Bolivian democracy vs the United States

The elusive truth of on armed raid in eastern Bolivia leads Matt Kennard into a major investigation of the efforts by Washington and its local allies to undermine the radical government of Evo Morales. 

Matt Kennard
3 June 2013

In the middle of the night on 16 April 2009, an elite Bolivian police unit entered the four-star Hotel Las Americas in the eastern city of Santa Cruz, a hotbed of opposition to the government of President Evo Morales. Flown in from the capital, La Paz, the commandos planned to raid a group of five men staying in the upscale lodgings. What happened in the early hours of that morning is still disputed, but at the end of the operation, three of the five men lay dead. Some say they were executed, while the Bolivian government claims its officers won out in a twenty-minute firefight.

In the aftermath, the story gained international attention when it was revealed that two of those killed were not Bolivian. One was Michael Dwyer, a 26-year-old Irishman from County Cork, where he had been a bouncer and security-guard before moving to Santa Cruz just six months earlier. Another, Arpad Magyarosi, was Hungarian-Romanian, and had been a teacher and musician before relocating to Bolivia in February 2009.

The third man killed in the operation was the ringleader of the group, Eduardo Rozsa-Flores, an eccentric Bolivian-Hungarian who had been born in Santa Cruz before fleeing the country during the United States-backed dictatorship of Hugo Banzer in the 1970s. His family moved to Chile before the ascent of another US-supported dictator in that country, General Augusto Pinochet, meant they resettled finally in Hungary. Rozsa was a supporter of Opus Dei, the right-wing Christian sect, and fought in the Croatian independence war in the early 1990s, founding the paramilitary International Platoon which many believed was aligned with fascistic elements.

That night in Hotel Las Americas, two others, Mario Tadic, a Croatian, and Elod Toaso, also from Hungary, were arrested and remain in a high-security La Paz prison to this day. The government says it acted on intelligence showing that the men were a terrorist cell who were planning a programme of war and violence in the country, which included blowing up President Morales and his cabinet on Lake Titicaca.

The intelligence services, after a tip-off from an informer close to the group, had been following them for a number of months. They decided to act soon after a bomb exploded at the house of the Archbishop of Santa Cruz, Cardinal Julio Terrazas, who escaped unharmed.

Soon after the Hotel Las Americas incident, the government appointed a seven-person committee to investigate the plot, headed by Cesar Navarro, deputy minister for coordination with social movements and civil society. This spent the next five months, until November 2009, looking into it. Among the items seized during the raid was Rozsa’s laptop, in which investigators claim to have discovered emails between Rozsa and ex-CIA asset and cold-war double-agent Istvan Belovai.

“There are emails between Rozsa and Belovai, he was the brains behind it,” Navarro tells me in his office in the presidential palace in La Paz. “He would ask them logistical questions about escape-routes from the hotel, about whether the government or police were able to get in.” Belovai, who died of natural causes in 2009, called himself “Hungary’s first Nato soldier.” Navarro believes Rozsa became friends with Belovai in the 1990s at the time of the Balkans war.

When the police raid was revealed, the attitude of the US embassy, shown in Wikileaks’ release of diplomatic cables sent from La Paz to Washington, was one of incredulity about the government’s claims and instead worry about persecution of the opposition. One comment was headlined “Terrorism excuse for mass arrests?” In it, officials expressed concern about “raising fears of possible arrests of members of the Santa Cruz-based political opposition.” The reaction from the opposition was no more sympathetic. The right-wing governor of Santa Cruz, Rubens Costas, an ally of the United States, accused the Morales government of “mounting a show.”

The photos released by the government afterward told a different story. Rozsa and Dwyer can be seen posing with large caches of heavy weaponry, including pistols and submachine guns, and a large rifle with telescopic sights. President Morales said the cell was planning to “riddle us with bullets.”

According to the diplomatic cables, a US embassy official met with a public defender assigned to terror suspect Mario Tadic. The lawyer told the official that the right-wing Santa Cruz politicians named by the government “are most likely linked with the group.” The government had named a range of opposition leaders who were in fact intimately involved with the US embassy. Tadic, the lawyer said, had been stockpiling weapons and carrying out military training on rural properties outside Santa Cruz. She said they were responsible for placing the explosive device in front of Cardinal Terrazas's house, while Tadic had testified that the next target was going to be governor Costas’s residence, and that Rozsa had advised Costas to strengthen his security gate to minimise the damage. The intent in targeting the cardinal and the governor was to make it look like supporters of MAS (Morales's party) were carrying out the attacks. In response a conflagration, ending in civil war, would erupt.

