For the most current version of this Note, see Background Notes A-Z.

Flag of Bolivia is three equal horizontal bands of red at top, yellow, and green with the coat of arms centered on the yellow band.

PROFILE

OFFICIAL NAME:
Republic of Bolivia

Geography
Area: 1.1 million sq. km. (425,000 sq. mi.); about the size of Texas and California combined.
Cities: Capital--La Paz (administrative--pop. 800,385); Sucre (constitutional--292,080). Other major cities--Santa Cruz (1,486,115), Cochabamba (587,220), El Alto (858,716). (Population estimates 2004).
Terrain: High plateau (altiplano), temperate and semitropical valleys, and the tropical lowlands.
Climate: Varies with altitude--from humid and tropical to semiarid and cold.

People
Nationality: Noun and adjective--Bolivian(s).
Population (July 2007 estimated): 9,119,152.
Annual population growth rate: 1.42%.
Religions: Predominantly Roman Catholic; minority Protestant.
Languages: Spanish (official); Quechua, Aymara, Guarani.
Education (2001): Years compulsory--ages 7-14. Literacy--86.7%.
Health (2003): Infant mortality rate--50.4 per 1,000 births.
Work force (2003, 4.1 million): Nonagricultural employment--2.48 million; services, including government--42%; industry and commerce--58%.
Ethnic groups (2001): 55% indigenous (primarily Aymara, and Quechua), 30% mestizo or mixed, 15% European.

Government
Type: Republic.
Independence: August 6, 1825.
Constitution: 1967; revised 1994.
Branches: Executive--president and cabinet. Legislative--bicameral Congress. Judicial--five levels of jurisdiction, headed by Supreme Court with a separate Constitutional Court.
Subdivisions: Nine departments (similar to states).
Major political parties: Movement Toward Socialism (MAS), Social Democratic Power (PODEMOS), Nationalist Revolutionary Movement (MNR), National Unity (UN)
Suffrage: Universal adult, obligatory.

Economy (2006)
GDP: $10.3 billion.
Annual growth rate: 4.5%.
Per capita income: $1,030 (PPP).
Natural resources: Hydrocarbons (natural gas, petroleum); minerals (zinc, silver, lead, gold, and iron).
Agriculture (12.8% of GDP): Major products--Soybeans, cotton, potatoes, corn, sugarcane, rice, wheat, coffee, beef, barley, and quinoa. Arable land--27%.
Industry (36.0% of GDP): Types--Mineral and hydrocarbon extraction, manufacturing, commerce, textiles, food processing, chemicals, plastics, mineral smelting, and petroleum refining.
Services including government (51.2%).
Trade: Exports--$3.7 billion (2006). Major export products--natural gas, tin, zinc, coffee, silver, wood, gold, jewelry, soybeans, and byproducts. Major export markets--U.S. (12%), Brazil (42.7%), Colombia (7.5%), U.K. (2%), Argentina (10.6%), Peru (4.7%), and Japan (6.1%). Imports--$2.9 billion. Major products--machinery and transportation equipment, consumer products, construction and mining equipment. Major suppliers--U.S. (9.2%), Argentina (18.8%), Brazil (24.6%), Chile (12.2%), Peru (7.3%).

PEOPLE
Bolivia's ethnic distribution is estimated to be 55% indigenous, 15% European, and 30% mixed or mestizo (self-identified). The largest of the approximately three-dozen indigenous groups are the Quechua (29% or 2.5 million), Aymara (24% or 2 million), Chiquitano (1% or 180,000), and Guarani (1% or 125,000). No other indigenous groups represent more than 0.5% of the population. There are small German, former Yugoslav, Asian, Middle Eastern, and other minorities, many of whose members descend from families that have lived in Bolivia for several generations.

Bolivia is one of the least-developed countries in South America. Almost two-thirds of its people, many of whom are subsistence farmers, live in poverty. Population density ranges from less than one person per square kilometer in the southeastern plains to about 10 per square kilometer (25 per sq. mi.) in the central highlands. The annual population growth rate is about 1.45% (2006).

La Paz is the highest of the world's capital cities--3,600 meters (11,800 ft.) above sea level. The adjacent city of El Alto, at 4,200 meters (13,800 ft.) above sea level, is one of the fastest-growing in the hemisphere. Santa Cruz, the commercial and industrial hub of the eastern lowlands, also is experiencing rapid population and economic growth.

