolivian artists include, among others, Guzman de Rojas, Arturo Borda, Maria Luisa Pacheco, and Marina Nunez del Prado. Bolivia has rich folklore. Its regional folk music is distinctive and varied. The “devil dances” at the annual Oruro carnival are among the great South American folkloric events, as is the lesser known carnival at Tarabuco.

The Andean region has probably been inhabited for some 20,000 years. Around 2000 B.C., the Tiwanakan culture developed at the southern end of Lake Titicaca. The Tiwanakan culture centered around and was named after the great city Tiwanaku. The people developed advanced architectural and agricultural techniques before disappearing about 1200 A.D., probably because of extended drought. Roughly contemporaneous with the Tiwanakan culture, the Moxos in the eastern lowlands and the Mollos north of present-day La Paz also developed advanced agricultural societies that had dissipated by the 13th century. Around 1450, the Quechua-speaking Incas entered the area of modern highland Bolivia and added it to their empire. They controlled the area until the Spanish conquest in 1525.

During most of the Spanish colonial period, this territory was called “Upper Peru” or “Charcas” and was under the authority of the Viceroy of Lima. Local government came from the Audiencia de Charcas located in Chuquisaca (La Plata--modern day Sucre). Bolivian silver mines produced much of the Spanish empire’s wealth. Potosi, site of the famed Cerro Rico--“Rich Mountain”--was, for many years, the largest city in the Western Hemisphere. As Spanish royal authority weakened during the Napoleonic wars, sentiment against colonial rule grew. Independence was proclaimed in 1809. Sixteen years of struggle followed before the establishment of the republic, named after Simon Bolivar, on August 6, 1825.

Independence did not bring stability. For nearly 60 years, short-lived, weak institutions and frequent coups characterized Bolivian politics. The War of the Pacific (1879-83) demonstrated Bolivia’s weakness when it was defeated by Chile. Chile took lands that contained rich nitrate fields and removed Bolivia’s access to the sea.


An increase in world silver prices brought Bolivia prosperity and political stability in the late 1800s. Tin eventually replaced silver as the country’s most important source of wealth during the early part of the 20th century. Successive governments controlled by economic and social elites followed laissez-faire capitalist policies through the first third of the century.

Indigenous living conditions remained deplorable. Forced to work under primitive conditions in the mines and in nearly feudal status on large estates, indigenous people were denied access to education, economic opportunity, or political participation. Bolivia’s defeat by Paraguay in the Chaco War (1932-35) marked a turning point. Great loss of life and territory discredited the traditional ruling classes, while service in the army produced stirrings of political awareness among the indigenous people and more of a shared national identity generally. From the end of the Chaco War until the 1952 revolution, the emergence of contending ideologies and the demands of new groups convulsed Bolivian politics.

Revolution and Turmoil
Bolivia’s first modern and broad-based political party was the Nationalist Revolutionary Movement (MNR). Denied victory in the 1951 presidential elections, the MNR led a successful revolution in 1952. Under President Victor Paz Estenssoro, the MNR introduced universal adult suffrage, carried out a sweeping land reform, promoted rural education, and nationalized the country’s largest tin mines.

Twelve years of tumultuous rule left the MNR divided. In 1964, a military junta overthrew President Paz Estenssoro at the outset of his third term. The 1969 death of President Rene Barrientos, a former junta member elected president in 1966, led to a succession of weak governments. The military, the MNR, and others installed Col. (later General) Hugo Banzer Suarez as president in 1971. Banzer ruled with MNR support from 1971 to 1974. Then, impatient with schisms in the coalition, he replaced civilians with members of the armed forces and suspended political activities.

The economy grew impressively during most of Banzer’s presidency, but human rights violations and fiscal crises undercut his support. He was forced to call elections in 1978, and Bolivia again entered a period of political turmoil. Elections in 1978, 1979, and 1980 were inconclusive and marked by fraud. There were coups, counter-coups, and caretaker governments.

In 1980, Gen. Luis Garcia Meza carried out a ruthless and violent coup. His government was notorious for human rights abuses, narcotics trafficking, and economic mismanagement. Later convicted in absentia for crimes, including murder, Garcia Meza was extradited from Brazil and began serving a 30-year sentence in 1995 in a La Paz prison.