The fact that alleged terrorists were staying in a four-star hotel, with no discernible day job, suggested they had plenty of money to undertake this project. Pictures of these foreigners partying in Santa Cruz - subsequently released by government officials who had Rozsa’s laptop - show they were accepted and welcomed openly by some powerbrokers in the city. It seemed to go all the way to the top, even the governor of the state. But none came more powerful in the city than Branko Marinkovic, a Croatian-origin oligarch, who had been a longtime friend of the US embassy and seems to have been granted asylum, although no documents exist to confirm this. His smooth entrance into the US came after the a lawyer identified him as among those “most likely” to have been involved with the terrorist group.

His right-hand man, Juan Jedulka, told the lead public prosecutor in the case that in March 2010, he had been asked by Marinkovic to pass envelopes of money to Rozsa as part of a plan to support the terrorist group. Another suspect in the Rozsa case, Hugo Achá Melgar, a keen friend of a self-described human-rights group in New York, also soon fled to the United States, where he was also welcomed with open arms.

“[There] are several factors that could induce the [government of Bolivia] to connect us to suspected extremist groups in Santa Cruz,” noted one US embassy cable in the Wikileaks release. “The petition of political asylum from alleged terrorist Hugo Acha and his wife, allocation of USAID assistance to a Bolivian organisation suspected of funding a terrorist cell in Santa Cruz, and an implied [US government] role based on the [government of Bolivia] assertion that the Santa Cruz cell leader organized meetings and had contacts in Washington.” All of these assertions turned out to be true.

"Paying clandestine visits"

As we sit in his office, lined with pictures of Che Guevara and prominent members of Bolivian civil society, Cesar Navarro, who headed the terrorism investigation, speaks at 100 miles an hour, desperate to get all the information out as quick as possible. “Rozsa didn’t come here by himself, they brought him,” he tells me. “Hugo Achá Melgar brought him.”

Achá’s story reveals a long trail that leads all the way to a set of offices in midtown Manhattan. The husband of a prominent opposition congresswoman, Achá was the founder and head of a Bolivian version of the Human Rights Foundation (HRF), an American NGO based in New York. Not very well known - but boasting Elie Wiesel and Václav Havel on its “international council” - the HRF was founded in 2005 by a character atypical of the NGO and human-rights world. A rich playboy-cum-political talking-head, Thor Halversson, can be spotted on the Manhattan party scene, as well as opining on Fox News.

The foundation he created is not typical either (Halversson told the Economist in 2010 that he wanted his organisation to break out from the traditional NGO mould by focusing “mainly on the sins of leftist regimes in Latin America”. “With the confidence of a new kid on the block", the magazine continued, "he argues that the big players in human rights have become too bureaucratic, and disinclined to do bold things like pay clandestine visits to repressive countries.”

HRF’s obsession with the “repressive” governments of Venezuela and Bolivia was not something new to the family. Halversson’s father, Thor Halvorssen Hellum, is a Venezuelan businessman, the head of one of the richest families in the country, who spent seventy-four days in prison before being found innocent of attempted homicide and all other changes related to a series of bombings in Caracas in 1993. (The Houston Chronicle noted at the time: “Police have identified one alleged mastermind as Thor Halvorssen, a former president of telephone company CANTV, former presidentially-appointed anti-drug commissioner, and, according to officials, a former operative of the U.S. Central Intelligence Agency in Central America.”) Two hours after his release, another NGO, the International Society for Human Rights, appointed him director of its Pan-American committee.
Halversson Jr’s own human-rights project was set up, he says, to help in “defending human rights and promoting liberal democracy in the Americas.” The group said it “will research and report on human rights abuses” and “produce memoranda, independent analyses, and policy reports.” But it is clear is that the organisation is set up primarily to malign the governments of Venezuela and Bolivia.

It did have sizeable funds to carry out its tasks. The group’s financial accounts make for interesting reading. By 2009, “general programs” spending was up 813 percent from the previous year, to $458,840. In the four years from 2006 to 2009, HRF has spent nearly $2.6 million on running costs. But where was the money going?

Thanks to cables released by WikiLeaks, iit is known that when Marinkovic fled to the United States, one of his first ports of call was the HRF office in Manhattan. Marinkovic, whose parents emigrated from the former Yugoslavia in the 1950s, became a successful businessman before moving into politics, a well-trodden route in eastern Bolivia. When the Morales government embarked on a land-reform programme that took fallow lands from their owners to give to landless peasants, men like Marinkovic had much to lose.

