USAID in Bolivia: Partner or Patrón? 9781626376946

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USAID

IN

BOLIVIA

USAID IN BOLIVIA Partner or Patrón?

Lawrence C. Heilman

Published in the United States of America in 2017 by FirstForumPress A division of Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301 www.rienner.com

and in the United Kingdom by FirstForumPress A division of Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU

© 2017 by Lynne Rienner Publishers, Inc. All rights reserved

Library of Congress Cataloging-in-Publication Data Names: Heilman, Lawrence C., 1935– author. Title: USAID in Bolivia : partner or patrón? / Lawrence C. Heilman. Description: Boulder, Colorado : FirstForumPress, 2016. | Includes bibliographical references. Identifiers: LCCN 2016013611 | ISBN 9781626374362 (hc : alk. paper) Subjects: LCSH: United States. Agency for International Development | Economic assistance, American—Bolivia. | Economic development—Bolivia. | United States—Foreign economic relations—Bolivia. | Bolivia—Foreign economic relations—United States. Classification: LCC HC182.H45 2016 | DDC 338.91/73084—dc23 LC record available at https://lccn.loc.gov/2016013611

British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library.

This book was produced from digital files prepared by the author using the FirstForumComposer. Printed and bound in the United States of America

The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1992. 5 4 3 2 1

Left unsung, the noblest deed will die. —Pindar from Isthmean Odes

Titanic in its concentration of will [the United States of America], with unprecedented triumph in all spheres of material aggrandizement, its civilization yet produces as a whole a singular impression of insufficiency, of emptiness. —José Enrique Rodó from Ariel

Contents

List of Figures and Tables Acknowledgments

x xi

Introduction

1

1

5

The Bolivian Context The Land, 5 The People, 15

2

Forging a Development Relationship: Franklin D. Roosevelt, 1933–1945

21

Washington: Pursuing Wartime Objectives, 21 Bolivia: A Revolution Struggles to Emerge, 23 Antecedents to a Development Mission in Bolivia, 25

3

A Development Mission to Fight Communism: Harry S. Truman, 1945–1952

39

Washington: Development and Defense March in Lockstep, 39 Bolivia: Prologue to Revolution, 40 The Point Four Mission Is Established in Bolivia, 41

4

Revolution Dictates the Development Path: Dwight D. Eisenhower, 1953–1961

53

Washington: Paladins on the Potomac, 53 Bolivia: The 1952 Revolution, 55 The Role of a US Overseas Mission Evolves, 58

5

The Alliance for Progress: John F. Kennedy and Lyndon B. Johnson, 1961–1969 Washington: A Clarion Call, 87 Bolivia: Old and New Caudillos, 99 USAID Mission Bureaucrats on a Development High, 101

vii

87

viii

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USAID in Bolivia

New Directions for Reaching the Rural Poor: Richard M. Nixon and Gerald R. Ford, 1969–1977

127

Washington: Guns or Butter Economics, 127 Bolivia: In Search of Order and Progress, 132 The USAID Mission Identifies the Rural Poor, 136

7

In Pursuit of Basic Needs and Human Rights: James E. Carter Jr., 1977–1981

155

Washington: Promoting Human Rights, 155 Bolivia: From Political Stability into Financial Chaos, 159 The USAID Mission Pursues Basic Needs for the Rural Poor, 160

8

Out of Chaos a New Development Path Emerges: Ronald W. Reagan, 1981–1989

171

Washington: A New Development Agenda, 171 Bolivia: Backing Away from a Financial Abyss, 175 The USAID Mission Faces New Challenges, 177

9

The War on Drugs with a Development Agenda: George H. W. Bush, 1989–1993

191

Washington: Bush’s Hot War in the Andes, 191 Bolivia: New Leadership and a New Economic Policy, 196 The USAID Mission’s Development Drama Continues, 198

10 USAID’s Development Surge: William J. Clinton, 1993–2001

213

Washington: USAID Reinvented, Reorganized, and Relocated, 213 Bolivia: Pacted Democracy Prevails, 218 The USAID Mission: A New Style with Vintage Substance, 220

11 A Commitment to Empowering All Bolivians: George W. Bush, 2001–2009 Washington: The Dismemberment of USAID, 241 Bolivia: Democracy Runs a Rough Road, 246 The USAID Mission’s Program: More of the Same, 253

241

Contents

12 Ending USAID’s Development Drama: Barack H. Obama, 2009–2013

ix

273

Washington: The Merry-Go-Round, 273 Bolivia: The Morales Perspective, 275 The USAID Mission’s Final Act, 279

13 Past Is Present

289

Partner or Patrón: Seventy Years of Searching for a Development Path, 289 A Quick Look Back at Seventy Years of US Government Assistance, 291 Delivering Economic Assistance: Who’s on First? 293 The Dismemberment of USAID, 294 Listening to Bolivians, 294 A Harsh Reality, 295 What About Tomorrow? 296

Appendixes 1: USOM/USAID Mission Staffing: Bolivia, 1953–1979 2: US Economic Assistance to Bolivia by Presidential Administration 3: US Economic Assistance to Bolivia, Fiscal Years 1946–2014 4: Development Assistance to Bolivia, Calendar Years 1960–2013 5: Mission Directors, Bolivia 6: Key Indicators, Bolivia Chronology Bibliography Index About the Book

299 301 303 307 311 313 315 319 327 346

Figures and Tables

Figures

1.1 Map of Bolivia

6

1.2 Geographic Profile of Bolivia

7

1.3 Major Ecological Zones in Bolivia

8

4.1 USOM/USAID Mission

59

5.1 United States Agency for International Development

93

5.2 Organization of a Country Team

103

Tables

1.1 Distinguishing Features of Major Ecological Zones

9

1.2 Distribution and Density of Population by Region, 1972

12

4.1 Agriculture Research Stations, 1974

66

4.2 Agricultural Production Increases, 1950 and 1963

77

6.1 Comparison of Vital Statistics in South America, 1971

143

6.2 Production and Value of Principal Crops, 1963–1965 and 1970–1972

146

6.3 Estimated Disposition of Crops, 1973

147

6.4 Exports of Principal Agricultural Goods as a Percent of Total Exports, 1951–1972

148

11.1 Health Status Indicators

260

x

Acknowledgments

When I decided to undertake a case study of the US government’s development program in Bolivia, I was guided by the advice of Dr. Betty Meggers, a mentor and friend in the Andean Archaeology Section of the Department of Anthropology at the Smithsonian National Natural History Museum. Until the time of her death, her support was a major factor in keeping me focused on finishing this study. The support I received from Jorge Arellano, a colleague in the Department of Anthropology, played an important role in preparing a number of the charts and maps and encouraging me almost daily to finish this study. Mary Jo Arnoldi, former chair of the Department of Anthropology, was constant in her support of my project. It was Barbara Watanabe who played the vital role in moving my draft to a product ready to be sent to the publisher. Without her kindness, unlimited patience, and determination to support my project, I would have been lost. My thanks go to a long list of United States Agency for International Development (USAID) and State Department officials, including Frank Almaguer, Bob Armstrong, Robert Baker, David Cohen, Scott Eckersley, David Erikson, Tex Ford, David Jickling, Clark Joel, Felix Lapinski, Carl Leonard, Ed Marasciulo, Terry Myers, Haven North, John Oleson, Ray van Raalte, Irv Rosenthal, Sy Rotter, Fred Scheick, Jack Sontag, Bill Stedman, Colin Thompson, Irv Tragen, Bobbie Van Haefton, Ron Venizia, and Mick Zenick. Each brought a unique perspective that proved valuable as my story unfolded. A special thanks is due to Ahir Hites of the International Monetary Fund, who provided health and agriculture indicator data critical to telling the USAID story in Bolivia. I must also recognize the efforts of Phil Church, John Gold, Francis Muya, and Jennifer Torres of DevTech Systems, Inc., who provided basic financial data, core indicator data, and foreign donor commitments data. I am deeply indebted to USAID’s Mission director, Liliana Alyalde, who provided me unlimited entrée to the Mission’s staff in the fall and winter of 2003. Liliana also gave me unfettered access to the Mission’s unclassified files. This was critical to my comprehending the breadth of

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the Mission’s program. It was also during this period that Ambassador David Greenly facilitated interviews with members of his Country Team and made it possible for me to travel into the Chapare and see the Alternative Development Program in action. Norma Jean Parker, the director of the Office of Andean Affairs at USAID Washington, is also due special thanks for the support she provided when I was contracted to review for her office the Alternative Development Program in the Andes. As I approached the end of this saga, five old and dear friends, Tom Calhoun, Chuck Farnsworth, Jeff Harris, Joan Henley, and Carol Peasley did the final proofing of my manuscript before it was off to the publisher. There was a short period when I was nearing the completion of my manuscript that I was about to give up this project. I was ill and could see no light at the end of the tunnel. Larry and Pat O’Rourke came to my aid and were determined to see me through my gloomy days. Their support was critical to get me moving in a positive direction. It was shortly thereafter that Patti Gray, a good friend, volunteered to edit my manuscript. Her deep knowledge of the aid process and substance of the US government’s development assistance program, coupled with her unerring editorial judgment, has resulted in a vastly improved manuscript. It was her energy, enthusiasm, and intellect that were the forces that pushed me to finish this project. A loving wife of fifty-five years, Anne Heilman, and my adult children, Elin and Carlos, were a constant source of encouragement and support. A Note on Sources

Commencing with the Eisenhower administration and continuing through the Obama administration, I reviewed congressional presentations prepared in Washington and annual budget submissions, sector assessments, project papers for grants and loans, project evaluations, and semiannual reports prepared in or for the USAID Mission to Bolivia. In the case of the projects designed and implemented in the late 1960s, early 1990s, and 2003, I interviewed USAID Mission personnel and observed projects being implemented in the field. During these periods, I had free access to the USAID Mission’s project files. I also reviewed periodic reports prepared by USAID contractors and grantees. A majority of the cited documents were collected while working for USAID as a foreign service officer or as a contractor working on USAID matters. On numerous occasions I helped the USAID Library collect documents that were on the verge of being thrown away. I collected no classified documentation. In every instance that I collected

Acknowledgments

xiii

documentation as a contractor, I asked permission to do so from a directhire USAID employee. Presently I am trying to determine to whom I should give the documents that I have collected. National Archives

Since the 1950s, USAID has required that key documents be sent to the National Archives. The criteria for USAID missions and USAID Washington sending documents to the National Archives are subject to interpretation by USAID employees. My experience suggests that the process is haphazard at best. To recreate the US government’s development assistance program for the 1940s and early 1950s, I reviewed documents from the National Archives, including the papers of the first Mission director, Oscar M. Powell, that were from his official office files. USAID’s Development Experience Clearinghouse (DEC)

The DEC is the principal online resource for USAID program and project documentation reaching back to the early 1960s. At this writing it has more than 155,000 documents available for viewing and electronic downloading. It is the first place to go when initiating research dealing with the US government’s foreign assistance program. The criteria for selection of documents to be sent to the DEC from USAID is evolving.

Introduction

On May 1, 2013, the New York Times reported that President Evo Morales had announced he was expelling the United States Agency for International Development (USAID) from Bolivia. He was quoted as saying, “Some institutions of the United States Embassy continue to conspire against . . . the people [of Bolivia] and especially against the country,” and as a result, “we have decided to expel U.S.A.I.D. from Bolivia.”1 After receiving more than $4.6 billion of US taxpayer funds over the past seventy years to support development efforts in Bolivia, how could Morales terminate the USAID relationship in such an abrupt manner?2 The answer to this question is rooted in a complex slice of history beginning with the assistance provided to Bolivia by the US government during World War II. It is this story I want to tell. To date, most of the studies of USAID have focused on the rationale and process of foreign economic assistance without examining country programs and their impact. A significant factor that discourages taking a comprehensive approach to telling USAID’s story is the sheer enormity of this historical task. USAID has operated in nearly two hundred countries, and in some of these countries its story reaches back to the beginnings of World War II with work initiated by predecessor agencies. In many countries it has implemented hundreds of projects. The task is further complicated by the fact that each project has generated a stream of documentation that is seemingly endless. Because of the need to situate a development program in the context of its economic, social, and political history, I have chosen a case study approach confined to a description of the Bolivian program that began in the World War II era. USAID’s history in Bolivia is an intricate tapestry of three concurrent and interrelated stories. Therefore, each chapter, starting with Franklin Delano Roosevelt and ending with Barack Obama, is divided into three parts: The first part contains a historical examination of the major events, ideas, and some of the personalities that contributed to shaping the US government’s development assistance policies, programs, and projects. Each presidential administration is reviewed to determine if the new administration made significant modifications in the manner that the

1

2

USAID in Bolivia

foreign assistance program was conducted. This part also discusses the evolution of the form and function of the USAID bureaucracy in Washington. USAID officials stationed in Bolivia closely followed events in Washington to anticipate how these events and ideas would affect the Mission’s program in terms of program substance and funding levels. Because the Bolivian historical context was the dominating factor affecting the pace and nature of the development interventions sponsored by the US government, the second part briefly reviews the Bolivian political and economic setting. This part also discusses how ideas evolving in Bolivia contributed to shaping the development aspirations of Bolivians and the development path the Bolivian leadership promoted. In most cases, the third part is divided into two sections. The first section describes how the USAID Mission was organized to articulate, implement, and assess the US government’s development program in Bolivia. The second section describes the Mission’s development goals, the program strategy designed to achieve its goals, and the major projects that were funded by the Mission to realize these goals. This part will also include an assessment of the more important successes or failures of the USAID Mission’s development assistance program based on the performance data that was available to Mission managers for each presidential administration. For sixty years, senior managers of the USAID Mission and its predecessors reported at least yearly that satisfactory progress was being made in Bolivia that was attributable to the efforts of the US government’s development assistance program. Yet it was not an uncommon perception on the part of the US public, politicians, pundits, and even USAID employees that insufficient progress was made in Bolivia to justify the large expenditure of taxpayer funds. Recently, President Evo Morales of Bolivia has vociferously denounced the US government for promoting a development path that has encouraged Bolivia to embrace US-style capitalism, which he adamantly claims is the root cause for the majority of Bolivia’s citizens languishing in a state of poverty. How is it possible that such widely varying perceptions prevail regarding the effectiveness of the development assistance provided to Bolivia by the US government? When I joined USAID in 1967, I was required to attend a series of orientation lectures. At the first lecture, the presenter, a Mr. Dove, started by saying, “Welcome to the Agency for International Development, the Agency without a memory.” I was shocked by what I hoped was a frivolous, comedic remark by a graying bureaucrat far from

Introduction

3

the development frontier. When posted to the USAID Mission in Bolivia in the spring of that year, I found much to my dismay that documentation did not exist to allow me to understand what had happened in the 1950s regarding the US government’s development efforts. There was a process in place in which documents were periodically culled, boxed up, and sent off to Washington, where they were forwarded to the National Archives. However, there was no central location in the Mission where documents existed that coherently described the history of the US government’s development assistance program in Bolivia. Though USAID officials could dig into their office files to review the recent history of a particular project, it was an exception when documents were available to explain the rationale for the Mission’s involvement in a particular development sector or project. Project impact data and evaluation data were difficult, if not impossible, to come by. Descriptive materials summarizing program accomplishments, other than the annual report required by USAID Washington that formed the basis for the annual Congressional Presentation (CP), were not available. A USAID official, new to the Mission, was expected to make a careful review of the current files of the project(s) assigned to him or her. Knowledge of the historical context of a project was not considered essential for appreciating the problems that a project had to address. On the job, doing was what really mattered. On several occasions starting in the 1970s, different offices in USAID Washington attempted to create systems for establishing a record of their projects. Most of these efforts had moments when they flourished but eventually were abandoned. Sometime during the 1980s, the USAID Mission in Bolivia made a determined effort to create a library, but during the 1990s, leadership in the Mission decided to reduce support for the library, effectively shutting it down. Some of the documents in the library were sent to Washington, and it was rumored that other documents were sent to a storage facility in El Alto, which is located on the Altiplano. Many documents were just thrown away, and at least one local employee, unable to trash USAID’s legacy in which she had personally been involved, hid documents under her desk or in her bookshelves and took some documents home for safe keeping.3 When I visited the Bolivian Mission in 2003, a small library that was located in a walk-in vault was mostly neglected and unused. During this visit, I interviewed all the Bolivian employees who were currently working in the Mission and had served in the Mission for at least fifteen years. I found only a handful of local employees and a couple of US citizens who could reach back through the 1990s and into

4

USAID in Bolivia

the 1980s with recollections of USAID activities. Only two local employees whom I interviewed could recall efforts of the first thirty years of development activities funded by the US government. One obvious consequence of this imperfect memory is that no one really knows what the development expenditures over the last seventy years have wrought in Bolivia. This book examines the development path pursued by Bolivia and the level of US government support for Bolivia’s strategy. The degree to which the national interest of each government was reflected in the development strategy is assessed. The overarching goals and the major projects funded by the US government to address these goals is discussed. The degree of continuity existing from one US presidential administration to another over the course of seventy years in terms of the Mission’s strategy, its programs, and its projects is considered. Finally, an underlying leitmotif of this study is to describe the culture of a USAID Mission in terms of its organization, the routines that guide the management of its program, and the staff that manages the program. It is natural to think of a large impersonal government bureaucracy providing development assistance. In reality, it is the human face that dominates the daily development enterprise. To convey the human element, I describe the role of a few of the individuals in the USAID Mission who played important roles in the delivery of development assistance. In undertaking this study, I realize that I run the risk of writing a history that is laden with personal bias reflecting my direct involvement in the US government’s development activities in Bolivia. I can only hope that my effort at documenting the period stretching from World War II to the present day is adequate to demonstrate my commitment to accurately portray an important aspect of the histories of Bolivia and the United States. Notes 1. William Neuman, “U.S. Agency Is Expelled from Bolivia,” New York Times, May 1, 2013, http://www.nytimes.com/2013/05/02/world/americas /bolivian-president-expels-us-aid-agency.html. 2. “U.S. Overseas Loans and Grants: Obligations and Loan Authorizations, July 1, 1945–September 30, 2015 (Greenbook)” (USAID Washington), p. 94. For more details, see http://explorer.usaid.gov. 3. Interviews with Sonja Aranibar (senior program assistant, USAID Bolivia), La Paz, Bolivia, December 2004.

1 The Bolivian Context

The Land

Towering Andean mountains cut Bolivia into a maze of geoclimatic niches. From lowland rainforests that spread east to Brazil to the cold uplands of the Altiplano in the west, a gamut of climates, soils, flora, and fauna exist. The diversity of human culture is correspondingly great. It is this mosaic of land and people that present a riddle of human and physical geography that complicates Bolivia’s quest for national integration. (See Figure 1.1.) Bolivia is divided into three major geographic areas: the Altiplano, the Oriente, and the intervening, high valleys that break into five major compartments with the Yungas in the north and the Cochabamba, Sucre, Potosi and Tarija valleys to the south. The Altiplano, which accounts for 17 percent of the land area, is densely populated in the region bordering Lake Titicaca. The intervening high valleys, accounting for 13 percent of the land, are also heavily populated. The Oriente, the vast tropical hinterland, includes the Amazon Rain Forest, the Beni Plains, the Chapare, the Santa Cruz Plains, the Brazilian Shield, and the Chaco. The Oriente accounts for 70 percent of the national domain, yet it is sparsely populated when compared with the rest of Bolivia.1 (See Figure 1.2.) Altiplano

The Altiplano, or high plateau, lies between two immense mountain chains, the Cordillera Oriental and the Cordillera Occidental. The Cordillera Occidental to the west, with mountain peaks reaching twenty thousand feet, generally follows Bolivia’s border with Chile and blocks easy passage between the Altiplano and the Pacific Ocean. The Cordillera Oriental, which is a complex mountain system that defines the Altiplano on the east, is rich in mineral deposits. Vast deposits of

5

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USAID in Bolivia

Figure 1.1 Map of Bolivia

silver discovered by the Spaniards in the Cordillera Oriental contributed to fueling the European and Asian commercial economies in the late sixteenth century. Tin deposits, also located in the Cordillera Oriental, drove Bolivia’s export economy from the middle of the nineteenth century to well into the twentieth century.

The Bolivian Context

7

Figure 1.2 Geographic Profile of Bolivia

Source: From “Agricultural Development in Bolivia: A Sector Assessment” (USAID Bolivia, August 1974), p. 43.

With elevations to fourteen thousand feet, the Altiplano stretches north from Lake Titicaca to five hundred miles south beyond the saltpans of Coipasa and Uyuni to Argentina. The Altiplano blends three discernible ecological subsystems: the northern part has warmer temperatures and higher rainfall, the central part is drier and cooler, and the southern part is the coldest and driest of all. Moving from north to south, the Altiplano becomes less populous and farming is less productive. (See Figure 1.3.)

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USAID in Bolivia

Figure 1.3 Major Ecological Zones in Bolivia

Source: Adapted from “Figure 2: Principle Ecological Zones of Bolivia,” in “Agricultural Development in Bolivia: A Sector Assessment” (USAID Bolivia, August 1974) p. 44.

Lake Titicaca is located on the northern Altiplano and is the largest lake in South America. The presence of such an immense body of water, measuring 3,500 square miles, produces higher rainfall and a warmer climate than other parts of the Altiplano. As a consequence, the Titicaca region since the pre-Columbian era has been densely populated, reflecting its agricultural productivity. (See Tables 1.1 and 1.2.)

Table 1.1 Distinguishing Features of Major Ecological Zones Zone

Altitude (feet)

Average Precipitation (inches) 26” north Altiplano, 14” central Altiplano, 10” south Altiplano

Altiplano

High Valleys

5,000– 12,000

67°

32”

Yungas

1,000– 8,000

73°

41”

Principal Crops

Principal Livestock

Languages

potatoes, onions, quinoa, barley, tubers, alfalfa, legumes

sheep, llama, alpaca, cattle

Aymara, Quechua, Spanish

horticulture crops, wheat, corn, deciduous fruits

sheep, cattle, poultry, swine

Aymara, Quechua, Spanish

coca, coffee, cacao, rice, citrus, bananas

mules, poultry, swine

Quechua, Spanish, Aymara continues

The Bolivian Context

11,500– 14,000

Average Temperature (Fahrenheit) 53° north Altiplano, 50° central Altiplano, 47° south Altiplano

9

10

Zone

Altitude (feet)

Average Temperature (Fahrenheit) 83°

Average Precipitation (inches) 98”

Principal Crops

Principal Livestock

Languages

Amazon Rain Forest

400– 1,200

brazil nuts, rubber, yucca

cattle, poultry, swine

Spanish

Beni Plains

600–800

79°

71”

citrus, yucca

cattle

Spanish

Chapare (Yungas de Cochabamba)

700– 5,000

77°

100+”

coca, yucca, corn, citrus, rice, cacao

swine, poultry

Quechua, Spanish

continues

USAID in Bolivia

Table 1.1 continued

Table 1.1 continued Zone

Altitude (feet)

Average Precipitation (inches) 45”

Principal Crops

Principal Livestock

Languages

Santa Cruz Plains

1,300– 2,500

cotton, sugar cane, rice, yucca, corn, soybean

cattle, poultry, swine

Spanish

Brazilian Shield

700– 2,500

75°

37”

corn, yucca

cattle, swine

Spanish

Chaco

1,200– 1,500

82°

30”

corn, sugar cane, yucca

cattle, poultry, swine, goats

Spanish, Guarani, Quechua, Aymara

Source: Adapted from “Table 2.2: Distinguishing Characteristics of Bolivia’s Ten Major Ecological Zones,” in “Agricultural Development in Bolivia: A Sector Assessment” (USAID Bolivia, August 1974), pp. 43–49.

The Bolivian Context

Average Temperature (Fahrenheit) 77°

11

12

Region

% Total Area Population 44

% Rural Area

Pop. % (per sq. mile)

Population Density

Rural Population Density

39

Land Area (in sq. km) (sq km) 182,048

17

13

7

High Valleys

35

39

143,411

13

13

10

Yungas

5

6

45,814

4

6

5

Oriente

16

16

723,560

66

1

1

Bolivia

100

100

1,094,833

100

4.7

3.2

Altiplano

Source: Adapted from “Table 2.7: Regional Distribution and Density of Total and Rural Population of Bolivia,” in “Agricultural Development in Bolivia: A Sector Assessment” (USAID Bolivia, August 1974), p. 58. Note: It is estimated that the total population of Bolivia in 1972 was 5,195,000, of which 70 percent or 3,646,000 lived in rural areas.

USAID in Bolivia

Table 1.2 Distribution and Density of Population by Region, 1972

The Bolivian Context

13

Intervening High Valleys

The larger high valleys of Cochabamba and Tarija and the smaller ones in the Departments of Chuquisaca and Potosi are located between the Altiplano to the west and the tropical lowlands of the Oriente to the east. A wide range of climates is found throughout the high valleys, and soils vary with the topography covering a spectrum from deep and friable and easily crushed to those that are salty, shallow, seriously eroded, and infertile. These valleys are the maize and wheat producing areas of Bolivia. Maize is used for human consumption and the production of the nationally popular alcoholic drink chicha. The Yungas, from the Aymara word yunkas meaning “hot valley,”2 is the northernmost portion of the intervening, high valleys. A tropical area, it is more humid with denser vegetation than the other high valleys. It is composed of steep slopes and valleys that are deep and narrow. At the higher elevations, there is adequate precipitation for farming throughout the year. Coffee, bananas, sugar cane, cocoa, papaya, and citrus products including oranges, limes, grapefruit, and tangerines grow there. It is also one of the two major coca-producing areas, the other area being the Chapare. The region’s extremely steep topography has always made the movement of agricultural produce to population centers in the highlands a challenge. It is hardly an exaggeration for Bolivians to claim that their roads into the Yungas are the most dangerous in the world. With four thousand vertical foot drops off the side, a two-way graveled road barely wide enough for the generic Altiplano truck was for years the only way to reach deep into the Yungas. Even today, hiking the preColumbian foot trails that tie the Altiplano to the coca and maize producing areas of the Yungas presents a less harrowing experience than traveling by car or truck. Oriente

The Oriente’s immense alluvial plain, which spreads to the borders of Brazil and Paraguay, is a biodiverse paradise replete in flora and fauna species. It has vast unexploited forests and bountiful hydrocarbon resources. The Oriente is divided into six perceptible ecological zones: the Amazon Rain Forest, the Beni Plains, the Chapare, the Santa Cruz Plains, the Brazilian Shield, and the Chaco. The Amazon Rain Forest, located in the extreme north, is a part of the Amazon River basin system. Temperatures average above eighty degrees Fahrenheit, and an annual rainfall of ninety-eight inches is spread throughout the year. The elevation ranges from four hundred to

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USAID in Bolivia

1,200 feet above sea level. The sparse population is involved in exotic agricultural activities, including the gathering of Brazil nuts and wild rubber and the hunting of animals and snakes for their skins. Much of the Beni Plains is an alluvial pampa stretching to the northeast frontier. It is a humid region with rainfall coming mainly in the summer months. A topsoil of two to three feet lies on a clay subsoil; these soils tend to be dense and percolation is slow. Sparsely populated, the area’s major activity is cattle production. Because this vast expanse is generally level, the area is subject to inundation during the rainy season. The Chapare, located in the Department of Cochabamba, extends north from the Cordillera Oriental spreading into the Oriente. Its altitude ranges between seven hundred to five thousand feet above sea level with two landforms, low hills and alluvial plains, dominating the landscape. It has a tropical climate with annual rainfall averaging more than one hundred inches per year. The Chapare has a rich variety of microclimates, soils, flora, and fauna that favor the production of bananas, cacao, yucca, corn, rice, and citrus products. This region has also become the major coca-producing area. In the late 1960s, roads were built with loans provided by the USAID Mission that reached into the Chapare to facilitate spontaneous colonization, and in the 1990s, the Mission supported the construction of a network of farm-to-market roads. The Santa Cruz Plain has long been considered one of the most promising areas in South America for agricultural development. With the completion of the Santa Cruz–Cochabamba–La Paz highway linking marketing centers in the west and the completion of the railroad linking Santa Cruz with Brazil, this tropical area was already playing a crucial role in diversifying Bolivia’s economy by the 1970s. A variety of soils in the area allows for a mixture of agricultural activities, including extensive cattle ranching and the raising of sugar cane, cotton, maize, rice, and citrus. More recently, the production of soybeans has played a valuable role in diversifying the Bolivian economy. To the east of the Santa Cruz Plains and extending to the Brazilian border is the Brazilian Shield. In contrast to the Santa Cruz area, the potential for agricultural production in the Brazilian Shield region is limited. Precipitation of forty-five inches is spread throughout the year, and its soils are uniformly old, highly acidic, and nearly leached of the nutrients critical to agricultural production. Cattle production is the primary economic activity with ranches spread over an extensive pampa covered with savanna shrub.

The Bolivian Context

15

The Chaco, a semiarid expanse stretching south of the Santa Cruz region, continues on to the frontier of Paraguay. An eight-month dry season permits only thorny, drought-resistant plants to grow. Though it is an area with some beef cattle production, there appears limited potential for increased agricultural activity. The People

The Aymara and the Quechua dominated the Altiplano and the high valleys of Bolivia for over one thousand years before its conquest by the Spain in the sixteenth century. With their subjugation, the status of the Aymara and Quecha aburptly changed. No longer noble participants in a high civilization that reached deep into the pre-Columbian era, the Aymara and the Quechua in a moment of time became subserviant to Spain’s imperial interests. The impulse that inspired the Spanish conquests in the New World was the search for resources to strengthen the financial base from which the Crown could advance its continental interests and expand its vast seaborne empire. With conquest came the Crown’s obligation to defend the indegenous population from the depredations of the Spanish conquerors and educate them in the doctrine of the Catholic Church. Here was the rub, for Spain’s development interests in the New World were driven by economic and religious imperatives that when translated into concrete actions were frequently in unremitting conflict. The individual Spaniard’s interest—that of the soldier, the government official, the settler, the clergyman—tempered the way in which they perceived and described the indigenous population. In the case of colonial Charcas (Bolivia), most Spaniards refered to the local population as Indios (Indians). It was common for Spaniards to call Indians savages or dogs. Indians3 were the Spaniards’ beasts of burden in times of peace and cannon fodder in times of war. A majority of Indians during the colonial era owned no land and were classified as colonos or agricultural laborers committed to work on haciendas frequently owned by absentee overlords, or patróns. Prior to the 1952 Revolution, colonos were bound to patróns and their haciendas, and prior to the twentieth century, colonos were included in the sales transactions of haciendas. In return for their unpaid labor, colonos had access to a small plot of land on which they could build their houses and 4 grow the crops necessary for the survival of their families. The colonos’ labor obligations to the patróns were year round. Colonos were duty bound to use their tools and animals for plowing, planting, and harvesting the patróns’ fields. When the agricultural

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season was over, colonos were expected to contribute their family’s labor for road and fence construction and repair, to serve as house help on the hacienda or in the patróns’ town houses, and to work on other properties of the patróns. Colonos could also be loaned by their patróns to other proprietors to work on their estates, which might require leaving their families and providing their own meals for the time necessary to 5 complete this additional work. If the colonos were unable to fulfill these responsibilities or if they broke the patróns’ rules, they could expect to be fined or punished. The fine could be the loss of money, agricultural produce, or farm animals. They could also be whipped by the patróns and even forced to leave the 6 haciendas. In turn, the patróns were responsible for providing land to the colonos in order for the colonos to support their families. The patróns were also expected to assist their colonos in times of crisis. If colonos had trouble with the local government, their patróns were obliged to intervene. During feast days, patróns would usually provide 7 their colonos alcohol and coca. It was the patróns’ obligation to build and ensure the operation of a church on the haciendas, and they were expected to lend money to their colonos for marriage, burial, and health 8 expenses. Colonos farmed their small plots in much the same way that land had been farmed before the arrival of the Spanish. They grew a variety of potatoes and beans, corn, and quinoa. Quinoa, a cereal grain grown at high altitudes, was valued for its richness in calories and proteins. The Indians’ diet was supplemented by the Spanish introduction of cereal grains including wheat and barley, as well as vegetables and fruits that were grown mainly for the patróns. Colonos had access to native meat products including the llama and guinea pig as well as sheep, cattle, pigs, and chickens that were introduced by the Spanish. The llama, which was found throughout the Altiplano and in the high valleys, was valued for its wool as well as being the traditional beast of burden. Except for the introduction of oxen and the wooden plow, agronomic techniques employed on the hacienda had not changed since pre-Columbian times. As late as the midtwentieth century, colonos had no access to modern agricultural technology—no chemical fertilizers, pesticides, or mechanical tools were available to them. Crop yields were low, and food was never abundant. The colonos’ dwellings were constructed with sun-dried mud bricks or fitted stones, topped by thatched roofs of straw or reeds. The family lived, cooked, and slept in one room. Family members slept under llama or sheep hides on low benches, on dirt, or on the stone floor. Houses

The Bolivian Context

17

were poorly ventilated and electricity was nonexistent. Fuel for cooking and warmth consisted of llama and cattle dung. Usually a corral for livestock would be located adjacent to the colono’s family dwelling. Life for Indians who worked in the mines was as oppressive as that for the colonos. Conditions in the mines had improved little, if at all, since the sixteenth century when Indians worked the great silver mine, Cerro Rico at Potosi, for their Spanish masters. Mines were invariably located in the harshest of environments, commonly at altitudes of thirteen thousand feet or more. Working conditions were extremely dangerous and fatalities were commonplace. Mechanization was almost nonexistent, with miners using brute strength and small quantities of dynamite to extract the minerals. The Indian miner moved from one level in the mine to another by climbing crude wooden ladders precariously placed at the end of pitch-black shafts. Tunnels were traversed in a hunched or near crawling posture. Flooding was a frequent hazard, and intense heat constrained miners from wearing protective equipment. Safety standards were for all practical purposes nonexistent. Silicosis was endemic. Typically, the miners and their families lived near the mine in a camp where the mine operators sometimes provided housing. The housing would not have been significantly different from that of the colonos—one room, poorly ventilated, without plumbing and electricity. There was never enough housing, and educational opportunities and health facilities rarely existed. Most attempts on the part of miners to organize into unions were met with punitive opposition and sometimes with violent confrontation by the mine owners in collusion with the Bolivian government and the military. The miner’s work provided minimum compensation. It was a job that attracted Indians only because there were so few opportunities other than working as a colono. A variety of health problems plagued the Indians and their families regardless of where they worked. In the complete absence of a medical care system, family members turned to local practitioners. Indigenous medicine was a jumble of religious beliefs and magical practices, reflecting local folk traditions and the medieval concept of medicine brought by the Spanish. Due to living at high altitudes, the lack of potable water, and poor hygienic practices, Indian family members frequently suffered from either a respiratory disease, gastroenteritis, or both. Their nutritional status was poor, and their daily calorie intake in the mid-twentieth century fell considerably below the recommended requirement for agricultural or mining labor. Immunization programs were unheard of in the mines, free Indian communities, and on the hacienda. Consequently, smallpox was common. Most Indian children

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under six experienced protein and calorie malnutrition. All these factors contributed to Bolivia having one of the highest infant mortality rates in 9 Latin America. The vast majority of the indigenous population who lived in free communities and on haciendas was illiterate, and only a few Indians could speak Spanish. Indian children had little access to public 10 or private educational opportunities. The Constitution of 1826 allowed only Bolivians who were literate to vote or hold public office. All Bolivians, which included the indigenous population, were legally guaranteed such basic rights as reasonable compensation for their work, access to education, freedom to travel throughout Bolivia, ownership of property, and access to judicial process that included appearing in court and filing petitions. In practice, Indians enjoyed none of these rights. White overseers of rural estates and mining enterprises referred to the Quechua and Aymara as Indios, while the white class reserved the term Boliviano strictly for themselves. 11 From their perspective, Indians were not citizens of Bolivia. Prior to the Revolution of 1952, it was common to see Indians kneel and genuflect before their patróns. In his memoir, Victor Andrade, the Bolivian ambassador to the United States in the 1940s, confirmed the ingrained nature of the patróns’ relationship with their Indians: As a young man, I used to visit the several thousand acres of land that my family had held for many generations. I would sit on a chair in an open space, and the peasants would come up to me, kneel on the ground, kiss my hand, and leave some kind of tribute, like a chicken or some handicraft object. I would pat them on the head and offer friendly words of reassurance to the old and young alike. After everyone had completed this formality, and there might have been over one hundred persons involved, I would order large containers of 12 alcohol, mixed with some sweet liquid, to be opened and served.

