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Updated November 24, 2020
Bolivia: An Overview
Bolivia is a landlocked South American nation of 11.7
levels of government. In foreign policy, Morales aligned
million people (see Figure 1). From 2006 to 2018, Bolivia
Bolivia with Hugo Chávez of Venezuela in taking a hostile
became more stable and prosperous under President Evo
stance toward the United States. In 2008, he expelled the
Morales, its first indigenous president. Bolivia also
U.S. Ambassador for allegedly fomenting opposition to his
experienced backsliding in measurements of governance. In
government, charges the State Department dismissed as
November 2019, Morales resigned after an election marred
false.
by irregularities and sustained protests. Luis Arce,
Morales’s former finance minister, took office a year later,
Figure 1. Bolivia at a Glance
after winning 55% of the vote in October 2020 elections in
which his Movement Toward Socialism (MAS) also
maintained a legislative majority. President Arce faces
many challenges, including how to address the Coronavirus
Disease 2019 (COVID-19) pandemic and how to manage
relations with the United States.
Background
Chronic instability, poverty, corruption, and deep ethnic
and regional cleavages have stymied Bolivia’s
development. Bolivia won independence from Spain in
1825, experiencing frequent military coups and periods of
authoritarian rule for much of its history. The country
reestablished democratic civilian rule in 1982.
Sources: CRS Graphics, International Monetary Fund (IMF), Central
Intel igence Agency (CIA), Instituto Nacional de Estadísticas (INE),
Bolivia’s population is among the most ethnically diverse in
Trade Data Monitor (TDM).
South America. In the 2012 census, some 41% of the
population self-identified as indigenous (Quechua or
Under Morales, Bolivia ranked “partly free” in Freedom
House’s annual
Aymara). The rest of the population is of European, mixed
Freedom in the World reports, scoring
European and indigenous, or African descent. Bolivian
lowest on issues related to due process and judicial
indigenous peoples benefitted from the National Revolution
independence. The government launched judicial
of 1952, which led to land reform and expanded suffrage.
proceedings against opposition politicians, dismissed
Nevertheless, they remained underrepresented in the
hundreds of judges, and restricted freedom of the press.
political system prior to Morales’s government and
Concerns increased after the Constitutional Tribunal ended
disproportionally affected by poverty and inequality.
constitutional limits on reelection in 2017, essentially
overruling a 2016 referendum in which voters rejected
Cultivation of the coca leaf remains a contentious issue in
allowing Morales to run for a fourth term. In November
Bolivia and in Bolivian-U.S. relations. Many of Bolivia’s
2019, Morales resigned and went into exile amid
indigenous communities consider the coca leaf s acred and
nationwide protests against a disputed October first-round
use it for traditional, licit purposes (the leaf also is used to
election in which he had claimed victory.
make cocaine). Opposition to years of U.S.-backed forced
coca eradication policies led to the rise of coca growers’
Many Bolivians criticized the authoritarianism of the
trade unions and a related political party, the Movement
interim government that took over after Morales’s
Toward Socialism (MAS). In 2005, years of protest against
resignation. Led by Jeanette Áñez, formerly a conservative
leaders perceived to have governed on behalf of the elite led
senator, the interim government rolled back MAS policies,
to the election of Morales, president of the coca growers’
used violence against protesters, and prosecuted former
union and a self-identified person of Aymara descent.
MAS officials. Áñez suspended community-based coca
control and adopted a drug policy aimed at achieving a
Political Conditions
“drug free” Bolivia. The interim government also struggled
Morales and the MAS transformed Bolivia. Morales
to address COVID-19, and a corruption scandal prompted
decriminalized coca cultivation outside of traditional zones
the health minister to resign.
where it had been legal, increased state control over the
2020 Elections and Prospects for Arce’s Presidency
economy, used natural gas revenue to expand social
programs, and enacted a new constitution (2009) favoring
The October 2020 elections proved to be a referendum on
the rights and autonomy of indigenous peoples. Previously
the legacy of Morales and the MAS. In contrast to the chaos
underrepresented groups increased their representation at al
of the 2019 elections, the new Supreme Electoral Tribunal
administered a process that international election observers
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Bolivia: An Overview
deemed generally free and fair. Contrary to pollsters’
extraditions. According to the U.S. Office of National Drug
predictions, Luis Arce avoided a runoff election by winning
Control Policy (ONDCP), coca cultivation in Bolivia rose
54% of the vote, 25% more than his nearest rival, former
from 26,000 hectares in 2006 to 42,180 hectares in 2019.
president Carlos Mesa. Arce benefitted from divisions
ONDCP asserts that potential cocaine production rose 20%
among the opposition. The MAS maintained majorities in
from 2018 to 2019. While concerned about the uptick,
the Senate and the Chamber of Deputies.