In a 2007 interview with the New York Times, Marinkovic predicted that Bolivia would soon be like Zimbabwe, a land “in which economic chaos will become the norm.” But Marinkovic followed with a veiled threat: “If there is no legitimate international mediation in our crisis, there is going to be confrontation,” he said. “And unfortunately, it is going to be bloody and painful for all Bolivians.” This was just eighteen months before the Rozsa-Flores plot was scuppered.

The New York Times also notes that Croatian news services have investigated claims that Marinkovic “sought to raise a paramilitary force with mercenaries from Montenegro, where his mother was born.” Marinkovic denies the claims, but there is no doubt he was pushing for a breakup of the country in the same way Yugoslavia had split in the 1990s. On 1 September 2008, Marinkovic flew to the United States, and when he came back just a week later the east of the country was up in open revolt. Maybe it’s not so surprising. “The US has had a very good relationship with Branko Marinkovic,” says Navarro, the MAS minister. “When he was head of Santa Cruz civic committee business federations, they shared their opposition to the president.” (Civic committees are the common name in Bolvia for business federations, which are especially influential in the eastern region.)

While Marinkovic once jettisoned plans to visit Argentina due to distrust of the Morales-allied Cristina Kirchner government, fearing that he could be arrested there and extradited to Bolivia during trips to the United States he was (according to the cables from Wikileaks) participating in strategy meetings with Greenberg Quinlan Rosner and other polling and consulting firms, and with US government officials.

In its six years of operations, the HRF in New York has released two thirty-odd-page annual reports and sixteen other reports on varying topics related to “repressive governments.” To be fair, the group did organise the Oslo Human Rights Conference, which one Wall Street Journal reporter said was “unlike any human-rights conference I’ve ever attended,” because “there was no desire to blame…the U.S. or other Western nations.”

In the same NYT article, Halversson laughs off claims that he, like his father, is in league with the CIA, calling them “conspiracy theories.” But links between his group and Achá, the man accused by the Bolivian government of buying the tickets for the terrorists in Santa Cruz, are closer than he lets on. Halversson maintains that the Bolivian group was “inspired by HRF’s work” but claims that it is “a group of Bolivian individuals…a wholly independent group with a board of directors made up entirely of Bolivian nationals.” But Achá was briefing the US embassy on his problems all through the period after the terrorist cell was raided, and during that time the embassy met with him in “his capacity as head of Human Rights Foundation - Bolivia,” which the embassy believed was a subsidiary of the New York–based organization. One cable notes that Achá’s outfit is “an affiliate of the larger Human Rights Foundation group.”

The HRF group in New York still denies any wrongdoing by Achá. Its spokeswoman has said, “Human Rights Foundation in Bolivia has carried out extraordinary work denouncing human rights abuses in that country, and unfortunately the response of Morales comes in the form of insults and unfounded accusations...  We have carried out an internal review and have found no evidence that Mr. Acha is linked to the group that the government claims is carrying out separatist activities.”

The MAS government alleges, with evidence based on credit-card receipts, that Achá bought the plane tickets for the terrorists to make their way from Ireland and eastern Europe. The prosecutor in the case has also said that Achá’s business card was found in the backpack of one of the alleged terrorists. Furthermore, the lead prosecutor claims Achá met with Rozsa on at least three occasions, while testimony from other terrorist suspects in custody implicates Achá as a financial supporter of the group. Roger Pinto, from the conservative opposition party Podemos told the US embassy, according to a Wikileaks cable, that the government “has evidence that Acha was involved with the alleged Santa Cruz cell.” He added that Achá was involved in trying to solicit funds for the group from opposition leaders in the opposition heartland, but only in order to “set up a self-defense force for the [opposition areas of the country]…not to assassinate the president.”

Pinto contended that Achá had approached, among others, the mayor of the state of Trinidad, Moises Shriqui, with Rozsa to enlist his support. Pinto said Shriqui flatly refused to get involved and discounted the group as “a really bad idea.” Another opposition Podemos deputy, Claudio Banegas, told the US embassy that the congressional investigation into the Santa Cruz group had revealed that Achá did in fact have a relationship with the cell. His colleague said Achá’s involvement was “not at the top of the lighthouse, just at the bottom.”