The Indians’ lack of access to modern society was nearly complete: limited access to market, little access to education and health services, and no access to basic rights. They had neither vote nor voice in government. Their lives were as bleak and as harsh as the Altiplano itself. Only dramatic changes in social attitudes and political practices could break the cycle of poverty and ignorance to which the Indian family was bound.

The Bolivian Context

19

Notes 1 “Agricultural Development in Bolivia: A Sector Assessment” (USAID Bolivia, August 1974), pp. 44–49. 2 Alison L. Spedding, “The Coca Field as a Total Social Fact,” in Coca, Cocaine, and the Bolivian Reality, eds. Madeline Barbara Léons and Harry Sanabria (Albany, NY: State University of New York Press, 1997), p. 48. 3 Hereafter Indian will be used in lieu of indigenous peoples. It is used recognizing its negative connotation in order to communicate the deplorable way that most Spaniards treated the indigenous population. 4 Dwight B. Heath, Charles J. Erasmus, and Hans C. Buechler, Land Reform and Social Revolution in Bolivia (New York: Praeger, 1969), pp. 176– 181. Also see Ronald J. Clark, “Land Reform in Bolivia,” in Land Reform in Bolivia, Ecuador, Peru, 2nd ed., Spring Review of Land Reform vol. 6 (USAID Washington, June 1970), pp. 5–6, and Herbert S. Klein, Bolivia: The Evolution of a Multi-Ethnic Society, 2nd ed. (New York: Oxford University Press, 1992), pp. 227–229. 5 Ronald J. Clark, “Land Reform and Peasant Marketing Participation on the Northern Highlands of Bolivia,” Land Economics 44 (May 1968): pp. 154– 155. 6 Ibid., p. 156. 7 Heath, Erasmus, and Buechler, Land Reform, p. 200. 8 Clark, “Land Reform and Peasant Marketing,” p. 156. 9 “Bolivia: Health Sector Assessment” (USAID Bolivia, January 1975), pp. 52–66. 10 “Education in Bolivia: A Preliminary Sector Assessment,” part 1, USAID Bolivia, July 1975, p. 5, and Robert J. Alexander, The Bolivian National Revolution (New Brunswick, NJ: Rutgers University Press: 1958), p. 84. 11 Heath, Erasmus, and Buechler, Land Reform, p. 38. 12 Victor Andrade, My Missions for Revolutionary Bolivia, 1944–1962 (Pittsburgh, PA: University of Pittsburgh Press, 1976), p. 130.

2 Forging a Development Relationship: Franklin D. Roosevelt, 1933–1945

There will come a time when she [the United States] is a giant, a colossus even, much to be feared in those vast regions. Then, she will forget the benefits she received from others and think only of aggrandizing herself. —Count of Aranda to King Carlos III, 17831

Washington: Pursuing Wartime Objectives

President Roosevelt’s reaffirmation in 1933 of the Good Neighbor Policy was an essential first step in promoting solidarity with nations throughout Latin America and reflected his conviction that a prosperous and progressive Latin America was in the US interest. The specter of fascism sweeping across Europe and Asia provided additional motivation for strengthening relationships throughout the Western Hemisphere. At Inter-American Conferences in Buenos Aires in 1936 and in Lima in 1938, there was general agreement that the United States must be prepared to provide assistance to Latin America. Subsequently the US Congress authorized President Roosevelt to assign government employees to any Latin American nation that requested assistance. The Inter-Departmental Committee on Scientific and Cultural Cooperation was then established under the nominal leadership of the State Department to coordinate a broad range of scientific, technical, and cultural programs with Latin American countries including health, agriculture, education, transportation, and geologic survey activities.2

21

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Next came the creation of the Office of the Coordinator of InterAmerican Affairs in 1940, headed by Nelson Rockefeller. Its purpose was to negotiate agreements with Latin American countries that produced raw materials deemed essential to the US government in the event of war. In return, the US government provided assurances that it would support activities that promoted the economic transformation of countries throughout Latin America. With Rockefeller taking the lead, the Institute of Inter-American Affairs (IIAA) was created to manage health and agricultural activities, and in 1944, the Inter-American Education Foundation, Inc., (IAEF) was created to support primary and vocational education activities. In 1947, IAEF was incorporated into IIAA.3 In January 1941, Roosevelt identified the core values that would be at the heart of an emerging foreign policy that now featured development assistance. The Four Freedoms—freedom of speech, freedom of worship, freedom from want, and freedom from fear— represented a postwar vision that Roosevelt articulated for a Europe then being terrorized by Hitler’s Germany. In May, when Roosevelt addressed the nation and proclaimed that the United States was faced with an “unlimited national emergency,” he expanded his vision to one that promoted universal economic and social justice.4 The Atlantic Charter, drafted later that year to express a common accord between England and the United States, was built on those Four Freedoms. The Charter moved beyond the immediate war aims and expressed “hopes for a better future world” in which there would be cooperative efforts to promote social and economic progress. Roosevelt used the Charter to describe a world in which all nations would have reasonable access to raw materials and where the principle of national self-determination was fundamental to establishing a new world order that was to be pursued after the war.5 Roosevelt had laid the foundation for Latin American support of the worldwide crusade by the United States against fascism, and he had artfully included a vision of a postwar world in which all nations would be supported in their pursuit of peace and prosperity. At a meeting in Rio de Janeiro of the Foreign Ministers of the American Republics in January 1942, the United States and the Latin American nations held extensive conversations on a range of topics, including increasing US military assistance and the provision of US assistance to begin the process of transforming the economies of Latin American nations. In his memoirs, Victor Andrade, who became the Bolivian ambassador to the United States, described the importance of this meeting:

Forging a Development Relationship

23

The Rio de Janeiro conference in January 1942 abounded with heroic rhetoric about sacrifices in defense of freedom and self-determination of nations. It also dealt with economic matters and hopes of Latin American countries to develop beyond the point of producing only primary products. For the first time the United States had been receptive to the assertion of the rights and demands of underdeveloped nations. Along with the agreements for stabilizing prices and lowering the costs of the war effort, the United States had to promise assistance for economic development of other countries.6

Bolivia: A Revolution Struggles to Emerge

From 1932 to 1935, Bolivia clashed with Paraguay over the illusion that the Chaco was rich in hydrocarbons. The effect was substantial territorial loss for Bolivia and the death of tens of thousands of Aymara and Quechua from the highlands. As a consequence, the conviction took root, especially in the ranks of younger Army officers, that the military must play a proactive role in Bolivia’s political and economic affairs. The idea that the Aymara and Quechua were citizens of Bolivia and had a vital role to play in Bolivia’s future also gained currency. These views contributed to the military driving Daniel Salamanca from the presidency and the appointment of Colonel David Toro as Bolivia’s chief executive. Colonel Toro declared a development path that was to be guided by “military socialism.” One of his first acts was to declare the nationalization of Standard Oil, and he ordered its assets be turned over to the newly created state monopoly, Yacimientos Petroliferos Fiscales de Bolivia (YPFB).7 Toro proved incapable of addressing the deteriorating economic situation and was forced to resign in 1937. He was succeeded by Lieutenant Colonel Germán Busch, who was just as inept at leading the much-needed reform in Bolivia. Idealistic, temperamental, and manic, Busch committed suicide, with no accomplishments to match his heroic aspirations. After his death, conservative elites demanded national elections and an end to military rule. The election in 1940 of General Enrique Peñaranda to the presidency marked a return to the parliamentary system that had been suspended at the time of the Chaco War. Peñaranda assumed that once the democratic process was reconstituted, political and social order would be restored, and Bolivia’s mineral resources would again be exploited to benefit the elites in the mining industry, as well as the military and the small bureaucracy that purported to run the country. On the international scene, Peñaranda hoped to join the North Atlantic

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alliances and participate in World War II. Not only would the Allies provide a market for Bolivia’s tin, but also Bolivia would benefit from US technical and financial assistance. Reform-oriented political parties on the left had aspirations for Bolivians that ran counter to those of General Peñaranda. Foremost among the reform parties that won control of the Congress was the Movimiento Nacionalista Revolucionario (MNR) led by Victor Paz Estenssoro. The MNR called for the nationalization of the mining industry and lent strong support for an indigenous labor movement. Paz Estenssoro vociferously argued that close ties with the North American colossus could result in the US government’s domination of the Bolivian economy. Late in 1942, there was a series of incidents in the mines provoked by workers demanding higher wages, better living and working conditions, and the right to organize a national labor movement. At Catavi, a tin mine located near Oruro and owned by the Patiño family, the situation was particularly rancorous, and government troops were called in by President Peñaranda to suppress the miners. A violent confrontation resulted in hundreds of casualties. The MNR leadership was quick to denounce both the military’s intervention and the Peñaranda government for its role in the Catavi massacre. The slain miners became national martyrs, and the Catavi nightmare would be a rallying cry for the MNR for many years to come. The Peñaranda government drifted out of control, and late in 1943, the MNR, with the support of a youthful group of military officers who had participated in the Chaco War, overthrew Peñaranda. The United States refused to recognize the MNR-led government, given the MNR’s vitriolic criticism of the United States and the open sympathy the MNR showed for the Axis powers. For cosmetic reasons, the military disengaged itself from the MNR by appearing to exclude official MNR participation in the new government that was organized by Major Gualberto Villarroel. Nevertheless, the MNR continued to work closely, if not openly, with Villarroel and his cabinet. With the ideological underpinning provided by the MNR, Villarroel attempted to introduce a series of reforms recognizing the role that the miners and the Indians must play if Bolivia was to follow a progressive path. Massive demonstrations by miners and Indians seeking participation in the political process became a constant feature of life in Bolivia during Villarroel’s rule. Juan Lechín of the Partido Obrero Revolucionario, working closely with the MNR, led sixty thousand mineworkers in June 1944 into the Federación Sindical de Trabajadores Mineros de Bolivia. Equally important was a national congress of nearly

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one thousand Aymara and Quechua-speaking caciques8 that met in La Paz in May 1945 to claim an indigenous voice in national government.9 Speaking to the Indian leaders at its congress, Villarroel promised greater educational opportunities in the free Indian communities and declared the end of pongueaje, the practice of keeping Indian labor on haciendas in a state of perpetual servitude.10 The national congress inspired Indian leaders to seek fundamental change in their communities throughout Bolivia.11 Henceforth, Aymara and Quechua leadership would maintain a presence in La Paz and frequently voice its grievances on the streets of the nation’s capital. Antecedents to a Development Mission in Bolivia It is the fervent wish of every member of the Mission that the program of economic cooperation shortly to be undertaken by the government of Bolivia and the United States will lead not only to a permanent realignment and strengthening of the Bolivian national economy but also to the material and social progress of the Bolivian people. —Merwin L. Bohan, Chief of the US Economic Mission to Bolivia, 194212

Securing Strategic Materials

Even before World War II was declared, the US government turned to Latin America to obtain raw materials judged critical for supporting the war effort. The objective, wrote Dean Acheson, “was to corner all useful materials for our side and to preclude the enemy from getting them.”13 The US agencies created to obtain strategic materials had three intertwined objectives: execute long-term contracts as quickly as possible for the procurement of raw materials vital to achieving the US government’s wartime objectives, protect the financial interests of the United States by getting the lowest possible price for these raw materials, and deny these same raw materials to the Axis Powers and those countries sympathetic to the Axis cause. In the case of Bolivia, tin, tungsten, rubber, and cinchona bark were deemed essential, and the US Foreign Economic Administration instructed the Metals Reserve Corporation (MRC), the Rubber Reserve Company (RRC), and the Cinchona Procurement Office (CPO) to establish field offices in Bolivia to negotiate deals to obtain these materials. To speed up the process, the Bolivian government was informed that credits, equipment, and technical assistance would be

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available to support the accelerated production of each of the raw materials provided.14 A number of the activities supported by the US government to obtain exclusive access to Bolivia’s raw materials presaged development activities that were to follow after the war. Tin and Tungsten When buying Bolivia’s tin, price was always the issue. The price for a pound of tin and the wages of the miner were the points of contention that wove their way through the diplomatic dialogue between the US and Bolivian governments during the war years. It was widely acknowledged that the miner’s working conditions were deplorable, and MNR party activists were constantly making the link between low tin prices and the horrendous working and living conditions of the miners. Mine operators, on the other hand, linked increasing wages and improving conditions in the mines to reducing their profitability to the point that there would be little incentive to continue mining tin and tungsten. A common anxiety shared by the Bolivian military and bureaucracy was without taxes generated by the sales of minerals, the Bolivian government could not function.15 Negotiations between the MRC and both government of Bolivia officials and private tin mine owners were pursued between June and November of 1940. Finally, an agreement was reached covering the yearly purchase of tin for a period of five years.16 The mine owners were assured a fair price for their tin, and the United States secured a reliable source of tin for the duration of the war. Immediately, nationalist elements, particularly the MNR, raised strong objections claiming that the agreement was a sellout to the Yankees.17 A three-year agreement for tungsten was reached in May 1941. The agreement earmarked the country’s entire tungsten production to be purchased by the MRC.18 Following unrest among the miners in late 1942, mine owners protested that they were being squeezed by low prices dictated by the agreements with the United States on the one hand and rising production costs and the miners’ demands on the other hand. The owners, in concert with the Bolivian government, argued that in the interest of sustaining the levels of production called for by the agreements with the US government, it was critical that miners’ wages be held down.19 Both the US and Bolivian governments were concerned that labor unrest would threaten tin production. An immediate solution was to agree to raise the price of tin to allow for an increase in the wages of the miners. The Bolivian government also suggested that the United States undertake activities that would improve the life of the mining family. In turn, the

Forging a Development Relationship

27

US ambassador requested that experts be sent to Bolivia to study the situation “of the mine worker, with a view to the betterment thereof.” US concerns on the limit of its involvement were clearly stated in the secretary of state’s guidance to the US ambassador to Bolivia: The primary interest of the United States in the problems to be considered arises from its need for strategic minerals produced in Bolivia and its vital concern in seeing that the production is maintained and increased. In keeping with its established policy, this Government has, of course, no intention of intervening in any way in the internal aspects of the Bolivian labor situation. It is, however, glad to furnish expert advice on labor conditions at the request of the Bolivian Government.20

A commission was organized, headed by Calvert Magruder, judge of the US First Circuit Court of Appeals in Boston, to study the labor conditions of the miners in Bolivia. The commission’s report confirmed the dreadful situation in the mines and recommended a host of social and economic programs, including education, health, agriculture, and housing activities.21 Crude Rubber Officials in the RRC believed that Bolivia had considerable potential to increase rubber production in the tropical valleys and the Oriente.22 Betting on this potential, the RRC in 1942 proposed an agreement with the government of Bolivia that provided technical assistance, equipment, and loans for private sector rubber producers. The loans were to be administered by the Banco Agricola de Bolivia (BAB).23 The following year, the United States and the Bolivian government signed an agreement promoting agricultural research in general and rubber research specifically. The US Department of Agriculture (USDA) was assigned the task of leading the agricultural research effort in Bolivia. The agreement obligated the Bolivian government to acquire land for the research and demonstration activities and to procure locally whatever resources were necessary to implement a research program as envisaged in the rubber agreement.24 During this same period, technicians from the Health and Sanitation Division of the Office of the Coordinator of IIAA were sent to Bolivia to implement activities designed to improve health conditions in the rubber collection area. These efforts were forerunners of the malaria eradication program funded by the US government in the 1950s that focused on populated areas in the Oriente.25

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Cinchona Bark Another raw material that the US government was anxious to acquire was cinchona bark from which quinine is extracted. Harvesting cinchona bark, found in the tropical valleys of northern Bolivia, was a challenge. To facilitate collection, the CPO established purchasing offices and constructed airfields at collection points for shipping the cinchona bark to the United States.26 With the development of Atabrine, a synthetic drug, the United States no longer required cinchona bark for medical purposes. Nevertheless, the United States kept its procurement program in place to deny the bark to the Axis Powers.27 Strategic Materials and the Beginnings of a Development Relationship Though each deal brokered by the representatives of the US government was driven by national security concerns, the diplomatic dialogue was framed to emphasize that if Bolivia provided exclusive access to the strategic materials sought by the US government, development benefits for Bolivia would be substantial. With a panoptic appeal to hemispheric solidarity and assurances that assistance would be provided to promote the transformation of the Bolivian economy, the US government successfully accomplished its wartime goal of cornering the market for Bolivia’s tin, tungsten, cinchona bark, and crude rubber production. The agreements to buy Bolivia’s strategic commodities marked the beginning of significant US involvement in the political economy of Bolivia that would continue into the twenty-first century. US Development Assistance: A Metaphor for Self-Interest

In August 1941, a memorandum was passed from the State Department to Luis Fernando Guachalla, the Bolivian ambassador in Washington, D.C., which was to have an indelible impact on Bolivia’s development path for the next forty years. The memorandum proposed a “long-term plan of collaboration to foster continued mutually beneficial economic relations between the United States and Bolivia and to develop the national economy and national resources of Bolivia.”28 The plan identified three areas: development of a national communications infrastructure with an emphasis on roads; assistance to promote agricultural development and diversification as a means for increasing tropical agricultural exports and the prospects of achieving food selfsufficiency; and further development of the mineral sector with a focus on assistance to small, private enterprises that mined tin and tungsten. The memorandum also anticipated financial assistance to address the problems associated with stabilizing the Bolivian currency. Before

Forging a Development Relationship

29

implementing the program, the State Department offered to undertake surveys directed by US technicians to further define the problems identified in the memorandum.29 In a message to the State Department, the US Embassy in La Paz underscored the nature of the US commitment and commented: (1) that no advance commitment was made to any specific project or for the loaning of any specific amount, (2) that the surveys would be the basis of recommendations as to individual projects by the mission . . . , and (3) that the United States would be prepared to extend financial and technical assistance only “for the execution of individual projects which are considered desirable, useful and practicable by both the Bolivian and the United States Governments.”30

A Development Strategy Defined Given the importance of acquiring Bolivia’s natural resources on a priority basis, the State Department moved quickly to evaluate the prospects for economic development in Bolivia. An economic mission arrived in La Paz in December 1941. Chief of the mission was Merwin Bohan, a Foreign Service officer (FSO) stationed in Bogota as the commercial attaché. Other members of the mission represented IIAA and agencies in the US government, including the Public Roads Administration (PRA), the USDA, and the Bureau of Mines. Later the mission added two rubber technologists and a drug production technician to the team. The mission remained in Bolivia until May 1942.31 In August, Bohan submitted a final report to the Secretary of State outlining a long-term development effort. The “Report of United States Economic Mission to Bolivia” was a voluminous product of facts, photos, and first-hand observations. A splendid presentation, the Bohan Report buttressed reasoned conclusions with a wealth of data. The report’s recommendations articulated a national development strategy that had as its basic requirements “sustained effort” and “patience.”32 The Bohan Report described in detail Bolivia’s precarious financial situation. The economy was overly dependent on revenues generated by the mineral sector that fluctuated unpredictably with world market prices. Bohan reported that from 1936 through 1940, minerals accounted for 94 percent of the country’s exports. Whereas mining provided employment for 15 percent of Bolivia’s working population, agriculture supported two-thirds of the population, who for the most part were subsistence farmers. During this same time, imports had averaged $23 million a year, of which $10 million was for agricultural products.33

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To strengthen and diversify the economy, the Bohan Report made four recommendations: the creation of a national highway system to connect production areas with consumption centers; increasing the production of basic crops including rice, wheat, sugar, and cotton and improving processing, marketing, and credit facilities; development of irrigated farming systems; and expansion of the petroleum industry, which held “bright prospects.”34 Although the long-term prospects for mining were considered bleak, Bohan did not abandon support of the mining sector. Anticipating an extremely competitive postwar market for lead ores, it was imperative that production costs be lowered, the mining industry be expanded beyond tin and tungsten production, and new mines be identified to replace those that were exhausted. Specific activities were outlined in the report to support geologic exploration, to further develop infrastructure for the movement of mining products, to improve the metallurgical processes related to tin and tungsten production, and to provide financial support for medium and small mining operators to be provided through the Banco de Mineral de Bolivia (BMB).35 Bohan estimated that $88 million was needed to implement the report’s recommendations. The first stage called for an expenditure of $26 million to include funding for road construction, agriculture, petroleum, mining, and health activities. Bohan recommended that both the United States and the Bolivian government provide the financial resources for these activities. The Bolivian government was to create a highway fund of $1.5 million and was to provide an additional $9 million to support the program. A second stage called for a US expenditure of an additional $15 million and a government of Bolivia contribution of $20 million. It was anticipated that the government of Bolivia would be able to provide these additional resources by modernizing and expanding their tax collection system. For that reason, Bohan recommended that the Bolivian government immediately hire a tax expert to review the current tax collection system in order to make recommendations to increase tax collections.36 Bohan’s plan called for a ten- to twenty-year effort before Bolivia could reasonably expect to be transformed into a modern society. The plan stressed the need for a long-term planning and financial commitment on the part of the US government. Bohan emphasized the need to concentrate resources in geographic areas and by sectors. National interest, not regional interest, was necessary to “determine the tempo and the direction” of the Bolivian development effort. The first stage of the plan, which was to be carried forth during the war,

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emphasized development of the Oriente, with the highest priority given to the construction of the road linking Santa Cruz with Cochabamba.37 The Bohan Report proclaimed that the real wealth of Bolivia lay in the interior, in the vast alluvial plain spreading to the borders of Brazil and Paraguay. The Oriente could be the breadbasket of Bolivia and be counted on to reduce the need for imports. Food production in the Oriente was to be the key factor in the equation that would address Bolivia’s balance of payments problem. The traditional areas of human occupation, the Altiplano and the high valleys, where the rural population was almost exclusively involved in subsistence agriculture, received little consideration in the formulation of the Bohan Plan.38 Another important recommendation in the Bohan Report was to create the Corporación Boliviana de Fomento (BDC) mandated to manage the bilateral development program.39 BDC was expected to receive credits from the US Export-Import Bank (Ex-Im Bank) to finance development activities. Initially BDC was authorized to operate at a level of $25 million.40 The board of BDC was to be composed of six directors; the Bolivian government and the Ex-Im Bank would each name three. The BDC’s president and the vice president were to be chosen from the Bolivian government’s nominees. The general manager and the assistant general manager were to be selected from the nominees of the Ex-Im Bank. There was an understanding that the president of the board of directors would be a Bolivian and that the general manager of BDC would be a US citizen.41 US technicians were to do analysis for proposed activities, assist in the design of the activities, and provide hands-on technical assistance under the supervision of the general manager of BDC.42 Bolivia’s Development Program Is Ordained in Washington Shortly after receiving the Bohan Report, Cordell Hull, the secretary of state, informed the Bolivian ministers of finance and national economy that all the recommendations contained in the Bohan Report had been reviewed and accepted as well as the level and the means of funding the program.43 Hull agreed that $26 million for the economic assistance program was to be disbursed in the first year and included support for road construction, hydrocarbon and minerals exploitation, agriculture development, and health and sanitation improvements. US government funding for the first year of the program included $15.5 million in Ex-Im Bank credits; $2.1 million from the RRC; and a grant of $1 million from the Office of the Coordinator of IIAA for health and sanitation activities. The Bolivian government was to provide $9 million to BDC for economic development over a three-year period and an additional $1.5

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million to be earmarked for highway development.44 It was agreed that the US Treasury Department had the authority to contract with Bolivia’s Central Bank for a monetary stabilization program that could provide short-term credits of up to $2 million to assist in stabilizing “the dollar– boliviano exchange relationship.”45 Secretary Hull underscored Bohan’s recommendation that BDC was to be the “central agency for carrying out these developments and for the provision of expert assistance in studying additional projects.”46 He made it clear that the assistance provided by the United States was to be complemented with financial assistance by the Bolivian government, and all projects were to be undertaken jointly. Hull stated that funding for these projects, as well as any new project, would have to be “thoroughly studied” before there would be a commitment by the US government. He added that sufficient labor would have to be available in Bolivia to execute any new project without reducing the labor pool critical to keeping up productivity in Bolivia’s mines. Hull also warned that because of the US government’s resource requirements critical to pursuing the war, the availability of materials from the United States that were important for executing any project in Bolivia must be carefully reviewed.47 A Development Assistance Intermezzo To facilitate the purchase of raw materials, agreements were brokered to make technical and commodity assistance available to start the process of transforming Bolivia’s economy. US grants were provided for purchasing machinery for small mining enterprises, health studies of miners, and infrastructure improvements that facilitated the collection of crude rubber and Cinchona bark. However, plans to construct the Cochabamba–Santa Cruz highway experienced endless delays. Requests for equipment critical for the construction of the highway were turned down by the War Production Board, which reviewed all requests concerned with the procurement of equipment to be sent overseas. This was despite the fact that officials at the highest levels within the State Department argued that the construction of the highway was crucial to improving the economy of Bolivia and in turn improving Bolivia’s capacity to support the war effort. Another problem emerged when the PRA pointed out that survey work to date was clearly inadequate. Estimates for road construction provided by BDC ranged from $13 to $20 million, and consequently, no one could be sure what kind of a road would be built. To address this issue, experts in road construction from the PRA were sent to Bolivia to

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review the situation so the BDC could refine its estimates and determine the final design of the road.48 New estimates were prepared but were still suspect, as reflected in the comments by the Ex-Im Bank president: “it is difficult to escape the conclusion that available data as to cost is extremely meager.” Regardless, the Ex-Im Bank approved a credit of $10 million for the Cochabamba–Santa Cruz highway in December 1944. To cover its bureaucratic flank, the Ex-Im Bank executed a Memorandum of Project that stipulated should there be an overrun, it would be the Bolivian government’s responsibility to cover all such costs. The agreement further specified that the Bolivian government was responsible for advancing $3 million of Bolivian funds for the initial construction costs before any of the Ex-Im Bank credit could be disbursed.49 It was not until the war was over in Europe and about to end in Asia that the US government was finally able to provide substantial support for what had emerged as the cornerstone of the US government’s development strategy in Bolivia. In the summer of 1945, with the approval of the Ex-Im Bank, the BDC entered into a contract with a US firm, McGraw-Warren, for the construction of the Cochabamba–Santa Cruz highway.50 For the moment, the pace of US assistance had picked up. The US Government’s Wartime Objectives Accomplished

The State Department had successfully achieved its primary objective, which was to ensure that Bolivia was steadfast in its support of the Allied cause. To this end, Bolivia had provided raw materials, particularly tin and tungsten. State Department officials who negotiated the development assistance program assumed that there was a strong relationship between being able to deliver strategic resources on schedule and modernizing Bolivia’s economy. Technological advances in the mining sector, improved health services for miners and rubber gatherers, the introduction of agronomic innovations in the agricultural sector, and a national highway system to move mineral and agricultural products more efficiently were presented as activities that had potential for transforming Bolivia’s economy. The Bohan Report articulated a plan for the modernization of the Bolivian economy that the US government would be mindful of for over thirty years. It became basic reading for every embassy economic counselor and aid mission director stationed in Bolivia.51 Its essence was a “trickle-down” model in which diversification was the path to building a self-sufficient, sustainable economy. At its core, there were two key

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elements in the diversification strategy. The first element was the exploitation of the Oriente where capital-intensive farming had the potential of meeting domestic food needs as well as producing agricultural products that could gain entry into foreign markets. The second element was the expansion of the extraction of hydrocarbons— oil and natural gas. Given the urgency with which the US government had promoted the economic assistance program, it had been anticipated, particularly by Bolivians, that the implementation of activities designed to transform the Bolivian economy would have been pursued with alacrity. Because of Bolivia’s geographic remoteness and the necessity of the US government to focus on the war effort, the pace of implementing the Bohan Plan was slow. A factor contributing to the slow pace was the turmoil that dominated the Bolivian political scene from 1943 forward. Bolivia had initiated a discussion seeking support for development activities and was not timid about asking for economic assistance. These early discussions exploring the topics of assistance for infrastructure development, monetary stabilization, and the mining sector set the stage for the development dialogue that was to be pursued by the Bolivian government and the US government for the next several decades. As seen from the Bolivian perspective, the US effort during the war years was but a prelude to the activities that would be pursued after the war to transform Bolivia into a modern economy. In the course of negotiating a series of agreements in the early 1940s, a process emerged that set the pattern for the conduct of US foreign assistance programs in Bolivia. Many of the essential ingredients in this process would endure for the rest of the century as the size and the complexity of the US development assistance program in Bolivia grew to be one of the largest in Latin America. Projects would often have grant and loan components, and there would always be a required Bolivian contribution for each development activity funded by the US government. Another feature of the process introduced in the 1940s was the importance of an analytical phase as a part of the project identification and design process. The amount of time and the depth of analysis would vary reflecting the nature of the project. With few exceptions, there would be an analytical phase prior to disbursing funds for every development project in Bolivia. As the development assistance process matured and became laden with complex bureaucratic routines, tensions at the diplomatic level inevitably surfaced and had the potential to exacerbate relations between US development bureaucrats and their Bolivian counterparts. At times, the concern would turn into harsh

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criticism of the aid process, which was seen as overly prescriptive and bureaucratic by the US Congress and the State Department. More often than not, it was the US Congress that had mandated an approach that was replete with onerous reporting requirements. Bolivian officials were constantly beseeching their US counterparts to hurry the process along. Nor was it unusual for US Embassy officials to complain to their US colleagues in the aid bureaucracy about the excessive amount of time and the degree to which a problem had to be defined before the US government could finance a project. It also was not unusual to have US congressmen complaining about the slowness at which development activities were identified, designed, and implemented. A lament often voiced was that the feasibility study, the sector analysis, or the preliminary project design seemed to add too little to the project process. Yet it was the US Congress that demanded a prudent, analytical approach. It would be these criticisms of the aid process by State Department officials and US politicians that would be echoed time and again. These broadsides would be the basis for strident demands that the aid mechanism be significantly reformed every time there was a change of presidential administration, be it Democratic or Republican. Footnote to History: An Iowa Corn Breeder Comes to Bolivia to Clinch the Deal

An important factor that contributed to strengthening the US relationship with Bolivia was the visit of the highest US official ever to visit Bolivia. In March 1943, Henry Wallace, Vice President of the United States, made a five-week tour of Latin America, making stops in Costa Rica, Panama, Chile, Bolivia, Peru, Ecuador, and Colombia. At the time, several countries still maintained relations and traded with the Axis Powers.52 Wallace, in his role as head of the Board of Economic Warfare, focused on wartime economic matters in foreign countries.53 Beyond this priority concern, Henry Wallace, the farmer and corn breeder, was compulsive in promoting modern agriculture throughout the Americas. Wallace was the personification of the Good Neighbor Policy. At each stop, he made speeches in Spanish discussing economic development, particularly agricultural development, and the transformation of the country’s economic conditions as a means to strengthen its capacity to support the war effort. On the day that Wallace arrived in La Paz, the Bolivian Supreme Council of National Defense passed a resolution recommending that Bolivia declare a state of war

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with the Axis Powers. Wallace interpreted this as a prelude to President Peñaranda’s actually declaring war during the vice president’s stay in Bolivia.54 At the conclusion of his visit, Wallace sent a message to President Peñaranda that summarized his feelings: I send you the sincere appreciation of the people of the United States of America, for the great contribution which your country is making to the free peoples of the entire world, the strategic mineral products and the contribution of Bolivian agriculture are indispensable for victory. We express our appreciation also to the miners in the bottoms of the mines and to the laborers in the great agricultural fields. 55

Notes 1. Marie Arana, Bolívar (New York: Simon & Schuster, 2013), p. 354. 2. Patrick E. Morris, “History of Technical Assistance in Peru 1942–1962” (unpublished manuscript, USAID Library), pp. 1–4. 3. Ibid. 4. Franklin D. Roosevelt, Public Papers and Addresses of Franklin D. Roosevelt: The Call to Battle Stations, 1941 (New York: Harper & Brothers, 1950), p. 192. 5. Ibid., p. 314. 6. Victor Andrade, My Missions for Revolutionary Bolivia, 1944–1962 (Pittsburgh, PA: University of Pittsburgh Press, 1976), p. 176. 7. Herbert S. Klein, A Concise History of Bolivia (New York: Cambridge University Press, 2003), p. 188. 8. A cacique is a leader or boss. 9. Klein, Concise History of Bolivia, pp. 200–202. 10. Dwight B. Heath, Charles J. Erasmus, and Hans C. Buechler, Land Reform and Social Revolution in Bolivia (New York: Praeger, 1969), p. 41. 11. Klein, Concise History of Bolivia, p. 202. 12. Merwin L. Bohan, letter of transmittal, “Report of United States Economic Mission to Bolivia” (State Department, August 15, 1942). 13. Dean Acheson, Present at the Creation: My Years at the State Department (New York: Norton Press, 1969), p. 39. 14. “Point Four in Bolivia, 1942–1960: Programs of Technical Cooperation and Economic Assistance of the United States of America and Bolivia” (USOM Bolivia, December 1960), p. 6. 15. Kenneth D. Lehman, Bolivia and the United States: A Limited Partnership (Athens, GA: University of Georgia Press, 1999), pp. 79–81. 16. “Negotiation of a Contract Guaranteed by the Bolivian Government for the Purchase of Tin,” in Foreign Relations of the United States Diplomatic Papers, 1940: The American Republics, vol. 5 (Washington, D.C.: Government Printing Office, 1961), pp. 524–548. 17. Lehman, Bolivia and the United States, p. 75. 18. “Negotiations for the Purchase by the United States of Strategic Metals from Bolivia,” in Foreign Relations of the United States Diplomatic Papers,

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1941: The American Republics, vol. 6 (Washington, D.C.: Government Printing Office, 1963), p. 457. 19. Lehman, Bolivia and the United States, p. 81. 20. “The Joint United States–Bolivian Commission of Labor Experts,” in Foreign Relations of the United States Diplomatic Papers, 1943: The American Republics, vol. 5 (Washington, D.C.: Government Printing Office, 1965), p. 607. 21. Ibid., pp. 612–614. 22. “Negotiation and Application of an Agreement Concerning the Bolivian Export of Rubber,” in Foreign Relations of the United States Diplomatic Papers, 1942: The American Republics, vol. 5 (Washington, D.C.: Government Printing Office, 1962), pp. 560–561. 23. Ibid., pp. 574–575, 585. 24. Ibid., pp. 560–561, 574–575, 585, and Stanley Andrews, D.C. Myrick and Glen R. Samson, “Bolivian Agriculture: Its Problems, Programs, Priorities, and Possibilities” (USDA for USAID Bolivia, August 1962), p. 35. 25. Negotiation Rubber, in Foreign Relations 1942, p. 575. 26. “Point Four in Bolivia,” p. 6. 27. Lehman, Bolivia and the United States, p. 83, and “Arrangements to Procure for the United States Strategic Materials from Bolivia,” in Foreign Relations of the United States Diplomatic Papers, 1944: The American Republics, vol. 7 (Washington, D.C.: Government Printing Office, 1967), p. 484. 28. “Proposed Program for Economic Cooperation Between the United States and Bolivia,” in Foreign Relations 1941 vol.6, p. 436. 29. Ibid. 30. Ibid., p. 447. 31. Merwin L. Bohan, Part 1: General Conclusions and Recommendations, in “Report of United States Economic Mission to Bolivia” (State Department, August 15, 1942), pp. 3–4. 32. Ibid., p. 11. 33. Ibid., pp. 5–12. 34. Ibid., p. 9. 35. Bohan, Part 1: Conclusions, in “Report of Mission to Bolivia, Part IV, Mining and Metallurgy” (State Department, nd pp. 1–56.) 36. Bohan, “Report of Mission to Bolivia,” pp. 13–22. 37. Ibid., pp. 11–12, 15–20. 38. Ibid. 39. Ibid., pp. 22–26. 40. “Program for Economic Cooperation Between the United States and Bolivia,” in Foreign Relations 1942 vol. 5, pp. 592–594. 41. Bohan, “Report of Mission to Bolivia,” pp. 22–26. 42. “Secretary of State to Espada and Gutierrez, August 14, 1942,” in Foreign Relations 1942 vol. 5, p. 604. 43. Ibid., pp. 603–604. 44. Ibid., pp. 604–605. 45. Ibid., p. 606. 46. Ibid., p. 604. 47. Ibid., p. 605.