The great majority of Bolivians are Roman Catholic (the official religion), although Protestant denominations are expanding rapidly. Many indigenous communities interweave pre-Columbian and Christian symbols in their religious practices.

About half of the people speak Spanish as their first language. Approximately 90% of the children attend primary school but often for a year or less. The literacy rate is low in many rural areas.

The cultural development of what is present-day Bolivia is divided into three distinct periods: pre-Columbian, colonial, and republican. Important archaeological ruins, gold and silver ornaments, stone monuments, ceramics, and weavings remain from several important pre-Columbian cultures. Major ruins include Tiwanaku, Samaipata, Incallajta, and Iskanwaya. The country abounds in other sites that are difficult to reach and have seen little archaeological exploration.

The Spanish brought their own tradition of religious art which, in the hands of local indigenous and mestizo builders and artisans, developed into a rich and distinctive style of architecture, painting, and sculpture known as "Mestizo Baroque." The colonial period produced not only the paintings of Perez de Holguin, Flores, Bitti, and others but also the works of skilled but unknown stonecutters, woodcarvers, goldsmiths, and silversmiths. An important body of native baroque religious music of the colonial period was recovered in recent years and has been performed internationally to wide acclaim since 1994.

Bolivian artists of stature in the 20th century include, among others, Guzman de Rojas, Arturo Borda, Maria Luisa Pacheco, and Marina Nunez del Prado. Bolivia has rich folklore. Its regional folk music is distinctive and varied. The "devil dances" at the annual carnival of Oruro are one of the great folkloric events of South America, as is the lesser known carnival at Tarabuco.

HISTORY AND POLITICAL CONDITIONS
The Andean region probably has been inhabited for some 20,000 years. Beginning about the 2nd century B.C., the Tiwanakan culture developed at the southern end of Lake Titicaca. This culture, centered around and named for the great city of Tiwanaku, developed advanced architectural and agricultural techniques before it disappeared around 1200 A.D., probably because of extended drought. Roughly contemporaneous with the Tiwanakan culture, the Moxos in the eastern lowlands and the Mollos north of present-day La Paz also developed advanced agricultural societies that had dissipated by the 13th century. In about 1450, the Quechua-speaking Incas entered the area of modern highland Bolivia and added it to their empire. They controlled the area until the Spanish conquest in 1525.

During most of the Spanish colonial period, this territory was called "Upper Peru" or "Charcas" and was under the authority of the Viceroy of Lima. Local government came from the Audiencia de Charcas located in Chuquisaca (La Plata--modern Sucre). Bolivian silver mines produced much of the Spanish empire's wealth, and Potosi, site of the famed Cerro Rico--"Rich Mountain"--was, for many years, the largest city in the Western Hemisphere. As Spanish royal authority weakened during the Napoleonic wars, sentiment against colonial rule grew. Independence was proclaimed in 1809, but 16 years of struggle followed before the establishment of the republic, named for Simon Bolivar, on August 6, 1825.

Independence did not bring stability. For nearly 60 years, coups and short-lived constitutions dominated Bolivian politics. Bolivia's weakness was demonstrated during the War of the Pacific (1879-83), when it lost its seacoast and the adjoining rich nitrate fields to Chile.

An increase in the world price of silver brought Bolivia a measure of relative prosperity and political stability in the late 1800s. During the early part of the 20th century, tin replaced silver as the country's most important source of wealth. A succession of governments controlled by the economic and social elites followed laissez-faire capitalist policies through the first third of the century.

Living conditions of the indigenous peoples, who constituted most of the population, remained deplorable. Forced to work under primitive conditions in the mines and in nearly feudal status on large estates, they were denied access to education, economic opportunity, or political participation. Bolivia's defeat by Paraguay in the Chaco War (1932-35) marked a turning point. Great loss of life and territory discredited the traditional ruling classes, while service in the army produced stirrings of political awareness among the indigenous people. From the end of the Chaco War until the 1952 revolution, the emergence of contending ideologies and the demands of new groups convulsed Bolivian politics.

Revolution and Turmoil
The Nationalist Revolutionary Movement (MNR) emerged as a broadly based party. Denied its victory in the 1951 presidential elections, the MNR led the successful 1952 revolution. Under President Victor Paz Estenssoro, the MNR introduced universal adult suffrage, carried out a sweeping land reform, promoted rural education, and nationalized the country's largest tin mines.

