Bolivian Coup Comes Less Than A Week After Morales Stopped Lithium Deal
The Sunday military coup in Bolivia has put in place a government which appears likely to reverse a decision by just-resigned President Evo Morales to cancel an agreement with a German company for developing lithium deposits in the Latin American country for batteries like those in electric cars.
"Bolivia's lithium belongs to the Bolivian people," tweeted Washington Monthly contributor David Atkins."Not to multinational corporate cabals."
The coup, which on Sunday resulted in Morales resigning and going into hiding, was the result of days of protests from right-wing elements angry at the leftist Morales government. Sen . Jeanine Añez, of the center-right party Democratic Unity, is currently the interim president in the unstable post-coup government in advance of elections.
Investment analyst publisher Argus urged investors to keep an eye on the developing situation and noted that gas and oil production from foreign companies in Bolivia had remained steady.
The Morales move on Nov. 4 to cancel the December 2018 agreement with Germany's ACI Systems Alemania (ACISA) came after weeks of protests from residents of the Potosí area. The region has 50% to 70% of the world's lithium reserves in the Salar de Uyuni salt flats.
Among other clients, ACISA provides batteries to Tesla; Tesla's stock rose Monday after the weekend.
As Bloomberg News noted in 2018, that has set the country up to be incredibly important in the next decade:
Demand for lithium is expected to more than double by 2025. The soft, light mineral is mined mainly in Australia, Chile, and Argentina. Bolivia has plenty—9 million tons that have never been mined commercially, the second-largest amount in the world—but until now there's been no practical way to mine and sell it.
Morales' cancellation of the ACISA deal opened the door to either a renegotiation of the agreement with terms delivering more of the profits to the area's population or the outright nationalization of the Bolivian lithium extraction industry.
As Telesur reported in June, the Morales government announced at the time it was "determined to industrialize Bolivia and has invested huge amounts to ensure that lithium is processed within the country to export it only in value-added form, such as in batteries."
It's unclear what the next steps are for the industry in a post-coup Bolivia, according to global intelligence analysis firm Stratfor:
In the longer term, continued political uncertainty will make it more difficult for Bolivia to increase its production of strategic metals like lithium or develop a value-added sector in the battery market. The poor investment climate comes at a time of expanding global opportunities in lithium-ion battery production to meet rising demand from electric vehicle manufacturing.
ACISA told German broadcaster DW last week that the company was "confident that our lithium project will be resumed after a phase of political calmness and clarification."
On Sunday, Morales resigned.
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How Bolivia Lost Its Hat
Borderlines explores the global map, one line at a time.
In 1867, the British ambassador to Bolivia fell afoul of its dictator, Mariano Melgarejo, by refusing a glass of chicha , a cloudy drink based on fermented maize. Opting for cocoa instead, the ambassador got more than he asked for: Melgarejo, incensed, forced him to drink an entire bowl of liquid chocolate. He then paraded him three times around La Paz’s main square , tied up and seated back to front on a donkey [1], before shipping him back to London.
When the disgraced ambassador related his story to Queen Victoria, she was not amused [2] at all. Her Majesty resolved to have the Royal Navy bombard Bolivia’s capital in retaliation. Consulting a map of South America, she soon discovered that La Paz lay far inland on the Andean altiplano [3], well beyond the reach of British cannon. So she simply marked the offending country with an X, pronouncing: “Bolivia does not exist” [4].
Both before and after that infamous incident, forces inside and outside of the South American country have been hard at work to grant Victoria’s wish . Over the approximately 200 years of its independence [5], Bolivia has lost about half its original territory. Comparing a map of this “Greater Bolivia” to one of the country’s present incarnation , it’s as if somebody cut off three of Bolivia’s limbs — or rather two limbs, in the southeast and southwest, and a curious, flat-top hat in the north [6].
At the root of Bolivia’s partial erasure are valuable resources: specifically rubber, guano [7] and oil. That Bolivia lost each of those fights was not just a result of neighborly coveting, but also internal strife. Like many mineral-rich states [8], Bolivia’s natural wealth makes it potentially rich and powerful, but in reality quite weak.
For most of its existence, Bolivia has been poorly governed by a seemingly interminable procession [9] of tin-pot dictators. Melgarejo , who seized power in 1864, was Bolivia’s 18th president, and by some accounts its worst one (which is saying much, considering the long list of contenders).
His six-year dictatorship witnessed the first of Bolivia’s many dismemberments. Sycophantic, rebellious and eager to fight, Melgarejo was finely attuned to the career opportunities that the tempestuous politics of Bolivia offered its military officers. He blamed the bottle for his rebellion, in 1854, against the dictator Manuel Belzu, and was pardoned for his treason. Yet in 1861, he rose anew against the government of the day. Melgarejo helped Gen. José María de Achá into the saddle — only to depose him three years later. He also defeated the forces of Belzu , personally executing his former pardoner [10].