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48. “Beginnings of the Cochabamba–Santa Cruz Highway Project,” in Foreign Relations 1944 vol. 7, (Washington, D.C.: Government Printing Office, 1967) pp. 537–540. 49. Ibid., pp. 541–542. 50. Ibid. 51. Interview with Irving Tragen (Mission director, 1965–1968), Washington, D.C., January 1982. 52. John C. Culver and John Hyde, American Dreamer: The Life and Times of Henry A. Wallace (New York: W. W. Norton & Company, 2000), pp. 299– 300. 53. Ibid., p. 269. 54. “Visit of Vice President Henry A. Wallace,” in Foreign Relations 1943 vol. 5 (Washington, D.C.: Government Printing Office, 1965), p. 68. 55. Ibid., p. 69.

3 A Development Mission to Fight Communism: Harry S. Truman, 1945–1952

Democracy alone can supply the vitalizing force to stir the peoples of the world into triumphant action, not only against their human oppressors but also against their ancient enemies—hunger, misery and despair. —Harry S. Truman, Inaugural Address, January 20, 1949

Washington: Development and Defense March in Lockstep

With the end of World War II, a victorious United States focused on the communist threat emerging in the war-devastated nations of Europe. In March 1947, President Truman declared the Truman Doctrine, which called for assisting Turkey and Greece—nations that were struggling to reestablish democratic forms of government and economic stability in the face of Soviet and domestic communist pressure. Shortly after Truman’s declaration, his secretary of state, General George Marshall, announced a plan that coupled military and economic assistance as the basis for revitalizing the economies of the war-affected nations in Europe. During these years, the State Department pursued a policy of minimum engagement in Latin America. The prevailing sentiment was that the United States could ill afford investment in Latin America’s development while it financed the rebuilding of the economies in Europe and Asia.1 It was not until 1949, in his inaugural address, that President Truman announced his intention to provide economic development assistance worldwide. He stated, “we must embark on a bold new program for making the benefits of our scientific advances and industrial

39

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progress available for the improvement and growth of underdeveloped areas.”2 This fourth point of Truman’s foreign policy agenda would later become known as the “Point Four” program. After assessing the situation in Latin America, George Kennan, head of the State Department’s Bureau of Policy and Planning, concluded that the Latin American region had been neglected in the period after the war. Kennan recommended that the most effective way to fight communist subversion was to assist the Latin American nations in their efforts to modernize. The policy promoted by the State Department was straightforward: dollars for development in exchange for Latin America’s active support to fight communism in the Western Hemisphere. The new strategy called for a social and economic transformational program, a military assistance program, and an information program to sell the values, attitudes, and practices that promoted free enterprise and democratic governance.3 Truman championed a global mission that had economic development as an essential element. The Act for International Development, which was Title IV of the Foreign Economic Assistance Act, became Public Law 535 on June 5, 1950. The legislation outlined the goal and the scope of operations of the Technical Cooperation Administration (TCA), which was established to manage the US government’s effort in underdeveloped countries.4 With the passage of Point Four legislation, Truman encouraged the United States to look at a world that was facing new challenges. The communist threat to countries throughout Latin America was fervently described in a memorandum prepared by the State Department: Not only does the Point IV program occupy an essential and dominant position in the developing picture of our Latin American relations, it is also the one type of program that goes directly to the problem of enlisting the good will of the masses of people in Latin America, persuading them that we are on the side of their aspirations. The people of Latin America today are rebelling in their own minds against the misery that has been their lot for ages past. They are no longer willing to accept it. They have everywhere been subjected to a barrage of communist propaganda that offers communism as the only means of redemption.5

Bolivia: Prologue to Revolution

The period from the beginning of World War II through 1952 was a time of chronic political instability interspersed with episodes of near total anarchy in Bolivia. It was a time when traditional political parties

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attempted to defend the economic interests of tin barons and absentee landowners, while political coalitions on the left formed to declare new development paths. Indians, miners, students, intellectuals, and the middle class found their voices to promote participation in new economic, social, and political processes straining to emerge. The most dominant political force in Bolivia throughout the 1940s, whether in or out of power, was the Movimiento Nacionalista Revolucionario (MNR) led by Paz Estenssoro. Vociferous in his opposition to agreements with the United States for the sale of Bolivia’s tin, Paz Estenssoro claimed the nationalist cause. In an environment of increasing political and economic chaos, nearly all elements of labor and the urban-based middle class moved to support the MNR. The military allied with the traditional political parties in a futile effort to restore the old social order. In 1952, after several years of fraudulent elections, a deteriorating economy, and social unrest, the MNR came to power in what amounted to an “urban insurrection” that lasted but a few days “with relatively little loss of life.” Paz Estenssoro became president on April 16, 1952. Now having achieved power, it was MNR’s turn to rule. Led by Paz Estenssoro, Hernán Siles Zuazo, and Juan Lechín, the MNR troika had twisted and turned in search of a politics that would translate into a revolutionary, homegrown development path.6 7

The Point Four Mission Is Established in Bolivia Gestation of the Aid Mission in La Paz

The bureaucratic routines and the supervisory roles and responsibilities for managing Institute of Inter-American Affairs (IIAA) grants and US Export-Import Bank (Ex-Im Bank) loans continued to evolve in the post–World War II period. The US General Manager (GM) of the Corporación Boliviana de Fomento (BDC) appears to have managed all the grants provided by IIAA and the loans provided by the Ex-Im Bank. There were a number of instances in which the GM attempted to bring Yankee management verve to these early development efforts. In the case of the Cochabamba–Santa Cruz Highway, the GM provided the basic oversight function. This included lobbying for the release of funds, working closely with US technicians who implemented the survey to determine the design and cost of the proposed road, and directing the contracting process with the US firm that undertook initial construction of the highway. The GM and his staff represented the interests of the US government and as such were the precursor for the residential

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management team that was put in place in Bolivia in the early 1950s by the Truman administration. The GM’s contact in the US Embassy was probably the commercial attaché, who provided a stream of reports concerning the activities of BDC to the State Department in Washington.8 In March 1951, the Bolivian and US governments signed an Agreement for Technical Cooperation, which established a permanent aid mission in Bolivia.9 With the arrival of Oscar Powell near the end of the Truman administration as the first mission director, US development assistance efforts would henceforth be identified with a cadre of professionals who would stake their claims in a development bureaucracy that would expand rapidly. By the fall of 1952, there were thirty-nine US citizens employed by the Point Four Mission who were supervising four hundred Bolivians working with the Agriculture, Health, and Education Servicios.10 The number of US officials who worked for the Point Four Mission in Bolivia would grow rapidly, and by 1958, more than ninety US citizens were working in technical fields with Bolivian counterparts on projects funded by the US government.11 After Powell’s arrival, TCA in Washington issued an avalanche of directives for conducting the Point Four Mission’s business in Bolivia. In 1952, TCA issued “Basic Operating Procedures for Formulating Point 4 Programs,” which established the processes that field missions followed in designing and implementing activities in countries throughout Latin America.12 Another directive outlined the policy that required the host country, i.e., the country receiving aid, to pay “a fair share of the cost of the program.” The directive further stated that the host government should initially match the US government’s contribution, and after the first couple of years of project implementation, the amount provided by the host government should increase “gradually so that the relative contribution of the US becomes steadily smaller.”13 Other directives from Washington provided guidance regarding the planning and execution of agricultural and health projects.14 The Development Assistance Program Takes Root

Despite meager US government assistance immediately following the end of World War II, activities initiated in Bolivia during the war years continued with aid from IIAA and the Ex-Im Bank. Some of the projects initiated in the 1940s would continue into the 1950s and even into the 1960s. The Ex-Im Bank financed the construction of the Santa Cruz–

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Cochabamba highway, expansion of the petroleum industry, and the purchase of equipment to improve efficiency in mining operations. With the signing of the Point Four General Agreement for Technical Cooperation in 1951, an expanded program with a commensurate increase of grant funds, was fashioned to assist the Bolivian government in diversifying its economy.15 Technical training of Bolivian professionals and the provision of technical assistance by US advisors were at the heart of the bilateral programs for agriculture, health, and education, which were outlined in a series of new agreements.16 There was widespread recognition throughout the donor community that implementing a development assistance program would be a substantial challenge for Bolivia. A myriad of problems were identified, including the need for tax and fiscal administration reform. Also, there was concern that the Bolivian government would not be able to service new loans should they be approved. Another concern, which the International Monetary Fund (IMF) discussed with the Bolivian government, was the necessity to reform Bolivia’s exchange rate system. Dr. Hugh Keenleyside, who led the UN Technical Mission to Bolivia in 1951, informed State Department officials that the State Department’s support might be required to obtain the Bolivian government’s agreement for fiscal reforms recommended by the UN Technical Mission. Officials at the State Department assured Dr. Keenleyside that the State Department “would make it most clear to Bolivia that we [the State Department] would not continue ‘handouts’ if decided the recommended reforms were too unpalatable.”17 These same concerns regarding the fiscal health of Bolivia would be expressed repeatedly as Bolivia would jump from one financial crisis to another over the next sixty years. Agriculture, Health, and Education Servicios The method for implementing Point Four-funded activities in the agriculture, education, and health fields followed a pattern replicated in other Latin American countries that had programs funded by the US government. Organizations, popularly called Servicios, were created and located separately from the ministries of agriculture, health, and education. The typical Servicio was composed of resident US citizens and Bolivians who shared offices. The government of Bolivia was required to make financial contributions and provide personnel to each Servicio. In turn, the Americans were expected to provide technical and administrative leadership to facilitate the implementation of Servicio activities. In theory, the Servicio had lines of communication into their respective ministry as well as to the Point Four Mission. In theory, the

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managing of the Servicio was conceived as a shared responsibility between Americans and Bolivians. In fact, because the preponderance of the funding came from the US government, decision making was overwhelmingly dominated by the US advisor. A critical component of Point Four assistance was sending Bolivians for technical training in the United States.18 Agriculture. One of the earliest efforts to establish a Servicio to support agricultural development in Bolivia was the promotion of agricultural research and extension activities.19 In 1947, a three-man party, headed by Dr. Olen Leonard of the US Department of Agriculture (USDA), initiated agricultural research activities in Bolivia. The USDA team’s approach reflected the rich US experience that had contributed to the huge agricultural gains made in the United States since the 1930s. The US team recommended establishing the Tamborada Experiment Station in the Cochabamba Valley. The station was divided into plots for crop research, pasture research, and seed production. In addition, an area was set aside on the station for San Simón University, located in Cochabamba, to take part in the research and extension work at Tamborada. The intention of the US advisors was that San Simón would implement a program similar to a US land grant college.20 Similar efforts to establish research and extension centers at Belen on the Altiplano and Saavedra in Santa Cruz were undertaken in 1948.21 In 1951, the State Department reported that agricultural activities funded by the US government and managed by the BDC had not “flourished.” The reason cited was there had been insufficient public and private investment in the agricultural sector, particularly in the Santa Cruz Department. Large agricultural production gains had been predicted for Santa Cruz, and with the Cochabamba–Santa Cruz highway nearing completion, there was concern that all would be for naught.22 However, increased funding for the Bolivian program and particularly for the agricultural program was soon put in place.23 In the fiscal year (FY) 1952 congressional presentation, agriculture was budgeted to receive $770,000, or nearly half of the money to be allocated for technical cooperation.24 The Point Four Mission reported in September 1952 that the agricultural program is “growing rapidly and has the objective of making Bolivia more nearly self-sufficient in food production.”25 Grant funding for agricultural development would continue to be one of the Mission’s highest priorities, but it would be decidedly skewed to support farming in the Oriente where US and Bolivian planners alike sonorously evangelized a variation of the El Dorado myth. The verdant

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tropical lowlands with their rich soils and copious rains would transform the Oriente into a bountiful breadbasket and thus reduce Bolivia’s dependence on mining lead ores in order to acquire foreign exchange. By the end of the Truman administration, research and extension stations had been established on the Altiplano and in the Cochabamba, Beni, and Santa Cruz regions, and a network of extension offices had been established in eighteen provinces. Ever mindful of the need to identify specific accomplishments, the Point Four Mission reported that during 1952, agricultural extension agents made 2,630 farm visits, held over one thousand farmer demonstration meetings with a total attendance of over twenty-five thousand farmers, and took part in the preparation and dissemination of fifty radio talks, published 327 articles dealing with agriculture in local newspapers, and distributed 2,581 special bulletins dealing with agriculture. The short-term impacts of these activities were significant production increases of new varieties of corn and wheat and the improvement of blood strains of cattle and sheep.26 Health. Health-related activities throughout the 1940s and into the early 1950s received more grant support than either education or agriculture. A team of US and Bolivian health professionals that worked through a Health Servicio implemented all health activities. Their major undertaking was the supervision of the construction and staffing of health facilities located throughout Bolivia. An important part of this effort was identifying Bolivians to send to the United States to obtain technical training with funds provided through the Health Servicio. The Mission reported that nearly 1.4 million Bolivians received medical services in seven of the country’s nine departments through 1952.27 Education. US government support for education in Bolivia was channeled through the Education Servicio. The assistance focused on the construction of rural schools, teacher training, and curriculum development.28 Despite a plethora of problems including the frequent changing of ministers of education and the inability of the government of Bolivia to make the agreed financial contributions, modest progress was directly attributable to the US-led effort. For a twelve-month period in the early 1950s, it was reported that Education Servicio technicians provided assistance to teachers and students in rural schools in excess of six thousand hours; distributed 4,369 textbooks; and teacher-training programs improved as a result of Servicio-sponsored workshops.29 One US education advisor described progress as follows:

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In rural elementary education one observes the change from rote memorization to . . . instruction interested in the development of the child. One is proud to notice that the reader [in] the grubby hands [of the Bolivian child is] . . . a Bolivian translation of a good reader developed especially [for Bolivian children] and distributed through the Servicio. As one reads in the daily log of the [work of the] school hygenist (sic.), now located in all Nucleo schools, of the number of students and campesinos who are treated for broken bones, infections, and many other minor illnesses, one realizes what the development must mean to the communities and to the nation. In many of the rural areas [the] school is the center of community life.30

The Cochabamba–Santa Cruz Highway The major component of Point Four’s strategy to enhance Bolivia’s agricultural capacity was the construction of the Cochabamba–Santa Cruz Highway. After World War II, the work on the Cochabamba–Santa Cruz Highway continued, though there were frequent work stoppages. Nearly all of the funds earmarked for road construction were exhausted by late 1947 when BDC canceled the highway contract with McGrawWarren, the US firm that had managed the first phase of construction.31 In 1948, it was reported that after five and one-half years of work, final plans and specifications for the Cochabamba–Santa Cruz highway were complete, and construction efforts were ready to be resumed.32 From the Bolivian perspective, there was concern that the US government was taking an inordinate amount of time deciding on the release of additional funds for the project. A State Department official reported the displeasure of Bolivia’s ambassador with the US government’s bureaucratic process: The friendly feelings existing between the United States and Bolivia might be jeopardized by any action which could be interpreted as a discontinuance of interest in the Highway on the part of the United States. He (the Bolivian ambassador) said that the “Fifth Column” would attack the United States and convince people that we (the U.S.) had taken all we could from Bolivia during the war, made big promises of economic assistance and were now refusing to carry through a program begun only for our own selfish interests.33

In the meantime, the US ambassador to Bolivia, Joseph Flack, exhorted the Washington bureaucracy to action: I feel that since we are morally committed to the completion of the highway, every step to be taken in Washington should be accelerated, for in this way we may prove concretely to Bolivia that we are deeply

A Development Mission to Fight Communism

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interested in her welfare as a functioning member of the Hemisphere system.34

It was estimated that it would cost approximately $26 million to finish the highway, and the Ex-Im Bank proposed to provide up to $16 million with the Bolivian government furnishing the balance.35 On May 1, 1950, representatives from the Ex-Im Bank and the Bolivian government signed a loan agreement for $16 million for the completion of the Cochabamba–Santa Cruz highway.36 Commenting on the progress of road construction in 1951, a Point Four advisor characterized the history of the project as one that: was marked on both sides by errors, inefficiency, misunderstandings, and delays all to the detriment of the Bolivian economy and US prestige. At times, these difficulties created serious political problems. . . . American construction, engineering, and auditing firms have been engaged by the Bolivian government, and it is hoped that the project can be brought to successful completion some time in 1954.37

Hydrocarbon and Minerals Development With an eye to US national interests, the State Department continued to support the development of hydrocarbon resources by the Bolivian government after the war despite the US policy prohibiting the Ex-Im Bank from making loans to state agencies such as Yacimientos Petroliferos Fiscales de Bolivia (YPFB). Bolivia maintained that it not only had sufficient petroleum reserves to supply all of its domestic needs but also could become a major exporter.38 By 1947, the Ex-Im Bank had loaned Bolivia $8.5 million for a petroleum production program managed by YPFB. The program aimed to stimulate crude oil production in the Camiri oil fields, construct a pipeline to refineries, and increase refinery capacity in Cochabamba and Sucre. Because field production levels were lagging behind refinery capacity, the government of Bolivia in 1951 requested that YPFB receive additional credits of $3 million from the Ex-Im Bank to drill and repair wells in the Camiri fields.39 A State Department official, after reviewing the Bolivian petroleum program, pronounced the entire effort to be “overly ambitious.” Furthermore, the program “differed in important respects from the recommendations of the Bohan Mission.” Regardless, additional funding was recommended. Certainly the fact that the Bolivian government had recently passed legislation, which opened areas for petroleum development to private companies, including foreign companies and joint ventures with YPFB, provided the rationale for the State

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Department to support providing additional credits by the Ex-Im Bank to YPFB.40 The Bohan Report had recommended that assistance be made available to the Banco Minero de Bolivia (BMB) to support small and medium mining companies whose owners were interested in upgrading their operations.41 While in Washington in 1951, Pedro Zilveti Arce, Bolivia’s foreign minister, promoted the idea that assisting small and medium mining operations could result in reducing Bolivia’s dependency on the big three mining companies.42 That same year, the Ex-Im Bank authorized loans for two mining operations amounting to $1 million to purchase machinery and supplies for the purpose of improving efficiency in the mines. One of the two Bolivian mining companies selected to receive Ex-Im Bank credits was the Hochschild operation, one of the three largest mining operations in Bolivia. Perhaps the need to insure a steady supply of tin and bismuth was a US security consideration that overrode the view held by some US officials that the Patiño, Hochschild, and Aramayo companies were fat-cat operations that did not deserve concessionary assistance.43 Summing Up

During World War II and throughout President Truman’s postwar administration, activities were initiated that touched a number of Bolivia’s core development problems. The assistance provided through the Agriculture, Education, and Health Servicios represented the modest beginnings of a process that would contribute to creating the foundation on which an institutional capacity would take root to address Bolivia’s basic development needs. A valuable outcome of US assistance during this period was the growing awareness by US citizens working in Bolivia of the depth of the problems related to promoting improvements in Bolivia’s institutions concerned with the agriculture, education, and health development. These first US development officials, who saw the concept of a residential field mission grow, surely came to grips with the uniqueness of Bolivia’s human geography and the toughness of its development proposition. A footnote to this historical experience may be the missed opportunity to build on the concept of the BDC as the organization to manage the US development assistance process on Bolivian soil instead of creating a separate Point Four office of the US Embassy. The BDC model had the potential to represent the aspirations of Bolivians as well as US citizens in a dialogue of mutual respect. The BDC would last into

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the 1970s when it played a role directing colonization efforts in the Oriente supported by the US government. However, it was never to serve as the main vehicle for guiding US assistance as envisaged in the Bohan Report. With the passing of time, the BDC slipped into a nether land. Notes 1. John Lewis Gaddis, The Cold War: A New History (New York: Penguin Press, 2005), p. 36. 2. Harry S. Truman, “Inaugural Address,” January 20, 1949, http://www. trumanlibrary.org/calendar/viewpapers.php?pid=1030. 3. “Unsigned Draft Memorandum, Department of State, January 4, 1950,” in Foreign Relations of the United States, 1950: The United Nations; The Western Hemisphere, vol. 2 (Washington, D.C.: Government Printing Office, 1976), pp. 589–597, and “Memorandum by . . . Kennan to the Secretary of State, . . . March 29, 1950,” in Foreign Relations 1950, pp. 598–624. 4. “Memorandum by H. F. Arthur Schoenfeld to Mr. William H. Bray, Jr., January 31, 1951,” in Foreign Relations of the United States, 1951: The United Nations; The Western Hemisphere, vol. 2 (Washington, D.C.: Government Printing Office, 1979), pp. 1038–1041. 5. Ibid., pp. 1041–1043. 6. Cole Blasier, The Hovering Giant: U.S. Responses to Revolutionary Changes in Latin America (Pittsburgh, PA: University of Pittsburgh Press, 1976), p. 130. 7. During the Truman administration, the aid mission will be referred to as the Point Four Mission. During the Eisenhower administration, the aid mission to Bolivia was officially called the US Operating Mission to Bolivia (USOM Bolivia). Sometimes USOM Bolivia was referred to as the Point 4 Mission, the Point Four Mission, or the Point IV Mission. 8. Report No. 195 “Robert J. Redington, Commercial Attaché, US Embassy, Status of Agricultural Program of Bolivian Development Corporation, July 25, 1947” La Paz, Bolivia, National Archives, Records of Foreign Assistance or Agencies, 1948–1961, Mission to Bolivia (hereafter: Nat. Archives, Bolivia). 9. “Point Four General Agreement for Technical Assistance Between the United States and Bolivia,” agreement signed and entered into force in La Paz, March 14, 1951. 10. “Letter from Herbert L. Hunter, Director of Administrative Services Point 4/Bolivia, to Professor Martin B. Travis Jr., US Embassy, Lima, Peru, September 16, 1952,” Nat. Archives, Bolivia, p. 3. 11. “Distribution of Personnel as of June 30, 1948, through 1976” (Office of Personnel Manapower, USAID Washington, April 1977), p. 29. 12. “Basic Operating Policies for Formulating Point 4 Programs, Foreign Service Point 4,” circular no. 4 State Department, May 5, 1952, Nat. Archives, Bolivia, p. 1–5. 13. Ibid., p. 5.

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14. “Program Guide for Agricultural Development, Foreign Service Point 4,” circular no. 22 State Department, August 18, 1952, Nat. Archives, Bolivia, pp. 1–5, and “Program Guide for Health and Sanitation, Foreign Service Point 4,” circular no. 12 State Department, July 17, 1952, Nat. Archives, Bolivia, pp. 1–3. 15. “Memorandum from Atwood to Warren, April 27, 1951,” in Foreign Relations 1951, vol. 2, pp. 1146–1147. 16. For agriculture: “Bolivia, Agricultural Experiment Station . . . April 6, 1943,” in United States Treaties and Other International Agreements, 1951, vol. 2, part 2 (Washington, D.C.: Government Printing Office, 1952), pp. 2275– 2277. For education: “Bolivia, Cooperative Education . . . August 1, 1947,” in United States Treaties and Other International Agreements 1951, vol. 2, part 1 (Washington, D.C.: Government Printing Office, 1952), pp. 409–410. For health and sanitation: “Agreement Effected by Exchange of Notes Signed at La Paz, August 27,” in United States Treaties, 1951, vol. 2, part 1, pp. 291–293. 17. “Memorandum from Atwood to Warren, April 27, 1951,” in Foreign Relations 1951, vol. 2, pp. 1148–1149. 18. “Justification for the Point Four Program . . . FY 1952,” in Foreign Relations 1951, Vol. 2 pp. 1048–1049. 19. Merwin L. Bohan, “Report of United States Economic Mission to Bolivia” (State Department, August 15, 1942), p. 24. 20. “Preliminary Historical Review of Rural Development Division” (USAID Bolivia, December 1970), pp. 6–8. 21. “Servicio Agrícola Interamericano, Audit Report No. 66-1” (Controller’s Office USAID Bolivia, July 19, 1965), p. 8. 22. “Memorandum from Atwood to Warren, April 27, 1951,” in Foreign Relations 1951, vol. 2, p. 1147. 23. “Congressional Presentation: Mutual Security Program, Fiscal Year 1952, Budget Estimates, Volume G, Military Assistance and Economic Assistance for Title IV: American Republics,” pp. 33–34, 43–48, 51–52. 24. Ibid., pp. 33, 43–44. 25. Hunter to Travis, September 16, 1952, Nat. Archives, Bolivia, p. 2. 26. “O.M. Powell, Country Director, to C.O. Rowe, Acting President of the Institute of Inter-American Affairs, April 1, 1953,” Nat. Archives, Bolivia, p. 3. 27. Ibid., p. 4. 28. Hunter to Travis, September 16, 1952, pp. 1–2. Also see “Bolivia, Cooperative Education; Agreements effected by exchange of notes signed at La Paz, August 1, 1947,” in United States Treaties 1951, vol. 2, part 1, pp. 409– 420. 29. “Budget for Fiscal Year 1954, Narrative Report,” August 11, 1952, Nat. Archives, Bolivia, and Letter from Powell to Rowe, April 1, 1953, p. 5. 30. “Budget for Fiscal Year 1954, Narrative Report, August 11, 1952,” Nat. Archives, Bolivia, p. 1. 31. “Memorandum of Conversation by Espy, May 17, 1948,” in Foreign Relations of the United States, 1948: The Western Hemisphere, vol. 9 (Washington, D.C.: Government Printing Office, 1972), pp. 329–330. 32. “Memorandum of Conversation by King, November 18, 1948,” in Foreign Relations 1948, vol. 9, pp. 336–338. 33. Ibid., p. 337. 34. “(Flack) to the Secretary of State, La Paz, December 4, 1948,” in Foreign Relations 1948, vol. 2, p. 342.

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35. “Memorandum by Barber to Knapp, October 25, 1949,” in Foreign Relations of the United States, 1949: The United Nations; The Western Hemisphere, vol. 2 (Washington, D.C.: Government Printing Office, 1975), p. 543. 36. “Memorandum of Conversation prepared by Spencer M. King of the Office of North and West Coast Affairs, January 26, 1950,” in Foreign Relations 1950, vol.2, p. 745. 37. “Policy Statement, December 19, 1951, Bolivia,” in Foreign Relations 1951, vol. 2, p. 1172. 38. “Memorandum of Conversation by Hudson, April 5, 1951,” in Foreign Relations 1951, vol. 2, pp. 1142–1143. 39. “Memorandum by Atwood to Warren, April 27, 1951,” in Foreign Relations 1951, vol. 2, p. 1147. 40. “Policy Statement Prepared by the Department of State, December 19, 1951,” in Foreign Relations 1951, vol. 2, p. 1173. 41. Merwin L. Bohan, Part 4: Mining and Metallurgy, Section 1: Mining Recommendations, in “Report of Mission to Bolivia,” pp. 53–56. 42. “Memorandum of Conversation by Hudson, April 5, 1951,” in Foreign Relations 1951, vol. 2, p. 1142. 43. “Memo Miller to Maleady, November 9, 1951,” in Foreign Relations 1951, vol. 2, pp. 1182–1183.