Twelve years of tumultuous rule left the MNR divided. In 1964, a military junta overthrew President Paz Estenssoro at the outset of his third term. The 1969 death of President Rene Barrientos, a former member of the junta elected President in 1966, led to a succession of weak governments. Alarmed by public disorder, the military, the MNR, and others installed Col. (later General) Hugo Banzer Suarez as President in 1971. Banzer ruled with MNR support from 1971 to 1974. Then, impatient with schisms in the coalition, he replaced civilians with members of the armed forces and suspended political activities.

The economy grew impressively during most of Banzer's presidency, but human rights violations and eventual fiscal crises undercut his support. He was forced to call elections in 1978, and Bolivia again entered a period of political turmoil. Elections in 1978, 1979, and 1980 were inconclusive and marked by fraud. There were coups, counter-coups, and caretaker governments.

In 1980, Gen. Luis Garcia Meza carried out a ruthless and violent coup. His government was notorious for human rights abuses, narcotics trafficking, and economic mismanagement. Later convicted in absentia for crimes, including murder, Garcia Meza was extradited from Brazil and began serving a 30-year sentence in 1995.

After a military rebellion forced out Garcia Meza in 1981, three other military governments in 14 months struggled with Bolivia's growing problems. Unrest forced the military to convoke the Congress elected in 1980 and allow it to choose a new chief executive. In October 1982--22 years after the end of his first term of office (1956-60)--Hernan Siles Zuazo again became President. Severe social tension, exacerbated by economic mismanagement and weak leadership, forced him to call early elections and relinquish power a year before the end of his constitutional term.

Return to Democracy
In the 1985 elections, the Nationalist Democratic Action Party (ADN) of Gen. Banzer won a plurality of the popular vote (33%), followed by former President Paz Estenssoro's MNR (30%) and former Vice President Jaime Paz Zamora's Movement of the Revolutionary Left (MIR, at 10%). But in the congressional run-off, the MIR sided with MNR, and Paz Estenssoro was chosen for the fourth time as president. When he took office in 1985, he faced a staggering economic crisis. Economic output and exports had been declining for several years. Hyperinflation had reached an annual rate of 24,000%. Social unrest, chronic strikes, and drug trafficking were widespread.

In four years, Paz Estenssoro's administration achieved economic and social stability. The military stayed out of politics and all major political parties publicly and institutionally committed themselves to democracy. Human rights violations, which badly tainted some governments earlier in the decade, were greatly reduced. However, Paz Estenssoro's remarkable accomplishments were not won without sacrifice. The collapse of tin prices in October 1985, coming just as the government was moving to reassert its control of the mismanaged state mining enterprise, forced the government to lay off over 20,000 miners. The highly successful shock treatment that restored Bolivia's financial system also led to some unrest and temporary social dislocation.

MNR candidate Gonzalo Sanchez de Lozada finished first in the 1989 elections (23%), though, again, no candidate received a majority of popular votes, so Congress determined who would be president. The Patriotic Accord (AP) between Gen. Banzer's ADN and Jaime Paz Zamora's MIR, the second- and third-place finishers (at 22.7% and 19.6%, respectively), led to Paz Zamora's assuming the presidency.

Paz Zamora was a moderate, center-left president whose political pragmatism in office outweighed his Marxist origins. He continued the economic reforms begun by Paz Estenssoro. Paz Zamora also took a fairly hard line against domestic terrorism, authorizing a 1990 attack on terrorists of the Nestor Paz Zamora Committee and the 1992 crackdown on the Tupac Katari Guerrilla Army (EGTK).

The 1993 elections continued the tradition of open, honest elections and peaceful democratic transitions of power. The MNR defeated the ruling coalition, and Gonzalo "Goni" Sanchez de Lozada was named president by a coalition in Congress.

Sanchez de Lozada pursued an aggressive economic and social reform agenda, relying heavily on successful entrepreneurs-turned-politicians like him. The most dramatic program--"capitalization," a form of privatization under which investors acquired 50% ownership and management control of the state oil corporation, telecommunications system, airlines, railroads, and electric utilities, with moneys directed to the pension system instead of the Treasury--was strongly opposed by certain segments of society, with frequent and sometimes violent protests from 1994 through 1996.

In the 1997 elections, Gen. Hugo Banzer, leader of the ADN, defeated the MNR candidate. The Banzer government continued the free market and privatization policies of its predecessor, and the relatively robust economic growth of the mid-1990s continued until regional, global, and domestic factors contributed to a decline in economic growth. Job creation remained limited throughout this period, and public perception of corruption was high. Both factors contributed to increasing social protests during the second half of Banzer's term.

