Wall Street Journal Spins a Bolivian Fairy Tail

Last week the Wall Street Journal weighed in on Bolivia’s elections, with a fairy tail of a piece. The article below by Mary Anastasia O’Grady’s (“All About Evo”) correctly cites the Cochabamba water revolt as the spark that set Bolivia’s anti-´Washington Consensus politics into high gear. She then relies on totally discredited five-year-old spin from the PR staff of former President Hugo Banzer to explain what happened. It is actually embarrassing, really.

This just proves how utterly wrong writers can be when they try to paint themselves as experts about places they have never been. It also doesn’t say much for the journalistic standards of the Wall Street Journal. Below is my letter to the editor of the WSJ and then the original article.

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Dear Editor,

The role of economic globalization in Bolivia’s recent presidential election is certainly worthy of debate. However, it also worthy of a debate based on actual facts, as opposed to the unfortunate misrepresentation of the facts included in Mary Anastasia O’Grady’s recent WSJ article (“All About Evo”, 12-23-05).

O’Grady is quite correct in suggesting that the citizen revolt against water privatization in 2000, in which the Bechtel Corporation was kicked out of the country, was the spark that ignited a string of events that led to the election of Evo Morales as President earlier this month. That makes her twisting of the facts surrounding the water revolt all the more serious.

First, the reason that citizens revolted against Bechtel had nothing to do with coca farmers, as O’Grady suggests, and everything to do with Bechtel raising water rates for the poor an average of nearly 50% overnight, and in many cases by much more. Second, it was not the citizens of Bolivia who rioted but the government. A former dictator, Hugo Banzer, responded to peaceful protests by sending 1,200 national police to take over the country’s third largest city. An army sharpshooter, caught on camera, shot an unarmed 17 year old in the face and killed him.

These well-documented facts, and others, may not lend themselves to the ideological myth that O’Grady seeks to market, but they are facts. They are also a good part of the reason that Bolivians are justifiable skeptical of the suggested wonders of the Washington Consensus formula of privatization.

Jim Shultz
Executive Director
The Democracy Center
Cochabamba, Bolivia

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All About Evo
Wall Street Journal, December 23, 2005
By MARY ANASTASIA O'GRADY

Sunday's election of Evo Morales as president of Bolivia is more bad news
for liberty in Latin America. Winning on an anti-market, anti-trade and
anti-investment platform, Mr. Morales' victory does not bode well for a
nation already impoverished, backward, isolated and desperately in need of
economic growth.

The role of Fidel Castro and his apprentice, Venezuelan President Hugo
Chavez, in Bolivian politics is no less discouraging. There is some concern
that Mr. Morales may be coached to attempt a Chavez redux in Bolivia,
consolidating power in a constitutional assembly set for July and destroying
his political competition under the guise of legality. Whether what is left
of Bolivia's fragile democracy can survive a Morales presidency with Chavez
as the president's patron remains to be seen.

Yet Mr. Morales won a strong, legitimate victory, and to focus on the Castro
influence as the driver behind his win is to ignore the pillars of fear,
anger and resentment on which his popularity is built.

The fear was registered by a working class tired of the violence waged by
Bolivia's left. Anecdotal evidence suggests that some Bolivians felt Mr.
Morales had the best chance of bringing radicals - many of whom are far more
extreme than he is - under control and ending repeated roadblocks that have
paralyzed the economy in the last two years. The anger and resentment were
reserved for the traditional political class and the war on drugs, both of
which played crucial roles in enhancing Mr. Morales' popularity.

To trace the Morales ascendance, travel back in time to the 1997
presidential elections, when the late Gen. Hugo Banzer placed first, but
with only 22% of the vote. Needing a coalition partner to seal his victory
in a congressional vote, he turned to the left-of-center MIR party led by
Jaime Paz Zamora.

That alliance set off alarm bells in Washington because the MIR party
allegedly had drug trafficking ties and the U.S. had already pulled Mr. Paz
Zamora's visa. The party's secretary general, Oscar Eid, was even jailed in
Bolivia in 1996 on charges of links to drug trafficking. To alleviate gringo
concerns and ensure the flow of foreign aid, Banzer pledged a scorched earth
policy toward coca growers in Bolivia's Chapare region, promising to "wipe
out" the cultivation of the ancient leaf during his tenure.

Banzer and his vice president Jorge Quiroga - who was the center-right
candidate in the Sunday election - waged war on coca in the Chapare in 1998
and 1999. Meeting their goal did nothing to alter America's cocaine habits
but it did produce a sharp recession and a migration of poor, unemployed
Bolivians to urban centers. One place they showed up was Bolivia's
third-largest city, Cochabamba, where in 2000, according to the
then-Minister of Information Ronald MacLean-Abraoa, they were easily
mobilized in rioting against the privatization of water service.

The Cochabamba water privatization was the perfect storm for Bolivia's hard
left. But the center-right handed the Trotskyites the weapons they needed to
kill modernity. In fact, the "water war," as the tragedy became known,
exemplified many of the misdeeds committed throughout the region during a
period of supposed reform. The "market" got a black eye, but facts show that
experiments in reform often fell far short of economic liberalism. Instead,
special interests and politicians tried to use "reform" to get rich and
carve out privileges. They endorsed half-measures and ignored the importance
of competition.

According to Fredrik Segerfeldt, in "Water for Sale" (Cato Institute, 2005),
Cochabamba water prices, having been heavily subsidized, went up after the
1999 privatization, but not by the astronomical amount that enemies of the
sale claimed. One reason bills were higher was that previous shortages were
alleviated so consumption quickly climbed.

However, there were other issues. "The blame to be pinned on the local
authorities has been disregarded," Mr. Segerfeldt writes. Cochabamba Mayor
"Manfred Reyes Villa, known as Bonbon, had connections with companies that
would profit from the construction of a dam and he insisted against the
advice of the World Bank that the dam be included in the [water] project,
which incurred an extra cost of millions of dollars." Another plan, not
requiring a new dam, had been tried in 1997, but "Bonbon stopped it cold,"
notes Mr. Segerfeldt. "The local political situation was a mess of
patronage, populism and vanity projects."

Bonbon's dam gave the real "losers" in the privatization - Cochabamba's
vested interests, including subsidized upper-income households and
commercial actors - what they needed to excite the masses. "These groups
cynically exploited poor urban dwellers as an excuse for safeguarding their
own interests." The street violence grew so intense that Banzer had to
declare a state of siege.

The government reversed the water privatization but the damage was done. The
"p" word became a bogeyman, despite the fact, as Mr. Segerfeldt points out,
"the poor of Cochabamba are still paying 10 times as much for their water as
the rich, connected households and continue to indirectly subsidize water
consumption of more well-to-do sector of the community. Water nowadays is
available only four hours a day and no new households have been connected to
the supply network."

Lingering resentment transformed the displaced "cocaleros" into a
radicalized political force, which broadened its agenda against all things
American. Mr. Morales, who built his political career as a leader of the
"cocaleros," is riding that tiger to the presidential palace.

Yet he will not have an easy job of it. The hard left will press him to
nationalize gas reserves and has already promised violence if its wishes are
not granted. Brazil will try to make him moderate his approach since its
Petrobras is already a big player in the Bolivian gas market. It cannot be
lost on Mr. Morales that most of the country's reserves are untapped and
without foreign investment will remain so.

The Morales economic platform doesn't promise a future to Bolivians, only
revenge. That can't take him far and the opposition will have ample
opportunity to challenge him. Whether it can compete will depend a lot on
whether it has learned from its mistakes of warring against coca growers to
satisfy Uncle Sam and abusing its power to deny Bolivians equality under the
law.