4 Revolution Dictates the Development Path: Dwight D. Eisenhower, 1953–1961

Agriculture is stagnant and foodstuffs and raw materials that could be produced at home are being imported. The mining industry has reached a point at which, unless confidence can be created and considerable capital invested, a period of serious decline seems imminent. . . . A large part of the population is illiterate and ill, and infant mortality is appallingly high. Existing highways and railroads are decaying from lack of maintenance, at the same time as ambitious new projects are being initiated. Meanwhile, the country passes from crisis to crisis and revolution to revolution. —Keenleyside Report, UN Technical Assistance Mission to Bolivia, 1951

Washington: Paladins on the Potomac

During his campaign for the presidency in 1952, Dwight Eisenhower had been resolute in his criticism of his predecessor’s actions in Latin America, which included accusing Truman of abandoning Hoover’s Good Neighbor Policy. Eisenhower’s most strident criticism, however, was that Truman’s administration had been soft on communism. Though Eisenhower recognized that communist aggression directed at underdeveloped nations must be fought with US tax dollars, Latin American countries initially were not high on Eisenhower’s list to receive assistance. However, as perceived communist threats loomed larger south of the border, Eisenhower’s State Department, led by John Foster Dulles, increasingly turned its attention to Latin America. Eisenhower’s foreign policy team made it clear that the path to

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economic prosperity in Latin America was free trade and the promotion of a climate that protected US private sector investment. Private investment rather than grant assistance or concessionary loans provided by the US government were the tools that Eisenhower’s advisors promoted for advancing the modernization of Latin America. The mantra of the new Republican administration was “trade not aid.” Nevertheless, the Eisenhower administration ultimately would provide grants totaling $50 billion for economic and military assistance to countries in the underdeveloped world, which included assistance to Latin America.1 Throughout his presidency, Eisenhower’s foreign policy team pursued pragmatic courses of action, balancing US national interest with humanitarian concerns. Cases in point were the courses of action undertaken by the US government in Guatemala and Bolivia. In 1955, Bolivia, which was pursuing an economic development model that had strong socialist overtones, received the largest amount of grant assistance given to any Latin American country by the US government. The Guatemalan government, which was stridently anticommunist, was second only to Bolivia in terms of assistance provided by the US government in 1955.2 It was a complex foreign policy calculus, replete with historical irony, in which the US government supported generously both the Bolivian and Guatemalan governments, perceived by most pundits and politicians to be polar opposites on the political spectrum. The International Cooperation Agency

One of the earliest acts of the Eisenhower administration was to undertake a review of agencies mandated to manage the US government’s foreign assistance program. In late spring 1953, the president sent Congress his blueprint for the creation of the Foreign Operations Administration (FOA). The FOA was assigned responsibility for technical and humanitarian assistance functions that previously had been the concern of three different agencies: the Economic Cooperation Administration created in 1948; the Technical Cooperation Administration (TCA) or Point Four created in 1950; and the Mutual Security Agency created in 1951. The authority to administer the FOA was delegated to the secretary of state, who in turn delegated the basic responsibility for planning and implementing technical and humanitarian assistance programs to the director of the FOA. In 1955, the Eisenhower administration replaced the FOA with the International Cooperation Agency (ICA).3

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Public Law 480

In 1954, President Eisenhower signed Public Law 480 (PL480) legislation outlining a program that would be “the basis for a permanent expansion of our exports of agricultural products with lasting benefits to ourselves and peoples of other lands.”4 At the time of its initiation, the PL480 program was seen as a way to reduce large food surpluses that had accumulated under US Department of Agriculture (USDA) commodity support programs; to improve trade prospects for US agriculture; and to promote US foreign policy and humanitarian objectives. Initially the surplus disposal and trade objectives took priority. With a sharp decline of food surpluses in the United States, USDA started purchasing food from US farmers through a competitive process that was used in the PL480 program. Supplemental legislation in the 1960s, 1980s, 1990s, and the first decade of the twenty-first century broadened the uses of food aid, and the objectives of the PL480 program evolved to include furthering US foreign policy objectives, supporting economic development in poor countries, and providing humanitarian assistance for countries facing man-made and natural crises.5 There were several ways PL480 provided aid to developing countries: Title I (Economic Assistance and Food Security) allowed for the concessional sales of US agricultural commodities to developing countries and private entities, Title II (Emergency and Private Assistance Programs) provided for the direct donation of US agricultural commodities for emergency relief and development programs, and Title III (Food for Development) ran government-to-government grants of agricultural commodities that were tied to policy reform.6 In the case of Bolivia, approximately $1 billion of PL480 food aid was available for development and humanitarian purposes for the period 1955 to 2013.7 Bolivia: The 1952 Revolution

The seminal event to spur change in Bolivia in the twentieth century was the 1952 Revolution. Its effects were seismic. The ’52 Revolution represented an imperative to define a local development path that offered hope to Bolivia’s indigenous population. The triumvirate of Victor Paz Estenssoro, Hernán Siles Sauzo, and Juan Lechín Oquendo led the ’52 Revolution and provided its ideological underpinnings. It was the Aymara and Quechua from the mines, on haciendas and in free communities, with the support of students and the middle class who formed militias to challenge the military and in turn the government of

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Bolivia’s authority. In short order, military resistance evaporated. Henceforth Indians and the impure cholos8 would be called campesinos. To sustain the ’52 Revolution and secure the leadership of the Movimiento Nacionalista Revolucionario (MNR), Paz Estenssoro and his associates were quick to initiate programs that reflected the expectations of MNR supporters. Nearly every decision made to improve economic conditions in Bolivia was driven by Paz Estenssoro’s political agenda to gain control of a social whirlwind that blew across the Altiplano and through the high valleys stretching from Cochabamba through Sucre and on to Potosi. One of the first acts of the MNR was to declare universal suffrage. With the elimination of literacy and gender restrictions, campesinos were given the vote. Where previously there had been only two hundred thousand voters, nearly a million Bolivians could now go to the ballot box to participate in local and national elections. Throughout the 1950s, most new voters would identify with Paz Estenssoro and the MNR.9 Led by Juan Lechín, the miners, the most vocal and militant of the revolutionaries, demanded that their grievances be addressed immediately. They formed the Central Obrera Boliviana (COB) and pressed for the nationalization of all mining enterprises without compensation. The MNR decreed that the Bolivian Agriculture Bank (BAB), controlled by the government of Bolivia, would handle all financial transactions dealing with the sale and exportation of minerals. Within a year, the MNR nationalized the three largest mining enterprises, owned by the Patinós, the Hochschilds, and the Aramayos, which accounted for approximately 65 percent of Bolivia’s tin production. Given that the owners were promised compensation for their properties, the big three were not terribly upset by the prospects of nationalization. Profit margins were thin and the prospect of huge capital costs to improve efficiencies in their mines served to mitigate their concerns regarding the expropriation of their mining operations. Medium-sized mining enterprises, including those owned by US citizens, remained in the hands of their owners. The Corporación Minera de Bolivia (COMIBOL) was created to manage the nationalized mining properties. Miners were given positions on the management councils created to run COMIBOL, and miners’ representatives were designated to be party to all decisions that directly affected miners at each state-owned mining enterprise.10 By the time the Agrarian Reform Law was decreed, the call to revolution had spread like a wildfire. Everywhere colonos seized land they had worked for decades if not centuries, driving hacendados11 and their cholo managers from rural estates throughout the Altiplano and the

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high valleys. Destroying records of their debts and the patróns’ property records, campesinos divided the land among themselves and continued to farm it in much the same fashion that they had farmed it in the past. Now it was their land, and only they would benefit from their labor. The Agrarian Reform abolished unpaid labor and placed limitations on the size of land holdings. To reach into rural Bolivia, Paz Estenssoro created the Ministerio de Asuntos Campesinos/Ministry of Campesino Affairs (MAC) and chose as its first minister Nifio Chávez Ortiz, a passionate advocate for agrarian reform. MAC became Paz Estenssoro’s political arm reaching into nearly every rural community and organizing campesinos into political associations that constituted MNR’s power base in rural Bolivia.12 To complement the agrarian reform program, Paz Estenssoro articulated the Economic Diversification Plan that contained an important subset of activities focused on agricultural development. The Santa Cruz and Beni Departments and the Cochabamba Valley were areas designated to receive priority economic assistance from the US government.13 Paz Estenssoro turned to the president of the Bolivian Development Corporation (BDC) to determine the level of assistance required of the US government to achieve the goals outlined for the development of the Oriente and adjacent subtropical regions.14 On Bolivia’s Independence Day in 1955, Paz Estenssoro reported major production increases for cotton, corn, rice, and cattle in the Oriente where the US government had provided generous assistance. In the context of reporting these increases, Paz Estenssoro was prompted to point out that the excess populations on the Altiplano and in the high valleys would now be encouraged to move to the Oriente. Another essential feature of the government of Bolivia’s diversification strategy was the construction of a national road system designed to tie the Oriente with the Altiplano and the high valleys. The Santa Cruz– Cochabamba highway had been conceived as a key component of a national road system. Paz Estenssoro in his Independence Day speech extolled the completion of the Santa Cruz–Cochabamba highway as the “most significant event of the past year in the field of communications.”15 Vital to the implementation of Paz Estenssoro’s development strategy was maintaining close relations with the US government, for without this support it was doubtful whether any of the development aspirations that Paz Estenssoro had for Bolivia could have been realized. It came as no surprise that he proclaimed, “I wish to point to the friendly attitude of the United States government as one of the most healthy examples of sincere and generous cooperation extended without any

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specific demands or conditions which represents a new spirit in interAmerican relations.”16 Paz Estenssoro had much to crow about. In a brief period, the trio of tin barons who dominated the mining of tin in Bolivia and absentee landholders who controlled most of rural Bolivia in the form of haciendas lost their properties. Campesino families regained their patrimony. Campesinos were given the vote, given the right to intervene in decisions that directly affected them in the mines, and awarded the land by the MNR that that they had taken by brute force. It was in the process of the ’52 Revolution that Indians were proudly christened campesinos. The ’52 Revolution set a course for economic and social development to the benefit of the vast majority of Bolivia’s population, and the MNR would have domain over the political and economic processes of change throughout the 1950s. Throughout Paz Estenssoro’s presidency, a debate had raged regarding what development model should be pursued that would be consistent with the goals of the ’52 Revolution. Paz Estenssoro advocated a “state capitalistic model,” whereas Juan Lechín, representing the interests of the COB, advocated a comprehensive “state-socialist” model. The argument came to a head when the economy failed in the mid-1950s, and Siles Zuazo, Paz Estenssoro’s successor, was forced to seek increased financial support from the US government to save his country from financial ruin. The US government insisted that the government of Bolivia implement an austere financial scenario, which was the basis for an economic stabilization program, dictated by the International Monetary Fund (IMF) and accepted by Siles Zuazo.17 What emerged from the 1950s experience was a convoluted blending of conflicting development models advocated by Paz Estenssoro and Lechín and influenced by the US government. The Role of a US Overseas Mission Evolves USOM Bolivia: Its Form and Function

With the creation of the FOA in 1953 and its successor, the ICA in 1955, the concept of a residential mission to manage the aid process in developing countries was further refined. The US Overseas Mission (USOM) became the official designation of an aid mission abroad. By the mid-1950s, a staffing pattern for USOM Bolivia had been articulated and consisted of a mix of development professionals to manage a program of technical cooperation and economic assistance.18 The

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director and deputy director were the chief administrators of the Mission. Three staff functions—the Program Office, the Controller’s Office, and the Executive Office—were identified to support the Mission. The technical offices—agriculture, education, and health— were the heart of USOM Bolivia. Their primary function was to identify, design, and implement the projects funded by the US government. The basic organization of the Mission that would take form by the mid-1950s would prevail into the twenty-first century. (See Figure 4.1.) Figure 4.1 USOM/USAID Mission

The Mission Director: El Jefe Mission directors had to be able to articulate a development strategy; oversee the expenditure of funds for a variety of economic, social, and political activities; lead a staff of US employees and Bolivians from a variety of professional disciplines; and have a deep knowledge of the country in which they were plying their trade, which included, in the case of Bolivia, being fluent in Spanish. The Mission directors signed all official US government documents dealing with economic assistance. While at official ceremonies, where the ambassador and the Bolivian head of state might appear to have finalized a document, it was actually only the Mission director who was legally authorized to sign a document for the US government. As such, the ambassador was a bystander.

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Benefits that went with the Mission director’s job included a car and a chauffeur, a large house, a modest entertainment allowance, and the highest salary in USOM Bolivia. The lifestyle afforded the Mission director had an appearance of lavishness in a country as poor as Bolivia, but the compensation package was commensurate with the responsibility of managing a large enterprise in a foreign country. Regardless, when the Mission was established in La Paz, the administrator of TCA, Stanley Andrews, warned Oscar Powell, the newly appointed mission director, of the “dangers” of “luxury living.” On the one hand Powell was encouraged to “do everything possible to maintain a decent and healthful standard of living for our people,” but to be on the alert “to discourage . . . luxury, ostentation and pretentiousness in the accommodations and activities of Point 4 personnel.” Andrews went on to say that he “had been unfavorably impressed by the disparity between the manner of living of our people and the basic concepts of ‘shirt sleeve’ diplomacy inherent in the Point 4 program.”19 White Knights Bearing Technologies from a Distant Land In the 1950s, the heart of the Point Four program was the technical officers who were employed directly by Point Four. The educator, the agriculturalist, the health specialist, and the engineer were on the front lines of development. To accommodate their role, offices of agriculture, education, health, and engineering were established in most USOMs. US technicians, providing technical and administrative leadership in the Servicios, worked directly with Bolivian officials who were their counterparts. The US employees took a “hands-on” approach. They were in the field with their Bolivian colleagues, managing agricultural research stations, leading curriculum development training sessions, sponsoring heath education campaigns throughout Bolivia, and directing the construction of a road network. The Program Officer: Master of Bureaucratic Rituals The USOM Program Office, from the beginning in the early 1950s, was one of the major seats of power in the USOM. The program officers were the supreme factotums. Their major chore was to oversee the annual preparation of a program and budget statement for Washington and to supervise the project documentation process that detailed the specifics of each project funded by the Mission. The Program Office was the training field for future Mission directors. Economists were key personnel that often resided in the Program Office.

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Accountants and Auditors The senior managers of ICA were determined to create financial systems that would insure USOM-funded projects were run on sound management principles, as though they were business ventures in the private sector. Nonetheless, it was the perception of US taxpayers that their dollars were ending up in the wrong hands—those of aging army generals, venal dictators, and corrupt bureaucrats. This image persisted throughout the Eisenhower administration despite a sustained effort to strengthen USOM Bolivia’s financial management capacity. It was not until 1956 that a Controller’s Office was established as an integral component of USOM Bolivia. The Mission’s controller, Allen Gordon, described the situation in USOM Bolivia as one where “they [the Mission staff] were throwing too much [money] too fast down there with no organization to take care of it . . . too much [was] done off the cuff, with no records.”20 By the late 1950s, the Controller’s Office in the Mission was providing a full range of financial management services to address auditing and accounting functions. The Controller’s Office in Washington, which staffed teams to perform internal audits in Bolivia, supplemented USOM Bolivia’s efforts. By 1960, 150 end-use audits had been prepared by the Mission’s Controller’s Office that revealed a significant number of inadequacies in Mission-funded projects. The earlier end-use audits focused on the lack of reporting, unjustified stockpiling of commodities, unauthorized diversions of US government resources, and losses of commodities financed by ICA. As USOM Bolivia’s project portfolio grew, the number of end-use audits undertaken increased, and in every instance recommendations emerged from the audits that identified courses of action to rectify the problems identified.21 By the 1960s, the Controller’s Office was adequately staffed with US employees in leadership positions and Bolivians in key subordinate positions performing accounting and auditing functions. The Executive Office: Mission Housekeepers An Executive Office was created in the 1950s to attend to the logistical functions of the Mission. Bolivia’s remote and isolated location often resulted in unusual challenges for the US staff. Because there were no seaports or highways in Bolivia and only frail air transport and rail systems, the procurement of virtually any item would involve a long and arduous undertaking that could exhaust the patience of most US citizens working in USOM Bolivia. US employees and their families needed

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USOM assistance to survive on the local economy in a manner approaching a middle class standard of living. Housing had to be leased, potable water provided, automobiles imported, English primary and high schools established, and heating fuel secured. Foreign Service Nationals Each of the offices described above had a number of local hires called foreign service nationals (FSNs) who possessed skills appropriate to the offices to which they were assigned. As time passed, FSNs were able to assume greater responsibilities, especially in the Controller’s Office. The FSN typically saw his or her job in the Mission as a career opportunity and thus had the potential of providing valuable continuity in an operation where US foreign service officers came and went every two to four years. Development Evangelism in Bolivia: USOM’s Program

The Mutual Security Program for Fiscal Year (FY) 1954, which was submitted by the Eisenhower administration to Congress, described a development assistance program for Latin America as “part of the inner citadel of the free world of defense.”22 The rationale for economic development assistance was that the Latin American economies must be transformed if Latin Americans—and in turn Bolivians—were to become cold war warriors supporting the United States in its fight against the spread of international communism. The program funded by the Eisenhower administration reflected a blend of needs identified by Bolivian leadership that flowed from the ’52 Revolutionary experience, as well as ideas carried to Bolivia reflecting the US development experience. The vast majority of projects proposed by the US government in Latin America involved interventions promoting agriculture, health, and education development. Support for this trinity of projects by US development bureaucrats was pursued with near evangelical conviction. The rationale buttressing these activities was grounded in the conventional economic development wisdom of the day. The Yankee recipe for transforming Bolivia into a modern nation had been proven on the farms and in the public schools from one end of the United States to the other. US technicians arrived in Bolivia with project designs for the most part already fixed in their minds.

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President Eisenhower Sends Brother Milton to Assess the Situation President Eisenhower sent his brother, Milton, to Bolivia to view economic conditions up close and to come back with a course of action for the United States to pursue. Almost immediately upon arriving in Bolivia in 1953, Milton Eisenhower perceived the severity of the crisis facing the government of Bolivia. Milton was especially alarmed by the acute shortage of food in La Paz. After consulting with Paz Estenssoro, Milton telephoned Secretary of State John Foster Dulles to arrange for surplus food to be sent immediately to Bolivia.23 Upon returning to the United States, Milton Eisenhower reported directly to his brother about the problems facing Bolivia. He emphasized that the ’52 Revolution had the potential of giving the “little guy a break” and that in no way would Bolivia be a threat to the US way of life, even if the ’52 Revolution had socialist overtones. Furthermore, US mining interests were not being seriously threatened, and from a purely propaganda standpoint, the United States had everything to gain by being generous to this poor country whose people were locked in a desperate struggle for survival.24 Milton Eisenhower, when reflecting on his visit, says that when Paz Estenssoro: in his first term as Chief Executive of Bolivia, nationalized the tin mines and started a modest program of land reform, many American business leaders promptly called him a Communist. Their statements were widely published. Their view was upheld, in strong language, by the previous owners who lived sumptuously abroad. . . . [Paz Estenssoro’s government] most assuredly instituted reforms. The president and his associates may have been inexperienced, sometimes critical of us, and more inclined to socialism than Americans generally prefer. But they were not Communists.25

Milton Eisenhower’s recommendation to support Paz Estenssoro and in turn the ’52 Revolution contributed to President Eisenhower’s decision to move forward with an aid program in Bolivia. In July 1953, the Bolivian ambassador, Victor Andrade, informed the Bolivian government that Eisenhower’s administration was prepared to buy all of Bolivia’s tin at market price for the coming year. In September, Andrade relayed the good news that the US government would provide food subsidies at an annual cost of $8 to $11 million, and later announced that the Ex-Im Bank would provide credits of $23 million to continue the construction of the Santa Cruz–Cochabamba Highway.26 In the fall, Presidents Eisenhower and Paz Estenssoro exchanged correspondence

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confirming that an emergency program provided by the US government would consist of $5 million for agricultural products to be provided by the Commodity Credit Corporation. Under the Famine Relief Act, $4 million for essential commodities was also provided. In an exchange of letters, Eisenhower emphasized the humanitarian nature of the program to be initiated and the importance of promoting agricultural development as a critical component of Paz Estenssoro’s economic diversification strategy.27 The only support denied Bolivia was $3.5 million to support Yacimientos Petroliferos Fiscales de Bolivia for its oil exploration program. The US government’s official position was that it did not want to support a state agency that was competing with private oil companies.28 PL480 Food Assistance in Bolivia Bolivia began receiving PL480 food assistance in 1954. The Title II resources were the first to flow into Bolivia totaling more than $24 million between 1954 and 1961. Catholic Relief Service (CRS) ran the program in Bolivia. According to one estimate, CRS distributed approximately ten thousand metric tons of food a year to mothers’ clubs, primary schools, orphanages, and soup kitchens.29 To address the accounting functions related to tracking the use of the PL480 proceeds, the US and the Bolivia governments agreed to create an office that periodically reported the disposition of all the funds provided through the PL480 program. This office’s expenses apparently were funded from the PL480 cash proceeds.30 The Role of the Project Since its inception and until the mid-1990s, the US government’s foreign assistance program has been framed in grant and loan projects. During Eisenhower’s administration, USOM Bolivia’s portfolio consisted of approximately seventy-five grant-funded projects concentrated in the health, education, and agriculture sectors. In addition, the fledgling Mission cast a broad net undertaking projects in such diverse areas as geological survey, metallurgical research, natural resources survey, petroleum code development, low cost housing, civil aviation, road construction and maintenance, industrial development, supervised industrial credit, business development, trade union leader development, training for public employees, and public administration. The proclivity to fund nearly every conceivable development challenge would characterize the Mission’s program for years to come. Even during lean periods, when funding was reduced sharply, the US

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government’s development portfolio had the appearance of being omnipresent.31 The fact that a large number of projects were initiated in one administration and continued in the following administrations reflected both the continuity and stability in the US government’s development program. The effort to concentrate resources on the agriculture, health, and education problems continued as a major feature of the Mission’s program year after year. There would be significant changes in the geographic focus of these projects as the Mission developed a more refined understanding of the nature of the problems of the rural poor in Bolivia. Public administration projects would weave their way through the Mission’s portfolio from the 1950s into the twenty-first century. Projects designed to strengthen business operations in the private sector were also a constant feature of the Mission’s program. Every year the Mission’s portfolio of loan and grant projects would be reviewed by the Mission directors and their staff. Some projects were declared successful and were ended; other projects might be redesigned to reflect a better understanding of what was working. The technicians in the Mission identified new projects and performed the key roles in the design, implementation, and evaluation of their projects. Agriculture Initally Bolivia’s economic diversification strategy, which was supported by the US government, focused on increasing agricultural production in the Oriente. The Agriculture Servicio was the vehicle for managing nearly all agricultural activity funded by USOM Bolivia. The Agriculture Servicio’s objective was to create a network of research and demonstration centers and credit facilities with extension agents reaching out to farmers.32 Support for road construction, colonization activities, and agrarian reform were other important elements designed to meaningfully contribute to improving agricultural production. Agricultural Research and Demonstration. After the ’52 Revolution, the US government continued supporting the development of agricultural research and demonstration centers throughout Bolivia with emphasis on the Oriente.33 To complement the work undertaken at the agricultural research and demonstration centers, an agricultural extension capacity was created and expanded rapidly. (See Table 4.1.) By 1958, the extension network consisted of 103 extension agents and fifty home economists/demonstration agents providing assistance directly to farmers. The Agriculture Servicio expanded into sixty of the ninety-

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Table 4.1 Agriculture Research Stations, 1974 Station

Location

Year

Jurisdiction

Research Focus

Belen

N. Altiplano

1946

Ag. Servicio

potatoes, sheep, vegetables

La Tamborada

Valleys

1947

Ag. Servicio

wheat

Reyes

Beni Plains

1948

BDC

cattle, pastures

Saavedra

Santa Cruz

1948

Ag. Servicio

rice, sugar cane, maize

Riberalta

Amazon Rain Forest

1952

Ag. Servicio

rubber

Muyurina

Santa Cruz

1953

Ag. Servicio

cattle

Patacamaya

C. Altiplano

1953

Ag. Servicio

sheep, forage, wheat

Trinidad

Beni Plains

1961

Ag. Servicio

cattle, rubber

Chinoli

S. Altiplano

1962

Ag. Servicio

potatoes, wheat

Toralapa

Valleys

1962

Ag. Servicio

potatoes

1964

Ag. Servicio

citrus, rice

Cochabamba

Cochabamba Chipiriri

Yungas Cochabamba

San Benito

Valleys

1970

Ag. Servicio

fruit, wheat

Villamontes

Cochabamba

1970

BDC

oilseeds

Chaco

continues

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Table 4.1 continued Station Cochabamba

Location

Year

Jurisdiction

Research Focus

Valleys

1974

BDC

dairy, cattle

1974

BDC

dairy, cattle

Cochabamba Todos Santos

Santa Cruz

Source: Adapted from “Agricultural Research Stations in Bolivia, 1974” in “Agricultural Development in Bolivia: A Sector Assessment” (USAID Bolivia, August 1974), p. 206. All agricultural research stations that were initially under the jurisdiction of the Agricultural Servicio were transferred to the Ministry of Agriculture.

seven provinces of Bolivia. USOM Bolivia provided a US staff consisting of a chief administrator and nine senior technicians to manage the extension program.34 By 1958, the Servicio reported that it had 793 Bolivian employees who were assisted by US advisors.35 The Agriculture Servicio led the effort to bring Zebu cattle to the Oriente in the 1950s, and it was the Agriculture Servicio-sponsored research in cattle production at the Reyes Research Station in the Beni on range management, disease control, and breed selection practices that contributed to important increases of beef production in the Oriente. These accomplishments contributed to Bolivia moving into the 1960s from being a country that was unable to meet its domestic beef needs to one which was beginning to export beef to neighboring countries. Research on Cuban Yellow corn promoted by the Agriculture Servicio at the Saavedra Station in the Santa Cruz Department began as early as 1953, and commercial quantities of Cuban Yellow corn seed were available by the mid-1950s. Nearly all of the corn production by the late 1960s in the Oriente can be traced to these early efforts at the Saavedra Station. The consumption of Cuban Yellow corn by Zebu cattle was critical to establishing Zebu cattle in the Oriente, and by 1970, Cuban Yellow corn was the second most important crop in the Santa Cruz area.36 The Agriculture Servicio established a rice research program at the Saavedra Station that tested the appropriateness of extending highyielding Asian rice varieties to the Oriente. By the mid-1950s, the Palomorado, Durado, and Pratao varieties tested at the Saavedra Station

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were being extended to other areas in Bolivia, and by the mid-1960s, it was estimated that 90 percent of all of the rice grown in Bolivia had originated from certified seed of these varieties. By 1967, it was reported that Bolivia was self-sufficient in rice and occasionally exported rice.37 The Servicio also initiated research at the Saavedra Station to increase sugar production in the Santa Cruz region. By 1956, improved varieties of sugar had been tested, and sustained support to improve sugar production would lead to sugar self-sufficiency in Bolivia by 1964.38 A couple of important research and extension activities undertaken by the Servicio contributed to increased yields of quinoa and potatoes for farmers living on the Altiplano.39 Agricultural Credit. In the period following the ’52 Revolution and the declaration of the Agrarian Reform Decree in 1953, there was widespread confusion on the Altiplano and in the high valleys regarding who owned what land. These circumstances contributed to the collapse of commercial agriculture, which in turn contributed to a sharp decline of basic foods moving into urban markets. In response to this difficult situation, a presidential decree directed BAB to design a loan program to move agricultural credit on a priority basis to all farmers. The decree stipulated that loans for all farmers were to be made on a concessionary basis and forbade BAB to charge interest penalties for delinquent loans.40 USOM Bolivia directed the Agriculture Servicio to work with BAB to develop an agricultural credit program, and US technicians working with the Agriculture Servicio recommended that the agricultural credit operation be modeled after the Farm Home Administration Program in the United States. The Servicio developed lending criteria and the procedures for managing the credit dispersed by BAB, and BAB’s staff, working in conjunction with Servicio personnel, shared the responsibility for disbursing loans, maintaining the accounts, and executing the legal work related to making loans.41 Agricultural production credit was aimed at two strikingly different types of farmers. Campesinos, who for the most part farmed the Altiplano and the high valleys, were perceived as employing primitive agricultural practices and were instinctively disinclined to change their practices. Nevertheless, the Servicio staff expected that if campesinos were provided access to credit, they would use it to gain access to modern agronomic practices. In that way, credit could play a key role in transforming campesinos from subsistence farmers to commercial producers who would supply basic foods to Bolivia’s urban markets.42 Farmers of European extraction, who for the most part owned large farms, lived in the Oriente and were perceived as desiring access to

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progressive agricultural techniques. US advisors, working with the Agriculture Servicio, advocated that agricultural credit be focused on the farmers in the Oriente to assist Bolivia in meeting its immediate food needs.43 Consequently, in 1955, over 50 percent of Servicio loans were made to farmers in the Santa Cruz Department. This trend continued throughout the 1950s and into the early 1960s with commercial farmers located in the Oriente receiving over 90 percent of the funds available. An obvious consequence of this approach was that the most impressive gains in food production were made in the Santa Cruz Department.44 A Point Four Agriculturalist in Bolivia. In 1955, Jim Bleidner and his family were posted to Bolivia. Jim’s assignment was to work with the Agriculture Servicio, and the job required that the Bleidners live in Reyes, which was located two hundred miles east of La Paz in the Beni tropical lowlands. When the Bleidner family moved into the area, Reyes was a small town with a total population of perhaps two thousand. The only way to get to Reyes was to fly in one of the B-17s, World War IIvintage bombers that had been purchased by the Bolivian government and converted into cargo planes that also carried passengers. Life in Reyes was simple. There were virtually no roads in the area, and the Bleidners traveled for the most part by horseback or on foot. Their home, named Limoncito because it was located in a citrus orchard, consisted of two small bedrooms, a large living and dining area, and a bathroom. Their little kitchen was in a separate building. Water came from a well that was equipped with a gasoline engine and a generator that ran each day for several hours furnished electricity. Jim’s job was to manage a project concerned with increasing beef production for the La Paz market. Initially the BDC had built a slaughterhouse and a grass airstrip from which they flew the carcasses of cattle from Reyes into La Paz. After a couple of years, the BDC had successfully established a market in La Paz for Beni beef; however, the low production of cattle in the Beni could not keep pace with the demand generated by the La Paz market. The BDC was asked by the local ranchers to help them in establishing a livestock improvement project, and the Bolivian government asked USOM Bolivia to send an agriculturalist to Reyes to take over management of the BDC livestock operation. Jim’s goal was to establish an applied research program at the Reyes Research and Demonstration Station, and his first chores were to develop range management, disease control, and breed selection activities that had the potential of increasing beef production. Jim played a key role in the introduction of Zebu breeding stock and instituting the

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technique of artificial insemination. A direct outcome of these activities was that the average weight of cattle slaughtered in Reyes increased, calf birth rates improved, and calf and adult cow mortality decreased. Jim also took the lead in forming a 4-H Club and assisted the Bolivia government in building roads in the area. He was also associated with the Rotary and Lions Clubs that promoted community improvement activities.45 US citizens working in Bolivia marched in the vanguard of the international development process, bringing an abundance of technical know-how, energy, and faith in the US way of getting the job done. Unquestionably some Point Four technicians made mistakes that contributed to project failures while others barely muddled through. Nevertheless, numerous success stories and “lessons learned” emerged from the varied experiences of Point Four technicians in the education, health, and agriculture sectors in Bolivia. Certainly the story of Jim Bleidner and his family living and working in Reyes on the very edge of the development frontier is one of those success stories. Problems in the Agriculture Servicio. When the Agriculture Servicio was initiated prior to the ’52 Revolution, the target population was the owners and overseers of large agricultural estates. After 1952, USOM Bolivia’s program had to reach a different clientele, the campesinos.46 With the destruction of the hacienda system, communicating the simplest agricultural innovation to the new owners of thousands of newly created farms on the Altiplano and in the high valleys became a huge undertaking. The task of promoting change was complicated by the attitudes of the old owners, the patróns, who were considered enlightened and eager to accept new technology as contrasted with the new owners, the campesinos, who were guided by an ingrained mentality to practice survival agriculture.47 Too often, the US advisors did not recognize that their role was to be a catalyst in a process concerned with developing Bolivian institutional capacity.48 The advisors came full of technical “know-how” and a compulsion to do the work themselves. There was always the concern that unless US employees took the lead, the generous financial resources provided by the Point Four program might be wasted. The non-Bolivian nature of the Agriculture Servicio was described in an assessment of the Point Four program undertaken in 1962 by USDA: The Agricultural Servicio in Bolivia has dominated the agricultural program of Bolivia the last eight or ten years. Certainly, American technicians, American ideas, American thrust, and American planning, American

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decisions have literally operated the principal agricultural programs which have been carried out presumably jointly with the Bolivia government.49

A large and well-qualified group of Bolivian agricultural technicians had been trained with Point Four funds to build research and extension in the Agriculture Servicio. However, the Agriculture Servicio did not evolve into a Bolivian institution that would outlive the financial support provided by the Point Four program. When the Bolivian government was pressed to provide budgetary support for the Agriculture Servicio, it was either unable or unwilling to do so. In 1959, Washington directed USOM Bolivia to turn Agriculture Servicio operations over to the Ministry of Agriculture. As a result, the Agriculture Servicio all but collapsed. Many of the trained Bolivian agriculturalists left the Agriculture Servicio for higher paying jobs either abroad or in the private sector. If it had not been for continued financial support by the US government in the 1960s for research and extension activities, these activities might have disappeared altogether.50 The same USDA report that had been prepared for USAID Washington in 1962 sharply criticized USAID’s decision to shut down the Agriculture Servicio: The arbitrarily dumping, under Washington orders, of the extension system of the Servicio into the Ministry was ill timed and pernicious. It expected a government with an unprepared administrative structure to take on something which under similar circumstances could not have been done in the United States. While we believe that the building up of this large and expansive extension organization outside of the Ministry was a mistake, it is a mistake the US made and has made in many countries. We should live with that mistake and begin now with a planned and patient program of helping the ministry to absorb and carry on the most effective farmer educational system possible.51

Colonization of the Oriente: Searching for El Dorado To encourage immigration into the Oriente and in turn increase the number of farmers in the tropical lowlands, the Bolivian Agrarian Reform Decree of 1953 declared that unexploited land could be distributed to Bolivians and foreign immigrants. In 1954, a US government team was sent to Bolivia to review the feasibility of supporting colonization activities in the Santa Cruz Department.52 The team did not see the Oriente as an area that should necessarily absorb the indigenous populations from the Altiplano and high valleys. Quite the contrary, the team recommended that the government of Bolivia should promote large-scale foreign immigration for the colonization of the Santa Cruz area:

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Bolivia’s population can be strengthened in number, in culture, in productive capacity, in commercial enterprise, in the professions, crafts and sciences—indeed, in just about all fields of human activity and ingenuity. The country as a political and economic entity cries out for that strengthening. Low agricultural production in the face of an abundance of tillable soil, consequent food shortages, retarded industry, unfavorable trade and fiscal balances, costly and stifling subsidies and price policies—Bolivia has all of these and more, with about one-fourth of the people having the capacity to understand them and to participate in the measures intended to overcome them. . . . The new strength must come from without Bolivia.53

The team went so far as to recommend the type of immigrants: In view of the expected assistance of the government of the United States, it is recommended that we urge upon Bolivia the selection of immigrants from those countries in whose population problems (native and refugee) the United States has manifested concern, such as Germany, Austria, Italy, Greece, the Netherlands, and Japan.54

The message was clear. If Bolivia was to feed herself, the Oriente must play the key role in Bolivia’s agricultural development, and immigrants from Asia and Europe were to farm the Oriente, not the preColumbian immigrants who had been responsible for the first great agricultural advances in prehistoric Bolivia. Regardless of the explicit recommendations in the US government’s report, USOM Bolivia supported colonization programs managed by the BDC that encouraged campesinos from the highlands to migrate to the Oriente. The initial colonization effort was the Cotoca Colony in the Santa Cruz Department in 1954. An assessment of this US governmentfunded effort determined that BDC had fostered a highly paternalistic approach. Lands were cleared in advance of the colonists’ arrival, and a monthly financial subsidy was provided initially along with support for health, shelter, agricultural credit, and agricultural technical assistance. The colonists were directed to produce sugar cane, corn, and rice. In the final analysis, this colonization effort was judged poorly planned and far too costly, particularly when the abandonment rate of over 75 percent was considered.55 Other colonization efforts followed in the Santa Cruz Department that once again were directed by BDC with support provided by the Ministry of Defense. The results were equally disappointing with abandonment rates ranging from 50 to 75 percent. One of the major problems was that all-weather roads had not been constructed, making it difficult, if not impossible, for the colonists to move their crops to commercial markets. In the late 1960s, when all-

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weather roads were built in the same area, colonists stayed, and their farming enterprises generally thrived.56 In stark contrast to the Bolivian government efforts to move campesinos from the Altiplano and the high valleys was USOM’s support for settlements near Santa Cruz of Japanese colonists from Okinawa. The BDC was chosen to manage the Japanese effort, and report after report from USOM Bolivia notes the praiseworthy progress made in settling Okinawans in the Santa Cruz area.57 Building on the experience of the 1950s and 1960s, the Mission supported in the 1970s spontaneous colonization efforts with the SubTropical Land Development loan. Penetration roads and water points were constructed, agricultural service centers were created and staffed, and a health center was constructed, equipped, and staffed to support this colonization effort. The Instituto Nacional de Colonizatión was charged with implementing this Mission-funded project.58 In 1976, the Mission promoted yet another loan for the construction of rural access roads to support community development and colonization efforts in the Departments of Cochabamba, Santa Cruz, Sucre, and Potosi.59 In 1973, it was estimated that forty-eight thousand families had migrated to the Oriente from the highlands since the mid-1950s. Of this number, forty-two thousand Bolivians were classified as spontaneous colonists, meaning that their efforts were not subsidized. Most colonists settled in the Alto Beni, Chimorí, and Santa Cruz, living mainly along roads near markets and colonies supported by the government of Bolivia.60 It may be reasonably concluded that neither the planned nor spontaneous colonization efforts significantly alleviated population pressures on the “poor and limited land base” of the Altiplano and the high valleys.61 Roads to Unite the Country As recommended in the Bohan Report62 and in concert with the Economic Diversification Plan articulated by the Bolivian government, USOM Bolivia continued to support the construction of a road network connecting tropical and subtropical farm regions to consumption centers in the high valleys and the Altiplano. The Ex-Im Bank had provided over $33 million in credits for the construction of the all-weather road between Santa Cruz and Cochabamba. In the year after it was completed in 1955,63 5,400 vehicles, mostly small trucks,traveled the highway in both directions. By 1963, the vehicle count was ninety-three thousand, mostly heavy-duty trucks.64 The USOM next helped organize the Servicio de Caminos, which supervised the construction and maintenance of over four thousand