Banzer instructed special police units to physically eradicate the illegal coca of the Chapare region. The policy produced a sudden and dramatic four-year decline in Bolivia's illegal coca crop, to the point that Bolivia became a relatively small supplier of coca for cocaine. In 2001, Banzer resigned from office after being diagnosed with cancer. He died less than a year later. Banzer's U.S.-educated Vice President, Jorge Quiroga, completed the final year of the term.

In the 2002 national elections, former President Sanchez de Lozada (MNR) again placed first with 22.5% of the vote, this time followed by coca-growing syndicate leader Evo Morales (Movement Toward Socialism, MAS) with 20.9%. The MNR platform featured three overarching objectives: economic reactivation (and job creation), anti-corruption, and social inclusion.

A four-year economic recession, tight fiscal situation, and longstanding tensions between the military and police led to the February 12-13, 2003, violence that left more than 30 people dead and nearly toppled Sanchez de Lozada's government. The government stayed in power, but was unpopular.

Trouble began again in September 2003 when a group of tourists became trapped in the town of Sorata. After days of unfruitful negotiations, Bolivian security forces launched a rescue operation, but on the way out, were ambushed by armed peasants and a number of people were killed on both sides. The incident ignited passions throughout the highlands and united a loose coalition of protestors to pressure the government into halting the proposed project to export liquefied natural gas, most likely through Chile. Anti-Chile sentiment and memories of three major cycles of non-renewable commodity exports (silver through the 19th century, guano and rubber later in that century, and tin in the 20th century) touched a nerve with many citizens. Tensions grew and La Paz was subjected to protesters' blockades. Violent confrontations ensued, and most of the approximately 60 deaths occurred when security forces tried to bring supplies into the besieged city.

In the end, large demonstrations forced Sanchez de Lozada to resign on October 17, 2003. Vice President Carlos Mesa Gisbert assumed office and restored order. Mesa appointed a non-political cabinet and promised to revise the constitution through a constituent assembly, revise the hydrocarbons law, and hold a binding referendum on the country's natural gas deposits. The referendum took place on July 18, 2004, and Bolivians voted overwhelmingly in favor of development of the nation's hydrocarbons resources. But the referendum did not end social unrest. Large-scale protests led to Congress approving a confiscatory hydrocarbons law on May 17, 2005. After a brief pause, demonstrations resumed, particularly in La Paz and El Alto. President Mesa offered his resignation on June 6, and Eduardo Rodriguez, the president of the Supreme Court, assumed office in a constitutional transfer of power. Rodriguez announced that he was a transitional president, and called for early elections within six months.

Current Administration
On December 18, 2005, MAS candidate Juan Evo Morales Ayma was elected to the presidency by 54% of the voters. During his campaign, Morales, a coca union leader of indigenous descent, vowed to nationalize hydrocarbons and alleviate poverty and discrimination toward indigenous people. Morales was and remains highly critical of the "neo-liberal" economic policies that have been implemented in Bolivia over the past several decades. On January 22, 2006, Morales and his Vice President Alvaro García Linera were inaugurated into office.

Since then, President Morales has moved to fulfill his campaign promises, including raising the ceiling for licit coca cultivation from 12,000 hectares to 20,000 hectares. On May 1, 2006, the government issued a decree "nationalizing" the hydrocarbons sector and calling for the renegotiation of contracts with hydrocarbons companies. In November 2006, the government and companies signed new contracts that were expected to result in higher revenues for the government; however, vagaries in the contracts required further negotiations and clarification. Morales has continued to promote greater state control of natural resource industries, particularly hydrocarbons and mining, and of the telecommunications sector (see Economy section). These policies have pleased Morales' supporters, but have complicated Bolivia's relations with some of its neighboring countries, foreign investors, and members of the international community.

President Morales also secured passage of legislation convoking a special election for delegates to a constituent assembly to draft a new constitution. The MAS performed well in those elections, capturing 137 of 255 seats. The assembly convened on August 6, 2006, and planned to complete its work by August 2007; however, the Congress extended its mandate to December 14, 2007. Since the outset, the assembly faced political deadlock over the constituent assembly's voting rules. Although rules were ostensibly clarified in February 2007, the subject reemerged in August, after the legality of a vote to exclude the location of the capital was contested by the opposition. An agreement could not be reached, and the opposition delegates walked out of the assembly. The MAS approved a constitution without the opposition vote in November 2007. On December 14, 2007, Morales presented the constitutional text to the National Congress to legislate a referendum for its approval in 2008.

