What Bolivia's chaos really means

Jeffrey D. Sachs, Professor of Economics, Columbia University, Project Syndicate

The forced resignation of Bolivia's President Gonzalo Sanchez de Lozada, following a month of violent demonstrations, marks a tragic milestone whose meaning extends far beyond his impoverished country. Bolivia's civil and political breakdown provides another example of the poverty of U.S. foreign policy.

Sanchez de Lozada is one of Latin America's true heroes, a leader who helped usher in democracy and modest -- if fragile -- economic growth during the past 20 years, including two terms as president. Yet now he has fled in fear for his life. American arrogance and neglect played a big part in this stunning reversal.

Virtually all of South America has been in deep economic malaise of late, with high unemployment, rising poverty, and growing social unrest. Argentina endured economic collapse and four failed presidencies during the past three years. Brazil is battling recession and rising unemployment. Political systems have fallen apart in Peru, Ecuador, and Venezuela. Colombia is in open civil war.

As a landlocked Andean country, Bolivia suffers its own special distress. Its transport costs are among the highest in the world, reflecting mountainous terrain and international trade routes that must cross political boundaries and depend on foreign ports. This discourages inward investment and strains relations with coastal neighbors.

Indeed, the precipitating factor in Bolivia's collapse was a plan to export natural gas to the U.S. through archrival Chile, a country deeply resented since the War of the Pacific in the late 19th century, which rendered Bolivia landlocked.

Sanchez de Lozada spoke of the gas exports as a means for investing in health, education, and economic development. But Bolivia's impoverished population had been ripped off too many times and feared, understandably, that gas revenues would accrue to foreigners or to Bolivia's own rich.

Yet the spark in Bolivia was more than a regional economic crisis amplified by bad geography and a distrusted gas deal. Just as U.S. presidents treat the Middle East as America's gasoline station, they treat the Andean countries not as home to 130 million poor and struggling people, but, first and foremost, as suppliers of cocaine.

Bolivia's coca cultivators are viewed not as indigenous people trying to survive in a region mostly without jobs, but as drug traffickers. America's public health problem is seen as an Andean-wide plot to be suppressed with military force, exacerbating violence throughout the region.

When the Bolivian government before de Lozada faced U.S. demands to destroy the coca crop, I advised that it insist on adequate aid to finance economic development. Desperate for any assistance, Bolivia's governments ultimately uprooted thousands of hectares of peasant crops -- and got almost nothing in return but a lot of phony slogans about alternative development.

Not surprisingly, the 2002 elections turned on the explosive coca eradication issue. Evo Morales, the leader of the coca growers' federation, came within a whisker of winning the presidency, helped by the U.S. envoy's warning that his election would be seen as hostile to America. That "endorsement" by itself was almost enough to give Morales the presidency. In the event, it put him into the leadership of the insurrection that toppled Sanchez de Lozada.

The main surprise is that de Lozada lasted as long as he did. He inherited an economic, political, and social crisis as deep as any in the world, and he warned President Bush last year that extreme poverty and widening ethnic divisions could incite insurrection. Bush literally laughed in his face, saying not to worry, that he, too, faced political pressures. De Lozada pressed again for U.S. financial help -- US$150 million -- but Bush ushered him from the Oval Office with a pat on the back.

De Lozada returned to Bolivia empty-handed, except for instructions from the IMF to implement austerity measures in accordance with the dictates of the U.S. Treasury. This led to a police strike, followed by a popular insurrection and an assassination attempt. IMF officials have failed to provide an honest public appraisal of Bolivia's urgent financial needs.

Even after a failed assassination attempt, the U.S. again brushed off requests for aid. The U.S. adventure in Iraq has squandered $150 billion over two years, while Bolivia received $10 million -- that's right, $10 million -- in "emergency" help, a fifteenth or less of what was realistically needed to ease the intense economic crisis and help displaced peasants. Now U.S. interests in Bolivia lie in shambles: The country seethes with violence, and coca production is likely to soar.

American foreign policy is brain dead. Even as de Lozada was hounded from office on the streets of La Paz as an American lackey, the Bush administration showed no interest or support. An obsessive U.S. administration, led by a President who reportedly believes that he is on a holy mission to fight terror in the Middle East, pays no attention to the rest of the world.

Woe to any poor country that follows U.S. dictates. A narrow- minded and violent U.S. administration has lost interest even in helping its friends.