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kilometers of roads in the La Paz, Cochabamba, Potosi, Sucre, and Santa Cruz Departments. In support of the Road Servicio, the US government provided more than $4 million to procure road building and maintenance equipment.65 USOM also supported the Bolivian Army Engineers in the construction of penetration roads throughout Bolivia.66 In sum, the US government continued to fund road construction throughout the 1960s and into the 1970s, emphasizing the penetration of tropical and subtropical regions in the Santa Cruz Department, the AltoBeni, and the Chapare area of the Cochabamba Department. More US financial assistance was devoted to road construction throughout the 1950s, 1960s, and 1970s than any other development sector.67 A National Health Program Throughout the Eisenhower administration, USOM Bolivia supported a Health Servicio whose program was national in scope. The program included the development and the initial management of fifteen health centers located throughout Bolivia as well as mobile health units operating in the Departments of Potosi and Tarija. The Health Servicio also managed a communicable disease program as well as a malaria control program.68 From 1942 to 1962, the US government provided $6.5 million to support Health Servicio activities in Bolivia. To support these activities, nearly 150 US health technicians working in the Health Servicio served two years or more in Bolivia. These technicians were assisted by over 850 Bolivians, who were also funded by the US government. Over half of the Bolivians worked in the malaria control program.69 In the early 1960s, when the United States sharply reduced its financial support for Health Servicio activities, the Bolivian government also phased out its support for most Health Servicio activities. An immediate result was that the USAID Mission greatly reduced its involvement in the health sector. It would be almost a decade before significant assistance for health activities would once again appear as an important dimension of the Mission’s program.70 Education and the Goals of the ’52 Revolution Because of Paz Estenssoro’s preoccupation for undertaking a major reorganization of the educational system throughout Bolivia, the education sector became one of the MNR’s highest development priorities. Before the ’52 Revolution, education had been elitist and urban bound; now the priority was to provide educational opportunities to children throughout Bolivia, especially rural Bolivia. To start the process, Paz Estenssoro created a high-level commission to study the

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state of education and to make recommendations for educational reform. Some members of the commission promoted the idea that primary education for the Aymara and Quechua children should be in their native language. Others argued that instruction should be in Spanish. Both sides of the argument prevailed, for it was agreed that instruction would be in the language spoken by the students in their communities and in Spanish.71 The conclusions of the commission led to the establishment of an Education Code, which became the legal basis for all subsequent education activity in Bolivia. In his message to the Bolivian congress, Paz Estenssoro proclaimed: It is the proposition of the Reform to extend education, taking its benefits to the great masses, liquidating illiteracy and giving equal opportunities of learning to all the inhabitants, so that education will no longer be the privilege of the few.72

To pursue these goals, the percentage of Bolivia’s national budget devoted to education increased from 16 percent in 1951 to 28 percent in 1956. Rural education programs were placed under the responsibility of MAC, which was to coordinate its efforts with the Ministry of Education.73 USOM Bolivia assisted in the financing education reform with commitments to an Education Servicio that played a key role in the establishment of rural education centers that included vocational arts instruction and urban educational centers that emphasized industrial arts.74 The Education Servicio also supported the creation of a pilot program to develop model schools throughout Bolivia in rural and urban areas and established rural normal schools in Warisata in the La Paz Department, in Paracaya and Vacas in the Cochabamba Department, and in Canasamoro in the Tarija Department.75 When funding for the Education Servicio was terminated in 1964, much of the same criticism was leveled at the Education Servicio that also had been directed at the Health and Agriculture Servicios supported by USOM Bolivia. The Education Servicio was seen as a US program promoting essentially US ideas to address Bolivian problems. As such, it did not do enough to nurture the creation of Bolivian institutional capability in the education sector.76

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Taking Stock of the Point Four Program

The Bolivian political leadership genuinely believed that US prescriptions for the agriculture, education, and health sectors would contribute significantly to building a modern, progressive Bolivian nation. Copying US models to develop Bolivian institutional capacity must have appeared an eminently reasonable course of action to Paz Estenssoro and his associates, particularly given the Olympian stature that US citizens enjoyed throughout the world. On the other hand, USOM officials had few precedents to guide them as they labored to understand Bolivia’s culture and its development issues, and how to relate the US development experience to Bolivia’s development requirements. Further complicating the development challenge was the fact that ICA was a new government agency, in which management systems and bureaucratic routines were untested. When Dennis “Doc” Fitzgerald, the deputy director of operations of ICA, testified before a Congressional Committee in 1959, he described USOM Bolivia under the leadership of Oscar Powell as one where: The US government threw quite a bit of money down into Bolivia back in 1953 and 1954. Our staff down there had previously run a small kind of one-lung TC program, and all of a sudden they had a lot of money to handle. . . . We just had a deficient staff there for a long time.77

The report issued by Congress concluded that USOM Bolivia and ICA in Washington were “negligent” in providing appropriate oversight for USOM Bolivia. Regarding Powell’s performance, the report stated that he “was obviously not aware of the many glaring weaknesses and shortcomings of the mission’s operation.” It was recommended in the report that Powell be reprimanded “for not reporting accurately on the performance of many individuals working under his direction, who compounded errors in the administration of various aspects of program in Bolivia.”78 Oscar Powell, Ross Moore, and Rey Hill, the USOM Bolivia directors who served throughout the 1950s, must have looked upon their efforts with a mixture of pride and pain. Each of these mission directors played a critical role in guiding the Mission through a period of growth, and each reported accomplishments and shortcomings that translated into “lessons learned” on which future US government-funded programs were constructed.

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Project Successes Agriculture. The case was made in 1963 by officials in Bolivia’s Ministries of Planning and Agriculture, in conjunction with agricultural technicians from the Mission and economists in the US Embassy, that given all of the work promoted by the Agriculture Servicio, it was reasonable to infer that the US government had significantly contributed to the crop production increases identified below. (See Table 4.2.) A number of Agriculture Servicio activities linked directly to increased agricultural production in the Oriente of Zebu cattle, Cuban Yellow corn, rice, and sugar. These accomplishments laid the basis for diversifying the economy that had long-term consequences for breaking the stranglehold that tin had had on the Bolivian economy for more than one hundred years. Table 4.2 Agricultural Production Increases, 1950 and 1963 Production (in metric tons) Crop

1950

1963

Quinoa

7,715

11,134

Potatoes

139,384

700,000

Barley

44,247

120,759

Wheat

45,652

78,400

Corn

129,701

260,803

Citrus

35,000

150,000

Bananas

63,712

150,000

Coffee

1,000

3,150

Rice

10,000

40,000

Sugar

1,155

60,000

Sugar Cane

160,000

650,000

Cotton

126

910

Source: The US Embassy’s Economic Section and the USAID Mission compiled the data in the early 1960s in a joint effort from reports prepared by the Ministry of Agriculture in the 1950s and the Ministry of Planning in the early 1960s.

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Health. USOM Bolivia sponsored health programs through the Health Servicio that vastly extended the reach of heath care that benefited urban communities and to a lesser extent rural areas. About four hundred thousand Bolivians, or about 15 percent of Bolivia’s population, received some form of medical attention at Health Servicio-supported facilities. Regarding the Servicio’s communicable disease program, it is estimated that 77 percent of the Bolivian population received smallpox vaccinations; successful campaigns against yaws were undertaken in the Department of La Paz in 1958 and 1959; yellow fever was all but eliminated in the major urban areas; and there was a significant reduction of the instances of bubonic plague throughout the country. Another important contribution was the suppression of malaria in the tropical and subtropical lowlands. This effort was critical for opening new areas in the Santa Cruz, Beni, and Pando Departments, where previously malaria had been endemic..79 US assistance provided through the Health Servicio was essential in all these public health advances. In this process a cadre of health professions was trained, which was an essential prerequisite to staffing the health facilities operating in Bolivia in the 1950s and on into the 1960s.80 Education. Paz Estenssoro, in a speech delivered to the Bolivian Congress in July 1956, reported that from 1952 to 1956 that 1,327 rural schools had been constructed; rural school enrollment had increased from 61,230 to 132,167; and the number of teachers in rural areas had increased from 2,811 to 4,495.81 His message was clear: the Revolution had made great progress in terms of addressing the needs of children living in rural Bolivia. There were also impressive accomplishments reported for the urban areas for this same period, including the number of schools increasing from 735 to 847; the number of teachers increasing from 7,663 to 9,377; and the number of students increasing from 137,503 to 214,778.82 The resources provided by the Mission through the Education Servicio were a key factor in each of these achievements.83 Bolivia was an environment that was foreign to the experience of most US educators who had little sense of the depth of the problems they were tackling. Regardless, technical assistance activities promoted by US technicians and their Bolivian counterparts reached across the Altiplano, into the remote high valleys, and down into the tropical lowlands. Schools were built and textbooks were distributed throughout Bolivia. Rural and urban teachers were trained in the basics of modern

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pedagogy. Moreover, thousands of Aymara, Quechua, and cholo children in both rural and urban schools got their first real taste in the basics of reading and reckoning. Project Failures A number of projects fell far short of meeting the expectations anticipated by USOM Bolivia and the Bolivian government. The Villamontes irrigation project, identified in the Bohan Report and managed by the BDC, was curtailed in 1953 after an outlay by USOM Bolivia of nearly $1 million. Problems included the lack of adequate advance planning, deficient technical analysis by Bolivian government engineers who directed the implementation of the project, and the purchase of inappropriate equipment. Oscar Powell, USOM Bolivia’s first director, when testifying before a Congressional Committee, stated “the judgment” regarding the design and implementation of the Villamontes project “may have been bad.”84 The Muryurina Vocational Agricultural School project, also managed by BDC, was initiated in 1953. After more than $160,000 of expenditures, Ross Moore characterized the project as an “overbuilt, over-equipped plant, years ahead of the need . . . and too expensive, too elaborate for Bolivia to operate.”85 When the construction was finally completed, the site became an industrial school. USOM Bolivia attempted to identify another donor that would assume the costs of running the school; however, no other donor was found. The Bolivian government claimed not to have the resources to operate the school. Consequently, USOM Bolivia was faced with having to fund the school indefinitely.86 The Cochabamba Milk Process Plant project, the Animal Vaccine Laboratory project, and the Yucca Flour Mills project all failed to realize the expectations originally promoted by the BDC and agreed to by USOM Bolivia. Each suffered serious construction delays, procurement of equipment problems, and technology gaps.87 However, by the mid-1960s the Cochabamba Milk Process Plant was producing pasteurized milk that was delivered daily for sale in La Paz.88 Problems related to construction, equipment procurement, lack of proper planning, and the failure of the government of Bolivia to live up to its financial commitments were shortcomings that would afflict nearly every project undertaken by USOM Bolivia. In the case of the abovementioned projects, the problems were so extreme as to have caught the eye of a congressional committee. Systems for turning the development business into a routine operation to deal with the nagging problems of development in the complex Bolivian environment would challenge the

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best efforts of US development professionals for the rest of the twentieth century. Buttressing a Devastated Economy The failure of the Bolivian government to manage the country’s economy had resulted periodically in horrific financial problems affecting the lives of all Bolivians as well as the health of Bolivia’s public and private financial institutions. Since the 1920s when the US government first sent Treasury Department experts to hector Bolivian politicians,89 the US government had attempted to promote fiscal responsibility in the management of Bolivia’s public financial resources. By the mid-1950s, Bolivia was in the throes of yet another financial crisis as runaway inflation overwhelmed nearly every aspect of Bolivia’s fragile economy. The problems contributing to the crises were manifold. After the ’52 Revolution, the Bolivian government ran huge budget deficits resulting from the sharp decline of tax revenues that reflected the unprofitable mining of Bolivia’s tin by COMIBOL. From 1952 to 1956, money circulation rose from 6.7 million to 125 million Bolivian pesos, and the free market rate for the US dollar jumped from 190 Bolivian pesos to an astronomical 7,000 pesos. The Bolivian Central Bank reserves plunged from a surplus position of $30 million in 1951 to a deficit of $11 million by 1956.90 Traditional urban food markets were in disarray as a result of an acute shortage of food. The campesinos, the new landholders, were more concerned with having their families eat the food that they had produced than meeting the food needs of the urban market. Urban dwellers queued in endless lines hoping to buy necessities.91 It was in this desperate situation that PL480 Title II resources, totaling more than $24 million, started flowing into Bolivia.92 In 1956, the IMF and the US government prodded the Bolivian government to implement a series of fiscal reforms designed to promote transparency and accountability. A freely fluctuating exchange rate, the elimination of price controls, and the regulation of banking credit were considered the major ingredients necessary to promote fiscal responsibility and financial stability. The IMF provided Bolivia with drawing rights up to $9.1 million, and the US government provided $70.7 million through its Economic Assistance Program.93 As a result, the peso’s exchange rate stabilized and the inflation rate was greatly reduced by 1958.94 Bolivia managed to pass through one of its gravest economic crises, and the US government had played the dominant role in pulling Bolivia back from the abyss of financial adversity. Massive

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US food aid and financial assistance were key factors in sustaining the ’52 Revolutionary experience as driven by the governments of Paz Estenssoro and Siles Zuazo and propelled by a massive civilian army. Building Bolivian Institutions The specific development benefits provided through the Servicios to hundreds of thousands, if not millions of Bolivians were substantial. However, it was concluded that the US approach was flawed. Its management style was perceived as paternalistic and stifled Bolivian initiative. As such, it was discordant with what should have been the goal of the Servicio projects: to build sustainable, institutional capacity that delivered technical assistance and resources directly to Bolivians. Some would argue that the Servicio concept was cast aside for being ill conceived. Perhaps a fairer interpretation was that the Servicio approach represented an important beginning at institutional building. In any institutional development enterprise, the “lesson learned” was that it is absolutely critical to look to Bolivians to take the leadership role. The job of the United States is to be a partner, not a patrón. Reflecting on the prospects for Bolivian progress, Edmundo Flores, a prominent Mexican economist who had worked in Bolivia on land reform issues in the 1950s, wrote: Towards the end of 1951 I wrote a little paper saying that with all the changes the various South American countries were contemplating, such as teaching the Indians how to read and how to adopt new techniques, the Indians were bound to remain in the same abysmal conditions of living until they get full citizenship—until they were absorbed into their countries and taught to become Peruvians, Colombians, or Bolivians.95

In a bold effort to keep pace with the ’52 Revolution, Paz Estenssoro decreed that Indians were citizens and had the right to vote. Elections soon followed. Though it was also declared that nationbuilding departments would be designed to address the economic and social needs of Bolivia’s indigenous population, the path pursued by teams of Bolivians and US citizens to build these institutions proved more difficult than even the most realistic and pragmatic US development professional could have imagined. Notes 1. “Mutual Security Program, Volume 2, Fiscal Year 1955, Latin America,” pp. 443–447, and Stephen G. Rabe, Eisenhower and Latin America:

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The Foreign Policy of Anticommunism (Chapel Hill: University of North Carolina Press, 1988), pp. 64–65. 2. “Mutual Security Program, Volume 2, Part 2, Estimates Fiscal Year 1956 Regional and Country Program Detail, Latin America, Non-Regional Programs,” revised July 8, 1955, p. 364. 3. Shortly after Harold Stasson was appointed the first administrator of FOA, civil service rules were suspended while the new agency was being organized. General Schedule-13 employees and above were given a standardized test designed to determine if current employees were qualified to remain in the new agency. There was the perception that regardless of how one scored, if you were a Republican you were in, and more often than not, Democrats were out. If you were fired, it was commonly referred to as a “Stassination.” Interviews with Felix J. Lapinski (former Point 4 and USAID employee), Washington, D.C., March 2002, and Norman Cohen, (former USAID employee), Washington, D.C., December 2006. 4. https://en.wikipedia.org/wiki/Food_for_Peace. 5. Ibid.; Leslie Leach and Charles Hanrahan, “P. L. 480 Food Aid: History and Legislation, Programs, and Policy Issues” (Congressional Research Service, April 6, 1994), pp. 2, 10–11; and Randy Schnept, “U.S. International Food Aid Programs: Background and Issues” (Congressional Research Service, April 1, 2015), pp. 1–5. 6. Leach and Hanrahan, P. L. 480 Food Aid, pp. 5, 12–15, and Roberta K. van Haeften, “Title III: How It Works,” LAC TECH Bulletin 12 (June 1995): p. 1. 7. “U.S. Overseas Loans and Grants: Obligations and Loan Authorizations; July 1, 1945–September 30, 2015 (Greenbook)” (USAID Washington), p. 94. For more details see http://explorer.usaid.gov. 8. People of indigenous heritage who have some Spanish blood or who have adopted elements of Spanish dress, language, and/or culture. They are also referred to as mestizos. 9. Herbert S. Klein, Bolivia: The Evolution of a Multi-Ethnic Society, 2nd ed. (New York: Oxford University Press, 1992), p. 232. 10. Ibid., pp. 232–233. 11. The owner of a hacienda. 12. Dwight B. Heath, Charles J. Erasmus, and Hans C. Buechler, Land Reform and Social Revolution in Bolivia (New York: Praeger, 1969), pp. 42–43. 13. O. M. Powell, “The Bolivian Plan for Economic Diversification,” Foreign Service Dispatch no. TOTEC 64, August 31, 1953, p. 1. 14. “Letter from Alfonso Gumucio, president of the Bolivian Development Corporation, to Walter Guevara, Minister of Foreign Relations, June 27, 1953, La Paz, Bolivia,” National Archives, Records of Foreign Assistance or Agencies, 1948–1961, Mission to Bolivia (hereafter: Nat. Archives, Bolivia). 15. E. A. Gilmore, Jr., “President Paz’s Independence Day Message,” Foreign Service Dispatch 79, August 19, 1955, pp. 6, 8. 16. Ibid., p. 16. 17. Catherine M. Conaghan and James M. Malloy, Unsettling Statecraft: Democracy and Neoliberalism in the Central Andes (Pittsburgh, PA: University of Pittsburgh Press, 1994), p. 41. 18. “Point Four in Bolivia 1942–1960: Programs of Technical Cooperation and Economic Assistance” (USOM Bolivia, December 1960), p. 5.

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19. “Letter from Stanley Andrews, administrator, Technical Cooperation Administration, to Oscar Powell, US director of Technical Cooperation, US Embassy, La Paz, Bolivia, August 21, 1952,” Nat. Archives, Bolivia, p. 1. 20. Committee on Government Operations, Permanent Subcommittee on Investigations, 86th Congress, “Administration of United States Foreign Aid Programs in Bolivia,” report 1030 (Washington, D.C.: Government Printing Office, 1960), pp. 2–3. 21. Ibid., pp. 2–3, 9–17, 24–25. 22. “Mutual Security Program, Estimates Fiscal Year 1954,” July 3, 1953, p. 109. 23. Milton Eisenhower, The Wine Is Bitter: The United States and Latin America (New York: Doubleday and Company, Inc., 1963), p. 194. 24. Cole Blasier, “The United States and Revolution,” Beyond the Revolution: Bolivia Since 1952, in James M. Malloy and Richard S. Thorn, eds. (Pittsburgh, PA: University of Pittsburgh Press, 1971), pp. 71–72. 25. Eisenhower, The Wine Is Bitter, p. 67. John “Johnny” Johnson, professor of Latin American history at Stanford University, told the following story at the Foreign Service Institute in the winter of 1967, when he was giving a lecture in the Latin American Area Studies Program for foreign service officers, which the author attended. Johnson and a group of Latin American “academic types” went with Milton Eisenhower to see President Eisenhower to explain the nature of the ’52 Revolution. They argued that Bolivia needed this revolution to support the “little guy,” and it was in the interest of the United States to support Bolivia and in turn the ’52 Revolution. Johnson and his colleagues reasoned that supporting Paz Estenssoro and the MNR would preempt the Soviets from subverting the ’52 Revolution. 26. Victor Andrade, My Missions for Revolutionary Bolivia, 1944–1962 (Pittsburgh, PA: University of Pittsburgh Press, 1976), p. 173. 27. Blasier, “The United States and Revolution,” p. 74. 28. Andrade, My Missions, p. 173. 29. Leach and Hanrahan, “P. L. 480 Food Aid,” pp. 2, 10–11; Schnept, “Food Aid Programs,” pp. 1–5; and “An Assessment of the Impact of USAID’s P L-480 Title II and Title III Programs on the Poor in Bolivia” (Strategies for International Development for USAID Bolivia, June 1995), p. 20. 30. The author. The reports that were prepared by the Bolivian government unit that tracked the PL480 local currency generations were stored in a warehouse in El Alto. The disposition of these reports is unknown. 31. “Mutual Security Program, Estimates Fiscal Year 1954, July 3, 1953” p. 114; “Mutual Security Program, Volume 2, Fiscal Year 1955, Latin America, Country: Bolivia,” pp. 461–464; “Mutual Security Program, Volume 2, Part II, Estimates Fiscal Year 1956 Regional and Country Program Detail: Latin America, Non-Regional Programs, section iii” pp. 369–372; and “Mutual Security Program, Distribution of Fiscal Year 1957 Program by Projects for Countries in Europe, Near East, and Africa, Asia, Latin America, Country: Bolivia,” pp. 156–157. 32. “Point Four in Bolivia, 1942–1960,” pp. 86–91. 33. “Audit Report No. 66-1 on Servicio Agricola Interamericano (SAI),” USAID Bolivia, p. 8.

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34. Stanley Andrew, D.C. Myrick, and Glenn R. Sampson, “Bolivian Agriculture: Its Problems, Programs, Priorities, and Possibilities” (USDA for USAID Bolivia, August 1962), p. 90. 35. “SAI Informe de Actividades: Julio 1956–Marzo 1960,” Ministerio de Agricultura, p. 1. 36. “Agricultural Development in Bolivia: A Sector Assessment” (USAID Bolivia, August 1974), pp. 207–209. 37. Ibid. 38. “Preliminary Historical Review of Rural Development Division” (USAID Bolivia, December 1970), p. 88. 39. “Agricultural Development in Bolivia, Sector Assessment,” pp. 207–209. 40. Stanley, Myrick, and Sampson, “Bolivian Agriculture,” p. 95; Jerry Ladman, Ronald Tinnermeier, and Isaac Torrice, “Agricultural Credit Flows and Use in Bolivia” (USAID Bolivia, March 15, 1977), p. 98; and Tom C. Royden, “Country Study: A Review of Small Farmer Credit in Bolivia” (Utah State University for USAID Bolivia, September 1972), pp. 21–22. This study was published as a part of USAID’s Spring Review of Small Farmer Credit in Small Farmer Credit in South America, vol. 3, no. SR 103, February 1973. 41. “Preliminary Historical Review,” p. 71, and Royden, “Country Study, Bolivia,” p. 22. 42. Royden, “Country Study,” p. 23. 43. Ibid. 44. Ibid. 45. James Bleidner, Point Four: Memories of a Foreign Service Officer (Winter Haven, FL: Power of One Publishing, 2002), pp. 53–87. Also see Marjory Wylam Bleidner, Alligators on My Roof: An Autobiography (New York: Vintage Press, 2001), pp. 197–234. 46. Seymour Rotter, “Rural Development in Bolivia 1966–1967: An Analysis of Some of Its Major Aspects” (USAID Bolivia, June 1967), p. 31. 47. SAI Informe de Actividades, p. 1. 48. Ibid. 49. Andrew, Myrick, and Sampson, Bolivian Agriculture, p. 39. 50. Interview with Irving Tragen (USAID Mission director to Bolivia, 1965–1968), Washington, D.C., January 1982, and Andrew, Myrick, and Sampson, Bolivian Agriculture, p. 11. 51. Andrew, Myrick, and Sampson, “Bolivian Agriculture,” p. 11. 52. Merwin L. Bohan, “Report of United States Economic Mission to Bolivia” (State Department, August 15, 1942), pp. 1–9. 53. “Report of Santa Cruz Area Development Mission” (USAID Bolivia, September 1954), pp. 15–16. The report went on to say, “The president of Bolivia and those of his ministers and advisers who are directly concerned with the economic, agricultural, and population policies and problems of the country are agreed that in immigration lies the source of bolstering the Bolivian economy and productive capacity, especially through an expanded agriculture.” 54. Ibid., p. 24. 55. “Agricultural Development Bolivia, Sector Assessment,” p. 218. 56. Ibid., pp. 218–219. Also see “Capital Assistance Paper: Bolivia; SubTropical Lands Development,” AID-DLC/P-2034 (USAID Bolivia, May 28, 1974), pp. 39–47.

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57. Edward J. Rowell, “Resettlement of Okinawan Immigrants in Bolivia,” Foreign Service Dispatch no. 32, July 14, 1953, and C. H. Zondag, “AIRGRAM: FOA Project Agreement to Be Financed for Local Expenses for Colonization Programs in the Underpopulated Areas of Bolivia,” TOICA A284, October 14, 1955. 58. “Capital Assistance, Boliva, Sub-Tropical Lands Development,” (USAID Bolivia, May 28, 1974) pp. 1–3 Annex III, Description of Project. 59. “Bolivia; Rural Access Roads,” AID-DLC/P-2171 (USAID Bolivia, June 8, 1976), p. i. 60. “Agricultural Development in Bolivia,” pp. 220–222. 61. Ibid., p. 222. 62. Bohan, “Report of US Economic Mission to Bolivia,” p. 126. 63. Point Four in Bolivia, 1942–1960, p. 33. 64. Cornelius H. Zondag, The Bolivian Economy, 1952–1965: The Revolution and Its Aftermath (New York: Praeger, 1966), p. 129, and “Point Four in Bolivia, 1942–1960,” p. 33. 65. “Point IV in Bolivia, 1942–1960,” pp. 31–33. In a telephone interview with Edward Marasciulo in August 2003, he explained the operation of the Bolivian-US Servicio de Caminos. Marasciulo was a program officer in Bolivia in the mid-1950s and assisted in preparing the documentation that funded the Servicio de Caminos. 66. “Point IV in Bolivia, 1942–1960,” p. 33.With regards to Bolivian Army Engineers constructing roads with USOM Bolivia funds in the 1950s, this was reconfirmed in conversations/interviews with Dante Pavisch, a colonel in the Bolivian Army who supervised these projects and received training with the US Army Engineers in the United States (Santa Cruz, Bolivia, 2003 and 2004). In telephone conversations with Marasciulo, he explained that the USOM Bolivia supported roads constructed by Bolivian Army Engineers in the 1950s with local currency funds provided by USOM Bolivia. 67. “Point IV in Bolivia,” 1942–1960, pp. 30–33, 38–39, 86–87, 89–90. 68. “Bolivia Health Sector Assessment” (USAID Bolivia, January 1975), pp. 390–397. 69. Ibid. 70. Ibid., pp. 389, 397–402. 71. Robert J. Alexander, The Bolivian National Revolution (New Brunswick, NJ: Rutgers University Press, 1958), pp. 84–87. 72. Ibid., p. 86. 73. Ibid., p. 89. 74. “Education in Bolivia: A Preliminary Sector Assessment,” (USAID Bolivia, July 1974,), Part 6, pp. 1–2. The US government’s support of $2.3 million dollars for the period from 1944–1963 was the critical factor in structuring the Education Servicio to pursue the educational reform as envisaged by Paz Estenssoro. During this nineteen-year period, sixty US educational technicians came to Bolivia on long-term tours. They were supported by 272 Bolivian technicians and administrative staff. 75. Ibid., pp. 1–3, Part IV. 76. Ibid., p. 4, Part IV. 77. Committee on Government Operations, Permanent Sub-committee on Investigations “Administration of US Foreign Aid,” (Washington, D.C., Government Printing Office, 1960) p. 4.

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78. Ibid., pp. 26–27. 79. “Bolivia Health Sector Assessment,” pp. 390–397. 80. Ibid., p. 389. 81. Alexander, Bolivian National Revolution, p. 91. 82. Ibid., p. 90. By 1962, the USAID Mission reported even more accomplishments including 218,774 children attending rural schools and the total school population at 525,332. The number of rural schools had increased to 5,699, and the number of rural teachers had increased to 7,985. See “Development Assistance Program, FY 1975” (USAID Bolivia, November 1973), p. 4. 83. “Point Four in Bolivia, 1942–1960,” pp. 23–25, 87–89. 84. Committee on Government Operations, Administration of US Foreign Aid, Report 1030, pp. 10–11. 85. Ibid., p. 11. 86. Ibid., p. 12. 87. Ibid., pp. 12–17. 88. The author, when stationed in Bolivia with the USAID Mission in the late 1960s, purchased milk from the Cochabamba facility. The bottled milk with a coat of road dust on it was brought on a truck each night from Cochabamba to be delivered to households in La Paz in the morning. Regardless of the conclusions reached about this project at the end of the 1950s, there were many American families, had they known that the Cochabamba facility was funded by the US government, who would have hailed the project as a stunning example of Yankee ingenuity! 89. Paul W. Drake, The Money Doctor in the Andes: The Kemmerer Missions, 1923–1933 (Durham, NC: Duke University Press, 1989), pp. 175– 211. 90. Cornelius H. Zondag, “Problems in the Economic Development of Bolivia” (USOM Bolivia, November 1, 1956), pp. 22–24. 91. A debate continues to simmer as to whether there was actually a drop in food production in the 1950s immediately after the ’52 Revolution, when Aymara and Quechua farmers effectively took possession of the land that many of them had been farming since the colonial period or even before. Ronald Clark, who was with the Wisconsin Land Tenure Center, University of Wisconsin, argued that production actually increased, but instead of sending surpluses to market in urban areas, it remained on the farms to be consumed by the farm families who had recently taken possession of the land. The scarcity of food was so dire in urban areas that even US and Bolivian USOM employees where provided access to PL480 food. Telephone interview with Edward Marasciulo (August 2003), who was in the Program Office in La Paz in the 1950s. 92. “U.S. Overseas Loans and Grants,” (Greenbook) p. 94. 93. “Point IV in Bolivia, 1942–1960,” pp. 11–12. 94. Ibid. 95. Edmundo Flores, Land Reform in Bolivia: An Informal Discussion, “The Progress of Land Reform in Bolivia,” discussion paper 2 (Land Tenure Center, University of Wisconsin, May 1963), p. 4.

