In November 2024, Bloomberg columnist Juan Pablo Spinetto labelled Bolivia’s economic situation a “tragedy”. Citing figures on the shortage of dollar reserves and fuel, Spinetto also described the country’s future in three words: “devaluation, default and chaos”.
Spinetto’s opinion piece caused a stir in the Bolivian media but, in the five months since, his predictions have largely been realised. Although there has been no official devaluation of its currency, due to the fixed exchange rate of USD 1 to 6.96 bolivianos (BOB), banks have imposed steep commission fees, and exchange rates on Bolivia’s authorised cryptocurrency market have hit BOB 12 per dollar.
The origin of the crisis lies in the “decline of the natural gas sector”, economist Gonzalo Chávez told Infobae in September last year. Until 2014, the state received USD 5.5 billion a year from the export of the hydrocarbon. Since then, production has fallen, with revenue down to USD 1.6 billion in 2024. This is due to various factors, most notably lower demand from the main markets, Brazil and Argentina, as well as a decline in reserves.
Other contributing factors to the economic crisis include the decision to maintain the fixed exchange rate and the significant increase in public debt due to subsidies for both fuel and food.
In Bolivia, diesel and gasoline are bought at international prices (approximately USD 1.2 per litre) and sold domestically at BOB 3.74 and 3.72 (USD 0.54) per litre, respectively. This has been the case since 2004, with the government absorbing the rise in oil costs ever since.
As a result of all this, since 2023 the country has been experiencing a shortage of dollars that has deepened to the point that it is no longer able to supply fuel because it cannot pay the companies selling it.
President Luis Arce’s response during his four years in office has been to invest in the construction of biodiesel production plants in an effort to reduce the need for fuel subsidies.
Arce has also relaunched the country’s attempts to exploit its vast lithium reserves, to take advantage of the boom in demand for the metal for the global energy transition. He has also announced the exploration of new oil wells, including in national parks, to reverse the decline in Bolivian production.
It is a pattern that repeats itself and we Indigenous peoples pay the high cost: the loss of our territories and our livelihoodsRuth Alípaz, Indigenous leader from an Uchupiamona community
So far, the results have not been as expected, with the country’s only biodiesel plant far from being able to replace fuel imports. The lithium project has also failed to get off the ground, due to concerns about profitability and environmental impacts, while oil exploration has encountered resistance due to the vulnerability of surrounding ecosystems.
The Bolivian government maintains that these projects will help improve its revenues – but the country’s Indigenous peoples say it is they who always end up paying the price.
Natural resources in the spotlight
For Ruth Alípaz, an Indigenous woman from the Uchupiamona people of the Bolivian Amazon, President Arce’s response has been the one that governments always choose when faced with crises such as this.
“They turn to natural resource extraction,” she tells Dialogue Earth. Alípaz, a community leader, is well known for defending her territory, against illegal gold mining, mercury contamination of rivers, and the construction of hydroelectric dams that threaten to flood areas. She recalls that before the creation of protected areas, there was oil extraction, tin mining in the Altiplano highlands, and rubber and timber harvesting in the 1990s; natural gas in the 2000s; and now gold mining once more, as well as the introduction of African palm in the Amazon.
“It is a pattern that repeats itself and we Indigenous peoples pay the high cost: the loss of our territories and our livelihoods,” she adds.
In Bolivia, mining has been one of the main sources of income since colonial times. However, the royalties paid to the Bolivian state – 3% of total sales according to the country’s mining law – are not reflected in the economy. One reason is that much of the mineral production – 55% – is in the hands of mining associations known as cooperatives. None of them pay royalties because they are considered “autonomous non-profit entities” and are thus not required to pay taxes on profits.
“What it does leave behind is environmental damage, contamination, deforestation and infringement of rights,” claims Alfredo Zaconeta, a researcher on the subject at the Center for the Study of Labor and Agrarian Development (Cedla).
Economic wealth versus natural wealth
In his analysis, Zaconeta warns that mining “is not something we can do without”. But, he adds, it is an activity that requires discussions that involve not only the mining sector, which he says is currently the case, but also academia, civil society “and those affected in areas where mining is more harmful than beneficial”.
Extractive projects have long attracted criticisms from civil society and Indigenous groups over a lack of genuine participation in projects, a lack of access to information or only to biased information. This has generated a sense of mistrust and rejection among Indigenous and peasant communities, inside and outside mineral-rich areas, such as the salt flats of Uyuni and Pastos Grandes in Potosí, and Coipasa in Oruro.
What worries us is that the water will be affected and that we will be left with a plant that will require chemical productsLeonel Ramos, resident of the Mallku Villamar community
These vast areas of salt flats have been targeted by the Bolivian government for industrial plants using direct lithium extraction methods. Lithium is a key component in batteries for electric vehicles and electronic devices, and together these salt flats host one of the largest lithium reserves in the world, an estimated 23 million tonnes.