After a military coup forced Garcia Meza out of power in 1981, three separate military governments in 14 months struggled unsuccessfully to address Bolivia’s growing problems. Unrest forced the military to convoke the Congress elected in 1980 and allow it to choose a new chief executive. In October 1982--22 years after the end of his first term of office (1956-60)--Hernan Siles Zuazo again became president. Severe social tension, exacerbated by hyperinflation and weak leadership, forced him to call early elections and relinquish power a year before the end of his constitutional term.

Return to Democracy
In the 1985 elections, Gen. Banzer’s Nationalist Democratic Action Party (ADN) won a plurality of the popular vote (33%), followed by former President Paz Estenssoro’s MNR (30%) and former Vice President Jaime Paz Zamora’s Movement of the Revolutionary Left (MIR, at 10%). With no majority, the Congress had constitutional authority to determine who would be president. In the congressional run-off, the MIR sided with MNR, and Paz Estenssoro was selected to serve a fourth term as president. When he took office in 1985, he faced a staggering economic crisis. Economic output and exports had been declining for several years. Hyperinflation meant prices grew at an annual rate of 24,000%. Social unrest, chronic strikes, and drug trafficking were widespread.

In four years, Paz Estenssoro’s administration achieved a measure of economic and social stability. The military stayed out of politics; all major political parties publicly and institutionally committed themselves to democracy. Human rights violations, which tainted some governments earlier in the decade, decreased significantly. However, Paz Estenssoro’s accomplishments came with sacrifice. Tin prices collapsed in October 1985. The collapse came as the government moved to reassert control of the mismanaged state mining enterprise and forced the government to lay off over 20,000 miners. Although this economic “shock treatment” was highly successful from a financial point of view and tamed devastatingly high rates of hyperinflation, the resulting social dislocation caused significant unrest.

MNR candidate Gonzalo Sanchez de Lozada finished first in the 1989 elections (23%), but no candidate received a majority of popular votes. Again, Congress would determine the president. The Patriotic Accord (AP) between Gen. Banzer’s ADN and Jaime Paz Zamora’s MIR, the second- and third-place finishers (at 22.7% and 19.6%, respectively), led to Paz Zamora’s assuming the presidency.

Even though Paz Zamora had been a Marxist in his youth, he governed as a moderate, center-left president, and marked his time in office with political pragmatism. He continued the economic reforms begun by Paz Estenssoro. Paz Zamora also took a fairly hard line against domestic terrorism, authorizing a 1990 attack on terrorists of the Nestor Paz Zamora Committee and the 1992 crackdown on the Tupac Katari Guerrilla Army (EGTK).

The 1993 elections continued the growing tradition of open, honest elections and peaceful democratic transitions of power. The MNR defeated the ruling coalition, and Gonzalo “Goni” Sanchez de Lozada was named president by a coalition in Congress.

Sanchez de Lozada pursued an aggressive economic and social reform agenda, relying heavily on successful entrepreneurs-turned-politicians like him. The most dramatic program--“capitalization,” a form of privatization under which investors acquired 50% ownership and management control of the state oil corporation, telecommunications system, airlines, railroads, and electric utilities--was used to generate funds for a new pension and healthcare system called BonoSol. BonoSol funding was popular in the country but the concept of capitalization was strongly opposed by certain segments of society, with frequent and sometimes violent protests from 1994 through 1996. During his term, Sanchez de Lozada also created the "popular participation law," which devolved much of the central government's authority to newly created municipalities, and the INRA law, which significantly furthered land redistribution efforts begun under the MNR after the 1952 revolution.

In the 1997 elections, Gen. Hugo Banzer, leader of the ADN, returned to power democratically after defeating the MNR candidate. The Banzer government continued the free market and privatization policies of its predecessor. The relatively robust economic growth of the mid-1990s continued until regional, global, and domestic factors contributed to a decline in economic growth. Job creation remained limited throughout this period, and public perception of corruption was high. Both factors contributed to an increase in social protests during the second half of Banzer’s term.

