The Coup in Bolivia Has Everything to Do With the Screen You’re Using to Read This

Yves here. Bolivia is yet another example of a struggle over resources….and the locals losing.

By Vijay Prashad, an Indian historian, editor and journalist. He is a writing fellow and chief correspondent at Globetrotter, a project of the Independent Media Institute. He is the chief editor of LeftWord Books and the director of Tricontinental: Institute for Social Research. He has written more than twenty books, including The Darker Nations: A People’s History of the Third World (The New Press, 2007), The Poorer Nations: A Possible History of the Global South (Verso, 2013), The Death of the Nation and the Future of the Arab Revolution (University of California Press, 2016) and Red Star Over the Third World (LeftWord, 2017). He writes regularly for Frontline, the Hindu, Newsclick, AlterNet and BirGün. Produced by Globetrotter, a project of the Independent Media Institute.

When you look at your computer screen, or the screen on your smartphone or the screen of your television set, it is a liquid crystal display (LCD). An important component of the LCD screen is indium, a rare metallic element that is processed out of zinc concentrate.

The two largest sources of indium can be found in eastern Canada (Mount Pleasant) and in Bolivia (Malku Khota). Canada’s deposits have the potential to produce 38.5 tons of indium per year, while Bolivia’s considerable mines would be able to produce 80 tons per year.

Canada’s South American Silver Corporation—now TriMetals Mining—had signed a concession to explore and eventually mine Malku Khota. Work began in 2003, two years before Evo Morales and the Movement for Socialism (MAS) won their first presidential election in Bolivia. South American Silver conducted several studies of the region, all of which found substantial deposits that were poised to make this Canadian firm one of the major players in the mining industry.

A study done by Allan Armitage and others for South American Silver, and delivered to the company in 2011, showed that the Malku Khota mine would produce substantial amounts of silver, indium, lead, zinc, copper, and gallium. “The indium and gallium,” the study noted, “are regarded as strategic metals that give the project future upside potential.” Gallium is used for thermometers and barometers, as well as in the testing side of the pharmaceutical industry. There is Fort Knox level treasure to be made from these minerals.

Resource Nationalism

Evo Morales rode to victory in 2006 with the promise of a new day for Bolivia. Key to his agenda was to take control of the country’s resources and use them to improve the quality of life of Bolivia’s deprived populations. One of the great tragedies of Bolivia has been that since the mid-16th century, the indigenous populations have had to work to remove precious wealth from underneath their lands and send that wealth to enrich the people of Europe and later North America. They did not benefit from those riches.

Millions died in the mines of Potosí to bring the silver, and later tin, out of the ground. For the indigenous people who live near and on the hill, everything is upside down—one of the most lucrative hills is known as Cerro Rico (Rich Hill), while in Spanish there is a phrase that toys with the idea that wealth is equivalent to Potosí (vale un Potosí). Morales’ message during his campaign was framed around the concept of resource nationalism—use our resources to better the lives of those who live in deprivation and indignity.

Morales first went after the oil and gas industry. It is important to recall that his opponent in this year’s election—Carlos Mesa—was the president right before Morales won the election in December 2005. Mesa had come to power when his predecessor Sánchez de Lozada resigned in disgrace over the mass demonstrations in 2003 when Bolivians demanded more control over their gas reserves (the state repression was severe, with at least 70 people killed in the demonstrations). In May 2006—just over three months after being sworn in as president—Morales announced that the oil and gas industry had been nationalized. It is important to recall that his approval rating was well above 80 percent.

Nationalization was not easy, since the Bolivian government could not expropriate assets but only raise taxes and renegotiate contracts. Even here, the government faced problems since it lacked enough technical skills to understand the opaque energy sector. Furthermore, the problem with the energy sector is that even nationalized oil and gas must be sold to the transnational firms that then process them and market them; they remain in control of the value chain. What Morales’ government was able to do was to ensure that the State controlled 51 percent of all private energy firms that operated in Bolivia, which allowed the State’s coffers to fill rapidly. It was this money that was invested to go after poverty, hunger, and illiteracy.

Revenge of the Mining Companies

Canada’s Fraser Institute—a libertarian think tank that is heavily funded by the energy and mining sector—publishes an annual survey of mining companies. This survey is conducted by asking mining executives their opinions on a range of issues. The 2007–08 survey said that Bolivia is the second-worst country for investment; the worst was Ecuador. In 2010, the World Bank’s Ease of Doing Business Index rated Bolivia at 161 of 183 countries. Heads of mining firms—from Barrick’s Peter Munk to Repsol’s Antonio Brufau—made disparaging comments about the nationalization program. “If Bolivia keeps on this path,” a Wall Street banker told me at that time, “these companies will make sure that Bolivian natural gas remains underground.” Bolivia might be embargoed; Morales might be assassinated.

