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Evo Morales’s recent appoint­­ment of a leftwing journalist who speaks little English as ambassador to Washington might suggest that the Bolivian president has limited interest in meaningful dialogue with the US. But in at least one key area, trade, Bolivia has a strong incentive to engage with the larger power to its north.

Next week Alvaro García, Bolivia’s vice-president, will visit Washington for the second time this year to try to persuade members of Congress to extend the Andean Trade Promotion and Drug Eradication Act (ATPDEA), a set of tariff preferences due to expire in December.

That task has been made all the more difficult by the Morales administration’s insistence on exploiting anti-US sentiment at home to shore up its popularity among its radical grassroots supporters.

Before his stunning election victory last year, most analysts predicted that a Morales presidency would set La Paz and Washington on a collision course. A brief period of improved relations followed the election. Mr Morales welcomed Tom Shannon, the US State Department’s senior official for Latin America, in his speech to Bolivia’s Congress, and George W. Bush called Mr Morales to congratulate him on his victory. But things soon began to go downhill.

In April Mr Morales complained that Washington had refused visas to some members of his administration. In May he said the US was planning to assassinate him. By June he was accusing the CIA of covertly training agents in Santa Cruz, in south-eastern Bolivia. Last month he accused the US of “blackmailing” his government on the issue of coca.

“In his attitude towards the US, Evo is trying to build on the image of Bolivia as a victim of imperial power,” says Roberto Las­erna, a political consultant in the city of Cochabamba critical of the government. “He is constantly trying to provoke strong reactions from the US. Conflict and confrontation is what he wants – he feels that’s the way to get support at home, and it’s part of the relationship with [anti-American Venezuelan President Hugo] Chávez.”

Supporters of the government point out that the US attacked Mr Morales for a decade before he won office. Washington has also publicly fretted about him periodically since. In February Donald Rumsfeld, the defence secretary, said Mr Morales’s election victory was “clearly worrisome”. In May Mr Bush lamented the “erosion of democracy” in Bolivia and Venezuela. Adolfo Franco, the assistant administrator of USAID, warned Congress in June that Mr Morales had demonstrated “inclinations to consolidate executive power and promote potentially anti-democratic reforms”.

“The Bush-Evo relationship is always going to be tough,” says Jim Shultz of the Democracy Center, a left-leaning think-tank in Cocha­bamba. “It may be that the actual difference between them becomes insurmountable. But at the moment it’s falling apart over needless rhetoric.”

The worsening relationship was not helped by La Paz’s announcement in May that it would nationalise Bolivia’s vast gas reserves, but the policy barely affected US companies. The eradication of coca, the raw material for cocaine, has slowed, but US officials privately admit that since most Bolivian cocaine is bound for Brazil and Europe, it is less of a problem for them than is Colombian production.

The ATPDEA issue is more thorny: exports under the scheme totalled $157m (€122m, £83m) last year, about half of all exports to the US. Textile companies that benefit from the preferences employ some 10,000 Bolivian workers: they are considered to be most at risk should the low-tariff regime not be extended.

That presents Washington with a dilemma. The US does not want to reward those Andean countries – Ecuador as well as Bolivia – that have failed to negotiate bilateral trade deals as Peru and Colombia have done. But abandoning South America’s poorest country would mean giving up its coca-eradication efforts in the world’s third-biggest cocaine producer and could push Mr Morales more firmly into the arms of Mr Chávez.

US officials are also concerned that if Washington refuses to extend the ATPDEA, they will inadvertently boost Mr Morales at home by enabling him to stoke populist anti-Americanism.

Ultimately, the decision on ATPDEA will be taken by Congress. In an election year that could result in a US legislature more hostile to trade deals, Bolivia’s chances of winning an extension are slim. The result could be a hardening of views in the newest member of Mr Chávez’s anti-American bloc and a tacit admission by Washington that its policy priorities for Bolivia – democracy-building, economic development and anti-drug efforts – have failed.

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