Rising international demand for cocaine in the 1980s and 1990s led to a boom in coca production and to significant peasant migration to the Chapare region. To reverse this, Banzer instructed special police units to physically eradicate the illegal coca in the Chapare. The policy produced a sudden and dramatic four-year decline in Bolivia’s illegal coca crop, to the point that Bolivia became a relatively small supplier of coca for cocaine. In 2001, Banzer resigned from office after being diagnosed with cancer. He died less than a year later. Banzer’s U.S.-educated vice president, Jorge Quiroga, completed the final year of the term.

In the 2002 national elections, former President Sanchez de Lozada (MNR) again placed first with 22.5% of the vote, followed by coca union leader Evo Morales (Movement Toward Socialism, MAS) with 20.9%. The MNR platform featured three overarching objectives: economic reactivation (and job creation), anti-corruption, and social inclusion.

A four-year economic recession, difficult fiscal situation, and longstanding tensions between the military and police led to the February 12-13, 2003, violence that left more than 30 people dead and nearly toppled Sanchez de Lozada’s government. The government stayed in power, but was unpopular.

Trouble began again in the so-called “Gas Wars” of September/October 2003. A hunger strike by Aymara leader and congressional deputy Felipe “Mallku” Quispe led his followers to begin blocking roads near Lake Titicaca. About 800 tourists, including some foreigners, were trapped in the town of Sorata. After days of unsuccessful negotiations, Bolivian security forces launched a rescue operation, but on the way out, were ambushed by armed peasants and a number of people were killed on both sides. The incident ignited passions throughout the highlands and united a loose coalition of protestors to pressure the government into halting a proposed project to export liquefied natural gas, most likely through Chile. Anti-Chile sentiment and memories of three major cycles of non-renewable commodity exports (silver through the 19th century, guano and rubber late in the 19th century, and tin in the 20th century) touched a nerve with many citizens. Tensions grew and La Paz was subjected to protesters’ blockades. Violent confrontations ensued, and approximately 60 people died, most of them when security forces tried to bring supplies into the besieged city.

In the end, large demonstrations forced Sanchez de Lozada to resign on October 17, 2003. Vice President Carlos Mesa Gisbert assumed office and restored order. Mesa appointed a non-political cabinet and promised to revise the constitution through a constituent assembly, revise the hydrocarbons law, and hold a binding referendum on whether to develop the country’s natural gas deposits, including to service the export market. The referendum took place on July 18, 2004, and Bolivians voted overwhelmingly in favor of development of the nation’s hydrocarbons resources. But the referendum did not end social unrest. In May 2005, large-scale protests led to the congressional approval of a law establishing a 32% direct tax on hydrocarbons production, which the government used to fund new social programs. After a brief pause, demonstrations resumed, particularly in La Paz and El Alto. President Mesa offered his resignation on June 6, and Eduardo Rodriguez, the president of the Supreme Court, assumed office in a constitutional transfer of power. Rodriguez announced that he was a transitional president, and called for elections within six months.

Current Administration
On December 18, 2005, the Movement Toward Socialism (MAS) candidate Juan Evo Morales Ayma was elected to the presidency by 54% of the voters. Bolivia’s first president to represent the indigenous majority, Morales continued to serve as leader of the country’s coca unions. During his campaign, Morales vowed to nationalize hydrocarbons, to alleviate poverty, and to empower the indigenous population. Morales was highly critical of what he termed “neo-liberal” economic policies implemented in Bolivia over the past several decades. On January 22, 2006, Morales and Vice President Alvaro García Linera were inaugurated.

Since then, President Morales has moved to fulfill his campaign promises. On May 1, 2006, the government issued a decree nationalizing the hydrocarbons sector and calling for the renegotiation of contracts with hydrocarbons companies. In November 2006, the government and companies signed new contracts that were expected to result in higher revenues for the government; however, the contracts required further negotiations and clarification. Morales continues to promote greater state control of natural resource industries, particularly hydrocarbons and mining, and of the telecommunications sector (see Economy section). These policies have pleased Morales’ supporters but have complicated Bolivia’s relations with some of its neighboring countries, foreign investors, and members of the international community.

