Huáscar Salazar Lohman¹

Bolivia is experiencing a steadily intensifying economic crisis. While the downturn has been gradual, in recent months the population has started encountering scenarios that, just a few years ago, would have seemed unusual in the country. Long queues at gas stations, a dollar shortage, and mounting worries about economic stability have become everyday realities for Bolivians.

The scarcity of foreign exchange is perhaps the clearest sign of an economy that has turned into a ticking time bomb. For most people, acquiring foreign currencies—particularly dollars—is now only feasible through the parallel market, where prices are at least 20 percent higher than the official exchange rates. Many have watched the purchasing power of their modest savings diminish due to restrictions on withdrawing foreign currency, even as real exchange rates continue to climb.

A primary reason for the foreign currency shortage is that, in recent years, Bolivia has shifted to becoming a net importer of hydrocarbons.  For over two consecutive years, the value of natural gas exports has been lower than that of gasoline and diesel imports, and there are no signs of improvement in the near future.      

In this context, the country is struggling to pay for imported fuels, which has lead it to intermittent shortages. These days, filling up a gas tank has become a cumbersome ordeal, often involving hours of queuing and waiting.

However, the fuel shortage not only highlights the significant macroeconomic imbalances that have plagued the Bolivian economy for years, largely due to its reliance on extractive industries. It also starkly illustrates the fragility of an economic prosperity that, a decade ago, was touted as a success story. At that time, the state’s coffers were healthy, buoyed by the influx of foreign currency from natural gas extraction.

The revealing example of the ”chuto” cars

Nowadays, at fuel stations in Bolivia, particularly in rural areas, there typically are two lines: one for cars and another for people carrying reserve fuel cans. The rule stipulates that only cars with proper documentation—those that have been legally imported—can fill their gasoline or diesel tanks. However, it is also possible to purchase a certain amount of fuel in reserve cans for various activities, such as painting, mechanics, carpentry, and farming. In these fields, fuels are used as solvents or to power different types of engines.

Yet, the reality often diverges from the norm, and most of the fuel purchased in these containers is used for purposes other than those officially sanctioned. One of the most well-known uses is in drug production, where gasoline is a controlled substance employed in the manufacture of cocaine paste base. However, drug production is not the only illicit use for fuel acquired in this manner. Another significant portion—of particular interest in this discussion—ends up in the tanks of various undocumented vehicles, the so-called “chuto” cars. These cars enter Bolivia illegally—many of them stolen from neighboring countries—and are acquired for half the price or even less than what they would cost with proper documentation. It is estimated that there are about 700,000 of these undocumented vehicles in Bolivia, constituting almost 22% of all vehicles circulating in the country.

“Chuto” cars, predominantly found in rural areas of Bolivia, circulate in what appears to be a normal condition. The primary distinction is that they usually lack license plates. The fleet of “chuto” cars has grown substantially since 2008 when the government of Evo Morales implemented a ban on importing used cars over a certain age. This policy became even more restrictive in 2015, significantly driving up the prices of cars with proper documentation and benefiting large importers of new vehicles.

However, alongside the implementation of this rule, the government also adopted a lax stance towards the increase in undocumented cars within the country. This approach was essentially a response to the popular sectors—many of whom form the political base of the Movement for Socialism (MAS, in Spanish) Party—who did not have the financial means to access new vehicles. Former Vice President García Linera, in a public speech in the rural community of Chulumani, celebrated the improved economic situation of the peasants. He remarked that it was evident because now “everyone has their car [even if it’s] chuto, it doesn’t matter, but they have cars.”  

In essence, while the urban middle class, typically salaried, were encouraged to purchase new vehicles through loans—thereby also benefiting the financial sector—the rural popular sectors normalized the acquisition of undocumented vehicles as part of their economic well-being, as it was the option both enabled and legitimized by the government.

Nevertheless, this situation has remained inherently complex. Despite the tolerated presence of this fleet of “chuto” vehicles, the owners find themselves in a state of uncertainty and persistent discomfort. They lack legal assurance that the permissibility of their situation will be permanent. They frequently face extortion by the police, and in addition, they must park next to fuel pumps, purchase gasoline reserve cans, and fill their tanks using hoses or funnels. This process is not only highly inconvenient and time-consuming but also visibly marks social differences between those who can access fuels legally and those who cannot.