GOVERNMENT ORGANIZATION
The 1967 constitution, revised in 1994, provides for balanced executive, legislative, and judicial powers. The traditionally strong executive, however, tends to overshadow the Congress, whose role is generally limited to deliberating legislation initiated by the executive. The judiciary, consisting of a Supreme Court, an independent Constitutional Court, and departmental and lower courts, has long been plagued by corruption and inefficiency. Through revisions to the constitution in 1994, and subsequent laws, the government has initiated potentially far-reaching reforms in the judicial system.

For the first time in history, Bolivians chose their departmental prefects (similar to governors) by popular vote on December 18, 2005. Bolivia's nine departments received greater autonomy under the administrative decentralization law of 1995, although several departments--especially Santa Cruz and Tarija--are seeking increased autonomy. In a July 2006 referendum, Bolivia's four eastern departments voted in favor of increasing regional autonomy, and the other five provinces opposed the measure. The autonomy movement rallied around Sucre's August 2007 demand that the constituent assembly consider moving all branches of government to the traditional capital. Civic committees in six departments (Santa Cruz, Tarija, Beni, Pando, Cochabamba, and Chuquisaca) supported hunger strikes and protests in Sucre, which led to Bolivian Government-sponsored talks between Sucre and La Paz leaders, which were inconclusive as of March 2008. The Santa Cruz government approved an autonomy statute in December 2007; the governments of the other eastern departments followed Santa Cruz's lead. Santa Cruz held a popular referendum on its autonomy statute on May 4, 2008, in which the majority of voters voted for autonomy. The Bolivian Government considered this referendum to be illegal and does not recognize its results. Some government-aligned parliamentarians have advocated popular elections for the civic committees, which they claim disproportionately represent elite and opposition interests.

Bolivian cities and towns are governed by directly elected mayors and councils. Municipal elections were held in December 2004, with councils elected to 5-year terms. The popular participation law of April 1994, which requires a 20% allocation of national revenues to municipalities for discretionary use, has enabled previously neglected communities to make improvements in their facilities and services.

Principal Government Officials
President--Juan Evo MORALES Ayma
Vice President--Alvaro GARCIA Linera
Minister of Foreign Affairs--David CHOQUEHUANCA Céspedes
Ambassador to the United States-- Mario Gustavo GUZMÁN Saldaña
Ambassador to the Organization of American States--Reynaldo CUADROS Anaya
Ambassador to the United Nations--Hugo SILES Alvarado

Bolivia maintains an embassy in the United States at 3014 Massachusetts Ave., NW, Washington, DC 20008 (tel. 202-483-4410); consulates in Los Angeles, San Francisco, Miami, New Orleans, and New York; and honorary consulates in Atlanta, Chicago, Cincinnati, Houston, Mobile, Seattle, St. Louis, and San Juan.

ECONOMY
Bolivia's estimated 2006 gross domestic product (GDP) totaled $10.3 billion. Economic growth was estimated at about 4.5%, and inflation was estimated at about 4.3%.

In 1985, the Government of Bolivia implemented a far-reaching program of macroeconomic stabilization and structural reform aimed at maintaining price stability, creating conditions for sustained growth, and alleviating poverty. The most important change involved the "capitalization" (privatization) of numerous public sector enterprises. Parallel legislative reforms locked in place market-oriented policies that encouraged private investment. Foreign investors were accorded national treatment, and foreign ownership of companies was virtually unrestricted. Many of these reforms are currently under review. Nationalizations have taken place in both the hydrocarbon and mining sectors, and the government announced it would nationalize the country's biggest telephone company. The role of the state in the economy continues to be a primary goal of the Morales administration. Foreign direct investment (FDI) inflows have dwindled, as has long-term investment across most industrial sectors.

The hydrocarbon sector provides the most prominent example of the current investment climate. Bolivia has the second-largest natural gas reserves in South America. The Bolivian state oil corporation, Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), has contracts to supply Brazil with natural gas through existing pipelines until 2019. Moreover, in 2006, YPFB signed a "ramp-up" contract with Argentina that steadily increases export levels until 2010, when gas deliveries to Argentina should be more than four times current levels. It does not appear, however, that Bolivia will be able to supply both the domestic market and these contractual obligations. It was estimated that from 2006 to 2007, production would actually decrease slightly as lack of investment led to stagnating production. Companies appeared to be investing only what was necessary to maintain current operations.