The Bolivian government has tried to request extradition of Achá from the United States, to no avail. Like Marinkovic, Achá was successful in persuading the United States to grant him political asylum immediately when threatened with legal proceedings, according to the Wikileaks cables. In fact, providing a sanctuary for Bolivian suspects would become a theme of US policy toward the country. The United States had also been active in Achá’s education: he had participated in a Center for Hemispheric Defense Studies “Terrorism and Counterinsurgency” course in Washington in late 2008. In the cables Achá is referred to as a “human rights lawyer” and it is noted that political officers from the embassy met twice with him in Santa Cruz while he was investigating a September 2008 massacre of indigenous peasants in the Pando department of Bolivia. “He was preparing a report detailing a high degree of Morales administration involvement to provoke violence in Pando,” the cable adds.

"La Espana gradiosa"

Bolivian society, in particular its business interests, has always had a strong disdain for a central government they see as interfering and stifling. To this purpose, in most areas of the country, there are institutions called civic committees, which organise and represent business interests. They have become especially important in the opposition stronghold of the media luna or “half moon” provinces (Santa Cruz, Beni, Pando and Tarija), located in the Amazon lowlands.

This area represents the wealthiest part of Bolivia; for years sections of the population here have called for greater autonomy from central government. In Santa Cruz, where the Rozsa plot was foiled, the civic committee has become the major non-governmental voice of opposition to Evo Morales. Its presidency has been held by some of the most powerful businessmen and politicians in the country, including Rubens Costas, the governor of Santa Cruz, and Marinkovic himself. The committee’s funding comes from 220 businesses in the department. In its December 2007, internal report on civil society in Bolivia prepared by ARD, Inc., reports that the two main columns on either side of the state are “the civic committees […] on the right, and the large labor organizations on the left.”

But the Santa Cruz civic committee is not just “on the right” - it is acknowledged in the embassy cables as having fascist members involved in violence against indigenous citizens, particularly in the affiliated Youth Union. Ignacio Mendoza, a senator in Sucre, who is part of the left-wing opposition to MAS, told me: “Against us there is the Santa Cruz Civic Committee (SCCC) and the Youth Union, which is a neo-fascist group. These groups always threaten.” In December 2006, New York Times correspondent Simon Romero noted, “It is no surprise that many Bolivian supporters of Mr. Morales view Santa Cruz as a redoubt of racism and elitism.” He adds, “This city remains a bastion of openly xenophobic groups like the Bolivian Socialist Falange, whose hand-in-air salute draws inspiration from the fascist Falange of the late Spanish dictator, Francisco Franco.”

After I finished a series of interviews at the offices of the SCCC, the group’s spokesman inexplicably allowed me to download a tranche of files from their computer. They included racist cartoons of Evo Morales, as well as a poem lauding the old colonial country, Spain. One reads: The grand Spain/with benign fate./ Here he planted the sign/ Of surrender. /And it did in its shadow/ An eminent people/ Of clear front/ A loyal heart. The computer files I retrieve are also full of unhinged documents calling Venezuela's then president Chávez and Evo Morales terrorists. The Guardian accurately notes that the SCCC is “a sparkplug of separatist agitation in the East.”

Despite these leanings, US taxpayers, through USAID, are funding members of this group. In the Wikileaks cables, under the subtitle Blowing Smoke, an August 2007 dispatch makes fun of Bolivian government claims about USAID activities being used to help the opposition. But inadvertently the dispatch proves it. It notes: “[another] USAID contractor, Juan Carlos Urenda (a Santa Cruz civic committee leader) described the MAS accusations as an attempt to cast a smokescreen over the ‘serious problems in this country.’ ” A search in the trove of documents retrieved from the SCCC’s computer turns up the same Urenda, USAID contractor, as the author for the SCCC of a long article lauding the history of the department’s autonomy struggle. A prominent lawyer in the east, in 1987 Urenda published a book called Departmental Autonomies, which, he notes, “outlines what will be the fundamental doctrine of the process of autonomy.” He goes on to write, “Conscious of the error of having structured the country in a centralized way, [Santa Cruz] has not ceased in its attempt to decentralize the state throughout its republican history.”

It turns out that Urenda was actually one of the founders of the SCCC’s Pre-Autonomy Council and one of the area’s most prominent right-wing ideologues. This finding makes a mockery of USAID’s claim to be apolitical. As its own report notes, “It is clear that Bolivian civil society in the first columns on both sides [civic committees and labor movements] are playing roles that are less social and more political and governmental.”