Fulfilling another campaign promise, Morales secured passage of legislation convoking a special election for delegates to a constituent assembly to draft a new constitution. The MAS performed well in those elections, capturing 137 of 255 seats. The assembly convened on August 6, 2006, and planned to complete its work by August 2007; however, the Congress extended its mandate to December 14, 2007 after the constituent assembly faced political deadlock over its voting rules. Although rules were ostensibly clarified in February 2007, the subject reemerged in August, after the legality of a vote on the location of the capital was contested by the opposition. An agreement could not be reached, and the opposition delegates walked out of the assembly. The MAS approved a constitution without the opposition vote in November 2007, in a controversial assembly session in which opposition delegates were blocked from voting by demonstrators and the armed forces. On December 14, 2007, Morales presented the constitutional text to the National Congress to request a referendum for its approval in 2008. The opposition-controlled Senate prevented the referendum legislation from moving forward.

Under the administrative decentralization law of 1995, Bolivia’s nine departments had received greater autonomy, and on December 18, 2005, Bolivians elected their departmental prefects (similar to governors) by popular vote for the first time in history. In a July 2006 referendum, Bolivia’s four eastern departments voted in favor of increasing regional autonomy, and the other five provinces opposed the measure. The autonomy movement rallied around Sucre’s August 2007 demand that the constituent assembly consider moving all branches of government back to the traditional capital of Sucre. Civic committees in six departments (Santa Cruz, Tarija, Beni, Pando, Cochabamba, and Chuquisaca) supported hunger strikes and protests in Sucre. The strikes led to government-sponsored talks between Sucre and La Paz leaders. The talks were inconclusive. The Santa Cruz government approved an autonomy statute in December 2007; the governments of the other eastern departments followed Santa Cruz’s lead. Santa Cruz held a popular referendum on its autonomy statute on May 4, 2008, in which the majority of voters voted for autonomy. Voters in Beni, Pando, and Tarija also voted for increased autonomy in referenda that followed the Santa Cruz referendum. The Bolivian Government considered these referenda to be illegal and refused to recognize the results.


In May 2008, the Senate endorsed MAS-introduced legislation for a recall referendum on the mandates of the President, Vice President, and eight of nine departmental prefects, held on August 10, 2008. President Morales was ratified with 67% of the vote. Opposition prefects in the so-called “Media Luna” departments of Santa Cruz, Tarija, Beni, and Pando were also ratified with substantial majorities. Political tensions between the government and the opposition over the new constitution, the autonomy statutes passed in some department legislatures, and the division of tax proceeds from the hydrocarbon industry led to civil unrest, including incidents of violence and sabotage. Shortly thereafter, a conflict between government supporters and opposition members in the northern department of Pando left 13 dead over two days and led to the declaration of martial law. The government accused Pando prefect Leopoldo Fernandez of being responsible for the deaths. Although the constitution grants prefects immunity from prosecution, the government detained him without trial and appointed an interim prefect. Fernandez remained imprisoned without trial as of July 2009.

In late September 2008, the government and opposition prefects began a “national dialogue” in Cochabamba, but talks collapsed with no agreement. The dialogue moved to the Congress, and President Morales called on his social movement supporters to surround the Congress to pressure opposition members of Congress to vote for the government-sponsored approach. On October 21, 2008, the government and congressional opposition reached a compromise scheduling a constitutional referendum in exchange for textual modifications. Voters approved the new constitution on January 25, 2009.

The new constitution calls for elections on December 6, 2009 for president, vice president, and members of the new Plurinational Assembly (formerly called National Congress) and April 2010 for governors and municipal leaders.

A new Bolivian constitution was promulgated February 8, 2009, replacing Bolivia’s 1967 constitution. The 2009 constitution provides for legislative, executive, judicial, and electoral branches of government. It strengthens the executive branch and centralizes political and economic decision-making. It also provides new powers and responsibilities at the departmental, municipal, and regional levels, as well as in newly-created indigenous autonomous areas.

The executive consists of the president, vice president, and the ministers of state. The president and vice president are selected through national elections. The ministers of state are appointed.

The Plurinational Assembly (formerly called National Congress) is composed of two bodies: the Chamber of Deputies and the Chamber of Senators. The Chamber of Deputies has 130 members, and the Chamber of Senators has 36 members (4 from each of the 9 departments). Within the Chamber of Deputies, 70 members will be selected by direct vote, 62 by party list, and eight in special indigenous areas.