5 The Alliance for Progress: John F. Kennedy and Lyndon B. Johnson, 1961–1969

A golden age of poetry and power Of which this noonday’s the beginning hour. —Robert Frost1

Washington: A Clarion Call

In his inaugural address on January 20, 1961, President John F. Kennedy challenged US citizens to join him in a peaceful revolution “to abolish all forms of human poverty”2 throughout the world. Regarding Latin America, Kennedy proclaimed: To our sister republics south of our border, we offer a special pledge: to convert our good works into good deeds, in a new alliance for progress, to assist free men and free governments in casting off the chains of poverty. But this peaceful revolution of hope cannot become the prey of hostile powers. Let all our neighbors know that we shall join with them to oppose aggression or subversion anywhere in the Americas. And let every other power know that this hemisphere intends to remain the master of its own house.3

Despite a noteworthy effort on the part of the Eisenhower administration to reorganize and strengthen the US government’s development assistance bureaucracy, the perception persisted that US foreign assistance too often ended up in the hands of unprincipled dictators. The ugly protests directed at Vice President Nixon, when he visited Venezuela in 1958, served as a harsh reminder of the unpopularity of the United States, which was seen as propping up one

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detestable regime after another throughout Latin America. In general, the US public was uncomfortable with the notion of foreign aid for Third World countries, particularly since there were so many problems at home urgently needing attention. Kennedy described the people in “huts and villages”4 across Latin America as being on the brink of revolution. Change was inevitable, and the challenge was to encourage Latin American nations to follow a development path consistent with the interests of the United States and the aspirations of Latin America. The immediate problem was to foster a program that would demonstrate to Latin Americans that the United States wanted to be a good neighbor and could be counted on to do the right thing. What emerged after Kennedy’s inauguration were the broad outlines for a program that would become the Alianza para el Progreso (Alianza). The Alianza was conceived as an updated version of the Good Neighbor Policy with elements of the Marshall Plan. Kennedy believed that a soundly administered development program would be a potent weapon in the fight against communism that was looming ever larger in Latin America. He argued that the Alianza must be seen as addressing the economic and social issues of the Latin American masses; only then could the United States and its Latin American partners form a bulwark against communism in the Americas. Arthur Schlesinger, resident historian and President Kennedy’s peripatetic gadfly, observed that the Alianza “sought to remove our assistance from the framework of the cold war and relate it to the needs of nations struggling for their political and economic fulfillment.”5 In March 1961, just two months after his inauguration, Kennedy met with the Latin American diplomatic corps in the White House. He announced the Alianza, explaining that it was to be a “vast crucible of revolutionary ideas and efforts.”6 The diplomats in attendance were hopeful that a new era in Latin American-US relations was in the making—that Rodo’s Caliban was morphing into an Ariel. Development Models: Trickle Down Versus a Bottom-Up Approach

The development model, which had the greatest currency in the early 1960s, was articulated in Walt Rostow’s The Stages of Economic Growth: A Non-Communist Manifesto.7 Rostow presented a theory of economic growth nourished by capitalism in sharp contrast to Marx’s theory of how societies and their economies evolve. The engine for economic development in Rostow’s paradigm was private investment as the means to achieve growth and industrial wealth. Increased per capita

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income and the growth of gross national product were the indicators most critical to measuring success. Once an urban industrial base was established, the benefits would begin flowing to the people, first in the urban areas and eventually to the rural areas. At approximately the same time Rostow’s book appeared, a new idea was beginning to work itself into the foreign assistance legislation. Its essence was that poor people mattered and should play an explicit role in the development process. The Humphrey Amendment to the 1961 Foreign Assistance Law encouraged support for cooperatives, credit unions, and labor unions,8 and in 1962, the Zablocki Amendment to the Foreign Assistance Act stated: Wherever the President determines that the economy of any country is in major part an agrarian economy, emphasis shall be placed on programs which reach the people in such country, including programs which will assist them in the establishment of indigenous cottage industries, in the improvement of agricultural methods and techniques, and which will encourage the development of local programs of selfhelp and mutual cooperation.9

This concern for the farmers and their community in the development process was a subject of sustained congressional interest and led to its enactment of Title IX of the Foreign Assistance Act in 1966. Congress directed the United States Agency for International Development (USAID) to support projects that assured “maximum participation in the task of economic development on the part of the people of developing countries, through the encouragement of democratic private and local governmental organizations.”10 US economic support was intended to assist in stimulating the emergence of local institutions that would advocate people’s direct involvement in economic, social, and political processes at the grassroots level. At the center of this approach was the belief that it was obligatory to have the rural poor directly engaged in the projects that were designed to improve their economic well-being. This became known as the “bottom-up” approach.11 Bolivia would be the setting for some of the most innovative Title IX projects that stood in contrast to the “trickle-down” model advocated by Walt Rostow. Kennedy Launches a Decade of Development

In a message to Congress on March 22, 1961, Kennedy called for “launching a Decade of Development on which will depend . . . the kind

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of world in which we and our children shall live.”12 Before proposing the Foreign Assistance Act of 1961, Kennedy had created a presidential task force to review past aid efforts.13 The task force concluded that Eisenhower’s program had “for the most part been of great value.” However, there were “several important instances” in which expectations were not realized, and the “implementation of the program has often resulted in waste.”14 One Kennedy advisor described the International Cooperation Agency (ICA) machinery as having “bureaucratosclerosis.”15 Influencing the public debate regarding the direction that a refurbished foreign assistance program might go was Eugene Burdick’s novel, The Ugly American,16 which portrayed the shortcomings of US foreign aid in a series of edgy anecdotes. Made into an engaging movie, starring Marlon Brando, millions of US taxpayers were entertained by the apparent deficiencies and at times unfortunate and unintended consequences of the US government’s nation-building efforts in the Third World. In the first congressional presentation prepared by the Kennedy administration, the overarching theme of the new development program was “helping people to help themselves.”17 Instead of a series of unrelated activities, or a “bits-and-pieces operation,”18 the task force recommended that assistance be “long-term support for development plans created by the less-developed nations themselves” and recognized that “the effectiveness of any country development program depends in the last analysis upon that country’s acceptance and fulfillment of its own responsibilities.” Consequently, any country receiving assistance would be encouraged to make substantial contributions to any activity supported by the US government. US programs supporting “economic and social growth . . . should permit each nation to develop in its own image.” Explicit in the new development agenda forged by the Kennedy administration was the premise that each nation should be pursuing a development path that makes sense for that nation.19 The task force observed that there was a dearth of analysis for development activities funded in Latin America during the previous two decades. This lack of analysis made it nearly impossible to determine what had worked, and if there were failures, what factors contributed to the failures. What had previously substituted for planning in many underdeveloped countries was little more than a wish list of heavy infrastructure projects that would be given to every donor. In response to this woeful situation, the task force recommended that a planning and budgeting process be structured in the Washington bureaucracy as well as in each field mission. The task force presumed that this would lead to recipient countries creating their own planning and budgeting process,

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which would include executing rigorous assessments of the requirements for undertaking development activities, determining priorities, and identifying the goods and services required to implement each new project.20 Fidel Castro’s Cuba and the Alianza

Before his inauguration, Kennedy learned from Allan Dulles, director of the Central Intelligence Agency (CIA), that Eisenhower had authorized the CIA to prepare Cuban exiles for military action against the Castro regime. Eisenhower is reputed to have said that it was “the policy of this government” to help anti-Castro elements “to the utmost” and recommended that “this effort be continued and accelerated.”21 For months, it was widely discussed in hushed tones throughout the Miami Cuban community that anti-Castro activists were preparing an invasion of Cuba. It was such a poorly kept secret that an authoritative source, the Hispanic American Report published at Stanford University, reported that the CIA was training exiles in Guatemala for an invasion of their homeland.22 Shortly after Kennedy’s inauguration, the invasion of Cuba by a brigade of 1,400 anti-Castro guerillas was executed. It ended in utter failure. 23 Two colossal errors of judgment on the part of the US military and the intelligence community contributed to the making of this dreadful misadventure. There was a complete breakdown in intelligence gathering and analysis at the CIA, resulting in the fallacious assumption that Cubans would flock to support the cause of the CIA-backed paramilitaries once they had established a beachhead in Cuba. This error in judgment was coupled with a military operations plan so wrongheaded that it is impossible to understand how its weaknesses escaped the scrutiny of the Joint Chiefs of Staff. The result was the death or capture of most of the members of the anti-Castro brigade that took part in the amphibious assault at the Bay of Pigs. This searing disaster was a crucial factor in galvanizing Congressional support for the Alianza. Declarations at the Punta del Este Charter

In August 1961, the Inter-American Economic and Social Council (ECOSOC), a branch of the Organization of American States, met at Punta del Este, Uruguay, to discuss the merits of the Alianza. Representing the United States, Douglas Dillon, Kennedy’s secretary of treasury, told the delegates that theirs was a “revolutionary task.” Che Guevara, who represented Cuba at the meeting, argued the Cuban view

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of revolution for Latin America.24 Twenty nations including Bolivia pledged to support the Punta del Este Charter that proclaimed the Alianza’s goals: To improve and strengthen democratic institutions. . . . To accelerate economic and social development. . . . To wipe out illiteracy. . . . To press forward programs of health. . . . To this end the United States will provide a major part of the minimum of 20 billion dollars.25

The representatives from Cuba and the United States had argued two distinct approaches, each claiming to be revolutionary. In the market place of development ideas, the United States had bested Cuba. The Proclamation of Punta del Este prescribed the Yankee approach for battling for the hearts and minds of Latin Americans. In Bolivia, both approaches for promoting development would be tested. The United States Agency for International Development26

On November 3, 1961 President Kennedy created USAID by executive order. Though USAID was formed as an independent agency, it was directed to operate “subject to the foreign policy guidance of the President, Secretary of State, and the National Security Council.”27 To institutionalize a process focused on defining a country’s problems and the development program in which USAID would be directly involved, staffing changes were made in USAID Washington and USAID’s field missions. The ICA bureaucracy in Washington had been organized and staffed along technical lines, i.e., agriculture, education, and health offices. The task force’s new formulation called for USAID to be organized along geographic lines with program officers and economists leading the analytical process. The task force also had recognized the need to develop a planning, programming, and budgeting capacity in Washington as well as in each field mission. Bureaus with geographic responsibilities were established for Asia, Africa, and Latin America. Each geographic bureau had a program office staffed with development generalists and economists that would review long-term development plans that were prepared by each USAID Mission. In turn, each Mission had a program office staffed with development generalists and economists who were responsible for articulating a country development plan that demonstrated how the Mission’s grant and loan-funded projects fitted into a long-term, strategic plan.

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Figure 5.1 United States Agency for International Development

In the 1960s, there were two large, well-staffed bureaus in USAID Washington—the Bureau for Policy and Program Coordination (PPC) and the Technical Assistance Bureau (TAB). Their staffs would review and evaluate country development scenarios from their Olympian perches. In theory, these Washington-based bureauocracies existed to support the USAID Missions. In fact, some field officers found the Washington bureaucrats too remote from the field operation and harbored suspicions as to the relevancy of Washington’s musings. On the other hand, the officials who staffed PPC and TAB often complained that USAID Mission officials were not sufficiently attuned to USAID Washington’s policy pronouncements. For the most part, these differences resulted in creative tensions that enriched the dialogue between USAID Washington and the Missions. PPC was responsible for guiding the planning process and allocated the financial resources to the geographic bureaus that in turn reviewed the programs in their region and reallocated resources to support country programs. It was not until the mid-1970s that PPC took the lead in developing an agency-wide evaluation capacity and was charged with being USAID’s memory bank. Resplendently staffed with a variety of scientists and social scientists, TAB was responsible for ferreting out bright ideas that could be translated into projects that would accelerate progress in the country setting. As such, it was the applied research arm of USAID. One of the key responsibilities of each of these central bureaus was to be on the lookout for a “silver bullet” that would have universal application and

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fast track the development process in Third World countries. In the 1960s, there was a sense in USAID that the agency was at the forefront of the development community in understanding the development challenges facing throughout the developing world. (See Figure 5.1.) Loans and Grants

During the Kennedy administration, the Development Loan Fund which was created during the Eisenhower administration was transferred to USAID. Subsequently a loan office was organized in the Latin American and Caribbean Bureau (LAC) to manage the loan approval process, and capital development officers (CDOs) were assigned to most of the USAID Missions in Latin America to manage the design and implementation phases of loan administration in the field. Generally, loans were for “heavy” infrastructure projects—roads, bridges, and irrigation works. From a development standpoint, a loan usually involved little risk, and its implementation was a straightforward affair when compared to grand-funded projects. In the 1960s, the documentation and approval process ordained by the Washington bureaucracy for US dollar loans was rigorous. CDOs had a bit of a swagger about them as they worked the LAC bureaucracy. The meeting for a loan’s approval was managed with a degree of formality and solemnity unknown in other parts of LAC’s bureaucracy. Because the US government subsidized the interest rate of a USAID loan, the loan was commonly referred to as a “soft” loan. A debt servicing annex had to be prepared for each dollar loan, and it was not unusual to hear the resident CDO jest that if the resident USAID economist could not develop an acceptable debt servicing annex, the CDO would go out and find one who could. A justification in support of a loan was often that the “soft” terms and the yearly rate of inflation ensured that by the time the loan was due to be repaid, most of the loan was in reality a grant. Certainly many CDOs felt in their guts that ultimately the Bolivian government would default on their USAID dollar loans. In fact eventually the US government stopped making loans to Bolivia, and the repayment of USAID loans was forgiven. When compared with loan projects, grant projects were more experimental. Most grants were concerned with building institutional capacity that had the goal of delivering basic services to people. Agriculture, education, and public administration led the list of grant activities funded throughout Latin America in the 1960s. A grant project was identified and designed in the field. There was a lot of trial and error and redesign in the grant project process; in USAID vernacular, grant-

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funded projects were “rolling designs.” The process of identifying, designing, implementing, and evaluating projects was dynamic, with US employees and their host country counterparts working hand in hand as a project passed through these phases and moved toward achieving the goal of the grant. USAID Missions around the world had been charged by Kennedy’s task force “to make realistic assessments of needs and capabilities, to establish priorities, and to insure a proper balance of the varying kinds of goods and services which are required at varying stages of development.”28 Regardless, most USAID Missions in Latin America cast a wide net supporting projects in nearly every area of economic and social development. Scarcely any development caprice proposed by either US employees or their local counterparts went unfunded. The rationale was that every project depended on every other project and thus was critical to balanced and comprehensive development. Sir Thomas More, who published his Utopia in 1516, would have been in full accord with this holistic approach promoted by US development bureaucrats. To ensure accountability, transparency, and concurrence between US employees and their counterparts in the grant project, a comprehensive documentation process was put in place in the 1960s that itemized each significant aspect of a project including its technical assistance, training, and commodity components. This resulted in reams of documents negotiated and signed by many players in the host country and the USAID Mission. To succeed in the development game, it was crucial that both the generalist programmer and the technical officer be totally immersed in this bureaucratic process. Throughout the Kennedy and Johnson administrations, each USAID Mission would submit all grant and loan projects to USAID Washington for review in the project budget submission (PBS). Though every Mission had to justify every grant project every year to Congress, the review process of the PBS in Washington was more a formality than an assessment in which substantive decisions were made. As long as there was an ample dollar appropriation for grant activities, the Washington review process was a low hurdle to negotiate. It was assumed that if you could document progress, no matter how modest, funding for your grant projects would be available. Another assumption was that development expenditures would certainly bear results if the USAID officers in the USAID Missions were assiduous in their efforts.

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USAID Bureaucrats on a Short Leash

The President’s first congressional presentation for foreign operations emphasized that foreign assistance should not be “endless,” and with a fanciful flourish, the anonymous authors of the presentation ventured that: During the decade of the Sixties, expect to see a significant number of recipient nations become capable of continuing their growth out of their own resources and from normal commercial borrowing. . . . By the close of the decade, a number of the major nations of Latin America should have achieved self-sustaining growth. . . . As nearly as can be calculated, the Sixties will be a decade of peak requirements for external assistance to the less developed areas of the free world.”29

When USAID was created, the prevailing attitude in the Executive Branch and the US Congress was that the development tasks to be undertaken by USAID could be accomplished in a defined period of time, in much the same manner that the US government had administered the Marshall Plan in Western Europe. When the legislation governing the career status of personnel filling the ranks of USAID was passed in 1961, it stated that the foreign service reserve (FSR) officer in USAID could serve for the “duration of the operations” of USAID. The major distinction between the foreign service officer (FSO) in the State Department and the FSR in USAID was that the FSO was selected to join a permanent Federal bureaucracy as contrasted with the FSR who was joining USAID, which was a bureaucracy that would cease to operate when USAID had completed its objectives. Another important distinction was that the FSO had to pass intellectually muscular written and oral examinations that emphasized the eclectic knowledge required of a diplomat. On the other hand, the FSR was seen as a technician who already possessed the skills that he or she could readily apply to the nitty-gritty, technical problems of development in the Third World.30 When USAID’s administrator, David Bell, was asked if USAID would finish its work in a specific period of time, he replied: I don’t think it will happen for 10, 15, 20 years perhaps. . . . But it certainly will terminate in many places before then, and it may terminate completely before then. The personnel system that is used must be compatible with the possibility of terminating any part or all of the program which may not last too long.31

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In other words, USAID was conceived as a temporary agency with temporary staff, which was expected to work itself out of a job within a reasonable period of time yet to be determined. The rationale for creating a temporary organization to administer an international development assistance program was discussed in Inside Foreign Aid by Judith Tendler. She concluded: Of course, the placing of a terminal date on the assistance commitment may have been more a political maneuver on the part of aid proponents than a realistic assessment of what would happen. Aid proponents were said to have calculated that Congress would never authorize the funds unless it was promised the program [USAID] would eventually come to an end, sooner rather than later.32

A Spirited Transition with Mixed Results

USAID’s newspaper, the Front Lines, proclaimed that the USAID Mission was on “the front lines of a long twilight of struggle for freedom,” and USAID employees were encouraged to perceive themselves as striking development blows for impoverished nations throughout the Third World. The State Department, the United States Information Agency, the CIA, the Peace Corps, and USAID, each attracted some of “the best and the brightest” that US society had to offer. Each of these agencies, in its unique way, would play a critical role advancing the Alianza, with USAID being central to the US government’s development assistance effort. To burnish the image of the Alianza, the president appointed Ted Moscoso to be coordinator for the Alianza. In the late 1940s and 1950s, Moscoso played a key role in promoting development in Puerto Rico. He was responsible for creating Fomento, Puerto Rico’s industrial development agency, and played the pivotal role in advancing Operation Bootstrap, whose mandate was to reduce Puerto Rico’s dependency on agriculture through implementing a program of industrialization.33 Fowler Hamilton was selected as USAID’s first administrator. A stern taskmaster, Hamilton quickly dispatched Doc Fitzgerald “into administrative limbo.” It came as no surprise, given the key role that Fitzgerald had played shepherding ICA during the Eisenhower administration, that upon his retirement in 1962, Fitzgerald characterized the Kennedy administration’s approach to reforming development assistance as a “fanciful contention that brilliant new policies, bright new administrators, and brand new organization” was the answer to fixing the foreign assistance program. Having shunted

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Fitzgerald aside, Hamilton initiated the ticklish process of diminishing the role of the “technical assistance specialist”34 and in turn elevating the role of the development generalist and the economist, restructuring USAID along geographic lines, and putting businessmen in key management positions. Operation Tycoon was created to attract business executives from the largest and most successful US companies. When Robert McNamara, secretary of defense, heard of the program, he remarked, “Out of about 10 per cent you will get some good people. But 90 per cent of the ones you get won’t be any good at all.” One Kennedy appointee concluded that most of the business executives who made their way into major management positions had little more to offer than regularly observing: “That’s not the way we did it at Procter and Gamble.” Reshaping the USAID organization while supporting day-today operations proved more difficult than initially anticipated. As one administration appointee observed, reforming the aid program was analogous “to performing surgery on a man while he hauls a trunk upstairs.”35 Otto Passman, chairman of the House Appropriations Subcommittee on Foreign Aid, persisted in thwarting the Kennedy administration’s legislative initiatives, as did many congressmen who continued to perceive the newly constituted USAID as lacking in leadership and ineffectual in delivering foreign assistance.36 By 1963, Kennedy was convinced that a new administrator would have to be appointed to replace Hamilton. A blue-ribbon commission was established to review USAID’s performance. The commission concluded that though USAID was short on performance, it was in the national interest that the foreign assistance program be supported.37 Robert Lovett expressed the general attitude of the members of the commission: There had been a feeling that we are trying to do too much for too many too soon, and that we are overextended in resources and undercompensated in results, and that no end of foreign aid is either in sight or in mind.38

David Bell was selected to succeed Hamilton. A highly regarded economist, he had served as Kennedy’s director of the Bureau of the Budget. Bell had also worked in Pakistan with the Ford Foundation, where he had gained recognition for his ability to provide advice that translated development doctrine into realistic development activities. His appointment immediately resulted in the improvement of morale at USAID, and his “sober optimism” generated a positive sense that

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USAID could succeed in effectively providing aid assistance to Third World countries. An unexpected outcome of the musings of Kennedy’s blue-ribbon commission was a general understanding that the development rationale for the US government’s foreign assistance program was as important as the anticommunist rationale for obtaining political and financial support.39 Bolivia: Old and New Caudillos There is much poverty in my country. The communists have made themselves the advocates of the just demands of the workers and peasants. That makes it hard for us to oppose them without seeming to oppose what they might regard as a just social program. —President Victor Paz Estenssoro, in conversation with Arthur Schlesinger, Jr.40

Paz Estenssoro was reelected president in 1960, and Juan Lechín was elected vice president. Shortly after Kennedy’s inauguration, Paz Estenssoro traveled to Washington, and there the young and old presidents agreed that continuing a relationship, which had a large development assistance component, was in the national interests of both countries. A particularly sensitive issue, discussed at their meeting, was the strong communist presence in the Federación Sindical de Trabajadores Mineros de Bolivia, whose executive secretary was none other than Juan Lechín.41 Paz Estenssoro reassured Kennedy that he wanted Bolivia to continue down the same development path that had been supported by the US government throughout Eisenhower’s administration. To assert Bolivia’s control over the development agenda, Paz Estenssoro promoted a number of planning exercises that were managed by the Bolivian government. One such effort was executed by the National Planning Board, which produced the “Economic and Social Plan for Bolivia 1962/1971”42 (Plan). An ad hoc committee of experts selected by ECOSOC reviewed the Plan and determined that though it was inadequate as a long-term planning document, the Plan was useful as “a general reference framework with regard to the investment fields and priorities on which future action can be oriented.”43 Throughout the 1960s, the Bolivian government supported agriculture, health, and educational analytical exercises within the context of their commitment to a development path, which strived to harmonize the government of

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Bolivia’s revolutionary goals with the recommendations contained in the Bohan Plan44 and the goals of the Alianza. In spite of a constitutional provision that prohibited the president from succeeding himself, Paz Estenssoro sought and won the presidency again in 1964. To assuage the military, he chose as his running mate General René Barrientos. Shortly after Paz Estenssoro had been sworn in, a group of disgruntled military officers led by Barrientos drove him from office. The US government recognized the Barrientos government, and US assistance continued to flow with the new president upholding the legacies of the Movimiento Nacionalista Revolucionario (MNR) and the ’52 Revolution. Paz Estenssoro—philosopher king and founding father of the MNR; finance minister; political pragmatist with nods to fascism, communism, and capitalism depending on the circumstance; strident nationalist; vociferous critic of the United States; revolutionary; presidente and patrón of the Republic; nation builder; resolute supporter of the Alianza; friend of President Kennedy—had played many roles convincingly and with gusto. Was it time for the old caudillo to become a historical artifact? Certainly no one anticipated that there were more roles for him to play when he was forced from the political scene in 1965. In 1966, General Barrientos convincingly won election for the presidency, with the backing of a growing middle class, conservative business elements, the military, the bureaucracy, and Bolivia’s campesinos, particularly the Quechua whose language he spoke. With the exception of Ambassador Douglas Henderson, Barrientos had warm, cordial dealings throughout the US community. The frosty relations between Barrientos and Henderson probably reflected the ambassador’s distaste for the manner in which Barrientos came to the presidency by way of a military coup. Barrientos, who had received advanced flight training in the United States, was close to the leadership in the offices of the military attaché and in the US Military Group. They saw General Barrientos as one of their own. The general also had close relations with the CIA station chiefs during his presidency. On a number of occasions, Barrientos had shown strong interest in the USAID Mission’s development assistance program. He was particularly attracted to the National Community Development Program (NCDP), and the USAID’s mission director, Irv Tragen, accompanied Barrientos to inaugurate several community projects sponsored by the NCDP. In Quechuaspeaking areas, Barrientos could always be counted on to support USBolivian efforts to bring development to rural Bolivia.45

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USAID Mission Bureaucrats on a Development High Working in the USAID Mission

High Life in La Paz USAID officers and their families stationed in Bolivia in the 1960s would fly into La Paz from Lima. As one flew across the Altiplano and neared La Paz, one usually could catch a magnificent view of Lake Titicaca. On a bright day, the sunbeams bounced off Titicaca’s azure waters with breath-taking luminosity. Landing on the Altiplano at La Paz’s international airport could provide a unique physiological moment in one’s life. As one walked down the airplane’s stairs and off onto the Altiplano in the direction of a low lying, singularly unimpressive building, one might find oneself gasping for air and experiencing a feeling of light-headedness. Because this reaction was not unusual for first-time visitors, a Bolivian would miraculously appear with a cup of warm coca tea; if the situation was more serious, a bottle of oxygen would be offered to the breathless newcomer. The special hazard of living at such a high altitude was part of the rationale for providing every US government employee stationed in La Paz a 25 percent hardship allowance on top of the employee’s base salary.46 Driving down through El Alto, the small cholo village that served as the gateway to La Paz, one was struck by the primitiveness of the area. La Paz, founded by the Spaniards as a way station on the road to Potosi, was built on the side of a mountain stretching from the Altiplano at 12,500 feet down to eight thousand feet. Most USAID officials lived in the lower climes in Obrajes or still lower in Calacoto. In the 1960s, La Paz still had the feel of an early twentieth century large town. It had a few tall buildings, an occasional colonial structure to add panache to the city, and shells of unfinished buildings scattered here and there attesting to the slowness of the economy. The USAID Mission shared offices with the Embassy that was located downtown in La Paz. Younger officers with a propensity to run the steps from one floor to another would often find themselves in meetings struggling to catch their breath and even forgetting why they had showed up for the meeting. Many of the offices above the third floor had a panoramic view of the snow-capped mountain Illimani, which could make any day in the office seem worthwhile. However, living in La Paz was an austere experience, and services available on the open market were barely adequate. The provision of water, electricity,

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housing, and telephone communication each presented particular problems for US families. Decisionmaking in Washington and on the Development Frontier One of the strengths of USAID’s management of its vast bureaucracy was that decisionmaking was essentially decentralized. Decisions relating to development policy, the magnitude of resources to be allocated to a country, and the initial approval of projects were made in Washington. However, it was in the USAID Mission that the decisions regarding the design of a Mission’s project were made as well as almost every decision concerned with implementation of the project. Once a project was initiated, it was usually allowed to run its course with little or no interference on the part of the Washington bureaucracy. Both the number of projects and their complexity made monitoring a Mission’s program by USAID Washington difficult. Even with the availability of computers in the mid-1980s to compile, consolidate, and transmit information regarding the status of project implementation, Washington bureaucrats had but a frail understanding of what was actually happening in the field. Decisionmaking was a group effort, whether in Washington or the USAID Mission. All major decisions and many seemingly trivial details could be the subject of an endless stream of meetings held in Washington and to a lesser extent in the field. The meeting was the event where the generalist and the technician would join in dialogue, a.k.a. battle, to administer the project process. At meetings in Washington, ideas flowed freely with a lot of spontaneous participation from people coming and going. At a Washington meeting, someone was usually designated to take notes, document the follow-on actions, and distribute a memo to all participants. In the Mission, meetings were mostly concerned with the details of implementing projects and were unstructured affairs. At these meetings, notes were seldom taken, and the person who had the responsibility of taking actions based on the decisions taken at the meeting was entrusted to execute those actions according to the final dictates of the highest-ranking official in attendance.47 Ingrained routines in USAID Missions dictated the day’s actions to be pursued by Mission officials. The priority of the day was to be found in the pile of cables from Washington that demanded responses. Cables usually were about the operational details of grant and loan projects that needed prompt attention. Though a cable might be assigned a response time that ranged from “routine” to “immediate,” everyone in Washington expected a response as soon as it was possible to his or her

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cable. Also found in the in-box were Airgrams, which had been sent through the Diplomatic Pouch. Airgrams invariably were the latest “think piece” sent from geographic bureaus, PPC, or TAB. The trick was not to become a prisoner of your in-box. With experience one would eventually realize that much of its contents could be safely assigned to the wastebasket. To get away from interminable meetings and the mountainous in-box, US technicians in Bolivia could escape to the Altiplano, the high valleys, or down to the Oriente to follow a project’s implementation. Mission program officers and economists, on the other hand, were stuck in La Paz responding to the unremitting stream of inquiries from Foggy Bottom-based kibitzers. The Ambassador’s Country Team Throughout the Eisenhower administration and continuing into the Kennedy administration, the number of US government agencies operating overseas increased as did the number of US citizens in official capacities. (See Figure 5.2.) Figure 5.2 Organization of a Country Team

The ambassador, as the direct representative of the president, was formally designated the chief of mission and the “number two” carried the title deputy chief of mission. With no exception, every US government agency stationed at a foreign post worked for the ambassador and as such was an integral part of the Country Team. In the 1950s, a number of these agencies communicated directly to their Washington offices. In the early 1960s, all official US government agencies, including USAID, were directed to send all electronic transmissions through the State Department. This resulted in all

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electronic communications of the USAID Mission going to Washington under the signature of the ambassador and returning to the Embassy under the signature of the secretary of state. Most members of the Country Team understood that Bolivia was a complicated place and appreciated the advantages of exchanging information with other members of the Country Team. Nearly every week, the leadership of each component was obliged to attend the Country Team meeting to share ideas and highlight the courses of action to be followed by their respective component. As the years passed, Country Team meetings around the world would be moved deeper into the bowels of US Embassies to provide better security for the participants and to insure the privacy of their conversations. The setting for these meetings could not help but create a fortress mentality—sort of a “we” and “they” mentality that wasn’t particularly conducive to promoting a collaborative process with the host country. During the 1960s, the US Embassy was located on the upper floors of a commercial bank a short distance from Plaza Murillo, the political epicenter of Bolivia, where the National Congress, the Presidential Palace, and the Cathedral of La Paz were located. The embassy’s central location made it an easy target for all types of demonstrators who were constantly roaming Plaza Murillo and nearby Bolivian government buildings. In the first decade of the twenty-first century, the State Department constructed a new building sited at a lower elevation. The new embassy was a massive fortress-like structure, which was designed to project a sense of security for US government employees working inside. It was a bold statement that bellowed out with attitude to all Bolivians passing by that you “don’t want to mess with the United States of America.” (See Photos 5.1 and 5.2.) Though most ambassadors displayed consummate knowledge of the Bolivian scene and almost always spoke excellent Spanish, the ambassadors of the 1950s and 1960s seldom expressed an interest in the nuances of the development challenge. This situation was to change by the 1970s, as many senior members of the Country Team, as well as some ambassadors, had served in the Peace Corps and experienced the development challenge up close. Though USAID mission directors would have welcomed an ambassador who understood the nature of the development challenge, they would have difficulty tolerating a micromanaging ambassador who wanted to weed the development garden.

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Photo 5.1 US Embassy, La Paz, 1967

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Photo 5.2 US Embassy, La Paz, 2006

Staffing the USAID Mission Alex Firfer, a hard charging and tough talking operator, was an excellent choice in the early 1960s to lead the USAID Mission into a new era. He had cut his teeth on development problems working on Operation Bootstrap for Moscoso in Puerto Rico. Trained as an economist, Firfer had a penchant for detail and was quick to show displeasure with USAID officers who were not similarly inclined. Firfer played a major role in reshaping the Mission’s portfolio to conform to the legislative mandate of the Alianza. Irv Tragen replaced Firfer in 1965. A Foreign Service Officer (FSO) with the State Department, Tragen had spent his entire career working on Latin American affairs. The Kennedy magic was important for attracting young professionals to government service just when USAID was expanding and changing the composition of its officer ranks. The USAID Mission to Bolivia benefited from this recruiting effort, and a number of highly motivated professionals accepted the challenge that Bolivia offered. From the 1950s onward, the toughness of the development challenge in

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Bolivia presented a unique opportunity that always attracted development professionals. Both Tragen and Firfer took a personal interest in recruiting staff for the Bolivian Mission. The office dealing with personnel matters in Washington was never regarded as having much clout, and a strong Mission director often would play the key role in attracting high-quality development professionals to serve in the Bolivian Mission. The USAID Mission’s Program and Its Projects

After the proclamation of the Alianza, Firfer began a process of reshaping USAID’s program from projects that reflected a scattergun approach to an integrated strategy based on a planning process mandated by the legislation that created USAID. By the mid-1960s, Tragen was urging his staff to think strategically and bundle projects according to the Mission’s major objectives that included public administration, mining, infrastructure (roads and air transportation), agriculture, human resource, and private sector development.48 In their new management role, USAID Mission officials worked directly with Bolivian government departments in an advisory role, and Bolivian government officials would take the lead in managing the implementation of all projects. Several new projects reflecting Kennedy’s concern to help the poor in “the huts and villages” complemented the mandate of the ’52 Revolution to reach campesinos living on the Altiplano and in the high valleys. A question faced each year by the Mission director in Bolivia was whether sufficient progress was being made to warrant the continued expenditure of US government funds for every project in the Mission’s portfolio. Each project had its unique characteristics, and it was essential that the Mission’s staff carefully assess the performance of each project. Militating against perfect judgment calls was the intense desire of every Mission project manager to see their projects succeed. It was not uncommon for USAID senior supervisors to counsel patience when it came to achieving results in the development assistance process. The question always was how much patience was enough before one recommended significantly modifying or terminating an underachieving project. A representative sample of the progress reported in 1967 to USAID Washington for Mission-funded projects follows. Nearly all the projects discussed below had technical assistance, commodity, and participant training components.49 In the public administration sector, the National Tax Policy Commission project played the lead role revising tax laws that had the potential of significantly increasing Bolivian government

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revenues. The Civil Service System project had undertaken successfully the installation of a job classification system and pay plans in twelve Bolivian government ministries and agencies.50 The Mission’s objective to support Bolivia in developing and maintaining a national highway system that linked La Paz, Oruro, Cochabamba, and Santa Cruz resulted in more than nine hundred miles of roads being designed and constructed in the 1960s.51 The Mission also supported a comprehensive program and a series of projects to modernize the air transportation sector that was initiated in the 1940s and continued into the Nixon administration. In the 1960s, the Mission provided loan and grant funds for the improvement of airport infrastructure at La Paz, Cochabamba, and Santa Cruz. The Mission also procured communications and navigation equipment as well as providing training for technical staff. All the activities were designed to support night and jet operations at La Paz, Cochabamba, and Santa Cruz. The Mission also facilitated the brokering of a loan with Ex-Im Bank for the procurement of jet aircraft. Each of these activities to improve the safety of air transport was done in the scary context of antediluvian DC3s frequently crashing, antiquated communications systems between major airports on numerous occasions not working, and obsolete hand-set altimeters that provided readings for DC3s that on many instances had to fly at altitudes significantly higher than was judged to be safe. 52 The USAID Mission continued to support projects designed to strengthen the Ministry of Agriculture, including research, extension, and agriculture credit activities that had been initiated by the Agriculture Servicio in the 1950s.53 A critical aspect of identifying new projects in the agriculture sector was the execution of studies supported by the Mission that led to the design of grant projects that bridged the work initiated in the 1950s and continued into the 1970s.54 As a result of USAID Mission support in the human resources area, the primary school curriculum for mathematics, science, and language arts was revised; over 1,500 teachers were trained in modern pedagogical techniques; a curriculum laboratory was established that produced curriculum guides for grades one through six; and elementary and secondary schools were renovated in La Paz. The Malaria Eradication Servicio extended its control program to over 80 percent of the areas in Bolivia where malaria had been prevalent. The Bacteriological Institute produced its first batch of smallpox vaccines.55 Regarding progress in the Mission’s private sector program, the Credit Union Federation continued its “spectacular growth” with total savings

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increasing nearly 75 percent; fifty-six new credit unions being chartered; and membership increasing from 45,600 to 65,800.56 An important aspect of each USAID-funded project was the Mission’s participant training program. From 1943 through 1967, the US government funded the training of 2,123 participants in the fields of health, education, agriculture, labor, industry, mining, public administration, public safety, and transportation in either the United States or Latin American countries other than Bolivia.57 The vast majority of these participants returned to Bolivia, taking positions in the Bolivian government and the private sector.58 PL480 Food Assistance Supports the Government of Bolivia Budget and Mission Development Projects President Kennedy, early in his administration, declared, “Food is strength, and food is peace, and food is freedom, and food is helping people around the world whose good will and friendship we want.” The legislation that followed changed the emphasis of the program from one that was generally concerned with disposing of the agriculture surplus of US farmers to a program that focused on addressing humanitarian needs and responding to acute food shortages, which were beginning to be identified throughout the Third World.59 Over $49 million of Title I food commodities were made available to the Bolivian government during the 1960s for sale in local markets and the proceeds were used to fund a range of development activities agreed to by both governments. The 1966 Food for Peace Act required that self-help provisions be added to all Title I sales agreements as a way to encourage host countries to strengthen their own food production capacity.60 The role that the USAID Mission in Bolivia played in negotiating the uses of the local currencies generated by the wheat sales gave the Mission access to considerable additional resources to support its own development programs. It made for an “exciting time to be in the USAID Mission,” according to Hank Johnson, a junior officer in the Program Office in the early 1960s where the Title I program was managed. “The Mission had tremendous flexibility in negotiating the use of the PL480 proceeds,” according to Johnson.61 The list of grant and loan projects funded with local currency generations included the community development program; the social projects fund for the families of miners; equipment for COMIBOL mines; costs to support teacher training, curriculum development workshops, and school construction; land titling costs; and agricultural research and extension operating costs.62 Over $16 million in Title II food commodities were also made available to the Catholic Relief Service during the 1960s for

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use in projects that provided food to mothers’ clubs, primary schools, orphanages, and soup kitchens in both rural an urban areas.63 Support for the Mining Sector Shortly after Kennedy’s inauguration, William Thorpe, a prominent figure in the Eisenhower administration, was selected to lead a mission to assess the value of providing assistance to the mining sector. Thorpe concluded that the Eisenhower administration was entirely too permissive in the design of its assistance package for Bolivia, and he proposed an approach that would provide assistance with the proviso that the Bolivian government be required to promote “harsh” economic reforms. This included dramatically shrinking the labor force in the mines. What emerged was the Triangular Plan, whose executive body consisted of representatives from the US Embassy, which was usually the USAID mission director, the Inter-American Development Bank resident representative, a West Germany government representative stationed in La Paz, and the head of COMIBOL.64 The Triangular Plan was envisioned as the setting in which ideas to promote the rationalization of the public mining sector would be tested. The USAID Mission supported a variety of projects including a grant for technical assistance to support the operations of Bolivian Mining Bank and a loan for the procurement of equipment to improve the efficiency and safety conditions in COMIBOL mines. There was also a social projects fund established by the USAID Mission in the mid-1960s and administered jointly with the Peace Corps. The project supported community improvement activities in the mining areas under the management of COMIBOL.65 Beyond its specific efforts through the Triangular Plan to strengthen COMIBOL, the USAID Mission also supported a variety of interventions that directly benefitted both public and private sector mining enterprises. The Geological Service Organization (GEOBOL) was responsible for developing basic geological information to stimulate private investment in the mining sector which included the production of geological maps covering ninety thousand square miles. GEOBOL also executed more than twenty thousand laboratory investigations and analysis, which resulted in the discovery of marketable amounts of rare metals including cadmium, osmium, and iridium.66 The Mission also supported the Institute of Occupational Health that extended its respiratory disease campaign to one hundred thousand miners and their families; conducted four safety surveys of mines and factories; and reexamined pensioners for silicosis.67 Another new initiative to