Although they shy away from talking about direct aid, the leaders of the SCCC are full of praise for USAID when I talk to them. “USAID in Bolivia was supporting democratic organizations and tourism and fairs,” said Ruben Dario Mendez, the SCCC spokesman. “They were interested in fomenting political participation. Evo doesn’t like that, he doesn’t like there to be freedom.” It’s not just USAID that helps out either. He notes that the Journalists' Association of Santa Cruz has an agreement with the US embassy, which helps it print books and put on events, which is not in place in other parts of the country. “In some cases the US helps us,” he says. “Anyone can submit a proposal to get help. I have attended events about political governance about freedom of expression, human rights,” he adds. “There was a new penal prosecution code, and a workshop on that has been carried out by USAID for years.”

Nicolas Ribera Cardozo, vice-president of the SCCC, says that in the past year and a half he’s had two conversations with the head of communications and publications at the US embassy. “What they put across was how they could strengthen channels of communication,” he says. “The embassy said that they would help us in our communication work and they have a series of publications where they were putting forward their ideas.” But, he continues, things were even better under George W Bush. “There were better programs under Bush; there were programs from USAID and DEA to deal with narco-trafficking.” He adds that the National Endowment for Democracy has “held informative workshops for young people about leadership.” For him it’s not controversial that these programs were designed to help the opposition. “Of course they were opposition, it’s a liberal train of thought, you train people to be more aware, productive.”

I found more evidence of US support for these right-wing opposition forces in the south of the country, where President Morales in August 2006  announced the opening of the constituent assembly in Sucre, the judicial capital. It would spend six months redrafting the constitution with enhanced rights for indigenous communities, who would be given more economic control of Bolivia’s resources, as well as land reform. It was eventually passed by a referendum.

“Sucre is like the dividing line between the east and the altiplano [the poorer indigenous western highlands] so the idea was it was a place that could bring peace between the two peoples,” Mendoza, the senator from Sucre, tells me as he sits in the local government headquarters. “But radical groups here connected themselves with Santa Cruz, and all of a sudden it became about something bigger.” The whole process was marred by violence, as the opposition set out to scupper it. In demonstrations in Sucre in November 2007, three people were killed and hundreds injured as police battled with protestors.] “It all comes down to racism,” added Mendoza. “The constituent assembly was made up largely of indigenous farmers and that prompted racism. People were chanting, ‘Whoever doesn’t jump is a llama,’ acting superior to indigenous people and calling them llamas because they are from the altiplano.” As the killings and lootings got under way, the United States made no statement of condemnation. “They are setting fire to gas pipelines, and the US government does not condemn that?” asked Morales at the time. “Of course, they know they [the opposition groups] are their allies. So why then they would they denounce them?”

The tactics used by the SCCC mirrored those used in Chile when the United States was trying to destabilise the government of Salvador Allende. In Bolivia in 2008, there was the violence from the local youth groups but also strikes - this time organised by the business elites - designed to bring the country to its knees and keep goods from being delivered to the west of the country. The Confederation of Private Businesses called for a national shutdown if the government refused “to change its economic policies.”

All together this was called a “civic coup.” It failed, but around the same time the United States was trying to rejuvenate the opposition by bringing together civic groups against Morales, according to evidence uncovered during my time there. While in Sucre, I talk to the civic committee for the state department of Chuquisaca, in which the city sits, still an opposition stronghold. Felix Patzi, the president, describes the civic committee’s role as keeping “an eye on government projects to make sure they follow through on their promises.” But the US embassy had been in contact with an unusual request, he recalled. “They made an offer years ago. They wanted to finance a meeting of all the civic committees in the country to bring them together in 2007,” he said.

The idea was “to bring together the works of the different civic committees to encourage communication between them.” he continued, adding, “I don’t know why the US did it, but we heard from Santa Cruz that the idea was to create a national civic committee.” The United States had to have known (from their own internal documents) that such a National Civic Committee would be right-wing and would probably take on a political and governmental role. Patzi says the Chuquisaca committee refused because it doesn’t receive outside funding, but, he added, “I don’t how many other civic committees have accepted money from the US."

The most controversial part of the SCCC is its youth branch, the Union Juvenil Cruceñista, or UJC, which has have been called by one Bolivia analyst “paramilitary shock troops.” They roam the streets of Santa Cruz in times of turmoil and have been involved in violent attacks and atrocities against indigenous peasants, as well as damage to government buildings.  The US embassy Wikileaks cable notes that the UJC “have frequently attacked pro-MAS/government people and installations,” adding, “their actions frequently appear more racist than politically motivated.” The UJC “are militant,” it adds. To demonstrate the fact, a US official notes, “The Santa Cruz youth union seems to be radicalising: one group waving Santa Cruz flags drove through town in a jeep emblazoned with swastikas.”

