By Eli Clifton
WASHINGTON, Feb 23 2007 (IPS)

Thirteen months after the election of Bolivian President Evo Morales, political, ethnic and racial schisms have widened in the country but the United States should stay politically engaged, says a report released by a prominent New York-based think tank.

The report, “Bolivia on the Brink”, urges the United States to refrain from giving ultimatums to the Bolivian government and cautions against a U.S. withdrawal from the region, which it argues could result in disastrous consequences.

Morales, a close friend of Venezuelan President Hugo Chavez, has been a vocal critic of U.S. trade initiatives, as well as the institutions of representative democracy and market-oriented economic models promoted by the Summit of the Americas.

The rise of a Bolivian leader committed to empowering the nation’s poor and challenging the country’s political and economic elites was widely seen as a sign of declining U.S. influence in Latin America.

“Bolivia on the Brink”, published by the Council on Foreign Relations (CFR), argues that Morales’ aggressive policies, particularly a constitutional reform reducing the requirement for articles of a new constitution to a 50-percent majority – versus a two-thirds majority – have polarised Bolivians and set the stage for increasing social unrest.

The movements towards economic reforms have increased existing tensions between Bolivia’s economically privileged and impoverished regions, resulting in a series of violent protests and political tension.

Despite the report’s gloomy outlook for U.S. interests in the region, Gamarra, speaking on a conference call at the release of the report, is quick to argue that U.S. disengagement could be even more disastrous for Washington in a region “on the brink of redefining itself politically and on the brink of facing major political conflict.”

“The U.S. needs to be a ‘conflict preventer’ and remain engaged in the region or the internal situation could exacerbate over the next few months and over the next few years,” he said.

A different perspective was offered by Coletta Youngers, a senior fellow at the Washington Office on Latin America. “Argentina, Brazil and Chile don’t see Bolivia as ‘on the brink’,” she told IPS. “All three are led by presidents sympathetic to what Morales is trying to do. They understand the complexities of dealing with issues of income inequality and the inevitable conflicts with entrenched elites.”

Katherine Ledebur, director of the Andean Information Network in Cochabamba, Bolivia, agreed. “Bolivia is not on the brink,” she said in an interview. “It is a country that has been subject to recurring conflict, change and friction. Unfortunately, the election of Morales has not put stop to those cycles but it’s not that conflict began with the election of Morales.”

Over the past nine months, the Morales administration has maintained cordial relations with U.S. officials, who have developed ties to both the government and the opposition, ostensibly to show that acts by either group to destabilise the democracy will not be supported.

Gamarra’s report supports these steps by Washington but cautions that traditional U.S. policy tools of trade, such as counternarcotics, military and development assistance, will not provide enough leverage to unilaterally influence the direction of the Bolivian government.

However, space for a multilateral negotiating strategy seems limited with news emerging this week that Petrobras, Brazil’s government-controlled oil company, has agreed to a reworking of existing natural gas contracts with Yacimientos Petrolíferos Fiscales de Bolivia (YPFB- Bolivias state owned oil company) – appearing to have folded to Bolivian demands for a significant rate hike for exported Bolivian gas.

Although the details of the deal and the price hike are not clear yet, controversy is swirling around the fact that high-level government officials in both Brazil and Bolivia were involved in the Brazilian concessions, in what would have normally been a private commercial negotiation between Petrobras and YPFB.

“President Morales has a clear mandate from the Bolivian people to reverse decades of exploitation by foreign companies of Bolivia’s natural resources and the Morales government is moving forward to carry out that mandate in a coherent and relatively cautious way. They have been able to reach negotiated agreements with the major companies and both sides have compromised,” said Youngers.

Despite a recent drop in public approval of his administration’s policies, Morales has continued to hold onto a more than 50-percent approval rating, similar to his popularity when elected.

“It is unprecedented for a Bolivian president to maintain the support of over 50 percent of the population but clearly there is concern with the middle class and the polarisation within the country,” Youngers points out.

“(The drop in popularity)… comes from feeling that the country has become more polarised and middle class sectors feel Morales is not looking out for their best interests,” she added.

Violent clashes between opposition groups and Morales supporters in January and the news of a dramatic restructuring of natural gas contracts suggest an increase in ethnic and regional schisms between the Morales’ presidency, his constituency and Bolivian trade and economic partners.

“Although specific policies of the Bolivian government, particularly in community coca eradication programmes, may contradict traditional U.S. approaches, an unstable, conflict-ridden Bolivia would be a bigger headache for Bolivia’s neighbours, Latin America and the United States,” concludes the report.

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