The judiciary consists of a Supreme Court, an independent Constitutional Tribunal, and departmental and lower courts. The 2009 constitution reformed the selection of judicial officials, who will now be elected by the Assembly. Under President Morales, a number of judicial bodies including the Supreme Court and the Constitutional Tribunal (which is responsible for deciding questions of constitutionality) have been substantially weakened. After lawsuits initiated by the executive branch, a wave of resignations, and an impasse in appointments, the Constitutional Tribunal has none of its 10 members left, effectively leaving Bolivia with no judicial oversight on constitutional questions.

Bolivian cities and towns are governed by directly elected mayors and councils. Municipal elections were held in December 2004, with councils elected to 5-year terms. The popular participation law of April 1994, which requires a 20% allocation of national revenues to municipalities for discretionary use, has enabled previously neglected communities to make improvements in their facilities and services.

Principal Government Officials
President--Juan Evo MORALES Ayma
Vice President--Alvaro GARCIA Linera
Minister of Foreign Affairs--David CHOQUEHUANCA Céspedes
Charge d’Affaires of the Bolivian Mission to the United States--Erika DUEÑAS
Ambassador to the Organization of American States--José Enrique PINELO Navarro
Chargé d’Affaires to the United Nations--Pablo SOLON Romero

Bolivia maintains an embassy in the United States at 3014 Massachusetts Ave., NW, Washington, DC 20008 (tel. 202-483-4410); consulates in Los Angeles, San Francisco, Miami, New Orleans, and New York; and honorary consulates in Atlanta, Chicago, Cincinnati, Houston, Mobile, Seattle, St. Louis, and San Juan.

Bolivia’s estimated 2008 gross domestic product (GDP) totaled $18.94 billion. Economic growth was estimated at about 5.6%, and inflation was estimated at about 11.5%.

In 1985, the Government of Bolivia implemented a far-reaching program of macroeconomic stabilization and structural reform aimed at maintaining price stability, creating conditions for sustained growth, and alleviating poverty. The most important change involved the “capitalization” (privatization) of numerous public sector enterprises. Parallel legislative reforms locked in place market-oriented policies that encouraged private investment. Foreign investors were accorded national treatment, and foreign ownership of companies was virtually unrestricted. Many of these reforms are currently under review. President Morales nationalized the hydrocarbon sector and expropriated some large international companies, including Entel (telecommunications) and Vinto (tin smelting). Increased state control of the economy continues to be a primary goal of the Morales administration. Foreign direct investment (FDI) inflows have dwindled, as has long-term investment across most industrial sectors.

The hydrocarbon sector provides the most prominent example of the current investment climate. Bolivia has the second-largest natural gas reserves in South America. The Bolivian state oil corporation, Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), has contracts to supply Brazil with natural gas through existing pipelines until 2019. Moreover, in 2006, YPFB signed a “ramp-up” contract with Argentina that steadily increases export levels until 2010, when gas deliveries to Argentina should be more than four times current levels. However, lack of substantial investment between 2005 and 2008 meant that gas production stagnated; increasing by less than 10% over four years (2008 production level was estimated at 960 million cubic feet). Companies appeared to be investing only what was necessary to maintain current operations.

Bolivian exports were approximately $6.8 billion for 2008, up from $652 million in 1991. Imports were $4.9 billion in 2008. Bolivia enjoyed an estimated $1.9 billion trade surplus in 2008. Hydrocarbons made up 50% of the exports, minerals 22.2% and manufacturing 23.65%. Bolivian tariffs are low, however, manufacturers complain that the tax-rebate program which allows some companies to claim refunds of import taxes on capital equipment is inefficient, with many companies now owed millions of dollars by the Bolivian Government, which can take years to recover.

Bolivia’s trade with neighboring countries is growing, in part because of several regional preferential trade agreements. Bolivia is a member of the Andean Community (CAN) and enjoys nominally free trade with other member countries (Peru, Ecuador, and Colombia). Bolivia is also an associate member of Mercosur (Southern Cone Common Market). Bolivia currently is focused on developing markets through its membership in Bolivarian Alliance for the Americas (ALBA) whose members include Venezuela, Cuba, and Nicaragua.


