BOLIVIA: BANZER AND THE POLITICS OF INSTABILITY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00353R000100050009-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 12, 2016
• Document Release Date: April 9, 2002
• Sequence Number: 9
• Publication Date: May 28, 1974
• Content Type: IM

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SECRET
May 28, 1974
No. 1035/74
INTELLIGENCE MEMORANDUM
SUBJECT: Bolivia: Banzer and the Politics of
Instability
Introduction
The disruptive nature of politics in Bolivia
has earned it the reputation for being one of the most
turbulent countries in Latin America. Hardly a five-
year period has passed without a major uprising--
sometimes two or more have occurred within a year.
Paradoxically the internal effects of this instability
have been limited. Most of the disturbances have
been restricted to La Paz, with much of the country
unaware of them until they were over.
Even though capital cities throughout Latin
America have always exercised a predominant influence,
La Paz for more than a century has been especially
outstanding in this respect. The disproportionate
amount of political power wielded by La Paz is in
fact one of the major causes of instability. In
addition to serving as the breeding ground for poli-
tical parties, La Paz is the center where most political
decisions have been made--including the selection of
provincial Senators and Deputies. The length of
tenure for dictators as well as elected officials has
depended upon their ability to satisfy this urban
constituency. Its geographic isolation from other
population centers and its position as military head-
quarters for the nation has facilitated frequent
armed intervention in the affairs of state.
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Since the Chaco War of the 1930s the army has
been both the best organized political institution
and the most persistent factor for political instability.
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standard of living for the average indian peasant
has improved as a result of the important 1952 land
reform, but he has not become culturally assimilated.
Consequently the unstable political environment has
little effect on the majority of Bolivians, for whom
politics is a luxury they do not understand.
T e
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Political Scene
The current chief of state, retired Colonel Hugo
Banzer, rose to power in typical Bolivian fashion
through a military-civilian revolt almost three years
ago. Since then he has survived several attempts to
overthrow him.
Banzer has proven remarkably adept in thwarting
plots to unseat him by striking against his enemies
before they have been able to move.
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Indee , excep or ie army,
which has been t h he c ief prop of all governments dur-
ing the past decade, there are no strong political
institutions. Much of the chronic instability that
has characterized Bolivian history must be attributed
to reliance on individual leaders and the subsequent
power and policy vacuums created by their overthrow.
Friend or Foe
The coalition that Banzer formed after moving
into the presidency, the Nationalist Popular Front,
has never amounted to more than a fragile alliance
between the army and the two major political groups--
the Nationalist Revolutionary Movement (MNR) and the
Bolivian Socialist Falange (FSB). The Front has re-
mained a paper organization and, in fact, most of the
President's serious political problems have been caused
by lack of cooperation from his alleged supporters.
This has forced his government into a repetition of
the pattern that all recent Bolivian governments have
fallen into: suffering from internal disintegration
rather than from the growth of an overwhelming op-
position.
Although the MNR is still the majority party, it
retains little of the strength or reformist zeal that
characterized its revolutionary phase, which ended in
1964 when its leader Victor Paz Estenssoro was ousted
from the presidency by a military coup. The labor
and socialist wings split away and formed an independent
party--which is now in exile. Early this year, the
MNR, rent with continuing factional strife, was further
weakened when former President Victor Paz withdrew his
support from Banzer and was forced into exile.
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On the other hand, the Falange has always been
a small right-wing group. Formed in imitation of
European fascist parties of the 1930s, the FSB now
contains a diversity of political views, all reflect-
ing an elitist distaste for popular values and democratic
rule. Banzer is not a formal member of the FSB, but
has seemed to prefer it as a propaganda vehicle to
the mildly reformist MNR.
Economic Picture
With no important sectors pushing for basic
socio-economic reforms, Banzer has stressed broad
economic development and foreign policy issues. In
both fields he has sought to increase public con-
fidence in his administration by making optimistic
pronouncements. To date, however, there has been
little meaningful change, even though Banzer has
improved his ties with the US and Brazil, and is
seeking a reconciliation with Chile.
Bolivia has abundant natural resources, but is
still the poorest country in South America. Its
inability to exploit hydroelectric potential and
iron ore deposits (including one of the world's
largest) and to make full use of its petroleum and
natural gas supplies, is largely explained by lack
of trained manpower, and inhospitable terrain combined
with inadequate transportation
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By simply providing continuity of administration
for nearly three years, the Banzer government has had
a positive effect on the business climate, but its
efforts to foster economic growth have not been notably
successful. Banzer's early moves to stimulate invest-
ment and provide employment caused large budgetary
deficits and heavy losses of international reserves.
