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Bolivia

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Bolivia

 

Bolivia is the main natural gas supplier to Brazil and Argentina, and so becomes a vital link in the energy and electricity supply chains for both of these key countries in Latin America. 

See our discussion on Bolivia and natural gas

 

 

Regional autonomy?

 

4/2008: "An upcoming autonomy referendum for Bolivia's richest province may push the South American nation on a path toward political disintegration.  The May 4th vote in Santa Cruz province, which has rich farm land and natural gas reserves, could make it impossible for leftist President Evo Morales to govern.  Check out: “Bolivia: The Bosnia of South America

 

 

General information about Bolivia

 

 At 1,098,580 km² (424,135 mi²), Bolivia is the world's 28th-largest country (after Ethiopia). It is comparable in size to Mauritania, and it has about 1.5 times the area of the US state of Texas

 

Bolivia has been a landlocked nation since 1879, when it lost its coastal department of Litoral to Chile in the War of the Pacific. However, it does have access to the Atlantic via the Paraguay river.

 

An enormous diversity of ecological zones are represented within Bolivia's territory. The western highlands of the country are situated in the Andes mountains and include the Bolivian Altiplano. The eastern lowlands include large sections of Amazonian rainforests and Chaco. The highest peak is Nevado Sajama at 6,542 metres (21,463 ft) located in the department of Oruro. Lake Titicaca is located on the border between Bolivia and Peru. The Salar de Uyuni, the world's largest salt flat, lies in the southwest corner of the country, in the department of Potosí.

 

Major cities are La Paz, El Alto, Santa Cruz de la Sierra, and Cochabamba.

 

 

 

 

Image:LocationBolivia.svg

 

 

 

 

Economy

Main article: Economy of Bolivia

Bolivia is the poorest country in South America. This has been attributed to high levels of corruption and the imperialist role of foreign powers in the country since the colonization.[citation needed] The country is rich in natural resources. Apart from famous mines, which were known by the Incas and later exploited by the Spaniards, Bolivia owns the second largest natural gas field in South America after Venezuela. Furthermore, El Mutún in the Santa Cruz department represents 70% of the world's iron and magnesium

 

Bolivia's 2002 gross domestic product (GDP) totaled USD $7.9 billion. Economic growth is about 2.5% a year, and inflation was expected to be between 3% and 4% in 2002 (it was under 2% in 2001).

 

Bolivia’s current lackluster economic situation can be linked to several factors from the past three decades. The first major blow to the Bolivian economy came with a dramatic fall in the price of tin during the early 1980s, which impacted one of Bolivia’s main sources of income and one of its major mining-industries.[11] The second major economic blow came at the end of the Cold War in the late 1980s and early 1990s as economic aid was withdrawn by western countries who had previously tried to keep a market-liberal regime in power through financial support. The third economic blow came from the U.S.-sponsored eradication of the Bolivian coca-crop, which, at its peak, figured in 80% of the world's cocaine-production.[citation needed] Along with the reduction in the coca-crop came a huge loss of income to the Bolivian economy, particularly to members of the peasant-class.

 

Since 1985, the government of Bolivia has implemented a far-reaching program of macroeconomic stabilization and structural reform aimed at maintaining price-stability, creating conditions for sustained growth, and alleviating scarcity. A major reform of the customs-service in recent years has significantly improved transparency in this area. The most important structural changes in the Bolivian economy have involved the capitalization of numerous public-sector enterprises. (Capitalization in the Bolivian context is a form of privatization where investors acquire a 50% share and management-control of public enterprises by agreeing to invest directly into the enterprise over several years rather than paying cash to the government).

 

Parallel legislative reforms have locked into place market-liberal policies, especially in the hydrocarbon- and telecommunication-sectors, that have encouraged private investment. Foreign investors are accorded national treatment, and foreign ownership of companies enjoys virtually no restrictions in Bolivia. While the capitalization-program was successful in vastly boosting foreign direct investment (FDI) in Bolivia ($1.7 billion in stock during 1996-2002), FDI flows have subsided in recent years as investors complete their capitalization-contract-obligations.

 

In 1996, three units of the Bolivian state oil-corporation (YPFB) involved in the exploration, production, and transportation of hydrocarbons were capitalized, facilitating the construction of a gas-pipeline to Brazil. The government has a long-term sales-agreement to sell natural gas to Brazil through 2019. The Brazil pipeline carried about 12 million cubic metres (424 million cu. ft) per day in 2002. Bolivia has the second-largest natural-gas-reserves in South America, and its current domestic use and exports to Brazil account for just a small portion of its potential production. The government expects to hold a binding referendum in 2004 on plans to export natural gas. Widespread opposition to exporting gas through Chile touched off protests that led to the resignation of President Sánchez de Lozada in October 2003.