Pressure mounted daily on the MAS government, which began a process to write a new Constitution that would both protect nature and insist on resource wealth being used for the people. There was an immediate contradiction here: if the MAS government was going to undo centuries of deprivation, it would have to mine the earth to bring out the wealth. A tragic choice befell the government—it could not both conserve nature and transform the wretched conditions of everyday life at the same level of caution. At the same time, to get its minerals and energy to market, it had to continue to negotiate with these transnational firms; no immediate alternative was present.

Nationalization

Despite the constraints on it, the MAS government continued to nationalize resources, and insist on State firms being partners in resource extraction. Transnational firms immediately took Bolivia to the International Center for the Settlement of Investment Disputes (ICSID), a part of the World Bank system. The ICSID—formed in 1966—is based in Washington, D.C., and shares an outlook toward business that mirrors that of the U.S. Treasury Department.

On April 29, 2007, the leaders of Bolivia (Evo Morales), Cuba (Carlos Lage), Nicaragua (Daniel Ortega), and Venezuela (Hugo Chávez) signed a declaration to create an alternative to the investor-government system institutionalized in the ICSID. Bolivia and Ecuador formally withdrew from this U.S.-dominated system, while Venezuela’s Supreme Court declared that it did not have the power to intervene in Venezuelan sovereign affairs.

On July 10, 2012, Morales’ government nationalized the Malku Khota property of South American Silver. Company CEO Greg Johnson said he was “really shocked” at the decision. South American Silver’s shares dropped immediately; it had been trading at $1.02 on July 6, and it fell to $0.37 on July 11.

The immediate spur for the nationalization was the protest around the mine by indigenous artisanal miners who did not want this mega-project to undermine their livelihood. South American Silver had spent a great deal of money to convince 43 of the 46 neighboring communities to accept the mine; but they could not convince the artisanal miners. “Nationalization is our obligation,” said Morales.

All that indium would not make its way in significant quantities to the factories to produce LCDs for television sets, computer monitors, and cell phones.

South American Silver took the Bolivian government to the Permanent Court of Arbitration at The Hague. In November last year, the Court ordered Bolivia to pay South American Silver $27.7 million rather than the $385.7 million that TriMetals (the new name for South American Silver) had demanded.

Coup

In July 2007, U.S. Ambassador Philip Goldberg sent a cable to Washington in which he pointed out that U.S. mining firms had approached his embassy to ask about the investment climate in Bolivia. Goldberg felt that the situation for mining firms was not good. When asked if he could organize a meeting with Vice President Álvaro García Linera, he said, “Sadly, without dynamite in the streets, it is uncertain whether the Embassy or the international mining companies will be able to attain even this minimal goal.”

“Without dynamite in the streets” is a phrase worth dwelling upon. A year later, Morales expelled Goldberg from Bolivia, accusing him of aiding the protests in the town of Santa Cruz. Just over a decade later, it was the “dynamite” that removed Morales from power.

Resource nationalism is no longer on the agenda in Bolivia. The fate of Malku Khota is unknown. The fate of your screen is guaranteed—it will be replaced with indium from the Potosí deposits. And the benefits of that sale will not go to improving the well-being of Bolivia’s indigenous population; they will enrich the transnational firms and the old oligarchy of Bolivia.

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17 comments

    1. Olga

      I think it is worse than that – the entire capitalist system (we all live under) is implicated. And the olig. is just the top – we are all in it. It is hypocritical to blame the oligarchs – capitalism means consumerism, and to the extent that we all demand new and shiny baubles every day, we all all guilty.

      Reply
      1. Massinissa

        I’m sorry, but alot of that ‘demand’ is promoted by the needs of the structure of the system. If there’s so much ‘demand’ why are tens of billions in advertisement spent every year in the US alone? Also its not as if one can survive in the capitalist system without participating in it. The only alternative is to be homeless.

        Reply
  1. Ignacio

    Yesterday i witnessed a rare example of good journalism. A public channel invited an expert on Intl. Relationships. He defined the coup precisely: a coup is when you use institutional forces, instead of a constitutional process, to unseat a government, and this is what happened here: police and military units forced Morales away. Stop. It doesn’t matter if the government was breaking the constitution, was good or bad. It is a coup.