Joe Burgess/The New York Times
In 1867, he concluded the Treaty of Ayacucho, trading a rectilinear slice of Bolivia’s northernmost territory to Brazil, in part for a magnificent white horse. Upon seeing it, the story goes, he drew a hooflike shape on the map, delineating the part of Bolivia henceforth part of Brazil. But Brazilian encroachment continued, on lands that were nominally Bolivian but largely unexplored and unsettled.
The Acre River was not mentioned in the seminal Atlas of the Empire of Brazil of 1868 for the simple reason that it had not yet been discovered. But in the following years, thousands of Brazilians — wealthy planters and poor laborers — were lured in by the region’s plentiful rubber trees. In 1899, a Bolivian attempt to reassert control backfired: the Brazilian settlers expelled the Bolivian officials and proclaimed the independent Republic of Acre.
The Acre Revolution would eventually lead to the Treaty of Petropólis in 1903, by which Bolivia ceded control of Acre to Brazil, in exchange for 2 million pounds sterling and the promise of a rail link between Bolivia and Porto Velho, which would provide an outlet for Bolivian trade to the Atlantic via the Amazon River. The Acre territory would become a state in 1962. Nicknamed the Latex State, it still produces most of Brazil’s rubber — and none of Bolivia’s.
A year after Petropólis, Bolivia was forced to concede its most traumatic defeat. Ironically titled the Treaty of Peace and Friendship, the 1904 agreement with Chile cemented Bolivia’s loss of its Litoral province, leaving it coastless .
The loss was a result of the War of the Pacific, which ran from 1879 to 1883 and is more aptly called the Guano War. Throughout the 19th century [11], guano was an important source of fertilizer and a major ingredient in the production of explosives. A festering dispute over the Atacama Desert [12] was the fuse that lighted the fire: Spanish treaties that placed colonial borders “at” the desert were never sufficiently clarified, enabling both Chile and Bolivia to claim possession. An 1866 treaty placed the border between both countries at the 24th parallel south — granting Bolivia access to the sea — but gave both countries tax powers between the 23rd and 25th parallel.
Chile wanted to safeguard the commercial interests of its nitrate mining companies in the area against unilateral Bolivian taxation — and, farther north, Peruvian nationalization. Soon Chile was at war with both Bolivia and Peru. Though the fight was two against one, Chile got the upper hand, even occupying Peru’s capital, Lima, in 1881. Peru bowed out of the fight in 1883, and Bolivia signed a truce in 1884. Chile acquired the Peruvian department of Tarapacá [13], and the Bolivian department of Litoral.
The loss of Litoral is still deeply traumatic for Bolivians: unlike other territorial losses, this one made their country landlocked [14]. Even though Chile offers unfettered access to its Pacific coast, the re-acquisition of Litoral is seen as a panacea for the nation’s woes. Hence Bolivia’s insistence on maintaining a navy, even though it is mainly limited to laps on Lake Titicaca. Each year the country elects a Miss Litoral, a beauty queen for its nonexistent coastal province. And each March 23, Bolivia celebrates the Dia del Mar (“Sea Day”), casting avid eyes on its former coastline.
That day is also the anniversary of the death, in 1879, of Eduardo Abaroa Hidalgo, a tragic hero whose death encapsulates his nation’s many heroic tragedies. Abaroa died a martyr to Bolivia’s lost cause. When the surrounding Chilean troops demanded his surrender, he answered: “¿Rendirme yo? ¡Que se rinda su abuela , carajo !” [15] For his courage, he is honored in the names of countless Bolivian streets and town plazas and by dozens of bronze statues, many plastered with the bird excrement that fueled the Guano War in the first place.
In 1975, Chile’s dictator, Augusto Pinochet, proposed to settle the bad blood with Bolivia by swapping a narrow corridor of Chilean territory along the Peruvian border with an equal area of Bolivian territory inland. But Bolivia refused to take possession of land that it still considers to be rightfully that of its ancient ally, Peru. Chile and Bolivia remain frosty neighbors, and over a century after the so-called Treaty of Peace and Friendship still don’t have full diplomatic relations.
But Bolivia’s most traumatic defeat would not be its last. In 1932, it clashed with neighboring Paraguay over another desert, the Gran Chaco — then thought to be rich in petroleum. Again, Bolivia’s claims to the territory were historical, while its neighbor claimed uti possidetis, based on settlement of its citizens. The war lasted until 1935 and was the bloodiest in Latin American history, claiming 100,000 lives (many from dehydration). Sadly, the Chaco War was largely a proxy fight between two oil companies, with Standard Oil backing Bolivia and Shell supporting Paraguay.