In April 2000, violent protests over plans to privatize the water utility in the city of Cochabamba led to nationwide disturbances. The government eventually cancelled the contract without compensation to the investors, returning the utility to public control. International shareholders' outstanding claims were finally resolved in January 2006, when the Government of Bolivia agreed to purchase 80% of the shares in Aguas del Tunari, the joint venture company originally selected to manage the Cochabamba water concession.

Bolivian exports were approximately $3.7 billion for 2006, up from $652 million in 1991. Imports were $2.9 billion in 2006. Bolivia enjoyed a $500 million trade surplus in the first half of 2006. Bolivian tariffs are uniformly low (10%), with capital equipment entering duty-free or incurring 5% tariffs.

Bolivia's trade with neighboring countries is growing, in part because of several regional preferential trade agreements. Bolivia is a member of the Andean Community (CAN) and enjoys nominally free trade with other member countries (Peru, Ecuador, and Colombia). Bolivia is also an associate member of Mercosur (Southern Cone Common Market). The Andean Trade Promotion and Drug Eradication Act (ATPDEA) allows numerous Bolivian products to enter the United States duty-free, including alpaca and llama products and, subject to a quota, cotton textiles. The Bolivian Government worked to extend ATPDEA benefits beyond their February 2008 expiration date (now extended to December 2008).

In 2006, the United States exported $277 million of merchandise to Bolivia and imported $362 million. Bolivia's major exports to the United States are tin, gold, jewelry, and wood products, with textiles playing an increasingly important role. Its major imports from the United States are electronic equipment, chemicals, vehicles, wheat, and machinery. A bilateral investment treaty (BIT) between the United States and Bolivia came into effect in 2001.

Agriculture accounts for roughly 12.8% 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 in the CAN market. The extraction of minerals and hydrocarbons accounts for another 11% of GDP and manufacturing around 17%.

The Government of Bolivia remains heavily dependent on foreign assistance to finance development projects. At the end of 2006, the government owed $3.2 billion to foreign creditors, with 12% of this amount owed to other governments and the balance owed to multilateral development banks. Between 1986 and 1998, Bolivia attended seven rounds of negotiations with Paris Club creditors and received U.S. $1.35 billion of bilateral debt forgiveness. The United States forgave almost all of Bolivia's bilateral debt between 1999 and 2002 and strongly supported efforts to have multilateral institutions do the same. Bolivia received U.S. $1.95 billion in debt relief from HIPC (Heavily Indebted Poor Countries) I in 1998 and HIPC II in 2001, including almost complete bilateral debt forgiveness.

In June 2005, the G-8 countries decided to provide renewed World Bank and International Monetary Fund (IMF) debt relief for the 18 participant nations of HIPC I and II through the Multilateral Debt Relief Initiative (MDRI). Bolivia received U.S. $232.5 million in debt relief from the IMF in January 2006 and approximately U.S. $1.5 billion in debt relief from the World Bank in June 2006. The Inter-American Development Bank (IDB) forgave $1 billion in debt in March 2007. Bolivia was one of three countries in the Western Hemisphere selected for eligibility for the Millennium Challenge Account in 2004. Bolivia qualified again in 2005 and 2006, and presented a proposal to the Millennium Challenge Corporation in December 2005, which has been superseded by a new proposal submitted September 2007.

FOREIGN RELATIONS
Bolivia traditionally has maintained normal diplomatic relations with all hemispheric states except Chile. Relations with Chile, strained since Bolivia's defeat in the War of the Pacific (1879-83) and its loss of the coastal province of Atacama, were severed from 1962 to 1975 in a dispute over the use of the waters of the Lauca River. Relations were resumed in 1975, but broken again in 1978, over the inability of the two countries to reach an agreement that might have granted Bolivia sovereign access to the sea. They are maintained today below the ambassadorial level.

In the 1960s, relations with Cuba were broken following Fidel Castro's rise to power, but resumed under the Paz Estenssoro administration in 1985. Under President Morales, relations between Bolivia and Cuba have improved considerably, and Cuba has sent doctors and teachers to Bolivia. Relations have also improved with Venezuela, which has provided financial assistance to Bolivian municipalities, armed forces, and police since Morales took office. The Bolivian and Venezuelan Governments are also working closely together in the petrochemical industry, with plans to expand cooperation into the mining sector and advance the Venezuelan-sponsored Bolivarian Alternative for the Americas (ALBA) trading bloc. The Bolivian Government announced it would pursue formal relations with Iran and Libya in September 2007, with plans to cooperate in the petrochemical industry and increase Bolivian exports to both countries.