many observers recommend U.S. officials work with the
new government to combat these trends without unduly
President Arce is an economist who worked in Bolivia’s
punishing coca farmers.
central bank prior to serving as minister of finance. He has
pledged to govern in a conciliatory fashion, but clashes
U.S. bilateral assistance to Bolivia began to decline in
between his government and eastern, opposition-led
FY2007 and was cut completely by FY2013. President
provinces could still occur. The findings of an Inter-
Morales expelled the U.S. Agency for International
American Commission on Human Rights investigation into
Development (USAID) from the country in 2013 for
two massacres in 2019 is likely to ignite tensions if former
allegedly conspiring with the opposition; USAID denied the
Áñez officials are cited for abuses. Intra-party disputes
charge. The State Department then ended its antidrug
between hard-line and moderate MAS factions also could
programs in Bolivia due to a lack of adequate cooperation.
occur, particularly if Morales, recently back from exile,
Bolivia has since received most of its foreign aid from the
seeks to exert undue influence over the government.
European Union. Civil society groups in Bolivia continue to
receive small amounts of U.S. regional and global funds.
Economic Conditions
During Arce’s tenure as finance minister, Bolivia’s
In January 2020, President Trump waived restrictions on
economic growth averaged almost 4.5% annually,
U.S. FY2020 assistance to Bolivia, citing such aid as in the
according to the International Monetary Fund (IMF). Arce
U.S. national interest. USAID provided $3 million in
channeled earnings from Bolivia’s natural gas export boom
election-related assistance, and, as of August 2020, the
to fund social programs and wage increases that helped
State Department had provided $900,000 in COVID-19-
reduce poverty from 60% in 2006 to 34.5% in 2018. He
related funds. It remains unclear whether the U.S.
also created a sovereign wealth fund to help Bolivia
government will waive FY2021 aid restrictions or designate
weather economic downturns. A December 2018 IMF
Bolivia as a country that is making adequate efforts to meet
report expressed concerns about Bolivia’s rising debt,
its international counternarcotics obligations. Given Arce’s
declining reserves, and poor investment climate.
pledge to restart MAS-era drug policies, such a designation
seems unlikely.
President Arce has inherited an economy in crisis . The
COVID-19 pandemic has weakened demand for Bolivia’s
Bolivia receives trade benefits as a beneficiary country of
exports (namely gas), as global prices have declined.
the U.S. Generalized System of Preferences. In 2019, two-
Poverty and unemployment have risen, but the government
way trade totaled $1 billion, according to the U.S. Census
lacks the finances to fund new social programs or increase
Bureau. Bolivia’s largest exports to the United States are
public investments. Arce may need to attract new foreign
tin, silver, gold, tungsten, and quinoa; its primary imports
investment to help develop Bolivia’s natural resources,
from the United States are civilian aircraft and parts, as wel
including its lithium deposits. The IMF forecasts an
as petroleum oils.
economic decline of 7.9% in 2020. Arce is implementing
monthly cash transfers funded by the World Bank. He also
The United States and Bolivia have opposing geopolitical
vowed to raise taxes on the wealthy, govern austerely, and
orientations. The Arce government may find it difficult to
renegotiate Bolivia’s debts.
maintain positive relations with the United States if forced
to choose between maintaining or developing close ties
U.S.-Bolivian Relations
with China and Russia, on the one hand, and improving
U.S.-Bolivian relations are likely to remain challenging,
relations with the United States, on the other. Arce has
given tension in relations under Morales and the Trump
reestablished relations with Cuba, Venezuela, and Iran,
Administration’s strong support for the conservative interim
which the Áñez government had severed.
government. U.S. officials have vowed to work with
President Arce on shared interests, but differences over
Issues for Congress
drug policy and geopolitics could prove difficult to
Congress has expressed interest in Bolivia’s political
overcome. With limited bilateral trade and investment ties,
developments. S.Res. 447, agreed to in the Senate in
the possibility of a resumption in U.S. foreign assistance
January 2020, expressed support for the prompt convening
could encourage cooperation on some issues.
of new elections. H.Rept. 116-444 accompanying H.R.
7608 would prohibit U.S. assistance provided in FY2021
Each year since 2007, the U.S. President has identified
from being used to impede free and fair elections in
Bolivia as a major drug-producing country that failed to
Bolivia. Some Members of Congress have congratulated
meet its obligations under international counternarcotics
Arce on his victory and expressed hope for improved
agreements; such designations have triggered foreign aid
bilateral relations; others have concerns about the return of
restrictions. President Trump issued this year’s designation
a socialist government in Bolivia.
on September 16, 2020. While noting continued cultivation
above domestic limits, the designation praised the Áñez
Clare Ribando Seelke, Specialist in Latin American
government’s interdiction efforts and cooperation on
Affairs
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Bolivia: An Overview
IF11325
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