Until recently, the Andean Trade Promotion and Drug Eradication Act (ATPDEA) allowed numerous Bolivian products to enter the United States duty-free, including alpaca and llama products and, subject to a quota, cotton textiles. Effective December 15, 2008, President George W. Bush suspended Bolivia’s participation in the program based on its failure to meet international counternarcotics obligations; meeting those obligations is a criteria in the U.S. statute which created the preference program. On June 30, 2009, President Barack Obama determined that Bolivia was not meeting the program’s eligibility criteria. This determination does not affect Bolivia’s eligibility for benefits under the Generalized System of Preferences (GSP), which covers most of Bolivia’s exports to the United States.

In 2008 the United States exported $511 million of merchandise to Bolivia and imported $393 million. Bolivia’s major exports to the United States are tin, gold, jewelry, and wood products, with textiles playing an increasingly important role. Its major imports from the United States are electronic equipment, chemicals, vehicles, wheat, and machinery. A bilateral investment treaty (BIT) between the United States and Bolivia came into effect in 2001. While the Morales government has stated that it will respect all current BITs, officials have also publicly expressed Bolivia’s intent to “re-open” these treaties to align them with the new constitution.

Agriculture accounts for roughly 11.3% of Bolivia’s GDP. The amount of land cultivated by modern farming techniques is increasing rapidly in the Santa Cruz area, where climate permits two crops a year. Soybeans are the major cash crop, sold in the CAN market. The extraction of minerals and hydrocarbons accounts for another 14% of GDP and manufacturing around 11%.

The Government of Bolivia remains heavily dependent on foreign assistance to finance development projects. Estimates indicate that as of 2008, the government owed $4.6 billion to foreign creditors. Between 1986 and 1998, Bolivia attended seven rounds of negotiations with Paris Club creditors and received U.S. $1.35 billion of bilateral debt forgiveness. The United States forgave almost all of Bolivia’s bilateral debt between 1999 and 2002 and strongly supported efforts to have multilateral institutions do the same. Bolivia received U.S. $1.95 billion in debt relief from HIPC (Heavily Indebted Poor Countries) in 1998 and HIPC II in 2001, including almost complete bilateral debt forgiveness.

In June 2005, the G-8 countries decided to provide renewed World Bank and International Monetary Fund (IMF) debt relief for the 18 participant nations of HIPC I and II through the Multilateral Debt Relief Initiative (MDRI). Bolivia received U.S. $232.5 million in debt relief from the IMF in January 2006 and approximately U.S. $1.5 billion in debt relief from the World Bank in June 2006. The Inter-American Development Bank (IDB) forgave $1 billion in debt in March 2007. Bolivia was one of three countries in the Western Hemisphere selected for eligibility for the Millennium Challenge Account in 2004. Bolivia qualified again in 2005 and 2006, and presented a proposal to the Millennium Challenge Corporation (MCC) in December 2005, which was superseded by a new proposal submitted September 2007. An MCC assessment scheduled for December 2007 was postponed due to unrest surrounding the constituent assembly process. MCC’s technical engagement with Bolivia remained paused for a year due to internal political instability. In December 2008, the MCC Board of Directors decided to not select Bolivia as eligible for compact assistance.

Bolivia traditionally has maintained normal diplomatic relations with all hemispheric states except Chile. Relations with Chile, strained since Bolivia’s defeat in the War of the Pacific (1879-83) and its loss of the coastal province of Atacama, were severed from 1962 to 1975 in a dispute over the use of the waters of the Lauca River. Relations were resumed in 1975, but broken again in 1978, over the inability of the two countries to reach an agreement that might have granted Bolivia sovereign access to the sea. They are maintained today below the ambassadorial level. Relations with Chile have improved during the Bachelet administration. In June 2009, Peru recalled its ambassador over accusations of Bolivian involvement in its internal political affairs and personal attacks by President Morales on Peruvian President Alan Garcia.