Bolivia has pursued a foreign policy with a heavy economic component and the Morales government seems to be following in this same tradition. Bolivia has become more active in the Organization of American States (OAS), the Rio Group, and in Mercosur, with which it signed an association agreement in 1996. Bolivia promotes its policies on sustainable development and the empowerment of indigenous people.

Bolivia is a member of the UN and some of its specialized agencies and related programs, the Organization of American States (OAS), CAN, Non-Aligned Movement, International Parliamentary Union, Latin American Integration Association (ALADI), World Trade Organization (WTO), Rio Treaty, Rio Group, Amazon Pact, and an associate member of Mercosur. As an outgrowth of the 1994 Summit of the Americas, Bolivia hosted a hemispheric summit conference on sustainable development in December 1996.

U.S.-BOLIVIAN RELATIONS
Although President Morales has been publicly critical of U.S. policies, the United States and Bolivia have a tradition of cordial and cooperative relations. Development assistance from the United States to Bolivia dates from the 1940s, and the U.S. remains a major partner for economic development, improved health, democracy, and the environment. In 1991, the U.S. Government forgave all of the $341 million debt owed by Bolivia to the U.S. Agency for International Development (USAID) as well as 80% ($31 million) of the amount owed to the Department of Agriculture for food assistance. The United States has also been a strong supporter of forgiveness of Bolivia's multilateral debt under the HIPC initiatives.

The United States Government channels its development assistance to Bolivia through USAID. USAID is well known in Bolivia, especially in rural areas where thousands of projects have been implemented. USAID has been providing assistance to Bolivia since the 1960s and works with the Government of Bolivia, the private sector, and the Bolivian people to achieve equitable and sustainable development. USAID/Bolivia provides about $85 million annually in development assistance through bilateral agreements with the Bolivian Government and unilateral agreements with other organizations. USAID programs are implemented by non-governmental organizations (NGOs), the private sector, and the Bolivian Government. USAID's programs support Bolivia's National Development Plan and are designed to address key issues, such as poverty and the social exclusion of historically disadvantaged populations, focusing efforts on Bolivia's peri-urban and rural populations. USAID's programs in Bolivia strengthen democratic institutions; provide economic opportunities for disadvantaged populations through business development and trade; improve family health; promote sustainable use of natural resources and biodiversity conservation; provide farmers alternatives to illicit coca cultivation; and improve food security.

Public criticisms of the U.S. Government were made on a number of fronts in 2007, including of USAID-supported democracy programs and, in particular, the U.S. Government's non-partisan support across the political spectrum. The Bolivian Government lobbied for an extension of ATPDEA trade preferences and approval of a compact with the Millennium Challenge Corporation (MCC). President Morales delivered a $657 million proposal on September 24, 2007 to MCC officials, which focuses on transportation and agriculture development in northern Bolivia. On February 27, 2008, the U.S. Congress approved an ATPDEA extension, which is set to expire on December 31, 2008.

The control of illegal narcotics is a major issue in the bilateral relationship. For centuries, Bolivian coca leaf has been chewed and used in traditional rituals, but in the 1970s and 1980s the emergence of the drug trade led to a rapid expansion of coca cultivation used to make cocaine, particularly in the tropical Chapare region in the Department of Cochabamba (not a traditional coca growing area). In 1988, a new law, Law 1008, recognized only 12,000 hectares in the Yungas as sufficient to meet the licit demand of coca. Law 1008 also explicitly stated that coca grown in the Chapare was not required to meet traditional demand for chewing or for tea, and the law called for the eradication, over time, of all "excess" coca.

To accomplish that goal, successive Bolivian governments instituted programs offering cash compensation to coca farmers who eradicated voluntarily, and the government began developing and promoting suitable alternative crops for peasants to grow. Beginning in 1997, the government launched a more effective policy of physically uprooting the illegal coca plants, and Bolivia's illegal coca production fell over the next 4 years by up to 90%.

This "forced" eradication remains controversial, however, and well-organized coca growers unions have blocked roads, harassed police eradicators, and occasionally used violence to protest the policy. In response, previous government security forces have used force. In some cases confrontations between security forces and coca growers or distributors have resulted in injuries and fatalities, raising human rights concerns. The Morales government has embarked on a policy of voluntary eradication and social control. Although violent confrontations between police and coca growers/distributors have decreased under the new approach, its long-term efficacy remains to be proven.