    He said that the only rational -rational, not just, not even legal- way out of the current situation is to carry out elections and the best way to do this is by Congress mandate (where MAS is majority now) so it is needed an agreement with MAS and MAS is blocking it now. Probably they want assurances. The alternative would be to call elections by decree of the, otherwise illegal, current executive and that would be more problematic. It will be the turn of opposition to manipulate the results to their interests.

    If anyone believes that democratic clean elections can take place now in Bolivia I have a bridge…

    Reply
  2. Tyronius

    How many indigenous Bolivians will be murdered in the streets this time, in order to secure the riches of the mines for the transnational corporations?

    Reply
  3. Aumua

    There’s a good deal of info in the article, but the bold proclamation of the title isn’t necessarily supported therein. It certainly is plausible, but can we really outright declare that indium and gallium are the reason for the ouster of Morales?

    Reply
  4. Michael

    I’m sure it’s significant that – given two different deposits of indium, with different (predicted) production capacities – the source that promises more raw production is more valuable.

    But has anyone considered how distance and lack of access to convenient shipping (Bolivia is still land-locked last I checked) might affect the appeal of Bolivia’s deposits to would-be foreign interests versus eastern Canada’s?

    Reply
    1. NotTimothyGeithner

      Canada is full of now white “liberals.” Bolivia is full of brown people who aren’t Beyoncé. Conservatives might not care, but Pelosi’s base would be anxious if something happened to white people in Canada. Russians are slavs. Greeks and Spaniards need to be wary of neoliberals too.

      Killing distant brown people through local thugs is easier than dealing with Pelosi in a fight. Usually she agrees with terrible ideas.

      Reply
      1. Carolinian

        Hate to say it but our friends in the Great White North are not environmental heroes. Canadian mining companies are involved in some of the more controversial projects in the American West as well. Meanwhile slow growing Canadian forests are subject to sometimes ruthless exploitation. When I visited there some time ago I was surprised to learn that their national parks allow timber cutting and have therefore a different conservation ethic than the US versions (perhaps to change under Trump). So if one wonders why Trudeau endorsed the Bolivian coup then follow the money.

        Reply
        1. JEHR

          I am ashamed to be Canadian: we make a great pretense of being concerned for the environment and for indigenous people and then create mines on indigenous lands both at home and abroad and treat the indigenous workers badly.

          Our care for the environment is all talk. Right now we have a strong argument in the government over whether the environment (and climate change) or oil and gas exploitation will win out. I wonder who will win.

          Reply
  5. JG

    This is a well written article: thank you. I did snort a bit at the ridiculous phrase “artisanal miner”-but overall the article was fair unbiased and informative.

    Question: why doesn’t (didn’t) Bolivia sell the land in small (say 1000 acre) parcels to local individuals (Bolivian citizens only, 1 parcel per real person etc etc etc), allow severance of surface and mineral rights, and put strong environmental controls in? This formula has worked really well wherever it’s been tried, I don’t understand why it would not have been an all around win-win-win there.

    Reply
  6. eg

    As a Canadian, we have few exports more abhorrent than anything published by the Fraser Institute.

    Not for nothing do I gloss them “the Frasertards” …

    Reply
  7. Oh

    It’s terrible that Avo was forced out in a coup. The CIA is quite active even though they’re apparently against the Orange Man. Maybe he’s looking the other way.

    It’s unfortunate that we’re all indirectly responsible for use of these minerals/metals. If it’s not robbed by these corporations from Bolivia, they’ll probably do a resource grab in Africa, Indonesia or somewhere else. We need to use less of these materials in our daily life.

    Reply
  8. Felix_47

    The low wages and minimal benefit to Bolivians seems more to relate to the corrupt government of Morales as well. He meant well but those in power in the society, the whites, never signed on to it. There are a few mestizo Bolivians in my neighborhood who are poor but see four families in a house in a beaten down suburb of LA to be a huge step up. My kids play soccer with their kids and I get to practice my Spanish. Unlike the Protestants, the Catholics and the Muslims who ruled Spain for 1000 years and whose culture was transplanted to Bolivia saw religion as government and did not understand separation of church and state. When the underclasses believe God or Allah chose them to suffer they suffer. When women believe they were chosen by God to be subservient they believe and make tortillas while the men do what they want. A cultural curse.

    Reply

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