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encourage leadership development in the trade union movement was implemented by the American Institute for Free Labor Development.68 Despite the US government’s sustained support for of the stateowned and -operated mining enterprise, COMIBOL was never able to address the issue of excessively high labor costs, especially when compared with cost of production of lead ores from other parts of the world. While medium and small privately owned mining enterprises prospered in Bolivia, COMIBOL was a constant brake on the development of the Bolivian economy. Miners working in COMIBOL continued to be a persistent irritant on the political scene, but never represented a consequential armed threat that could challenge the survival of the Bolivian government, despite numerous rumors to the contrary. Rural Development: Campesinos Begin to Count By the mid-1960s, the USAID Mission had changed its tune from a theme of agricultural production in the Oriente to a steady beat for rural development on the Altiplano and in the high valleys. Ideas seeded in the Humphrey, Zablocki, and Title IX Amendments had taken root— animal husbandry, rural community development, and agrarian reform projects marked a fresh approach supported by USAID Bolivia.69 Alex Firfer planted the ideas for each of these projects and his successor, Irv Tragen, directed his staff to bring these projects to fruition. Sheep, Llama, Alpaca, and Wheat. The Sheep, Llama, and Alpaca Production and Marketing project had the objective of increasing “the productivity and income of nearly 200,000 families living on the Altiplano and in the high valley.”70 The Mission selected Utah State University (USU) to collaborate in designing and managing the implementation of activities to promote sheep, llama, alpaca and cereals development. An important factor in the USAID Mission’s decision to select USU was the striking similarity between the farming conditions in Utah’s Great Basin and the Altiplano. USU’s reputation was that of a “hands-on” organization whose agriculturalists would roll up their sleeves and work directly with their Bolivian counterpart in the field.71 The USU team initially focused on the problem of low productivity of the flocks of sheep that had been introduced by the Spanish. After four hundred years, the flocks had degenerated because of natural selection that allowed undesirable genetic characteristics to evolve and endure. Working closely with the extension service and operating out of research and demonstration centers on the Altiplano and in the high valleys, USU technicians carried out reproduction experiments including

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the distribution of improved breeding stock of sheep. USU technicians also worked on improving the forage for the sheep. In terms of cereals production, USU’s efforts concentrated on improving the quality and quantity of wheat seed production for local use.72 For the period from 1965 to 1975, modest accomplishments were registered in all phases of work undertaken by USU, including sheep improvement, wool marketing, and wheat seed production. A crucial step along the path of improving sheep production was upgrading their forage. Early in the 1970s, alfalfa was identified as the best candidate for sheep forage, and approximately four thousand hectares of irrigated alfalfa was being produced that yielded roughly five tons per hectare. By 1974, two thousand improved sheep had been imported and distributed to Altiplano farmers, which were supplying an improved stock of rams to other campesinos on the Altiplano. It was estimated that the improved breeding stock was producing almost 1,500 improved rams each year, and their offspring produced significantly more wool and more meat than the imported stock.73 Purchasing of hair and wool by the Comité Boliviano de Fomento Lanero (COMBOFLA) in 1966 rose from a base of 311,000 pounds with a value of $125,000 to 820,000 pounds with a value of $299,000 in 1976. COMBOFLA also had developed a market for low quality hair from animals from the Altiplano and the high valleys.74 In the case of wheat seed production, the Bolivian Wheat Seed Institute was managing a seed program that had contributed to Bolivia becoming self-sufficient in wheat seed.75 Potatoes, Campesinos, and Peace Corps Volunteers. During the 1960s, potato production increased dramatically throughout the Altiplano. (See Table 4.2.) The USAID Mission had played an important role linking the research effort undertaken by the International Potato Center (CIP) in Peru with the Bolivian government’s research and extension capacity on the Altiplano. New potato varieties developed at CIP that were disseminated to farmers throughout the Altiplano resulted in substantial increases in potato production. An unintended consequence of the increased potato production was that a glut of potatoes developed in surrounding markets, which undercut the farmers ability to get a reasonable price for their crops. The USAID Mission upon recognizing the seriousness of the situation enlisted the Peace Corps to encourage their volunteers to promote the construction of on-farm potato storage facilities. The new project was an overnight success with campesinos throughout the Altiplano having more potatoes to eat and earning more for the sale of their potatoes at market.76

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Land Reform. In 1962, the USAID Mission signed an agreement with the Land Tenure Center (LTC) at the University of Wisconsin to study land tenure issues.77 The major finding of LTC was that approximately three hundred thousand campesino families, 55 percent of the farm population, did not have clear titles to their land. Because of the failure to establish legal titles more rapidly, the LTC reported cases of intimidation by former landlords of campesinos in an effort to regain possession of their former holdings, landlords attempting to receive payment for their lands, and landlords attempting to reestablish traditional labor arrangements. Cases of land grabbing by more powerful campesinos as well as conflicts arising over the subdivision of common lands between campesinos and their village leaders and government officials were also reported by the LTC. The LTC argued that most of these problems could be resolved by granting legal titles to the rightful owners and reported that title distribution had progressed slowly because of the shortage of funds to support the work in adjudicating and distributing titles.78 The USAID Mission argued that without a clear title for their land, campesinos found it difficult, if not impossible, to acquire credit for making capital investments critical to improving their farm operations. Effective titling of the rural land holdings was crucial to the development of a rural land tax. Bolivia had neither a uniformly applied tax program for its rural population nor a plan for the development of such a program.79 From 1968 through 1972, the USAID Mission provided over $5 million to the National Agrarian Reform Service to accelerate the issuing of land titles.80 The National Community Development Program (NCDP). One of the USAID Mission’s most important undertakings in the 1960s was the NCDP,81 which reached into rural communities throughout the Altiplano, the high valleys, and down into the Chapare. It was the type of project that the policy wonks in Washington had envisioned when they spoke of applying the principle of “self-help.”82 Like most projects that the USAID Mission funded, the NCDP would span several US presidential administrations, this one continuing into the Nixon, Ford, and Carter administrations. The design and implementation phases of the NCDP were textbook exercises of collaboration at the working level between US and Bolivian community development specialists, as well as officials from all the Bolivian nation-building ministries that had a direct stake in rural development. The NCDP was guided by the belief that it was critical to mobilize village leadership to participate in community improvement projects

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sponsored by the Bolivian government. To reach into the villages, the program had to first identify and train a core group of Bolivians— Trabajadores del Desarrollo de la Comunidad/Village Level Workers (VLW)—who came from the villages on the Altiplano and in the high valleys. The VLW became the advocate for a democratic process in which the villagers discussed their priority development needs and later undertook projects designed to improve their economic and social circumstances. After several months of work in the village, the VLW completed a census that included a political analysis of the village including its organization, a map of village resources, and a survey of the development needs identified by the villagers. The villagers and the VLW reviewed this data in an open village forum before selecting a project to be undertaken by the village. Projects had to reflect a basic and felt need of the community, and the self-help component was required to exceed 50 percent of the total cost of the project. Finally, the project had to be realistic in terms of the needs, resources, and management capabilities of the village. A Village Project Committee, with the assistance of the VLW, was created to develop a detailed request that passed through the various levels of NCDP control, finally receiving approval from the central headquarters in La Paz. Throughout the implementation phase, the VLW worked with the Village Project Committee, providing technical assistance, as did Peace Corps volunteers (PCVs) who had been assigned to work with the NCDP. In theory, the VLW was to repeat “this process taking the community from project-to-project as he [the VLW] solidifies and molds the collective citizenry into a workable, competent, and responsible unit for local government.”83 In fact this is exactly what happened in Aymara and Quechua villages throughout rural Bolivia. By 1967, the NCDP claimed to be working through at least 270 trained VLWs who reached into over two thousand villages that had a total population of approximately 1.5 million.84 During the NCDP’s early period of operations, ample grant resources from the Mission made possible the rapid expansion of a national program.85 When the availability of grant funding declined in the late 1960s, Tragen decided to seek a loan to sustain NCDP’s activities for three more years. It was Tragen’s assessment that USAID Washington, because of its keen desire to demonstrate its seriousness in supporting Title IX activities, would endorse a loan to continue the operations of the NCDP. A debate flared at the Mission and in USAID Washington regarding the merits of loan versus grant funding. Some officers argued that community development activities by their very nature should be grant funded. Others argued because of the large

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commodity component of the project, it was appropriate to fund it with a dollar loan. Grant dollars were considered “soft” money, and the documentation procedures and review process were much less rigorous than those for obtaining a loan.86 In the summer of 1968, when the loan to support the NCDP was reviewed in Washington, the yearly debate on development assistance was taking place in an increasingly acrimonious environment. In the midst of the Vietnam War, there was a general sense that US taxpayers had grown weary and frustrated with the spending of their tax dollars in Third World countries where there were too few concrete results to show. Between 1966 and 1968, Congress had reduced grant funds significantly each year. The total US economic assistance in 1967 had been $5 billion, but in 1968 the level slipped to $4.5 billion. As US development assistance was dropping off, the costs of US technical expertise and commodities were rising and loan terms were becoming more stringent. The practice of tying US development dollars to the purchase of US goods as a means of addressing the US balance of payments problem was prevailing over the principle that USAIDfinanced goods should be procured at the lowest possible price.87 The community development loan presented by the USAID Mission contained a large item for local procurement of construction materials. Since this aspect of the proposed loan ran counter to the emphasis on US procurement, Tragen made a decision just hours before the official review in Washington to reduce the amount to be allocated for the local procurement of building materials. Given the mood in Washington, this tactic was perhaps a key factor in tipping the scales toward approving the loan.88 A second loan application for community development was prepared in 1972 by the USAID Mission for the NCDP. Due to the bleak revenue picture in Bolivia, the Bolivian government could do little to increase its budget to support rural development activities. However, if rural schools were to be built, health facilities constructed, feeder roads completed, and agricultural projects undertaken, it was critical to have the support of campesinos and access to their resources. The fact was that community contributions for NCDP projects were running about 70 percent of the total cost of projects. The self-help strategy, which had been so successfully promoted by the NCDP, was the key to unlocking community resources.89 This argument was key to gaining Washington’s approval for the second community development loan. Another factor that was considered in USAID Washington was the conviction that without directly addressing the plight of the rural poor, who constituted the majority population in most Third World countries,

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it was doubtful that the problems of underdevelopment could ever be resolved. Finally, development sages had begun to recognize that Rostow’s model for development would not address the problems of the rural poor. The USAID Mission had promoted a funding strategy that encouraged the Bolivian government to increase its contribution annually to support the NCDP as a means of preparing the Bolivian government for the day when USAID funding would cease. However, when the day came that there were no more USAID funds to support the NCDP, the Bolivian government could not or would not find the resources to continue the program. In the absence of support from President Banzer in the late 1970s, it was inevitable that the NCDP would slip into the shadows. Thirty years later, when Bolivia faced a period of severe economic and political instability, the Bolivian government had no institution to reach into rural communities where campesinos were moving towards open revolt. As the USAID Mission searched frantically for ways of reaching the rural population on the Altiplano, a couple of old USAID hands were heard to lament the folly of having let the NCDP collapse. Peace Corps Volunteers Living in the “Huts and Villages”

One of the dazzling creations of Kennedy’s administration was the Peace Corps, whose volunteers took the fight against poverty to Third World nations. It was the PCVs who translated Kennedy’s high rhetoric into concrete actions that contributed to changing the lives of “the peoples in the huts and villages.” When the Peace Corps was first established in Bolivia, the head of the Peace Corps, Sergeant Shriver, directed that the Peace Corps’ headquarters be located in Cochabamba. Cochabamba was a long, dusty drive from La Paz and offered the Peace Corps Director a degree of autonomy not available in La Paz. After several months, pressure from the embassy resulted in the Peace Corps moving its headquarters to La Paz, where it could be fully integrated into the operations of the Country Team. A multitude of stories document the important roles of PCVs in the execution of education, health, and agriculture projects funded by USAID. One example is the work of Kevin Lynch. Lynch took on an extremely rough assignment as part of a contingent of PCVs recruited to work with miners and their families living in communities adjacent to COMIBOL mines. He was assigned to the Siglo XX mining camp, where he was invited into the homes of nearly every miner in the camp.

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Over endless glasses of aguardiente, (a locally produced alcohol) he came to understand the problems and immediate needs of the families of the miners. He successfully guided to completion a number of “selfhelp” projects that brought improvements to the lives of the miners’ families. One such example was the establishment of a laundry cooperative managed by miners’ wives. Through a small social projects fund provided by the USAID Mission using PL480 generations, he obtained money to purchase a washer and dryer for the cooperative.90 Another PCV, Stacy Rhodes, came to Bolivia in the late 1960s to work with the NCDP and the sheep project on the Altiplano. For a year, Rhodes lived in Achiri, a small village not far from Lake Titicaca, where he trained campesinos in modern techniques of sheep shearing, breed improvement, silage making, pasture planting, and wool marketing. He then moved on to Machcamarca, where he introduced new agronomic techniques for increasing potato production, including the use of new potato varieties, chemical fertilizers, and insecticides. Rhodes also participated in the construction of several schools in the area. As a result of his Peace Corps experience, Rhodes decided on a career with USAID and was the mission director in Guatemala and South Africa.91 The type of hands-on involvement that characterized the work of Lynch and Rhodes is illustrative of the hundreds if not thousands of successful community development efforts in Bolivia undertaken by PCVs and supported by the USAID Mission. PCVs were in an ideal position to know what was happening in the rural communities where they lived, for they were the only US citizens who came in direct daily contact with campesinos. To protect the integrity of the Peace Corps, it was mandated by the Executive Branch that there could be no contact between PCVs and persons working with CIA. It was understood that if it were ever discovered that PCVs were being used to gather intelligence, their mission as ambassadors to the poor would be seriously compromised. All elements of the Country Team understood this, and for that reason the rule was established that once in CIA, one could never be employed by the Peace Corps. Neither could a PCV or Peace Corps staff work for the CIA until several years had elapsed since being in the Peace Corps. During the late 1960s, many PCVs spoke out against the war in Vietnam. On a number of occasions some PCVs picketed the US Embassy. In the early 1970s, when Bolivia was ruled by the military dictatorship of General Juan José Torres, PCVs were accused of spearheading a family planning effort, which included promoting abortions. The attack mounted by the government of Bolivia on the PCVs was vicious, and the Peace Corps was asked to leave Bolivia. In the 1990s, the Peace Corps

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returned and once again worked on projects funded by the USAID Mission. How Will History Judge the Alianza in Bolivia?

The mandate of the Alianza had reenergized the promises of the ’52 Revolution. Bolivian and US development professionals were surely elated that by 1967 nearly three hundred thousand land titles, as a direct result of the Mission’s Agrarian Reform Project, had been processed, which equaled the number of titles adjudicated in the previous fifteenyear period.92 However, it was the impact of the NCDP on campesino families that was the most spectacular achievement.93 By the mid-1970s, it is estimated that the NCDP was working in over three thousand rural communities throughout the Altiplano and the high valleys and had completed over four thousand projects in the fields of health, education, agriculture, and civil works. The projects were being completed with nearly 70 percent of the project cost provided by the communities, and it was common to have villages undertake a second project. From a financial perspective, the ability of the NCDP to mobilize the resources of rural communities for promoting improvements in communities throughout Bolivia was a key factor in the success of the NCDP. However, physical accomplishments were of secondary importance compared with the democratic process seeded by the NCDP that put campesinos at the center of the development process in their villages. To create new leadership roles in rural communities, hundreds of young Aymara and Quechua men were trained to serve as VLWs to energize the NCDP while others served on the community councils to guide the NCDP’s project selection and implementation processes. In addition, nearly one thousand villagers were trained each year from 1968 through 1974 in the principles of community development. USAID professionals who came to Bolivia in the 1960s were imbued with a sense of the inevitability of progress. Everyone was confident, including sagacious ambassadors, experienced USAID technicians, and youthful Peace Corps volunteers, that the problems of poverty and the underdeveloped circumstances of Bolivia could be successfully resolved. Yankee know-how and a generous amount of US dollars could win Bolivia’s war on poverty. However, few USAID officials in the early years of the US government’s foreign assistance program in Bolivia comprehended the complexity of Bolivia’s development problems. Old USAID hands look back to the period of the Alianza in Bolivia as halcyon days. They remember a period when problems were

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definable, solutions were apparent, and funds to implement them were always available. A USAID officer who worked in the economic section of the Mission in the late 1960s summed up progress in Bolivia this way: The Bolivian land reform was not merely a redistribution of land, labor, and time, or even income; it was simultaneously a redistribution of opportunity, freedom, and power. The campesinos in the region [of Lake Titicaca] are gradually becoming more educated, literate, and integrated into the social, political, and economic life of the nation. . . . Bolivian society is no longer divided into Indians and Bolivians as before the MNR revolution and land reform, and the uncertain future of Bolivia will undoubtedly be greatly influenced by the campesino majority who are now free either to succeed or fail on their own merits. The full impact of these changes will probably not be realized, however, until at least decades, and perhaps generations have lapsed.94

Footnote to History: The Other Development Path

Joseph Stalin was firm in his belief that at its core, the success of the Soviet revolution in Russia was based on the support of the urban proletariat. Stalin believed that real revolutions take place in cities. Conversely, Mao Zedong argued that the Chinese example of the peasant bound to the land and exploited by elites was the necessary precondition for promoting revolution in China. Che Guevara, Fidel Castro’s resident ideologue, supported Mao’s point of view, and the Cuban experience was meant to be the proof. In fact, what happened in Cuba was that after a couple of years in the Sierra Maestra, where Fidel had the support of the most of the local peasant population, he was able to attract broad support from urban Cuba. Women’s organizations, AfroCubans, university students, labor unions, the middle class—all these groups provided the base that was critical to turning the tide in support of Fidel’s revolution. Without this urban-based support, it is questionable that Castro’s revolution would have ever been able to move out of the Sierra Maestra. It appears that Che and Fidel came to an understanding that Che, after several years as a revolutionary bureaucrat and making a real mess of the Cuban National Bank as its president, could best use his talents to support revolution throughout the developing world. Che, the determined, romantic revolutionary, skillfully moved from one Third World country to another. Vietnam, the Dominican Republic, and the Congo may have been places where he committed bush league acts of development adventurism. Throughout his meanderings, the tradecraft

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he practiced was nothing less than superb. Che demonstrated remarkable capacity at outwitting the CIA, for throughout this period, the CIA didn’t have a clue where he was. Che decided to go to Bolivia to prove that his ideas for transforming a poor country were the right stuff. Why had he chosen Bolivia? On the surface Bolivia may have looked like a country ready for yet another revolution. It had the second lowest per capita income in Latin America; only Haiti’s was lower. When Che made an overland excursion in the early 1950s up through Peru, which he documented in his Motorcycle Diaries, he saw first-hand the harsh life of the Aymara and Quechua on the Altiplano.95 It is doubtful that he really understood the extent of the ’52 Revolution’s positive impact on the Bolivian campesino. Whatever he knew or didn’t know, he made a major miscalculation when he chose Bolivia as the place to prove that revolution could be made in 1968 in rural Bolivia. Campesinos had laid claim to the land they farmed on the Altiplano and in the high valleys. More importantly, campesinos had been enfranchised, which had deepened their stake in the Bolivian nation. Both men and women could register to vote, and every politician since the ’52 Revolution had sought their vote. As soon as Che landed at El Alto in November 1966 and checked into a hotel near the US Embassy, it was reported to the CIA that he had arrived. Because of sheer bureaucratic ineptitude, the information was not acted upon, and he was able to slip into the countryside with a small group of dedicated followers. On the eastern slope of the Andes in rugged terrain that was lightly populated, Che roamed from village to village preaching his brand of development. His orations were largely ignored, and on a couple of occasions villagers, who heard his harangues, tried to contact Bolivian soldiers in the area. Eventually the Bolivian Army caught up with him, and while crossing a river, he was shot twice before being taken into custody. Afraid of what might happen if the Bolivian government went public with the news that Che had been captured and was being held in custody, the decision was made to assassinate him. His death was ignominious. For youthful utopian communists, Che would become an eternal revolutionary figure struggling against the malevolent forces of capitalism. Notes 1. Robert Frost, “For John F. Kennedy’s Inauguration,” in The Poetry of Robert Frost (New York: Holt, Rinehart and Winston, 1969), p. 424. 2. Theodore C. Sorensen, Kennedy (New York: Harper & Row, 1965), p. 245.

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3. Ibid., p. 246. 4. Ibid. 5. Arthur M. Schlesinger, Jr., A Thousand Days: John F. Kennedy in the White House (Boston, MA: Houghton Mifflin, 1965), p. 589. 6. Ibid., p 204–205. 7. W. W. Rostow, The Stages of Economic Growth: A Non-Communist Manifesto (London: Cambridge University Press, 1960). 8. “Amendment on Cooperatives: Section 601(a), Chapter 1, Part III of the Foreign Assistance Act of 1961,” attached to “Increasing Participation in Development: Primer on Title IX of the United States Foreign Assistance Act” (USAID Washington, September 27, 1970), p. 3. 9. Ibid. 10. “Title IX of the Foreign Assistance Act: Utilization of Democratic Institutions in Development, Section 281,” attached to “Increasing Participation in Development” (USAID Washington), p. 2. 11. “Utilization of Democratic Institutions in Development,” House Report 1651, attached to “Increasing Participation in Development” (USAID Washington) pp. 5–6. 12. “The Act for International Development: A Program for the Decade of Development, Objective, Objectives, Concepts, and Proposed Program” (International Cooperation Agency, June 7, 1961), pp. i, v. 13. Ibid., p. ii. 14. Ibid., p. 5. 15. Schlesinger, Thousand Days, p. 586. 16. William J. Lederer and Eugene Burdick, The Ugly American (New York: W. W. Norton, 1958). 17. “The Act for International Development,” p. 7. 18. Schlesinger, Thousand Days, p. 586. 19. “The Act for International Development,” p. 7. 20. Ibid., pp. 8–10. 21. Ibid., p. 164. 22. “Cuba,” Hispanic American Report 14, no. 4 (June 1961): p. 313. 23. Ibid., pp. 312–315. 24. Schlesinger, Thousand Days, pp. 761–762, and Jeffrey F. Taffet, Foreign Aid as Foreign Policy: The Alliance for Progress in Latin America (New York: Routledge, 2007), pp. 35–37. 25. Schlesinger, Thousand Days, pp. 762–763. 26. When the United States Agency for International Development (USAID) was created, the agency was generally referred to as AID. The bureaucracy in Washington was referred to as AID Washington. A field mission was usually referred to as a USAID. In the case of Bolivia, the Mission was sometimes referred to as USAID/Bolivia or USAID/La Paz. In this book, the USAID Mission in Bolivia is referred to as the USAID Mission to Bolivia, the USAID Mission, or merely the Mission. When referring to USAID in general, USAID will be used. When referring to Washington, USAID Washington will be used. 27. https://en.wikipedia.org/wiki/Independent_agencies_of_the_United _States_government. 28. “The Act for International Development,” pp. 8–10. 29. Ibid., p. 8.

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30. Judith Tendler, Inside Foreign Aid (Baltimore, MD: Johns Hopkins University Press, 1975), pp. 14–15. 31. Ibid., p. 15. 32. Ibid., pp. 15–16. 33. Taffet, Foreign Aid as Foreign Policy, pp. 37–38. 34. Schlesinger, Thousand Days, p. 594. 35. Ibid., p. 595. 36. Ibid. 37. Ibid., pp. 596–597. 38. Ibid., p. 598. 39. Ibid., p. 599. 40. Ibid., pp. 182–183. 41. Thomas C. Field, Jr., From Development to Dictatorship: Bolivia and the Alliance for Progress in the Kennedy Era (Ithaca, NY: Cornell University Press, 2014), p. 18. 42. “Economic and Social Development Plan for Bolivia, 1962/1971,” National Planning Board, Government of Bolivia, La Paz, Bolivia. 43. “Measures Designed to Speed Economic Development in Bolivia Under the Alliance for Progress” (Committee of Nine, Alliance for Progress, May 1962), p. I, and Louis J. Walinsky, “Economic and Policy Implications of Bolivia’s Ten-Year Development Plan” (Robert R. Nathan Associates for USAID Bolivia, July 5, 1962), pp. 1–4. 44. “Plan nacional del desarrollo rural: Junta interministerial” (La Paz, Bolivia: 1963); “La Agricultura boliviana: Plan maestro de investigaciones por el periodo 1965–1970” (La Paz, Bolivia: Ministerio de Agricultura, Ganaderiá y Colonozación, 1965); “Plan nacional de salud, 1966–1975: Primera aproximacion” (La Paz, Bolivia: Oficina de Planeamiento, Investigaciones y Evaluacion, Ministerio de Salud Publica, February 1966); and “National Plan for Human Resource Development in Bolivia, 1969–1980: A Preliminary Draft” (Human Resource Sector, Ministry of Planning and Coordination, Bolivia and the Center for Human Resource Research, the Ohio State University, April 1969). 45. Interviews with Irving Tragen (Mission director, USAID Bolivia), La Paz, Bolivia, July 1967–September 1968. 46. For the calculation of the hardship allowance, which ranged from 5 to 25 percent, a number of factors that threatened one’s personal safety and health were considered, including political stability, natural hazards, and health risk factors. 47. The introduction of e-mail in the 1990s may have impacted significantly the Washington and field relationship as well as the relations within the Country Team and within the USAID Mission. 48. “The Act for International Development,” pp. 9–10; “USAID Bolivia: Country Assistance Program II, FY1967” (USAID Bolivia), p. I; and “Bolivia: Project Budget Submission, FY 1969” (USAID Bolivia, September 1967), p. 1. 49. “Project Budget Submission, FY 1969,” pp. 1–198. 50. Ibid., p. 24. 51. Ibid., pp. 60–62, 65–68; “USAID Bolivia CAP II,” pp. 104–110 and “Project Budget Submission, FY 1970” (USAID Bolivia, August 1968), pp. 47– 48, 55–61. 52. “Project Budget Submission, FY 1969,” pp. 62, 70–71.

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53. “Goal IV: Rural Integration into National Market” in “USAID Bolivia CAP II,” pp. 176–182. 54. Stanley Andrew, D.C. Myrick, and Glenn R. Sampson, “Bolivian Agriculture: Its Problems, Programs, Priorities and Possibilities” (USDA for USAID Bolivia, August 1962), and “I parte: Diagnostico” and “II parte: Plan de desarrollo,” in “Sector agropecuario y riegos: Plan bienal, 1965–1966” (La Paz, Bolivia: Ministério de Agricultura). 55. “Project Budget Submission, FY 1969,” Bolivia, p. 106. 56. Ibid., p. 140. 57. “The Annual Participant Training Report: Summary of Participants Trained” (USAID Bolivia, 1968), p. 1, and “The Participant Training Program in Bolivia: Final Report of a Training Evaluation Study” (USAID Bolivia, December 1964), p. iii. 58. “Annual Participant Training Report,” pp. 2–3, and “Participant Training Program,” pp. 97–157. 59. https://en.wikipedia.org/wiki/Food_for_Peace. 60. Leslie Leach and Charles Hanrahan, “P. L. 480 Food Aid: History and Legislation, Programs, and Policy Issues” (Congressional Research Service, April 6, 1994), p. 5, and “U.S. Overseas Loans and Grants: Obligations and Loan Authorizations, July 1, 1945–September 30, 2015 (Greenbook),” USAID Washington, p. 94. For more details, see http://explorer.usaid.gov. 61. Interview with Henry Johnson (Assistant Program Officer, USAID Bolivia, 1961–1964), Chevy Chase, MD, July 2015. To address the accounting functions related to tracking the use of the PL480 proceeds, the USAID Mission and the Bolivian government agreed to create a unit that would report to the Bolivian government and the USAID Mission. Eventually the reports were stored in a warehouse in El Alto. The disposition of these reports is unknown. 62. The author, while working with the Program Office and the Capital Development Office in Bolivia in the late 1960s, was directly involved in these local currency funded-projects. 63. “U.S. Overseas Loans and Grants (Greenbook),” p. 94. 64. Field, From Development to Dictatorship, pp. 17–21. 65. See “Convenio de donación: Cuenta de préstamos MOE-USAID; Proyectos de bienestar social de Comibol” (USAID Bolivia, June 28, 1966), pp. 1–4, and “Audit Report on COMIBOL: MC-1/341” (USAID Bolivia, April 7, 1971), pp. 1–12. 66. “Project Budget Submission, FY 1969,” p. 49. 67. Ibid., p. 106. 68. Ibid., pp. 243–247. 69. “Goal IV: Rural Integration into National Market,” in “USAID Bolivia CAP II,” pp. 165–171, and conversations with Irving Tragen, January 1968, La Paz, Bolivia. 70. “Goal IV: Rural Integration into National Market,” in “USAID Bolivia CAP II,” pp. 165–171. 71. Ibid., pp. 79–99, 141–196. 72. Ibid. Also see “Part II: Sheep, Llama, and Alpaca Program Accomplishments” and “Part III: Cereals Program,” in “Bolivia and Utah State University: A Decade of Contracts; Summary Report, 1965–1975,” Utah State University Bulletin, pp. 24–40, 74–102; E. Boyd Wennergren, “An Evaluation of the Utah State University/USAID Sheep Production and Marketing Program

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in Bolivia,” USU Series 9/75 (Utah State University for USAID Bolivia, September 1974), pp. 1–11; and “Building a Better Future: USAID in Bolivia, 1961–2013” (USAID Bolivia, October 2013), p. 16. 73. Wennergren, “Evaluation of the USU/USAID Program,” p. 17, and “Building a Better Future,” p. 16. 74. “Project Budget Submission, FY 1970,” p. 70; “Bolivia and Utah State University,” p. 30; and “Building a Better Future,” p. 16. 75. “Building a Better Future,” p. 16. 76. The author personally witnessed most of the events related to this success story. Irving Tragen, the mission director during the period when most of these events took place related some of the events to the author. 77. A sample of the studies produced as a result of the LTC research program in Bolivia designed to support the government of Bolivia’s agrarian reform program is: Peter Lord, “The Peasantry as an Emerging Political Factor in Mexico, Bolivia, and Venezuela,” May 1965; Ronald J. Clark, “A Study of the Bolivian Land Reform: Its Antecedents and Resultant Social, Political and Economic Change,” July 1966; Katherine Barnes, “Revolution and Land Reform in Chuquisaca and Potosí,” May 8, 1966; David Preston, “A Survey of Land Tenure and Land Use in Peasant Communities in the Central Altiplano of Bolivia,” May 1966; Carlos Camacho Saa, “Minifundia, Productivity, and Land Reform in Cochabamba,” December 1966; and Katherine Barnes, “Results of the Agrarian Reform in the Bolivian Yungas,” October 26, 1967. 78. “TOAID A-177: Noncapital Project Paper (PROP) Agrarian Reform Project, 511-11-190-364.4, Title IX: Agriculture Land Titling” (USAID Bolivia, May 29, 1969), pp. 1–10. Also see Ronald J. Clark, “Problems and Conflicts over Land Ownership in Bolivia,” Inter-American Economic Affairs 22, no. 4 (Spring 1969): pp. 3–18. 79. “Memorandum for the L.A. Capital Assistance Executive Committee: Bolivia IRR, Agrarian Reform Project,” 511-11/21-120-666, draft memorandum (USAID Bolivia, no date), pp. 1–3, and “Intensive Review Request, Agrarian Reform,” draft (USAID Bolivia, no date) pp. 1–9. 80. “TOAID A-177,” pp. 1–10. 81. Initially the program was named the National Community Development Program (NCDP). In June 1970, the program was renamed the National Community Development Service (NCDS). 82. “The Act for International Development,” p. 8. 83. “Bolivia, National Community Development Program: Report for Years 1965–1966–1967” (NCDP, August 1967), p. 14. 84. Ibid., pp. 43, 45. 85. A total of $860,412 was allocated from USAID grant resources to support the NCDP for the period 1964–1967. See “Ministerio de Agricultura, direccion nacional de desarrollo de comunidades, programa nacional de desarrollo de comunidades: Informe para los años 1965–1966–1967” (NCDP, August 1967), p. 18. 86. “Assistance Paper: Bolivia, Rural Community Development, AIDDLCIP-1031” (USAID Bolivia, 1972), p. 8 and “TOAD A696, Community Development Loan, LA/CD Staff Review Meeting, March 21, 1968” (USAID Bolivia, April 29, 1968), pp. 5–6. 87. Robert A. Asher, Development Assistance in the Seventies (Washington, D.C.: Brookings Institution, 1970), pp. 73–78.

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88. “Agency for International Development, Capital Assistance Paper, Bolivia: Rural Community Development, AID-DLC/P-1031” (USAID Bolivia, 1972), p. iv and “Agency for International Development, Capital Assistance Paper, Bolivia: Community Development Loan,” draft (USAID Bolivia, February 1968), p. ii. 89. “Annex X: Community/NCDP Contribution,” in “Capital Assistance Paper: Rural Community Development,” AID-DLC/P-1031 (USAID Bolivia, 1970), pp. 1–29. 90. “Convenio de donación,” pp. 1–4, and “Audit Report on COMIBOL,” pp. 1–12. Author traveled to Lynch’s site to observe his operation. 91. William S. Rhodes, “Description of Peace Corps Volunteer Service,” August 22, 1970. Author had several interviews with Rhodes in Washington, D.C., January 2015. 92. TOAID A-177, pp. 3–7. 93. Ibid. 94. Melvin Burke, “Land Reform in the Titicaca Region,” in Beyond the Revolution: Bolivia Since 1952, James M. Malloy and Richard S. Thorn, eds. (Pittsburgh, PA: University of Pittsburgh Press, 1971), p. 333. 95. Ernesto Che Guevara, The Motorcycle Diaries: Notes on a Latin American Journey (New York: Ocean Press, 2003).