The latter clearly was the underdog, but its guerilla tactics and dogged determination won the war. The Treaty of Buenos Aires, signed in 1938, awarded two-thirds of the Chaco, some 20,000 square miles, to Paraguay, significantly enlarging its territory [16]. Ironically, all the oil and gas that was subsequently discovered and exploited in the area was found in the third of the Chaco that remained Bolivian. Today its natural gas reserves are the second-largest in Latin America.
Good news for once, or so you’d think. But then you’d forget one of both reasons for Bolivia’s territorial misfortunes: its internal discord. Strife over whether to nationalize the gas reserves in 2003 led to the so-called Gas War, which led to dozens of casualties and threats of secession by mineral-rich parts of the country.
It also propelled Evo Morales to the presidency, the first Bolivian from the country’s indigenous majority to follow in the footsteps of the first head of state, Simon Bolivar [17]. Although Mr. Morales’s subsequent nationalization of Bolivia’s natural-gas reserves and his close alliance with Venezuela’s Hugo Chavez are not winning him any friends north of the Rio Grande, he as yet has refrained from parading foreign diplomats on donkeys through La Paz [18]. Perhaps this time, Bolivia will retain the right to exist, and get to keep its riches.
Frank Jacobs is a London-based author and blogger. He writes about cartography, but only the interesting bits.
[1] The original “ass-backwards.”
[2] The phrase “We are not amused” is popularly associated with Queen Victoria, exposing the supposed dourness of her character. So many variations are known that the story is most likely apocryphal.
[3] Averaging an elevation of 12,300 feet above sea level, the altiplano (“high plain”) is the world’s second-highest large plateau, after Tibet’s High Plains, and contains the world’s highest capital, La Paz (about 12,000 feet).
[4] The story is related in the 1971 book “Open Veins of Latin America,” Eduardo Galeano’s critical analysis of imperialism in Latin America. The book rocketed up the best-seller lists when Mr. Chavez gave it to newly elected President Obama at a Summit of the Americas in April 2009.
Several variations of the original story exist, adding color but subtracting veracity: that Melgarejo invited the ambassador to the senatorial inauguration of his horse, or the official presentation of his new mistress; that he challenged the ambassador to kiss his mistress’s behind, or that the ambassador pooh-poohed the glass of chicha even though offered by Melgarejo in person; and that the dictator forced an entire barrel of cocoa down the ambassador’s throat.
[5] Though the hat that defines Bolivia is round. The bowler hat (bombín in Spanish), a standard accessory for the Quechua and Aymara women, was introduced to the country in the 1920s by British railway workers.
[6] The country proclaimed its independence from Spain in 1806, but won its freedom only after 19 years of long, hard battles.
[7] Sometimes referred to as “nitrate,” but more popularly known as bird droppings. An effective fertilizer, it was very popular in 19th century horti - and agriculture and a great source of wealth and conflict to whoever owned the places where the birds did their number-twos.
[8] Bolivia was the source of most of Spain’s wealth in the 18th century — Cerro Rico was the world’s largest silver mine, Potosí the Western Hemisphere’s largest city.
[9] Bolivia, independent since 1825, is currently on its 80th president, which works out to an average of one president every two years and four months.
[10] Some stories have him confronting a crowd clamoring for Belzu with the former dictator’s corpse, shouting “Who lives now?” and the crowd dutifully replying, “Viva Melgarejo!”
[11] Until the invention of the Haber-Bosch process in 1909. Enabling the industrial manufacturing of ammonia from nitrogen in the air, it dramatically reduced the strategic importance of Chile’s guano reserves. Today, one-third of the world’s population is fed on crops fertilized by the Haber-Bosch process.
[13] After mediation by Herbert Hoover, Peru got back the Chilean-occupied Tacna department in 1929.
[14] The only other landlocked country in the Americas is Bolivia’s neighbor, Paraguay. Being landlocked can be disadvantageous, limiting access to seafood and maritime transport. Of the 45 internationally recognized countries that are landlocked, most suffer from lack of development.
[15] “Surrender, me ? Your grandma should surrender, you scoundrel!” Somewhat reminiscent of Gen. Anthony McAuliffe’s “Nuts!” during the 1944 Battle of the Bulge.
[16] More proof of the longevity of border-change-induced resentment: A final treaty between Bolivia and Paraguay wasn’t signed until 2009.
[17] Simon Bolivar, who liberated much of South America from Spain, served as the country’s president for four months in 1825. Originally Alto Peru, the country was named Bolivia in his honor.
[18] Bolivia’s coastal fixation being what it is, you’d almost forget about three further border changes to the country’s disadvantage. Perhaps also because they were effected in mutual agreement. In 1889, Bolivia granted the Puna de Atacama and the Chaco Central to Argentina, in exchange for a smaller border adjustment in its favor. And in 1903, it relinquished to Peru northern territories adjacent to the ones it ceded to Brazil by the Treaty of Petropolis. In 1928, a small slice of Mato Grosso on its eastern border changed hands and became Brazilian.
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