But this illusory and perverse sense of economic well-being is becoming increasingly unsustainable as the crisis deepens and becomes more pronounced. Due to the fuel shortage, the National Hydrocarbons Agency (ANH, in Spanish) has stipulated that the sale of fuel in reserve cans will be limited to just two hours a day and not available at all pumps. This measure aims to prioritize fuel distribution to legally documented vehicles, while still leaving a narrow window of opportunity for owners of “chuto” cars. However, it significantly complicates their ability to obtain fuel. Furthermore, this situation perpetuates colonial and racist stigmas by casting suspicion on those who queue at gas stations—typically individuals from popular sectors—suggesting they might be involved in illegal activities.

Indeed, this example serves as a poignant reminder that the Bolivian economic model of recent decades has created temporary illusions of well-being and perceived social mobility. However, these illusions are fragile; as the country faces a growing economic crisis, these constructs begin to fracture, ultimately impacting millions of lives.

A perverse model of economic well-being

Over the last two decades, Bolivia has seen an improvement in its population’s income level. According to data from the Economic Commission for Latin America and the Caribbean (ECLAC), the country’s poverty levels decreased from 63.5% in 2006 to 33.1% in 2018, while extreme poverty dropped from 34.3% in 2006 to 14.8% in 2018. That is, over a third of Bolivia’s population moved out of poverty, as measured by income level, during this period.

While this data may be subject to scrutiny when considering factors beyond income, it would be inaccurate to claim that there was no tangible improvement in the material living conditions of several—though not all—popular sectors of the country during the years of economic prosperity.

The significance of this improvement cannot be overstated—it profoundly impacted the daily lives and aspirations of millions who have historically been marginalized by a classist and deeply colonial social power structure. This, coupled with a range of symbolic and discursive demands brought to the forefront by social movements at the start of the 21st century, largely explains the enduring popular support for the Movement for Socialism (MAS in Spanish) since its rise to power in 2006.

However, this should not obscure the problematic conditions under which this surplus distribution was established, nor its complex social, economic, and environmental consequences. In other words, it cannot be ignored that this perceived well-being is built on foundations unsustainable over time and/or on the deterioration of socio-environmental conditions that are often overlooked or disregarded.

In light of the current crisis, the fragility and unsustainability of this economic well-being are becoming evident, along with the various forms of violence, empty and polarizing narratives, and the catastrophic environmental consequences that have underpinned it.

To grasp this situation, it is essential to explore how this economic well-being was generated without substantial modifications to the neoliberal economic power structure, a part of the country’s burdensome historical legacy that dates back to colonial times.

This means that the power structure remained largely unchanged during the MAS government, and thus, there was no significant redistribution of surpluses controlled by the traditional dominant sectors. These sectors, centered around extractivism—including private large-scale mining, hydrocarbons, and agribusiness—or the financial sector, are activities deeply tied to transnational capital.

The so-called “Nationalization of Hydrocarbons” during the early years of the MAS government involved a revision of contracts that enabled the Bolivian state to retain a larger share of the sector’s profits. However, this arrangement continued to benefit the large transnationals operating in the country, which, alongside the Bolivian state, saw their revenues increase substantially in absolute terms due to the rise in international oil prices.

Therefore, it is important to examine how the state utilized the increased surpluses from hydrocarbon exports. Additionally, it’s crucial to explore how surpluses were generated through illegitimate and illegal means, contributing to an apparent sense of economic well-being.

The precariousness of jobs in the public sector

In this context, a significant portion of the state revenues—derived mainly from gas exports—was channeled into promoting and expanding various extractivist projects, thereby reinforcing the country’s traditional economic power structures, which have perpetuated the paradigm of using extractivism to further extractivism.

Simultaneously, another portion of these resources was used to significantly increase the number of public servants. The figures grew from approximately 38,000 in 2001 to 297,000 by 2013, representing an increase of 676%.  This expansion of the Bolivian bureaucracy took shape within a corporate dynamic, where partisan control over public institutions became prevalent. However, this corporate dynamic had a distinct characteristic: the employment it provided within public institutions was precarious and became increasingly unstable.

For example, a significant number of public employees have been hired as “Online Consultants,” a designation that allows for the employment of workers without the social benefits stipulated by the General Labor Law. These positions offer no job security, as employees can be dismissed at any time for any reason, with no right to claims. 

This represents a perverse first aspect of economic well-being for hundreds of thousands of Bolivian families, whose access to better incomes is contingent upon their loyalty to the governing party and dependent on the revenues that the Bolivian state can generate. These revenues have recently seen a sharp decline for the reasons outlined above.

Illicit or illegitimate economies as a source of well-being

In addition to the surplus from hydrocarbon exports that supported a precarious state bureaucracy, another source of surplus arose from illicit or illegitimate economic activities. This second source contributed to income improvements for significant segments of the country’s popular sectors. The “chuto” cars business is one example, but there are several other sectors involved, such as smuggling, land trafficking, cooperative mining (much of which operates illegally), and activities related to drug trafficking.