In the 1960s, relations with Cuba were broken following Fidel Castro’s rise to power, but resumed under the Paz Estenssoro administration in 1985. Under President Morales, relations between Bolivia and Cuba have improved considerably, and Cuba has sent doctors and teachers to Bolivia. Relations with Venezuela are close, with the Venezuelan Government providing financial assistance to Bolivian municipalities, the armed forces, and the police since Morales took office. The Bolivian Government announced in September 2007 that it would pursue diplomatic relations with Iran and Libya, with plans to cooperate in the petrochemical industry and increase Bolivian exports to both countries.

Bolivia is a member of the UN and some of its specialized agencies and related programs, the Organization of American States (OAS), CAN, Non-Aligned Movement, International Parliamentary Union, Latin American Integration Association (ALADI), World Trade Organization (WTO), Rio Treaty, Rio Group, Amazon Pact, UNASUR, and an associate member of Mercosur. As an outgrowth of the 1994 Summit of the Americas, Bolivia hosted a hemispheric summit conference on sustainable development in December 1996. UNASUR’s “parliament” will be located in Cochabamba, in the geographic center of Bolivia.

The United States and Bolivia have traditionally had cordial and cooperative relations. Development assistance from the United States to Bolivia dates from the 1940s; the U.S. remains a major partner for economic development, improved health, democracy, and the environment. In 1991, the U.S. Government forgave a $341 million debt owed by Bolivia to the U.S. Agency for International Development (USAID) as well as 80% ($31 million) of the amount owed to the Department of Agriculture for food assistance. The United States has also been a strong supporter of forgiveness of Bolivia’s multilateral debt under the HIPC initiatives.

The United States Government channels its development assistance to Bolivia through USAID. USAID is well known in Bolivia, especially in rural areas where thousands of projects have been implemented. USAID has been providing assistance to Bolivia since the 1960s and works with the Government of Bolivia, the private sector, and the Bolivian people to achieve equitable and sustainable development. In 2008 USAID/Bolivia provided about $85 million in development assistance through bilateral agreements with the Bolivian Government and unilateral agreements with non-governmental organizations. USAID’s programs support Bolivia’s National Development Plan and are designed to address key issues, such as poverty and the social exclusion of historically disadvantaged populations, focusing efforts on Bolivia’s peri-urban and rural populations. USAID’s programs in Bolivia provide economic opportunities for disadvantaged populations through business development and trade, provide farmers with alternatives to illicit coca cultivation, improve food security, improve family health, strengthen democratic institutions, and promote sustainable use of natural resources and biodiversity conservation.

Bilateral relations have deteriorated sharply during the Morales administration, as the Bolivian Government escalated public attacks against the U.S. Government and began to dismantle key partnerships. In June 2008, the government endorsed the expulsion of USAID from Bolivia’s largest coca-growing region. In a dramatic action which culminated a period of intense Bolivian Government hostility toward the United States, in September 2008, President Morales accused Ambassador Philip S. Goldberg of conspiring against the government, declared him "persona non grata," and expelled him from Bolivia. President Morales never offered proof for his accusation, which the U.S. Government rejected as baseless. In a reciprocal action, the Department of State expelled Bolivian Ambassador Gustavo Guzman later that month. In November 2008, President Morales expelled the Drug Enforcement Administration (DEA) from the country, ending a 35-year history of engagement against narcotics production and trafficking.

Bolivia’s international obligation to control illegal narcotics is a major issue in the bilateral relationship. For centuries, a limited quantity of Bolivian coca leaf has been chewed and used in traditional rituals, but in the 1970s and 1980s the emergence of the drug trade led to a rapid expansion of coca cultivation used to make cocaine, particularly in the tropical Chapare region in the Department of Cochabamba (not a traditional coca growing area). In 1988, a new law, Law 1008, recognized only 12,000 hectares in the Yungas as sufficient to meet the licit demand of coca. Law 1008 also explicitly stated that coca grown in the Chapare was not required to meet traditional demand for chewing or for tea, and the law called for the eradication, over time, of all “excess” coca.

To accomplish that goal, successive Bolivian governments instituted programs offering cash compensation to coca farmers who eradicated voluntarily, and the government began developing and promoting suitable alternative crops for peasants to grow. Beginning in 1997, the government launched a more effective policy of physically uprooting the illegal coca plants. Bolivia’s illegal coca production fell over the next 4 years by up to 90%.