As a remedy, the government introduced a "Stabiliza-
tion and Development Plan" in October 1972 that in-
cluded a devaluation of the peso by nearly 41 percent
and additional taxes on traditional exports. The
devaluation greatly aggravated domestic economic
problems, however, because increases in the cost of
imports have led to heightened demands for wage hikes.
At the same time, the budget deficit has continued
to grow because of bloated expenditures and lax col-
lection of taxes. Moreover, despite rising prices,
exports have been constrained by capacity limitations.
In spite of record high prices for exports and
increased demand for its products, especially oil and
natural gas, Bolivia continues to suffer from poor
economic management, it
is therefore doubtful that any economic reform would
have a noticeable impact in the near future.
Foreign Posture
The aberrations that distinguished the regimes
of Banzer's immediate predecessors, Ovando and Torres,
would make Banzer's foreign policy appear successful.
He has improved relations with the United States by
limiting gratuitous anti-American rhetoric and by
arranging compensation for the nationalization of
various US businesses. At the same time, he has
improved ties with his more conservative neighbors--
forging a mutually advantageous economic relationship
with Brazil and attempting to reopen long broken
relations with Chile.
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Bolivia has few persistent
foreign relations problems that cannot be resolved
by reasonableness in La Paz, and Banzer has done his
best in this area.
Banzer's Gambit
Following a cordial meeting between Banzer and
Chilean junta President Pinochet, held recently in
Brasilia, both presidents announced that they were
moving to resolve longstanding differences between
their countries. The two nations broke relations
more than a decade ago as a result of a dispute over
the use of water resources. Even before that, how-
ever, ties had been strained for almost three quarters
of a century because of Bolivia's claims to territory
on the Pacific Coast conquered by Chile during the
War of the Pacific that ended in 1884.
While Pinochet may have encouraged Banzer's hopes
of regaining an outlet to the sea through the northern
Chilean port of Arica, this is former Peruvian ter-
ritory and Chile is committed by a treaty signed in
1929 to consult with Peru before ceding any territory
in the area to a third power. The chances of Bolivia's
recovering its lost port, Antofagasta, are almost nil
because such a settlement would divide Chilean ter-
ritory.
Current Problems
Although peasant demonstrations against rising
food prices that rocked the government last January
have not reoccurred, residual problems and grievances
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though the President subsequently met with peasant
leaders to patch up relations and promise assistance,
continuing inflationary pressures are likely to pro-
voke similar protests. Food shortages will persist
because PL-480 commitments for fiscal years 1974 and
1975 have been scaled down and there is uncertainty
that Argentina will meet all of its 1975 commitment
of 120,000 tons of wheat. Prices of other commodities,
although officially frozen, will gradually creep up-
ward because of hoarding and speculation.
The Nationalist Revolutionary Movement (MNR) has
refrained from open criticism of Banzer since he
banished Victor Paz last January, but resentment has
hardened among Paz's supporters toward both the gov-
ernment and those MNR leaders who continue to main-
tain relations with Banzer. The efforts of MNR leader
Ciro Humboldt to project himself as Paz's successor
have not won popular acceptance and he has failed to
reunite the movement. During the most recent party
assembly, widespread disaffection with party leader-
ship was evident. Despite the current schisms within
the movement, however, its reformist tradition continues
to sustain the organization, and whoever succeeds Banzer
will have to deal with the MNR.
Prospects for Banzer
Under Banzer's rule Bolivia has continued to
stagnate. Seen in perspective, his government re-
presents a return to the generally conservative type
of leadership that has prevailed throughout most of
Bolivia's political history. The preceding unstable
governments of Generals Ovando and Torres were ex-
ceptions to this conservative trend, and the ease
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with which they were ousted demonstrates that even
they were unable to maintain popular support. The
hope of a new deal for Bolivia has not been realized,.
and Banzer has been unable to create an administrative
institution that could survive his personal rule.
Like most of his predecessors, the President is forced
to deal almost exclusively with immediate problems,
and is unable to formulate long-range plans or strategies.
His repressive measures against the far left
have effectively checked any threat from that sector,
but he has not been able to prevent opposition from
forming within his own coalition. The unity that
once held the disparate groups together has long since
vanished. Without the fear of the left to keep them
together, they are competing for the available spoils
that come with power.
Banzer may be able to main-
tain himself in office for many more months, even
though few Bolivians are now willing to rest their
hopes with his government. The longer elections are
postponed, the greater the chance that one of the
officers, who feels it is his turn to be president,
will move against him.
At some point Banzer probably will leave office
in the same extra-constitutional fashion in which he
took power. His ouster will be swift, and major
disturbances will most likely be limited to the capital.
Whoever replaces him will be supported by the army and
probably will provide the same kind of conservative,
pro-US leadership that characterizes the Banzer gov-
ernment.
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