I also talked to Samuel Ruiz, president of the UJC. Dressed in a crisp shirt and shiny shoes, with slicked-back hair, we sit down in the meeting room at SCCC headquarters, surrounded by photos of previous SCCC presidents, Marinkovic and Costas.  Now the UJC has 3,000 passive members, and 500 active, according to Ruiz. Asked three times if it has any indigenous people as members, he avoids the question. He instead complains that when Evo came to power he got rid of USAID and other US groups. “It has a huge impact,” he says. “When there were international agencies, Bolivia was much more peaceful. Now we see loose arms and legs about the streets, there are kidnappings, it is violent and dangerous, whereas it wasn’t before.” The Youth Union have now taken matters into their own hands, he adds.

Ruiz further makes the claim, mirrored by the US embassy, that Evo sent campesinos to Santa Cruz to start violence at the height of tensions over the new constitution, even though the cables note that Morales went out of his way to avoid casualties.  “Military planners have told us that President Evo Morales has given them instructions not to incur civilian casualties,” one cable notes. “Field commanders continue to tell us they will require a written order from President Morales if asked to commit violence against opposition demonstrators.” Another notes, “A senior military planner told [us] that President Morales wants the military to be careful to avoid violent confrontations with demonstrators if called upon to support Bolivian police.”

"We'll take care of him"

The most active of the many US agencies working in Bolivia is USAID. Between 1964 and 1979, it contributed more than $1.5 billion, trying to build a citizenry and investor climate conducive to US corporate needs. For nearly half a century it has carried out its stated goal of providing “economic and humanitarian assistance,” ostensibly a gift “from the American people.” Mark Feierstein, USAID assistant administrator for Latin America and the Caribbean, put its raison d’être bluntly in December 2010, when he said, “USAID’s programs are not charity [...] they are not only from the American people, as the agency’s motto says, they are for the American people.”

It so happens that Feierstein was a key campaign consultant to former President Gonzalo Sánchez de Lozada (known as Goni) who fled to the United States in 2005 to avoid facing trial for a massacre of protesters in La Paz. People in the US are now bringing charges against Goni to prosecute him under the Aliens Tort Claims for his role in the murders. (Feierstein has never expressed regret about the campaign; in fact, the same firm did polling for Morales's presidential opponent in 2009, Manfred Reyes Villa.) The Morales administration has continually said that USAID uses its money to push the strategic goals of the US government under the cloak of “development.”

Much important work has been carried out on this topic by the investigative journalist Jeremy Bigwood in the period before MAS came to power, but his FOIA requests stopped being answered when he asked for information on projects after the election of 2005. Early on the United States fingered the MAS party as a problem that had to be dealt with. A FOIA request from Bigwood produced a declassified July 2002 letter from the US embassy, a USAID political party reform project was outlined which aimed to “help build moderate, pro-democracy political parties that can serve as a counterweight to the radical [MAS].” The next section was redacted.

In Sucre, I talk to Ramiro Velasquez, an administrator in the local government offices who has worked for a USAID-funded program in the city. He says it was set up by a consultancy, funded by USAID, which has a subsidiary called Fortalicimiento Identitad de Democracia, or FIDEM. “They were looking for Bolivian operators in every department to do their work,” he says. “FIDEM was looking for an NGO to do the work and they would look for operators. They were in La Paz, Oruro, Potosi and Sucre.” Velasquez was asked to be operator and told they wanted him to run courses on “democracy and participation,” a programme eventually shut down by the Morales government. “This project was aimed at young people,” he says. “So to get young people, you had to get into universities and social movements and state institutions, even the church.” In the end, 600 young people signed up.

The courses took on two phases, with the first workshops an opportunity to select around twenty young people to move on to La Paz for the second phase, carried out by FIDEM and another NGO. It was called “leadership training,” ostensibly to create a new generation of Bolivian leaders. “They were teaching about democracy, but not the type of democracy Evo and Bolivians have,” he says. “They were teaching them about representative democracy, not participatory democracy, using Evo as an example of what not to do. It was clearly to create leaders for the opposition, everyone knew what it was about,” he adds.

The Wikileaks cables from La Paz would support this conclusion. One visiting US official went to a “civic education project funded by USAID through the NGO FIDEM and implemented by the Santa Cruz binational center” in late 2008 with the aim of growing a “civic responsibility” arm. The project was “reaching” 21,000 residents in a marginalised neighborhood, it boasted, before adding, “it is widely-thought to be a MAS stronghold.” The local residents are “enthusiastic” about the initiative, it notes, as the region’s people are “determined as much as possible to halt democratic back-sliding.”