Bolivia plans to expand, at least for a limited time, legal coca production to 20,000 hectares and stresses development of legal commercial uses for coca leaf. Although the U.S. prefers long-term limits that track more closely with current estimated legal domestic demand of around 4,000 to 6,000 hectares, it will continues to support counter-narcotics efforts in Bolivia as the 20,000 hectare proposal is still significantly below current cultivation, which has oscillated between about 23,000 and 28,000 hectares since 2001.

The United States also heavily supports parallel efforts to interdict the smuggling of coca leaves, cocaine, and precursor chemicals. The U.S. Government has, in large measure, financed alternative development programs and the counter-narcotics police effort. The U.S. recertified Bolivia as not having "failed demonstrably" in 2007 to cooperate on counter-narcotics issues, finding Bolivia's interdiction efforts strongly positive, though against a backdrop of steadily rising production and trafficking of cocaine. Recent Bolivian governments have supported U.S. Government counter-narcotics programs.

In addition to working closely with Bolivian Government officials to strengthen bilateral relations, the U.S. Embassy provides a wide range of services to U.S. citizens and businesses. Political and economic officers deal directly with the Bolivian Government in advancing U.S. interests, but are also available to provide information to American citizens on local economic and political conditions in the country. Commercial officers work closely with numerous U.S. companies that operate direct subsidiaries or have investments in Bolivia, providing information on Bolivian trade and industry regulations and administering several programs intended to aid U.S. companies starting or maintaining businesses in Bolivia.

The Consular Section of the Embassy, and the two consular agencies in Cochabamba and Santa Cruz, provide vital services to the estimated 13,000 American citizens resident in Bolivia. Among other services, the Consular Section and the consular agencies assist Americans who wish to participate in U.S. elections while abroad and also provide notarial services. Some 40,000 U.S. citizens visit annually. The Consular Section also offers passport and emergency services to tourists as needed during their stay in Bolivia. The Consular Section is currently analyzing a new Bolivian regulation that would require U.S. citizens entering Bolivia for tourism to obtain a visa. The Consular Section will provide information about this new visa requirement on the Embassy's website at http://bolivia.usembassy.gov. In addition to the services provided to U.S. citizens, the Consular Section adjudicates thousands of immigrant and non-immigrant visas at the Embassy in La Paz each year.

Principal U.S. Embassy Officials
Ambassador--Philip S. Goldberg
Deputy Chief of Mission--Krishna Urs
Management Counselor-- Christopher A. Lambert
Political/Economic/Commercial Officer--Michael Hammer
Director, Narcotics Affairs--Joseph Manso
Public Affairs Officer--Denise Urs
Consular Chief--Cynthia Haley
Defense Attaché--Col. John Ruedisueli (acting)
Commander, U.S. Military Group--Col. James Campbell
Director, USAID Mission--Peter Natiello (acting)
DEA Country Attaché--Patrick P. Stenkamp
Peace Corps Director--Javier Garza

U.S. Embassy
Avenida Arce #2780
La Paz, Bolivia
(tel. 591-2-2168000)

U.S. Consular Agency in Santa Cruz
(tel. 591-3 -330725)

U.S. Consular Agency in Cochabamba
(tel. 591-4-4256714)

USAID/Bolivia
P.O. Box 4530
Calle Nueve No. 104
La Paz - Bolivia
Tel. 591-2-278-6544
http://bolivia.usaid.gov/

Other Contact Information

U.S. Department of State
2201 C Street, NW
Washington, DC 20520
Main Switchboard: 202-647-4000

Department of Commerce, Trade Information Center, International Trade Administration
1401 Constitution Avenue
Washington, DC 20230
Tel: 800-USA-TRADE
Internet: Country Commercial Guide for Bolivia - http://www.buyusainfo.net/docs/x_3201945.pdf

U.S. exporters seeking general export information/assistance or country-specific commercial information should consult with the nearest Export Assistance Center or the U.S. Department of Commerce's Trade Information Center at (800) USA-TRADE or go to the following website: http://www.export.gov

American Chamber of Commerce in Bolivia
Edificio Hilda, Oficina 3
Avenida 6 de Agosto
Apartado Postal 8268
La Paz, Bolivia
Tel: (591) 2-2432573
Fax: (591) 2-2432472

[This is a mobile copy of Bolivia (05/08)]