Bolivia is on the verge of national and social disintegration. Its elections on 18 December 2005 – for a president, Congress and department prefects – may be a final opportunity to start solving deep social and economic problems and profound ethnic divisions. The international community – especially the U.S. and key left-leaning governments in the region like Brazil – will need to show restraint, offer reasonable support and focus on areas of common interest. This is particularly so if the new government is led by the mercurial indigenous champion, Evo Morales, who may otherwise be tempted to join forces with Venezuela’s populist president, Hugo Chávez, in a dangerous confrontation with the U.S.

After the ousting of President Gonazalo Sanchez de Lozada in October 2003 and the forced resignation of his successor, Carlos Mesa, in June 2005, the country is under enormous pressure. Interim President Eduardo Rodríguez, the former head of the Supreme Court, was initially able to steer away from the abyss that loomed when he took office. The honeymoon calm was broken, however, by a bitter fight over reallocation of congressional seats provoked by the relatively prosperous, business-oriented eastern department of Santa Cruz as part of the long-standing struggle with poorer, more statist-inclined and indigenous power centres in the western highlands and valleys that threatens to tear the country apart.

The latest surveys give Morales, the leader of the coca growers (cocaleros) in the Chapare region, and his Movement Toward Socialism (MAS) party a narrow lead over their main rival, former President Jorge Quiroga and his Democratic and Social Power (PODEMOS) citizen association. Neither candidate is likely to win an absolute majority, which means the election would be decided by the new Congress, a prospect that favours the more traditionalist and conservative Quiroga even if he polls fewer popular votes. If Morales becomes the next president, he will be under strong pressure from substantial sectors of the social movements to adopt radical policies, especially regarding nationalisation of the hydrocarbon industry and relations with the international financial institutions. Both scenarios almost certainly guarantee social upset and quite possibly violence.

The next government will have to deal with strong centrifugal forces challenging the unity of the nation-state, powered by autonomy claims from not only Santa Cruz but also the southern department of Tarija and radical indigenous and trade union groups in the western highlands. There are fundamental policy issues of hydrocarbon resource management, poverty reduction, equitable distribution of social and economic power, rural development and the building of a stronger and more inclusive state. All sides need to be willing to compromise on a policy consensus over a five-year period and beyond.

There is widespread expectation that the new government and Congress will prepare a constituent assembly to draft a new constitution and a referendum on regional autonomy, both to occur in mid-2006. These two measures, if based on a negotiated consensus, could form the foundation for the country to move toward democratic stability and socio-economic progress. Without that consensus, they could tear it apart.

The international community should provide effective election monitoring through the Organization of American States (OAS) and announce it will cooperate constructively with the new government, regardless of who leads it. U.S. unease over Morales remains strong, as he has spoken most harshly against the coca eradication aspect of its anti-narcotic drugs policy (proposing lifting all constraints on coca leaf production) and is close to Chávez. Washington remembers the counter-productive effect when its ambassador spoke out against Morales in the 2002 election, however, and has wisely avoided taking sides in the campaign. If Morales wins, it will need to move with care to avoid pushing him further into Chávez’s embrace.

The transnational oil companies also can play an important role in helping Bolivia achieve stability and socio-economic development by agreeing to negotiate new contracts with the government and paying higher taxes and royalties on natural gas production.

Bogotá/Brussels, 8 December 2005