President Luis Arce’s economic model (and its limits)

Luis Arce Catacora, the economic architect of the Movement Towards Socialism during Evo Morales’ fourteen-year presidency, will take power today as Bolivia’s sixty-seventh president. Arce and incoming Vice President] David Choquehuanca were two of the longest-serving ministers in Evo’s cabinet (both from 2006 to 2017) and they stood at the core, respectively, of the party’s socialist and plurinational projects during those years.

When the Morales government came to power, it was haunted by the spectre of economic failure under the last center-left government, the 1982 to 1985 UDP government of Hernán Siles Zuazo. Morales turned to Arce, an economist who had worked in the Bolivian Central Bank since 1987, to lead his economic policy. Arce faced an incredible challenge: to thread the needle between popular demands for redistribution and an international credit market wary of leftist populism.

The markets were already trembling: Morales was already a bogeyman of demagogic populism. He was vilified by American diplomats for the coca leaf’s connection to narcotics and stereotyped domestically as an uninformed peasant ignorant of diplomatic protocol and economic realities. Moreover, Morales proposed a “21st century socialism” as his economic project. Everything that was an anathema to neoliberal technocrats seemed to be packaged together.

And yet, the new Morales government was far from ignorant of global economic or political realities. It still needed foreign credit, still lived in a hemisphere politically and militarily dominated by the United States, and still sought international investment. The spectre of dangerous populism, and the historical shadow of the 1982–86 hyperinflation, threatened all of those relationships. The Bolivian government could not afford to be downgraded in international bond markets, isolated like a new Cuba, or spurned by transnational corporate investors. And so, the government sent clear signals to global powers about just what its brand of populism would entail.

One unlikely emissary was Vice President Álvaro García Linera, a Marxist intellectual and former guerrilla, who spoke at the Washington-based Center for Strategic and International Studies in 2006. “We are not,” the Vice President pledged, “a populist government with easily opened pockets and cheap promises.” He highlighted the government’s “austerity” with its officials, who would no longer put money in offshore accounts (unlike their notoriously corrupt predecessors), and its “responsible management of macroeconomics.” This was Arce’s portfolio.

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