The Bolivian government estimate that 70% of USAID money is unaccounted for appears overstated, but it is possible that money was being spent without the knowledge of the government. After one spate of criticism of USAID programmes by Morales, the US ambassador to Bolivia notes that the country “cannot afford to risk $120 million in assistance” from the agency (it works out at about $12 for every Bolivian). In another, it is noted “we’re spending about $90 million annually to further social and economic inclusion of Bolivia’s historically marginalised indigenous groups and to support democratic institutions and processes, including decentralised governance.”

But an American journalist living in La Paz was present at an “all-hands staff meeting” called by the US embassy to explain USAID’s activities to US journalists after another round of criticism from the Bolivian government. She was given a breakdown of spending by USAID in 2010. “This information was given to the small group of reporters gathered to use as background in stories,” she tells me. It outlined $16.8 million to USAID health programmes, $19.2 million to Integrated Alternative Development (alternatives to coca production), $15.3 million to environmental and economic development programmes, and $22 million to counternarcotics. That adds up to $73.3 million. In 2007, the ambassador notes USAID was spending $120 million a year through USAID. Either that was cut substantially in three years or some of the money was being funnelled to projects with no official acknowledgment.

Where was the other $50 million going? I procured a host of official USAID documents on USAID “democracy promotion” programmes in Bolivia in the period after the Morales government was elected. In one, which outlines the goals and success of its “administration of justice” programmes, which have run in the country for seventeen years (“among the largest in Latin America”), ARD, Inc. is explicit about where its money is going. “USAID/Bolivia programs include support to promote decentralisation and municipal strengthening, support to Congress and political parties,” it notes.

Another vital US agency that works in Bolivia is the National Endowment for Democracy, which was created by President Ronald Reagan in 1983 to “promote democracy” but has a history of doing the opposite. In Bolivia the NED has focused on potentially recalcitrant indigenous areas, promoting the “American way” to the young. I obtained the pitches from various Bolivian projects that have received grants from the NED. The tactic of “training civil society” to gain access to on communities around Bolivia was exactly the same as USAID projects. One project, Observancia, which ran from 2008-09 and cost $54,664, is typical. It was working in eight municipalities and helped in the “training of municipal functionaries and civil society.” The aim was to create future “municipal candidates” who would be “inserted into government programmes.”

Other projects look to “encourage political citizenship among young people.” In one project in Totora, Cochabamba, the pitch notes that the population is mostly Quechua-speaking and a lot more “politicized” than neighbouring states, adding, “there exists…an obstinate opposition to what they term as ‘neoliberal,’ and they reject any advances from such parties.” Opposition to US business interests was not something the NED took kindly to. It notes that one of the characteristics of Totora is the imposition of “a logic of the majoritarianism,” which rejects a form of democracy “respectful of any differences.”  “This prompts us to consider that in the future we should include democratic values, in all sectors of society, not just as a citizen’s exercise when voting for their electoral representatives, but also with the logical respect that democracy has in other contemporary global societies.” But the fact that the Totora populations organise themselves in collectives and make decisions collectively is very common for indigenous groups throughout the country. No matter. The NED would try to train it out of them.
"Building an investor-friendly business climate"

A key reason USAID disliked the Morales government is that it wasn’t good for business. The investment climate in Bolivia, which had been favorable to US transnationals for decades, was turning into a more hostile place. Corporate fears were shared by their natural allies in the European-descendant oligarchy in the east of Bolivia. Both were increasingly scared of the economic programme of the Morales government, which has provided a model for developing countries around the world: achieving high growth, as well as reducing in poverty, while part-nationalising key industries.

The Bolivian government, even when composed of ruthless dictators, maintained an investor-friendly business climate, which saw US companies like Coeur d’Alene Mines take advantage of Bolivia’s vast natural resources, just as the Spanish had done before (Bolivia’s major exports to the United States are tin, gold and wood products). For a long time foreign investors and owners of companies enjoyed virtually no restrictions. Foreign direct investment (FDI) in Bolivia grew to $7 billion in stock during 1996-2002, nearly all of which went to business interests in the east. Concern about nationalisations is frequent in the cables from La Paz. “There is…rampant speculation about President Morales’ traditional 1 May speech, in which he is expected by many to announce nationalisation of companies based in Santa Cruz, potentially including…food industries,” one from April 2009 reads. “If the latter, many expect Branko Marinkovic’s cooking oil and other companies to be taken in the name of ‘food security.’ ”

The cables from La Paz do not pull punches when outlining their opposition to the economic thinking of the MAS government. One March 2006 cable notes that an economics professor who advises Morales is “steeped in out-dated socialist economic theories and has yet to accept the practical realities of a globalized economy.” It adds that he “may be beginning to understand the real impact of free trade on job creation,” but, unforgivably, “he appears to believe that markets in Venezuela and China serve as alternatives to U.S. markets. He has told Bolivian exporters to seek markets outside the United States, unconvinced that the U.S. is crucial to their trade.”

