Unrest worsens in Bolivia as Evo Morales steps down

More than 20 people have died in clashes between protesters and security forces in Bolivia since disputed presidential elections in October and the resignation of Evo Morales on Nov. 10.

The United Nations has warned that the country risks spinning out of control.

“The country is split and people on both sides of the political divide are extremely angry,” Michelle Bachelet, the United Nations High Commissioner for Human Rights, said on Nov. 16. “In a situation like this, repressive actions by the authorities will simply stoke that anger even further and are likely to jeopardize any possible avenue for dialogue.”

The unrest marks the end of one of the most stable and prosperous periods in the history of a country better known for countless coups and revolutions.

Morales, the first member of Bolivia’s Indigenous minorities to rule the country, oversaw more than a decade of robust growth combined with significant investment in infrastructure and welfare policies that helped lift millions out of poverty.

After being elected president in December 2005, voters thanked him time and again at the polls, making the socialist the longest-serving president in Bolivia’s two centuries of independence.

In recent years, however, some Bolivians fretted that Morales, a former ally of Venezuela’s Hugo Chavez and Ecuador’s Rafael Correa, who served as that country’s president from 2007–2017, was preparing to stay in power indefinitely.

After losing a 2016 referendum to allow him to stand for a fourth term, Morales appealed to the country’s Constitutional Court, which ruled that stopping him from running amounted to a breach of his human rights. Opponents say the court is dominated by his supporters.

So when counting on the first round of this year’s presidential elections was inexplicably halted on Oct. 21, opponents immediately smelled a rat.

Former president of Bolivia Evo Morales holds a press conference in Mexico City on Nov. 13, one day after he arrived in Mexico, where he accepted political asylum. Credit: EneasMx /WikimediaCommons

Although Morales claimed victory, many doubted that he won by the required 10% margin to avoid a runoff against second-placed candidate Carlos Meza.

The opposition quickly organized huge protests, bringing many of the largest cities to a halt, and demanded the president’s resignation.

Morales initially held on, but his fate was sealed when an audit by the Washington-based Organization of American States found that electoral fraud had taken place. He resigned on Nov. 10, hours after Bolivia’s top brass requested that he do so for the good of the country.

As required under the constitution, the senate’s right-wing chair, Jeanine Anez, has been sworn in as interim president, and has promised to hold fresh elections as soon as January 2020.

But the path is unlikely to be smooth, Raul Penaranda, a political analyst and founding editor of the Pagina Siete newspaper, told The Northern Miner.

Morales’ supporters are still on the streets clashing with riot police, protesting what they say was a coup d’état against a democratically elected president.

From exile in Mexico City, Morales has offered to return if it would help restore peace — a message that has only further inflamed supporters.

Whoever eventually takes office is set to inherit a nation in turmoil.

For foreign investors, the future looks uncertain.

Under Morales, foreign investment in the mining sector has been minimal compared to the tens of billions of dollars invested in neighbouring Chile and Peru. Apart from Sumitomo’s San Cristobal zinc mine, launched in 2009, no major mines have been built in the country this century.

Instead, Morales was best known for seizing assets from multinationals such as Glencore’s Vinto tin smelter and Colquiri zinc mine.

But with revenue from gas exports declining, squeezing the public finances, the country needs foreign investment to balance the books.

In recent years, the Morales government began to open up the mining sector to private investment again, passing legislation that allows private companies to explore and mine on land held by state mining company Comibol.

At the beginning of this year, the government signed the first such deal granting New Pacific Metals (TSXV: NUAG) a 45-year concession over 55 sq. km of claims around its Silver Sands project in Potosi.

In October, just a fortnight before the elections, Comibol signed a second deal with Prophecy Development (TSX: PCY) covering its Pulacayo and Paca concessions.

The government hopes such projects will eventually replace production from existing mines such as San Cristobal and Pan American Silver’s (TSX: PAAS; NASDAQ: PAAS) San Vicente mine, which are set to close in the coming years as reserves deplete.

But the deals have been criticized in a country where many are suspicious of foreign investment in natural resources.

A weakened government could be susceptible to such pressure.

In October, as he fought for political survival, Morales annulled a decree paving the way for a US$1.3-billion joint venture between state lithium company Yacimientos de Litio Bolivianos and German firm ACI Systems to produce lithium chemicals from the Salar de Uyuni.

The proposal promised to bring jobs and investment to one of Bolivia’s poorest departments and the development of new industries, such as car-making and battery production.

But local leaders criticized the plan for leaving not enough resources in the region (most of the lithium would be exported to Europe), leading to weeks of protests ahead of the October vote.

New Pacific’s deal with Comibol had secured ministerial approval ahead of the elections, but still needs the approval of Congress before enactment.

However, the company is confident that a new administration will not renege on the deal, given the country’s need for foreign investment.

“People in the country recognize the need for companies like us to come in and extract minerals, as long as it is done respectfully,” New Pacific’s president, Gordon Neal, told The Northern Miner.

Another reason is the growing cost of previous expropriations.

Evo Morales supporters after his resignation in November. Credit: Zlatica Hoke/ WikimediaCommons.

Last year, the government paid almost US$43 million in compensation to Chilean mining company Quiborax for the loss of its concession to mine ulexite on the Salar de Uyuni, while the Permanent Court of Arbitration in the Hague ordered the Bolivian state to pay US$28 million to TriMetals Mining (TSX: GRC) for the expropriation of a major silver deposit.

More could follow. Glencore (LON: GLEN) is seeking almost US$700 million for the seizure of the Vinto smelter and other assets before the International Chamber of Commerce.

For now, New Pacific is holding tight, but given the recent unrest, the company has halted drilling at Silver Sands to protect staff, and delayed the proposed mineral resource originally planned for year-end.

The company’s share price has fallen 11% since Morales resigned.

Prophecy Development, whose share price has fallen by a third since the elections, did not respond to requests for comment on the status of their contract with Comibol.