LA PAZ – The populist government of Bolivian President Evo Morales seems to be heading for political failure. Faced with 11% annual price growth and mounting complaints from the country’s worst-affected sectors, Morales promises change, but delays decisions, leaving in place the policies that are stoking the problem.
Of course, economic common sense sometimes prevails, but it is usually short-lived. At the end of 2010, for example, the Morales government decided to eliminate fuel subsidies in order to reduce the fiscal drain of importing market-rate energy and selling it at prices that have not changed in ten years. But the decision was reversed within a week, because the groups that brought Morales to power took to the streets in protest. Morales then promised to “govern by obeying.”
Opinion polls have registered a sharp fall in Morales’s popularity, with social protest of the type he once engineered now raised against him. A long strike by public transport workers was followed by another, just as long, staged by the Central Obrera (Bolivia’s trade union federation) and state employees.
The transport workers wanted a pay increase, following a multi-year wage freeze, while other workers want higher salaries to compensate for inflation, which is higher in Bolivia than the Latin American average, while economic growth is lower. Morales has yielded to the protests by making concessions and short-term promises, which will only fuel further inflation.