 

In April 2000, Bechtel signed a contract with Hugo Banzer, the former president of Bolivia, to privatize the water-supply in Bolivia's third-largest city, Cochabamba. The contract was officially awarded to a Bechtel subsidiary named Aguas del Tunari, which had been formed specifically for that purpose. Shortly thereafter, the company tripled the water-rates in that city, an action which resulted in protests and rioting among those who could no longer afford clean water. Drawing water from community wells or gathering rainwater was made illegal. [12][13] Martial law was declared, and Bolivian police killed at least six people and injured over 170 protesters. Amidst Bolivia's nationwide economic collapse and growing national unrest over the state of the economy, the Bolivian government was forced to withdraw the water-contract. In November 2001, Bechtel and its principal co-investor, Abengoa of Spain, filed suit before the International Centre for Settlement of Investment Disputes at the World Bank. They sued the Bolivian government for $50 million ($25 million in damages and $25 million in lost profits). The legal battle attracted attention and pressure from many anti-neoliberal globalization and anti-capitalist groups. Admist protest and pressure, an agreement was signed in Bolivia on January 19th, 2006. Bechtel and Abengoa of Spain agreed to abandon their lawsuit against the country in return for a token payment of 2 Bolivianos (about 30 American cents).

 

Bolivian exports were $1.3 billion in 2002, from a low of $652 million in 1991. imports were $1.7 billion in 2002. Bolivian tariffs are a uniformly low 10%, with capital equipment charged only 5%. Bolivia's trade-deficit was $460 million in 2002.

 

Bolivia's trade with neighboring countries is growing, in part because of several regional preferential trade-agreements it has negotiated. Bolivia is a member of the Andean Community and enjoys nominally free trade with other member countries (Peru, Ecuador, Colombia, and Venezuela.) Bolivia began to implement an association-agreement with Mercosur (Southern Cone Common Market) in March 1997. The agreement provides for the gradual creation of a free-trade-area covering at least 80% of the trade between the parties over a 10-year period, though economic crises in the region have derailed progress at integration. The U.S. Andean Trade Preference and Drug Enforcement Act (ATPDEA) allows numerous Bolivian products to enter the United States free of duty on a unilateral basis, including alpaca- and llama-products and, subject to a quota, cotton textiles.

 

The United States remains Bolivia's largest trading-partner. In 2002, the United States exported $283 million of merchandise to Bolivia and imported $162 million. Bolivia's major exports to the United States are tin, gold, jewelry, and wood-products. Its major imports from the United States are computers, vehicles, wheat, and machinery. A Bilateral Investment Treaty between the United States and Bolivia came into effect in 2001.

 

 

 

Agriculture accounts for roughly 15% of Bolivia's GDP. The amount of land cultivated by modern farming-techniques is increasing rapidly in the Santa Cruz area, where weather allows for two crops a year. Soybeans are the major cash crop, sold into the Andean Community market. The extraction of minerals and hydrocarbons accounts for another 10% of GDP and manufacturing for less than 17%.

 

Bolivia's government remains heavily dependent on foreign assistance to finance development-projects. At the end of 2002, the government owed $4.5 billion to its foreign creditors, with $1.6 billion of this amount owed to other governments and most of the balance owed to multilateral development-banks. Most payments to other governments have been rescheduled on several occasions since 1987 through the Paris Club mechanism. External creditors have been willing to do this because the Bolivian government has generally achieved the monetary and fiscal targets set by IMF programs since 1987, though economic crises in recent years have undercut Bolivia's normally good record. The rescheduling of agreements granted by the Paris Club has allowed the individual creditor-countries to apply very soft terms to the rescheduled debt. As a result, some countries have forgiven substantial amounts of Bolivia's bilateral debt. The U.S. government reached an agreement at the Paris Club meeting in December 1995 that reduced by 67% Bolivia's existing debt-stock. The Bolivian government continues to pay its debts to the multilateral development banks on time. Bolivia is a beneficiary of the Heavily debted Poor Countries (HIPC) and Enhanced HIPC debt-relief-programs, which by agreement restricts Bolivia's access to new soft loans. Bolivia was one of three countries in the Western Hemisphere selected for eligibility for the Millennium Challenge Account and is participating as an observer in FTA negotiations.

In 2004, the government gave great importance to the development of port-facilities at Puerto Busch on the Paraguay River. Farther north in Puerto Suárez and Puerto Aguirre, which are connected to the Paraguay via the Tamengo Canal, which passes through Brazil, mid-size container-ships traverse. As of 2004 about half of Bolivia's exports leave via the Paraguay River. When Puerto Busch is finished, larger ocean-going ships will be able to dock in Bolivia. This will greatly increase Bolivia's competitiveness, in that they will have a reduced need for foreign ports, such as those in Peru and Chile, which adds to the price of exports and imports. Tobacco is produced by Bolivian farmers – in 1992, over 1,000 million tons – but even more is imported to satisfy domestic demand.

 

 

 http://en.wikipedia.org/wiki/Bolivia

 

 

 

 

 

 

 

 

 

Map of Bolivia from the CIA World Factbook.
Map of Bolivia from the CIA World Factbook.

 

 

 

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