“What worries us is that the water will be affected and that we will be left with a plant that will require chemical products,” says Leonel Ramos, a native of Mallku Villamar, a Quechua community in the southwest of Potosí, in southern Bolivia. This site is the entrance to the Salar de Pastos Grandes, which in turn is part of the Los Lípez Ramsar site, a wetland of international importance. Exploration and studies on water resources to assess potential impacts have already been carried out at the site, “but so far we haven’t received the results,” laments Ramos.
Several important legal frameworks for the protection of the environment, Indigenous peoples and their right to information and consultation have been established in Bolivia. Among them are the Environmental Law and the Law for the Protection of Indigenous Nations and Peoples in Situations of High Vulnerability. The first establishes environmental rights and the participation of traditional communities in matters of development and natural resource usage in their lands; meanwhile the latter focuses on the protections and safeguards for groups exposed to threats to their territory and way of life, including similarly for resource use. Bolivia has also ratified the Escazú Agreement, the Latin American treaty on access to information, public participation and access to justice in environmental matters.
In November, the Russian company Uranium One Group signed a contract to build a USD 970 million industrial lithium carbonate plant in Pastos Grandes. Another deal was signed with Hong Kong CBC – a Chinese consortium made up of battery giant CATL and its subsidiary Brunp, plus mining firm CMOC – which is to build two other plants in the Salar de Uyuni. For the moment, these contracts are at a standstill in Bolivian congress, awaiting “complete and legalised” documentation from the government, according to a local press release.
Sara Crespo, director of the NGO Probioma, which specialises in socio-environmental monitoring, notes that economic benefits from mining do not tend to reach the affected communities. “Which is the department with the highest mining production and considered one of the poorest in the country?” she asks, alluding to the dichotomy that Potosí has faced since colonial times.
‘They divide us’
Both Indigenous leaders and researchers with whom Dialogue Earth spoke agree that the current economic crisis in Bolivia is generating division, and even violence, among the inhabitants of the Indigenous and peasant communities themselves.
“The issue has made the pressure on the territories more aggressive in terms of mining, hydrocarbons and the advance of the agricultural and livestock frontier,” says Crespo.
Uchupiamona leader Alípaz says the situation has already been debated by the National Coordinating Body for the Defence of Indigenous Peasant Territories and Protected Areas of Bolivia (Contiocap).
“Now we are seen as those who want to stop development, and they make us fight, because some say: ‘let them give it to us’,” says Alípaz, referring to promises of royalties. “But in reality they [the government and companies] only light the fuse for something that will never come.”
The other major problem, not only for Indigenous peoples but also peasant communities, is the lack of access to information.
Since the enactment of Bolivia’s new Mining Law (2014), access to data has been restricted. Until 2018, explains Probioma’s Crespo, it was possible to purchase access to complete information on the mining situation in the country, with up-to-date maps. All of this was then interpreted by experts and explained to Indigenous and peasant communities, in non-technical language, so that they could make an informed decision on whether to accept or reject the entry of new mining companies into their territories.
“In 2023, the AJAM [Mining Administrative Jurisdictional Authority] issued a resolution in which, among other elements, absolutely nothing is handed over,” says Crespo. In an administrative resolution to which Dialogue Earth had access, technical reasons for this are detailed, but the causes are not specified. “There is no explanation. There are technical-legal reports, but there is no argumentation as to why,” Crespo added.
Environmental defenders’ struggles
Added to these challenges in information access, some observers and residents have reported a situation of persecution of Indigenous and peasant leaders.
This is what happened at Tres Marías, a peasant community located in the municipality of Yanacachi in La Paz, where flower producers have been displaced by miners.
“They [the miners] built a community within our community in order to have territory to exploit,” denounces Mary Catacora, a local resident.
Since 2021, Indigenous coordinating body Contiocap has registered 272 forms of attacks or threats on defenders in Bolivia – ranging from prosecutions for defamation to intimidation.
Among those on the receiving end of this was Catacora’s father, who led community protests against mining cooperatives last November, preventing them from entering mining areas and accessing roads within the territory, said to have been built illegally. He was among several community members reported to have been physically and verbally attacked by miners. This year, local prosecutors issued warrants to apprehend these community members after the mining cooperative pursued legal action against them for their protests – something Contiocap describes as “arbitrary” and “without due process”.
Mary, like the other representatives of areas affected by mining, agrees that their struggle will continue, because it is no longer only about land, but also about livelihoods.
As she reflects on this feeling of exploitation, food prices continue to soar across Bolivia, while school absenteeism is also on the rise as the fuel shortage persists.
“We are worried about the day to day: what are we going to eat? What are we going to give our children? Where are we going to get water? Finally, where are we going to get some fuel?” asks Alípaz.
