Bolivia has a dual territorial strategy that starts with its natural resources. Tin, silver, nitrogen, gold, iron, lithium, rubber, natural gas and petroleum are all mineral resources at the foundation of Bolivia’s economy. The indigenous people of the Andes and the Amazon region on the eastern side of the Andes are subsistence farmers and industrial laborers. For the last two hundred years, ups and downs in global markets have regularly supported and then disappointed Bolivia’s economic development. In the nineteenth century it was silver mining that carried export trade, in the late nineteenth century it was guano and rubber and then in the twentieth century it was tin.
All during these rises and falls of the economy, the mountain agriculture of the indigenous population and plantation style agriculture were the other side of the economy. By the 1950s, land reform began to break up large plantation tracts and return them to the indigenous people. The struggles between a fluctuating economy and increasingly polarized politics between Spanish land holders and indigenous people kept Bolivia from developing and kept most of the population poor.
Bolivian territory was originally determined and controlled by Spain, but after independence, in 1825, boundaries were subject to local geopolitics. Bolivia, Peru and Chile fought a war from 1879 through 1883 over the guano and saltpeter found in the coastal desert region that is now west of Bolivia. Peru and Bolivia lost the war and Chile took the territory that was previously Bolivia’s access to the Pacific Ocean. Over a hundred years later the loss of that strategic Atacama desert region remains a source of conflict between Bolivia and Chile.
As a landlocked country who’s largest economic assets are minerals, natural gas and petroleum Bolivia has struggled for economic stability. The country suffered hyper-inflation and decline in foreign demand for their export commodities at various times during the twentieth century. During the last ten years, global demand for oil, natural gas, and minerals have provided Bolivia an opportunity to establish stable economic growth. The ongoing support for that stability and growth depends on politics and alliances.
Politics continue to be a struggle between urban populations that descend from the Spanish and who have continued to control many of the countries valuable assets and the indigenous people of the Andes mountains and Amazon lowlands. About sixty two percent of Bolivia’s population are indigenous people and Evo Morales, Bolivia’s current president is of indigenous ethnicity. The political struggle is about how natural resources are to be used and who gets the profits. But illegal cocaine production plays as a hidden feature of economic growth for the indigenous population. It’s part of how stability is happening.
The Hidden Strategy
Since the 1980s, when cocaine became a high demand recreational drug in the United States and Europe, Bolivia expanded it’s traditional growth of cocoa plants. The indigenous farms have grown cocoa and chewed on the leaves for thousands of years and growing cocoa is legal although restricted. The politics of indigenous agricultural development, cocaine distribution and international trade and investment are all part of the growth pattern. President Morales has officially limited cocoa growing and at the same time decreased Bolivia’s dependence on U.S. trade. But a look at cocaine production statistics reveal Bolivia has continued to be the second or third largest producer in the world. There is a healthy black market helping to support the agricultural side of the economy.
Bolivia’s trade alliances are focused on South American trade more than they used to be. In 2001 Brazil became Bolivia’s largest trading partner, displacing the United States. Bolivia has actively sought to foster economic connections in South America after long relying on the United States as its primary trade partner. A twenty year trade contract with Brazil which sends natural gas to Brazil through a pipeline that Brazil helped finance plays a large role in this shift.
The territorial cycle is based on a relationship between the resources of the territory and the number of people living in that territory. When the resources are able to support the population, the population grows. Currently Bolivia’s population is growing modestly and the government has established itself as a full member of MERCOSUR, the South American Common Market, and the Andean Community of Nations. All the members of both groups are South American countries, which is allowing Bolivia to continue gaining access to foreign investment for it’s mining natural gas and petroleum development and shift its trade partners to a wider assortment of countries in North America, South America and Asia.
Bolivia is aligned with and part of the emerging South American trade bloc that operates in the shadow of the North American Free Trade Association (NAFTA). As a loosely arranged trade bloc, they seek ways to work with NAFTA countries, but also ways to work around NAFTA’s dominance in the Western hemisphere. On top of the South American trade partners, Bolivia trades with China and India also, in an attempt to support political and economic stability that is anti-imperialist and also conceals Bolivia’s continued participation in the global cocaine black market.