This “forced” eradication remains controversial, however, and well-organized coca growers unions have blocked roads, harassed police eradicators, and occasionally used violence to protest the policy. In response, previous government security forces have used force. In some cases confrontations between security forces and coca growers or distributors have resulted in injuries and fatalities, raising human rights concerns. The Morales government has embarked on a policy of voluntary eradication and social control. Although violent confrontations between police and coca growers/distributors have decreased under the new approach, its long-term efficacy remains to be proven.

Bolivia plans to expand legal coca production to 20,000 hectares and stresses development of legal commercial uses for coca leaf. The United States prefers long-term limits that track more closely with current estimated legal domestic demand of around 4,000 to 6,000 hectares. Current cultivation has oscillated between about 23,000 and 29,000 hectares since 2001.

The United States has supported efforts to interdict the smuggling of coca leaves, cocaine, and precursor chemicals, as well as investigate and prosecute trafficking organizations. However, these efforts have been significantly constrained after the expulsion of DEA. The U.S. Government continues to finance alternative development programs and the counter-narcotics police effort.

In addition to working closely with Bolivian Government officials to strengthen bilateral relations, the U.S. Embassy provides a wide range of services to U.S. citizens and businesses. Political and economic officers interact directly with the Bolivian Government in advancing U.S. interests, but are also available to provide information to American citizens on local economic and political conditions in the country. Commercial officers work closely with numerous U.S. companies that operate direct subsidiaries or have investments in Bolivia. The officers also provide information on Bolivian trade and industry regulations and on administering several programs intended to aid U.S. companies starting or maintaining businesses in Bolivia.

The Consular Section of the Embassy, and the two consular agencies in Cochabamba and Santa Cruz, provide vital services to the estimated 13,000 American citizens who reside in Bolivia. Among other services, the Consular Section and the consular agencies assist Americans who wish to participate in U.S. elections while abroad and also provide notarial services. Additionally, some 40,000 U.S. citizens visit Bolivia annually. The Consular Section also offers passport and emergency services to tourists as needed during their stay in Bolivia. In 2008, the Bolivian Government began requiring that U.S. citizens obtain visas to visit Bolivia; more information about visa procedures can be found at In addition to the services provided to U.S. citizens, the Consular Section adjudicates thousands of immigrant and non-immigrant visas at the Embassy in La Paz each year.

Principal U.S. Embassy Officials
Charge d'Affaires--John S. Creamer
Deputy Chief of Mission--Patrick Moore (acting)
Political/Economic/Commercial Officer--William J. Mozdzierz
Director, Narcotics Affairs--Gwen Llewellyn (acting)
Public Affairs Officer--David Hodge
Consul General--Cynthia Haley
Defense Attaché--Col. John Alvarez
Commander, U.S. Military Group--Col. Gary Garay
Director, USAID Mission--John Niemeyer (acting)

U.S. Embassy
Avenida Arce #2780
La Paz, Bolivia
Tel. 591-2-216-8000

U.S. Consular Agency in Santa Cruz
Tel. 591-3 -351-3477

U.S. Consular Agency in Cochabamba
Tel. 591-4-411-6313

P.O. Box 4530
Calle Nueve No. 104, Obrajes
La Paz - Bolivia
Tel. 591-2-278-6544

Other Contact Information
U.S. Department of State
2201 C Street, NW
Washington, DC 20520
Main Switchboard: 202-647-4000

Department of Commerce, Trade Information Center, International Trade Administration
1401 Constitution Avenue
Washington, DC 20230
Tel: 800-USA-TRADE
Internet: Country Commercial Guide for Bolivia -

U.S. exporters seeking general export information/assistance or country-specific commercial information should consult with the nearest Export Assistance Center or the U.S. Department of Commerce’s Trade Information Center at (800) USA-TRADE or go to the following website:

American Chamber of Commerce in Bolivia
Edificio Hilda, Oficina 3
Avenida 6 de Agosto
Apartado Postal 8268
La Paz, Bolivia
Tel: 591-2-2432573
Fax: 591-2-2432472