Another U.S. Foreign-Policy Failure
Published on Thursday, October 30, 2003 by the Miami Herald
Another U.S. Foreign-Policy Failure
by Jeffrey D. Sachs

The forced resignation of Bolivia's President Gonzalo Sánchez de Lozada, following a month of violent demonstrations, marks a tragic milestone whose significance extends far beyond his impoverished country. The breakdown of civil and political order in Bolivia provides another vivid example of the poverty of U.S. foreign policy.

Sánchez de Lozada is one of Latin America's true heroes, a leader who helped usher in democracy and modest economic growth during the past 20 years, including two terms as president. Yet now he has fled Bolivia in fear for his safety. The arrogance and neglect of U.S. foreign policy played a large part in this stunning reversal.

Virtually all of South America is in deep economic malaise, suffering high unemployment, rising poverty and growing social unrest. As a landlocked Andean country, Bolivia has faced its own special distress. Its transportation costs are among the world's highest, reflecting the country's mountainous terrain and international trade routes, which must cross political boundaries and depend on foreign ports. This situation discourages inward investment and strains relations with coastal neighbors.

Indeed, the precipitating factor in Bolivia's collapse was a plan to export natural gas to the United States through archrival Chile. Sánchez de Lozada spoke of the gas exports as a means for investing in health, education and economic development. But Bolivia's impoverished population had been ripped off too many times and feared, understandably, that the revenues would accrue to foreigners or to Bolivia's own rich.

At the same time, more than an economic crisis, bad geography and an unpopular gas deal caused the spark in Bolivia. Enter the war on drugs. When the preceding Bolivian government faced U.S. demands to destroy the coca crop, I advised it to insist on adequate aid to finance economic development benefiting the hundreds of thousands of displaced peasant farmers and their dependents. Desperate for any assistance at all, Bolivia's government ultimately uprooted thousands of hectares of peasant crops -- and got almost nothing in return but phony slogans about alternative development.

Not surprisingly, the 2002 elections turned on the explosive coca-eradication issue. Sánchez de Lozada barely beat Evo Morales, the leader of the coca growers' federation, and warned President Bush last year that extreme poverty and widening ethnic divisions could lead to an insurrection. Bush literally laughed in his face, saying that he, too, faced political pressures. Sánchez de Lozada pressed for help -- $150 million -- but Bush quickly ushered him from the Oval Office with a pat on the back.

Sánchez de Lozada returned to Bolivia empty-handed -- except for instructions from the International Monetary Fund to implement austerity measures in accordance with U.S. dictates. The measures led to a police strike, followed by popular upheaval and an assassination attempt against Sánchez de Lozada. IMF officials deny responsibility but have failed to provide an honest public appraisal of Bolivia's urgent financial needs.

Now U.S. policy interests in Bolivia lie in a predictable shambles: The country is seething with violence, and coca production is likely to soar. An obsessive U.S. administration, led by a president who reportedly believes that he is on a holy mission to fight terror in the Middle East, has lost interest even in helping its friends.

Jeffrey D. Sachs is professor of economics and director of the Earth Institute at Columbia University.

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