These activities have, on one hand, generated economic income and distributed surpluses to social sectors that are unable to access better living conditions through the “legal” avenues available in the Bolivian economy. On the other hand, some of these activities, like smuggling or the “chuto” cars business, also help to reduce the cost of this supposed economic well-being. For instance, owning a “chuto” car and purchasing illegally imported products—often cheaper than many domestic products—is less expensive.

However, it is important to bear in mind that there has been an implicit public policy which has not only tolerated these activities but, on many occasions, actively promoted them as a form of social containment and a way to appease various social grievances. These activities are not new, but they have intensified and, in many cases, become normalized in recent decades.

The Bolivian government’s policy of collusion—tolerating illegal or illegitimate activities—without fostering a transformation in the economic structure of Bolivia, results in a perverse dynamic of generating economic well-being for several reasons:

• First, these activities are embedded in dynamics involving multiple and profound forms of violence (physical, sexual, psychological, patriarchal, colonial, etc.), which are intertwined with mafia capitals. This connection helps reproduce and amplify the structural violences of the Bolivian society.
•  Secondly, because they are highly unstable and unsustainable dynamics over time. Whether due to a crisis, new international agreements, shifts in the traditional power sectors of the economy, or other factors, these dynamics can abruptly impact hundreds of thousands of people whose well-being relies on this state permissibility.
• Thirdly, it is invariably the lowest levels of these activities—the grassroots participants—who bear the consequences when things go wrong. Indigenous peoples, peasants, residents of peri-urban neighborhoods, or, broadly speaking, impoverished segments of the population, are the ones who often find themselves exposed, persecuted, or imprisoned. Meanwhile, those who control these sectors typically remain unpunished.
• Fourth, because most of these activities have severe environmental consequences. Not only are these activities directly linked to extractivism, but they also consistently fail to adhere to any form of regulation, resulting in the predation and destruction of vast territories and ecosystems.
• Fifth, because they perpetuate classist and racist structures. The colonial imaginaries that persist in Bolivian society often lead to targeting and accusing individuals engaged in these illegitimate or illicit activities, primarily based on their social class, ethnic origin, or skin color.

The collapse of the “Bolivian economic miracle” and its consequences

Currently, the decline of the Bolivian economy can be attributed to the persistence of an economic model that is heavily reliant on extractivism. Both the old and new elites, along with the Bolivian state—regardless of the ideological leanings of its leaders—have not only relied on the extraction of natural resources for economic survival, but have also continuously fueled this extractive economic model without attempting to alter this entrenched pattern.

The substantial revenues that flowed into state coffers from 2005 to 2016, derived from natural gas sales to Brazil and Argentina, were followed by a period of significant dissavings and increased indebtedness when international commodity prices declined. As a result, the country now faces the highest foreign debt in its history and its international reserves have plummeted to their lowest levels in the last two decades.

The illusion of the “Bolivian economic miracle” is gradually disintegrating, making it increasingly challenging to maintain the previously high levels of public spending within the country. Similarly, the sense of economic well-being that was supported by a cheap dollar is eroding day by day, despite the government’s continued efforts to promote a narrative of stability.

Public institutions have started to enact austerity measures, which are poised to impact jobs in the public sector that lack fixed contracts, likely leading to increased unemployment and underemployment rates. The industrial productive sector lacks the capacity to absorb additional labor, and it is highly likely that the ongoing economic deterioration will further increase unemployment in this sector as well.

On the other hand, peasant productive activities—one of the sectors that has seen minimal investment over the last two decades—are struggling to compete with imported and smuggled products from neighboring countries, which renders the sector unattractive for labor employment opportunities.

Given this scenario, it is highly likely that in the coming years, illegal or illegitimate activities, particularly those related to extractivism, will emerge as significant sources of labor demand. Alongside this, it is expected that the depredation of large territories will also increase exponentially, as has been the case in the Amazon, the Chaco, and Chiquitanía regions — it’s important to remember that Bolivia is “the country with the highest rate of primary forest loss per capita worldwide.” At the same time, the increase in these activities is likely to foster a climate of greater violence and social disintegration. This consequences, despite efforts to obscure them, have already become a part of daily life in Bolivia.

The original version of this text was published in Spanish on the Zur Pueblo de voces website.

1. Huáscar Salazar Lohman is a Bolivian economist and his studies address the issue of the production of the commons and non-capitalist economies. He currently works as coordinator and researcher at the Centro de Estudios Populares in Cochabamba. ↩︎