It notes that he recently returned from Venezuela after negotiating an agreement to buy Bolivian soy. “Additionally, he has regularly antagonized other businesses, telling them that the President’s Dignity Tariff, a new lower price mean to provide cheap electricity to Bolivians is a done deal, remarking that the private sector should either get on board or suffer.” USAID had a plan to deal with this. One of the most important components of the justice project is “promotion of legal security,” through which “it was hoped that the business and investment climate in Bolivia would be improved.” The principal donor for this purpose was USAID, and the project was budgeted at $4.8 million over five years, the biggest outlay for 2010. It chimed with the sentiment in cables from La Paz, one of which noted that “key areas of concern in Bolivia currently are democracy, narcotics, and protection for U.S. investments.”

A major concern for the US was the Morales administration's penchant for nationalising - with compensation - foreign-owned assets. These have included the Spanish-owned (Red Eléctrica) power grid, Swiss-owned (Glencore) mining assets, as well as Brazilian natural-gas companies, amongst others. No sector has been spared. One cable notes, “The main impact [of nationalization] has been to halt new investment in the [energy] sector, which Bolivia needs to meet domestic demand and fulfil contractual obligations to Brazil and Argentina.” It adds that “[as] a political measure, however, the ‘nationalization’ remains wildly popular.” It was also successful. In June 2011 the ratings agency Standard & Poor’s raised Bolivia’s credit ratings by one notch, praising President Morales’s “prudent” macroeconomic policies, which allowed for a steady decline in the country’s debt ratios.

One of the US embassy’s key concerns was protecting US and other transnational mining investments, despite high-level Bolivian officials giving “repeated assurances that the Morales administration will respect existing U.S. mining interests.” One cable notes, “We continue to urge the government of Bolivia to respect existing mining concessions and to limit tax and royalty hikes.” In other words, create a good business climate, even if it’s at the expense of the population. “One U.S. investment which is vulnerable is San Cristobal mine, which is 65% owned by Apex Silver,” said one August 2007 cable. “San Cristobal would be particularly hard-hit by a bill currently in Congress, which would increase mining taxes. Although the Bolivian government claims to want a fifty-fifty split of profits, the proposed tax increases actually result in, on average, a 60% government take of profits.” It added that “the proposed tax increases pose a serious threat to San Cristobal mine.”

"Being a softy"

When in Sucre, I talked to Enrique Cortes, a professor who works at one of the universities in the city and a specialist in US-Bolivian relations. “Bolivia is still dependent,” he says. “This position of dependency was from the beginnings of when the nation was created. We were always dependent on an international monetary system, lately led by the US.” He added, “There was a triangular relationship between the state, oligarchs and transnational organizations, and these oligarchs responded to international money. When they lose power they use force to stop history from developing. Within that fits Rozsa-Flores and the Pando massacre.”

The move to democracy, he says, may not be permanent, and could be scuppered. “There was the fascist process, dictatorship, but it’s not over. With Carter began the phase of controllable democracies, but now we think a new phase has opened. And this new phase is characterised by vital resources, and wanting control over these vital resources. So that’s the central conflict with the US.” He thinks Washington can still put a brake on the process initiated by MAS to greater independence. “A coup is not the only way to put brakes on this. History shows there are other strategies, such as penetrating the popular organisations, and social movements using agencies like USAID.”

But coups had been the traditional US tactic in the country. Declassified documents released in 2008 by the state department exposed US financial and political support for the military coup by right-wing general Hugo Banzer in 1971, who ruled until 1978. Fast forward four decades, and WikiLeaks cables reveal that as the political turmoil in Bolivia was peaking, the US embassy was contemplating the eventuality of a military coup. One from November 2007 notes that “there are strong indications that the military is split and could be quite reticent to follow orders.” In fact, there were further signs for optimism. “Evo does not have a network of personal friends within the military,” one cable December 2007 notes, a month later, while a senior figure in the Bolivian military “might be sympathetic to a coup,” but, adds the cable, “we cannot expect him to stand behind his assurances.” If Bolivia erupts into violence again, the Morales administration might not be so lucky.


The author's research was supported by the Investigative Fund of the Nation Institute

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