6 New Directions for Reaching the Rural Poor: Richard M. Nixon and Gerald R. Ford, 1969–1977

Unless we can see the Great Ascent from the vantage point of those who must make the climb, we cannot hope to understand the difficulties of the march. —Robert L. Heilbroner, The Great Ascent: The Struggle for Economic Development in Our Time1

Washington: Guns or Butter Economics

In the late 1960s, as Lyndon Johnson’s presidential term was ending, funding for the US government’s foreign assistance program was beginning to feel the pinch of two wars: one fighting communism in Southeast Asia and the other concentrated on poverty in cities across the United States. The two wars contributed to the immense drain of the financial resources of the US government, forcing US taxpayers and their elected representatives in Washington to question the wisdom of nearly every dollar spent by the federal government. The US financial picture was further complicated by an erupting balance of payments deficit due to the huge costs of the war in Vietnam and the insatiable appetites of Americans for European and Japanese consumer goods. The influential MIT economist, Paul Samuelson, personalized the problem in terms of a dilemma facing US taxpayers: could they afford both guns and butter? A caustic critic of foreign assistance and the Vietnam War, Senator William Fulbright, lashed out in his book The Arrogance of Power at the

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idea of an omniscient US government, which sought to impose an American way of life on poor nations around the world.2 Conservative members in the US Congress argued that there was scant support at home for US-sponsored development programs; liberal members contended that military considerations dominated and, to a large extent, undercut the effectiveness of the USAID program. Popular support for helping Third World countries plunged to its nadir, and in 1972 the Senate voted against the authorization bill that supported foreign assistance. A new authorization bill was drafted but died with the adjournment of the 92nd Congress. The Nixon administration had been put on notice by the US Congress that the US government’s foreign assistance program had to be restructured.3 When the number of Americans stationed in foreign countries managing US government-funded aid programs came under scrutiny, the Johnson administration ordered the reduction by one-third of all US officials worldwide, and the Nixon administration announced an additional 20 percent cut. Candid conversations of USAID employees in the field and in Washington turned negative as morale plummeted. Younger USAID officials pondering their prospects wondered if USAID had a future. Rockefeller Tests Latin America’s Turbulent Waters

On his first full day in the White House, President Nixon met with Nelson Rockefeller, the popular Spanish-speaking governor of New York, and Galo Plaza, the secretary general of the Organization of the American States. Galo Plaza suggested to President Nixon that Rockefeller undertake a special mission to Latin America to meet with its leaders. Nixon agreed and asked Rockefeller to seek “the advice and counsel” of leaders throughout Latin America as a basis for formulating new policies to guide the Nixon administration in its relations in the Western Hemisphere.4 Rockefeller and his team of experts encountered anti-US demonstrations at nearly every stop, which Rockefeller attributed to the “general frustration over the failure [of Latin American nations] to achieve a more rapid improvement in standards of living” and “the failure of the Alliance for Progress to live up to expectations.”5 In Bolivia, the Rockefeller team had to meet with representatives of the Barrientos government in nearby El Alto because demonstrators blocked the road that led from the international airport into La Paz. An exploding population, rapid urbanization, heightened forces of nationalism challenging the appropriateness of foreign assistance and foreign private investment, and communist subversion with Fidel Castro

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in the vanguard were some of the most striking problems that Rockefeller identified in his report.6 In addition, the report expressed concern that the United States had: allowed a host of narrow special interests, a series of other foreign policy priorities, budgetary and balance of payments constraints, a burgeoning bureaucratic tangle, and well-intentioned but unrealistic rhetoric to submerge this special relationship to the point where many of its neighbors in the hemisphere wonder if the United States really does care. Its assistance and trade policies, so critical to the development process of other nations, have been distorted to serve a variety of purposes in the United States which have nothing to do with the aspirations and interests of its neighbors; in fact, all too often, these purposes have been in sharp conflict with the goals of development.7

Rockefeller acknowledged that the Alianza was the first formal agreement with Latin American nations that conveyed economic and social goals that were “the best expression of our common objectives” in the Western Hemisphere. The report further acknowledged that “genuine” progress had been made because of the Alianza. The rub was that the unrealistically high expectations that were agreed to at Punta del Este in 1961 resulted in the perception that the Alianza had been a failure. Rockefeller’s report was emphatic that the development effort must continue with the goal of improving “the quality of life of all individuals” in Latin America. The report emphasized that Latin American nations must assume greater responsibility by using their own resources, supplemented by resources provided by the United States.8 Rockefeller argued that a major reorganization of the foreign assistance program was essential. At times, the sheer size and complexity of the bureaucracy concerned with administrating the US foreign assistance program overwhelmed the process, severely constraining the efficient management of USAID country programs. Decisionmaking was scattered throughout a bloated bureaucratic maze that was characterized by procrastination and indecision.9 “Bureaucratosclerosis” had struck again; only this time it was Democrats, not Republicans, who supposedly were responsible for the mess in USAID. Rockefeller further recommended that an economic and social development corporation be created and located in the executive office of the president to replace the USAID bureaucracy in Latin America. Within the new corporation, Rockefeller further recommended the creation of subsidiary corporations to address education and agriculture problems in Latin America.10 The similarity of Rockefeller’s proposal with the bureaucratic infrastructure created by the Roosevelt

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administration to deliver technical assistance during WWII, which a younger Nelson Rockefeller had managed, was striking. However, the Nixon administration never acted on Rockefeller’s proposal to restructure the aid program for Latin America.11 USAID officials had waited impatiently for Rockefeller’s report and its recommendations. When at last the report was circulated throughout the USAID bureaucracy, there was a feeling that the report’s recommendations contained no significant changes regarding the way USAID conducted its business either in Washington or in the field.12 Not with a bang and barely a whimper, USAID officials throughout Latin America assigned the Rockefeller report to wastebasket oblivion. New Directions

After more than two decades, expected benefits of “trickle down” had not been realized for rural populations in Third World countries. In fact, the number of poor people was growing at an alarming rate. Development theologians around the world damned trickle down and exhorted rich nations to help poor nations. An important player on the international development scene was E. F. Schumacher who, in his book Small Is Beautiful: Economics as If People Mattered, challenged the notion that modern technologies and capital-intensive production methods would solve the problems of poverty in the Third World. He envisaged the rural poor playing a major role at the grassroots level and helped popularize the idea that when designing development interventions, it was imperative to consider the consequences of the proposed intervention on the environment.13 As such, he was an outspoken advocate of the “limits of growth” concept promoted by the Club of Rome.14 The Club predicted that unless there were major changes in the physical, economic, and social relationships that have traditionally affected world development, society would run out of nonrenewable resources in less than one hundred years.15 Within the USAID bureaucracy, Ted Owens, in his study Development Reconsidered: Bridging the Gap Between Government and People,16 attracted a worldwide audience of development practitioners when he underscored the huge challenge of connecting poor farmers to their country’s nation-building bureaucracies. Owens described dual societies throughout the Third World in which government officials had abandoned their responsibility to support the rural poor in their struggle to survive.17 Owens traveled to USAID Missions throughout the Third World preaching an economic development theology of liberation. It was as if Bartolomé de las Casas, “defender and apostle to the Indians,”

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had been resurrected and once again was leading the charge to defend the poor and their right to economic inclusion in the development process.18 This tumult for reform took express aim at USAID. Congress heard the message and framed the 1973 Foreign Assistance legislation to promote a “New Directions” approach that mandated interventions that would directly impact the rural poor.19 This approach: identified itself with the core elements of the process of selfdevelopment or what might be called the “participatory” or “selfdirected” school of development. . . . The assumption is that selfgenerating and self-sustaining development and growth can only be achieved if there is large-scale human resource development—in terms of managerial and technical skills, self-confidence, awareness, etc.— among the poor themselves through their active participation in and direction of their own development. They should be agents rather than objects or targets of development.20

Searching for Credibility and Accountability

In the 1970s, when many countries in the Third World appeared to be badly faltering in their development efforts, and USAID was struggling to quantify its performance in its Missions, it was popular to blame the way in which USAID Washington and its Missions were organized to conduct the business of development. It was during this period of mounting criticism of USAID’s efforts that a number of important changes in the project system focusing on the issue of accountability were undertaken. A single format and standardized approval process was mandated for all grant and loan projects. A rigorous review process for all new projects in the design stage was institutionalized in Washington. In addition, USAID required that every project be designed using the Logical Framework, which was regarded by a number of USAID officials as the newest silver bullet that would provide USAID with the system that it desperately needed for capturing and reporting the success or failure for each of its projects. Every project had a purpose that was the project’s objective and theoretically was to be achieved within a timeframe of five to seven years. Indicator(s) for measuring whether in fact the purpose had been achieved were identified in the project design process and were to be collected during the implementation phase of the project process. Once the project implementation phase commenced, it was a rare USAID Mission that tracked performance using the indicators that had been agreed to in the design phase in the Logical Framework. The task

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of putting a system in place to track performance over the life of the project was complicated by the fact that senior managers in Washington and in USAID Missions had no idea how difficult it was to create such a system. The challenge of measuring performance was further compounded by the turnover of nearly every USAID official in Missions every two to four years. This factor alone substantially contributed to the patchy effort in accounting for USAID’s performance in Third World countries. Weakening of the Audit Function

The decision was made in the early 1970s in Washington that the audit function had to be removed from being under the direct supervision of a USAID Mission’s Controller’s Office to ensure that the audit function maintained its integrity. Once removed, particularly if the audit function was located in a regional venue outside of the country program being audited, the auditor was too far removed from the country operation to prepare meaningful audit reports. Eventually the responsibility for the audit function was delegated to agencies outside of the USAID bureaucracy, which further reduced the effectiveness of the audit function. Bolivia: In Search of Order and Progress

Many would argue that President René Barrientos was at the top of his game when the helicopter he was flying struck an electrical line in the summer of 1969. The Steve Canyon of the Andes, who had dodged bullets throughout a lifetime of political adventurism, died instantly. Barrientos’ vice president, Luis Adolfo Siles Salines, became the chief executive. It was only a matter of months before he was driven from office by the military, and General Alfredo Ovando, chief of the armed forces, took over. While US citizens viewed Barrientos as somebody who could always be counted on to support the US government, the enigmatic and dour Ovando suggested a less friendly posture. A declining USAID program, with a substantial portion of project funds being tied to procurement of US-manufactured products and employment of US advisors to provide technical services, created a general sense that the US government’s assistance for Bolivia was being exploited to the advantage of US business interests. The US-Bolivian relationship had been further exacerbated when it was revealed that the Minister of the Interior and close friend of Barrientos, Colonel Antonio Arguedes, was a CIA-paid informant.21

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Bolivians interpreted US performance in the unpopular Vietnam War as evidence that US worldwide hegemony was eroding. They watched as Peace Corps volunteers (PCVs) in Bolivia joined demonstrations against the Vietnam policy of their own government on the street in front of the US Embassy in La Paz. Certainly the leverage the US diplomatic mission was able to apply to the Bolivian government was all but dissipated, despite two decades of massive US financial support for the troubled Bolivian economy. Given these circumstances, General Ovando needed to look for new partners. Ovando was attracted to the radical politics of his neighbors. Governments in Peru and Chile were veering left, espousing what was interpreted by the US government as extreme leftist and ultranationalist ideologies. Ovando’s rhetoric was quick to follow suit, as were his actions. One of his first acts was to abrogate the 1955 Petroleum Code, and once again, US petroleum investments in Bolivia were nationalized. This time the Gulf Oil Company felt the sting of ardent indigenous nationalism. Searching for new sources of credit for making capital investments in both the mining and petroleum sectors, Ovando turned to the Soviet Union. Bolivia and the Soviet Union exchanged ambassadors and negotiated a $28 million loan for strengthening mining and petroleum infrastructure. Bolivia also negotiated trade agreements with the Soviet Union’s client states in Eastern Europe. Ovando turned to Juan Lechín for support, and leftist elements of Bolivia’s labor movement, which had suffered under Barrientos, were resuscitated. However, Ovando’s efforts to build a political base from moribund elements of the Movimiento Nacionalista Revolucionario (MNR), as well as other parties of a socialist ilk, failed. Hardly a year had passed before the military decided to replace General Ovando with yet another Army general, Juan José Torres.22 Whereas Ovando had started leaning to the left, Torres lurched even further left, embracing a radical revolutionary ideology. The US government was declared public enemy Number One, and based on the popular film La Sangre del cóndor, Torres ordered the Peace Corps to leave Bolivia on the pretext that PCVs promoted abortion, contraception, and involuntary sterilization activities in rural Bolivia. It was an ugly situation. The US development assistance program was suspended, and USAID Mission employees, including the mission director, took a long, housebound holiday.23 The remaining privately owned mining enterprises were nationalized, and the contract with U.S. Steel, granting them rights to manage the Matilda Mine, which had served as a showcase for US investment in Bolivia, was abrogated. The US government’s satellite tracking station, located on El Alto and run by

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the US military, was shut down. Meanwhile, negotiations with the Soviet Union and her Eastern European satellites resulted in loans to the Corporación Minera de Bolivia (COMIBOL) for building a lead ore smelter. At last Bolivia was freed from having to transport her lead ore concentrates to the United States, England, or Germany for processing.24 Torres pronounced, maneuvered, and floundered while desperately searching for political support. Overtures were made to campesinos, labor organizations, and Marxist-Socialist factions, and a Popular Assembly was declared by Torres in a futile effort to promote popular participation to fulfill his vision for a new Bolivia. In the meantime, major segments of Bolivian society, including elements of the military, were growing weary of Torres’ antics, which were found to be increasingly bizarre. It was no secret that the Nixon administration viewed Torres as a wild-eyed, radical populist leading his country down a dangerous path and would look favorably on actions designed to remove Torres from office. Ernie Siracusa, who had been the US ambassador since December 1969, relished the challenges that Bolivia offered. Throughout his diplomatic career, he was known for playing diplomatic hardball. Siracusa cultivated a paladin’s image, which he burnished to high gloss with frequent trips on his sleek fire-engine red, 400cc Honda motorcycle into rural Bolivia. Decked out in a black leather jacket and pants and a Darth Vader-like shiny black helmet, Siracusa, followed by a pack of similarly clad subordinates, charged with gusto down the dusty roads surrounding La Paz.25 There would have been no reluctance on his part to lean on US military and intelligence components of his Country Team to carry the message to their Bolivian contacts that it was in Bolivia’s best interest that Torres be removed from office. Enter Hugo Banzer, the Little Colonel from Santa Cruz. With the backing of the military, the middle class, the MNR and the Falangista parties, Torres was driven from the presidency in 1971. Banzer ruled Bolivia from 1971 to 1978. When he seized the presidency, US foreign assistance, suspended during the Torres period, was reinstated and generously increased. The mantra of “order and progress,” which was used to rationalize the existence of nearly every autocratic regime in Latin America since Independence, was also echoed to legitimize Banzer’s rule. Brazil’s “economic miracle” of steady economic growth orchestrated by its generals would serve as a model for Banzer.26 In turn, Banzer would foreshadow events in Chile and Argentina where ruthless autocrats would eventually prevail. Early in his administration, Banzer directed the Planning Ministry to prepare a multiyear development strategy. The result was the “Plan

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quinquenal de desarrollo económico y social, 1972–1977.” As a part of the planning exercise, the Planning Ministry outlined an investment program for the period 1973 through 1977 to be considered by the donor community. The USAID Mission’s internal review of Banzer’s plan concluded that it did not adequately identify the nature of the problems that constrained Bolivia’s development, nor did the plan identify previous major investments or their impact. As such, the plan fell seriously short as a planning tool to guide investments by the government of Bolivia, the private sector, or the donor community, but it did represent an important step in restarting a development dialogue within the Bolivian government.27 As discussed in the “Development Assistance Program, FY 1975” prepared by the USAID Mission, the Bolivian government’s priority was to generate investments that had the potential for inducing high economic growth rates that could be sustained. There was general consensus that if rapid growth were to be achieved, the export of minerals, hydrocarbons, cattle, and cotton must be expanded to earn foreign exchange.28 After reviewing the magnitude of the Bolivian government’s financial requirement for the expansion of its export sector, the Mission concluded that a mix of investments by the private sector, donors, and the World and Inter-American Development Banks would adequately cover the Bolivian government requirements. As a consequence, the USAID Mission could concentrate its resources on the rural poor in the high valleys and the tropical lowlands of the Departments of Cochabamba and Santa Cruz, thereby focusing Mission efforts to be in compliance with the New Directions guidance.29 One of Banzer’s more noteworthy actions was to promote the revision of the country’s investment code to attract support of the US government and business interests. The Soviet Union’s presence was tolerated to draw on their continued support for investments in the mining sector, which Banzer viewed as vital. The stability provided by Banzer’s authoritarian government and his government’s improved management of public sector finances were critical factors in creating an environment in which Bolivia experienced a period of relative stability and modest economic progress.30

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The USAID Mission Identifies the Rural Poor Managing Projects in the USAID Mission

During the Nixon and Ford administrations, a constant refrain that echoed in the hallways and offices throughout USAID Washington and its Missions abroad was the need to do “more with less.” The number of foreign service officers in the USAID Mission to Bolivia had been reduced from sixty-two in 1968 to thirty-one by 1975.31 However, the new requirements for designing loan and grant projects and undertaking in-depth assessments for development sector increased the workload. During the 1950s and into the early 1960s, it was the USOM technical official who was fully and directly responsible for managing the implementation of Mission-funded projects. By the mid-1970s, a new management style had evolved. The USAID officer now “monitored” the work of employees of for-profit companies, universities, and private voluntary organizations who in turn worked directly with Bolivian officials. During this period of changing roles and responsibilities, a new type of development official, the project development officer (PDO),32 was given the responsibility to oversee the project process from the execution of the sector assessment and identification of a project and its design through the project’s final evaluation. With the PDO looking over their shoulders, the USAID technical staff including agriculture, education, and health technical officers, had the responsibility to monitor the work being performed by the contractors and their Bolivian counterparts. The ramification of being a project “monitor” instead of a “manager” or an “implementer” was constantly debated within USAID. Senior executives, when dealing with inquiries from Congress, the press, or the executive branch, felt obliged to claim that USAID Missions were heavily involved in directly managing the implementation of USAIDfunded projects. A typical reaction of senior managers in the field, when a problem was identified in the course of implementing a project, particularly if members of the press corps or congress got wind of a problem, was to exhort the USAID official most responsible for the project to “get on top of the situation” or “make sure this kind of thing doesn’t happen again.” How were these exhortations to be interpreted? Were you meant to find out what was happening by being a better monitor? Or, were you meant to return to actively managing the project process by getting down into the weeds and taking a more hands-on approach?

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Struggling to Establish an Evaluation System While there were several nods during the 1950s and 1960s to institutionalize a project evaluation system, there is little evidence that USAID Missions had undertaken evaluations that had had meaningful impact.33 Beyond the annual requirement to discuss “Progress to Date” for each project in the Annual Budget Submission, there was no other formal report for Washington that identified progress or lack thereof. When Irv Tragen was assigned to Bolivia as the Mission director in 1965, he brought Sy Rotter, a USAID foreign service official, to undertake a comprehensive evaluation of the Mission-funded development program. Rotter was a maverick. Bright, aggressive, and outspoken, he spent a couple of years roaming the Bolivian countryside looking at USAID projects. Working out of the Program Office, he reported directly to Tragen. To anyone taking the time to read Rotter’s report,34 the lessons to be learned had little to do with development in Bolivia and everything to do with how not to manage the evaluation function in a USAID Mission. The Mission had failed to develop a comprehensive work plan that identified the projects to be evaluated. The Mission was also at fault for not having systematically reviewed Rotter’s work as it progressed. He was a loose cannon who ranged all over Bolivia, engaging in verbal firefights whenever the opportunity presented itself. His report suffered the ignominy of being buried deep in the bowels of the Mission lest some Washington visitor find a copy of this failed effort. In the early 1970s, USAID Washington was in the process of developing a formal evaluation system, which addressed a number of basic issues including who should do the evaluations and what was the role of the Mission in the evaluation process. A balance had to be struck between the independence of the evaluator and the role of the USAID Mission monitoring the work of the evaluator so as to not compromise the work of the evaluator and at the same time ensure the quality of the evaluation. In most cases, consulting firms were contracted to conduct formal project evaluations. By the mid-1970s a formal system to evaluate projects was institutionalized throughout the USAID world as an integral element in the project process. The system prescribed that all evaluations be based on a scope of work identifying the key problems or issues to be investigated and that the product be framed in terms of actionable findings, conclusions, and recommendations. Project progress was to be assessed in terms of the project’s objectives and its performance indicators stated at the time of the design of the project. There were two basic types of evaluations recommended for every project: the mid-term evaluation and the end-of-project

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evaluation. The mid-term evaluation was seen as a critical tool for recognizing that most projects were “rolling designs” that would benefit from periodic review and modification. It was vital that a Mission committee be established at the conclusion of the mid-term evaluation to assure that recommendations identified in the mid-term evaluation were addressed in a timely fashion. The end-of-project evaluation was concerned with assessing if in fact the project purpose had been achieved and capturing “lessons learned” that could be broadly disseminated. From the mid-1970s until Bush 43, when the requirement to perform project evaluations was suspended, almost all projects funded by USAID in Bolivia were evaluated.35 During the Obama administration, the requirement to perform evaluations was reinstituted. Leadership in the USAID Mission During this period, the Mission was fortunate to have two directors— John Oleson and Frank Kimball—who were both well suited to lead the project process. John Oleson was a demanding bureaucrat who focused on details, yet always kept his eye on the big picture. One USAID official remembers Oleson coming to every meeting when a project was being discussed armed with a yellow tablet with both sides of the page filled with questions. He would methodically go through his list of questions, one by one.36 When asked to comment on the role of USAID officers as managers, he observed that the most important responsibility of the Mission director was to ensure that sound investments were made using taxpayer dollars. Whether you promoted a “hands-on” style of management or a less directed approach was dictated by the circumstances surrounding the particular project. Washington’s responsibility was to provide guidelines; the mission director interpreted the guidelines to determine what made sense in terms of the field operation. Oleson opined that a mission director was paid “to make good decisions to get the job done.”37 Frank Kimball succeeded Oleson. Kimball had spent most of his career in the loan end of the business before becoming a mission director. He was fond of asking new loan officers, when their projects came up for review in Washington, if they would be willing to spend their own money on the loans that they were proposing. This could be a moment of truth or stunned silence or both for the newly initiated. The styles of these two Mission directors were strikingly different, yet both were regarded as excellent managers.38

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New Directions in the 1970s

The projects that received funding during the closing days of President Johnson’s administration were essentially the same projects that were funded during the early years of the Nixon administration. Since the mid-1960s, each project in the Mission’s portfolio had been assigned to one of the following sectors: rural and agricultural development, human resources development, fiscal and administrative reform in the public sector, transportation infrastructure development, mining and minerals development, and private sector/industrial development. Each group of projects suggested an overarching goal in the Mission’s program. Regardless of how projects were grouped, each project continued to be a freestanding entity that was judged on its own merits. It became the Mission’s priority to identify and design new agriculture, education, and health projects that concentrated resources on subsistence farmers on the Altiplano and in the high valleys.39 Given the direction the ’52 Revolution had pointed in terms of a development strategy and considering the Title IX requirements introduced in the mid-1960s, it made good development sense to focus on the rural poor. Before making major new commitments, the Mission undertook detailed assessments for each sector. Each assessment was executed in close cooperation with technical elements in the Bolivian government. Upon completion of the assessment, it would be reviewed and approved in Washington as a prerequisite to funding the projects recommended by the assessment.40 Agricultural Development and the Poorest Majority The USAID Mission, in close collaboration with Utah State University, which had been working with farmers on the Altiplano and in the high valley since the mid-1960s, undertook the in-depth assessment of agriculture. The assessment described the central role that agriculture must play if the quality of life of Bolivia’s poorest majority was to improve. Though there had been significant increases in the agricultural productivity in the Oriente among large and medium scale farms, farmers on the Altiplano and in the high valleys lagged far behind.41 Describing the problem in stark terms, the Mission’s assessment estimated that 95 percent of the agricultural population were small farmers who annually cultivated two to three hectares and had an annual income estimated at $45–$50.42 Adding to this grim reality was the finding that nutrition levels of campesino families living on the

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Altiplano and in the high valleys were well below recommended international standards.43 The agricultural assessment revealed that Bolivian government and USAID expenditures in the agricultural sector reflected a bias in support of commercial agriculture in the subtropical valleys and the lowlands of the Oriente. This bias was manifestly obvious when reviewing the credit operations of the Bolivian Agricultural Bank (BAB), which primarily supported commercial farming in the Oriente. The loans provided by the World Bank and the Inter-American Development Bank (IDB) to support cattle production in the Oriente underscored this bias.44 The rationale for supporting investments in the Oriente was that gains in sugar, cotton, and cattle contributed to Bolivia’s export market, thus reducing Bolivia’s traditional dependency on tin and tungsten production.45 The litany of problems documented in the agricultural assessment, which had persisted after more than thirty years of US government assistance to support agricultural development, was sobering. Farmers throughout the high valleys and on the Altiplano continued to be tied to antiquated agricultural production technologies. Contributing to this problem was the lack of the Bolivian government’s resources to support educational institutions in rural areas, which resulted in most campesinos being ill prepared to practice modern agriculture. Poorly organized and underfunded agricultural research and extension systems, coupled with a chronic shortage of agricultural technicians and scientists to work in public institutions to promote progressive agriculture, undercut the Bolivian government’s efforts to support farmers in the high valleys and on the Altiplano.46 The strategy adopted by Bolivia and supported by the USAID Mission concentrated on extending modern agricultural production practices to the farmer. The Mission recognized that it did not have sufficient resources to reach all of the rural poor and decided that it must focus its efforts on farmers living in the Cochabamba and Sucre Valleys and the adjacent areas that reached into the Oriente. The Mission rationalized its strategy on the basis that the World Bank, InterAmerican Development Bank, and the United Nations Development Programme would provide the resources necessary to address the development problems facing farmers on the Altiplano.47 The Mission’s multipronged strategy included activities that promoted modern technologies focused on increasing agricultural production, educational opportunities for agricultural scientists and technicians, training opportunities to enhance management capacity in the Ministry of

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Agriculture (MOA), and strengthening agricultural research and extension activities.48 Education for the Rural Poor In the late 1960s, the USAID Mission had financed a number of studies examining the Bolivian education system. The intent of the studies was to provide the rationale for the Mission’s grant projects that had been in play for nearly twenty years and which had concentrated on curriculum development, teacher training, and textbook production.49 If the Mission was going to continue funding educational projects, a number of elemental questions had to be asked. How do you build a primary and secondary educational system in a country with such a rich tapestry of indigenous languages? Should all instruction be in Spanish? What type of bureaucratic infrastructure must be created from the ministerial level to the rural school system? To what extent should rural schools support vocation education? Is there a role for long-distance education approaches? Is it possible, given all the special needs that existed in Bolivia, to create an educational system that Bolivia could afford? After Bolivia’s Ministry of Education (MOE) completed an analysis of the education sector, the USAID Mission undertook a sector assessment to fill the gaps left in the analysis.50 Following Washington’s approval of the assessment, the USAID Mission designed projects to raise the efficiency of the MOE, to decentralize administrative support for schools throughout Bolivia, and to improve the technical qualifications of school administrators and teachers.51 To address the social and economic factors that affected the education of poor rural Bolivians, the Mission provided funds to support long-distance educational radio, vocational educational training, and the development of a bilingual educational curriculum to be incorporated into rural schools.52 Health Care for All Bolivians The US government had supported major health initiatives throughout the 1940s and 1950s. However, development investments for the health sector went out of fashion during the Alianza years. A general sense permeated the USAID bureaucracy that health problems in the Third World were overwhelming and that there were no affordable short cuts or silver bullets to facilitate delivering health care at an affordable price. It was believed that given current public health practices and their cost, expenditures to support health initiates in Bolivia would most likely be wasted. Therefore, it appeared to make more sense to support agriculture and education projects where the relationships between the investments

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and their impact on economic development were better understood. There was also a feeling in the USAID Mission that there was no real urgency to promote family planning given Bolivia’s high infant mortality rate. Conversely it was argued that a larger population was needed to provide an increased labor force in a country that was so sparsely populated. Furthermore, the Mission had no desire to be perceived as taking on the Catholic Church, which was outspoken when it came to its opposition to family planning and any manner of contraception.53 However, with a US legislative mandate to address the basic health needs of the poorest majority, a Health Sector Assessment was undertaken and completed in January 1975. Contributing to the assessment process were a series of important studies undertaken by the Bolivian government, including the Ministry of Health (MOH) draft in 1972 of a “National Health Plan” that was known as the “Five-Year Plan.”54 The Health Sector Assessment concluded that the health status of Bolivians was one of the worst in Latin America. At the heart of its health problem were two facts. Life expectancy at birth was forty-six years, and infant mortality of children one year and under who lived in rural areas was estimated to be 250 per thousand. (See Table 6.1.) Malnutrition was rampant, contributing to the poor health of children throughout Bolivia. The assessment asserted that public health care in Bolivia was fragmented, poorly managed, and grossly underfunded. Other problems included a practically nonexistent planning capacity at national and regional levels and a chronic shortage of medical supplies, equipment, and technical personnel. The most glaring deficiency identified in the assessment was the near complete lack of health infrastructure reaching into rural Bolivia. The MOH, which was responsible for administering a national health care system, devoted most of its resources to managing the operation of hospitals in the urban centers of La Paz, Cochabamba, and Santa Cruz.55 The Mission embraced a new goal of promoting a health strategy in which the campesino families living in rural areas would be the chief beneficiary. The Mission’s immediate objective was to support the government of Bolivia in developing a comprehensive health care policy that would be the foundation on which the health care infrastructure would deliver services to rural areas.56 A series of projects was funded, including a grant to create a unit in the MOH responsible for developing a methodology for the design and management of a “low cost, replicable, comprehensive rural health delivery system” that would be implemented on a pilot basis in the eastern lowlands north of Santa

Table 6.1 Comparison of Vital Statistics in South America, 1971 Country

Population (millions)

Births (per thousand)

Deaths (per thousand)

Annual Growth Rate (%)

Infant Mortality (1 and Under)

Bolivia

5

44

19

2.4

154–250

Argentina

25

22

9

1.5

58

820

Brazil

96

38

10

2.8

170

250

Colombia

22

44

11

3.4

78

310

Chile

10

34

11

2.3

92

480

Ecuador

6

45

11

3.4

86

220

Paraguay

3

45

11

3.4

52

230

Peru

14

43

11

3.1

62

380

Uruguay

3

21

9

1.2

50

520

Venezuela

11

41

8

3.4

46

950

*

Per Capita Income ($) 150 New Directions for Reaching the Rural Poor 143

Source: Adapted from “Table 2.1: Comparison of Vital Statistics in Latin America, 1971,” in “Bolivia: Health Sector Assessment” (USAID Bolivia, January 1975), p. 66. * Note: When the infant mortality data was collected in 1971, the health sector assessment team noted that it was difficult to obtain this data and questioned its reliability.

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Cruz. Drawing on the experience gained in this initial activity, it was anticipated that additional resources would be allocated to support a larger geographic area that targeted rural families living in the Departments of Cochabamba, Chuquisaca, and Santa Cruz.57 The mission also funded potable water and sanitation activities targeted on the Departments of Cochabamba, Chuquisaca, and Santa Cruz.58 Since 1968, the Mission had funded population seminars attended by government of Bolivia decisionmakers in which the “negative impact of accelerated population growth” was discussed to encourage the government of Bolivia to create a Maternal and Child Health (MCH) Department. In fact, an MCH Department was created in 1971, and by 1974 five family planning clinics were located in urban communities, setting the stage for the delivery of family planning services.59 Two Development Paths

Trickle Down Hugo Banzer could reasonably claim that Bolivia’s public institutions and its national economy were better managed as a result of his leadership, particularly when compared to the state of affairs that prevailed during the period of his immediate predecessors. From 1971 to 1976, the gross domestic product (GDP) averaged annual increases of more than 5 percent. During this same period, Bolivia’s credit standing improved, which contributed to Bolivia’s gaining greater access to US and European capital markets. Concomitantly, there was significant growth in both public and private investments concentrated on mining, hydrocarbons, and agricultural enterprises, which on average increased by 20 percent from 1974 through 1976.60 Its successful exploitation of oil and natural gas resources throughout the 1970s resulted in Bolivia gaining an increased share of the world’s hydrocarbon market. By the mid-1970s, hydrocarbons accounted for 27 percent of Bolivia’s exports,61 and the mining of minerals accounted for 61 percent of Bolivia’s exports despite the fact that the mining sector accounted for only 12 percent percent of GDP. During this same period the mining labor force shrunk to 3 percent of the national labor force.62 The modest assistance provided to COMIBOL and the Bolivian Mining Bank by the US government, commencing in the 1940s and continuing through the mid-1970s, played a minor role in introducing efficiencies to the mining sector. The assorted road improvement and construction projects supported by the US government since the inception of the aid program in the 1940s also contributed

New Directions for Reaching the Rural Poor

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significantly to improved productivity in the hydrocarbon and mining sectors. The vast, unsettled lands, abundant rainfall, and good soils of the Oriente continued to nourish the myth of a modern-day El Dorado. The Bolivian government, with substantial assistance from the US government reaching back to the 1940s, had promoted policies and projects to encourage agricultural development in the Oriente as the key to diversifying the Bolivian economy. The Mission’s assistance to strengthen and expand agricultural research, demonstration, and extension services played an important role in stimulating agricultural production in the Oriente, on the Altiplano, and in the high valleys. BAB, supported by the USAID Mission, the World Bank, and IDB had provided important agricultural production and farm improvement credits that contributed to increasing agricultural productivity in the Oriente and to a much lesser extent on the Altiplano and in the high valleys. Sustained US government support for the expansion and improvement of a road system linking production centers in the Oriente with marketing centers in the western highlands contributed to moving Bolivia in the direction of a modern, export-oriented economy. By the mid-1970s, production of sugar, cotton, and cattle had captured 12 percent of Bolivia’s export market.63 In fact, there were significant agricultural production increases in to be found throughout Bolivia with the Oriente leading the way. (See Tables 6.2, 6.3, and 6.4.) Tin, though still dominating the Bolivian export economy, no longer had a stranglehold on the economy. Since the Spanish discovery of silver at Potosi, the exploitation of minerals had been the essence of the Bolivian economy. Now, twenty-five years after the ’52 Revolution and unending pronouncements to diversify the economy, the mix of exports was finally changing. However, it would take twenty-five more years before the mineral stranglehold on the Bolivian economy would be definitively broken. During the 1970s, the production and exportation of coca and cocaine had begun to contribute significantly to export earnings. Money laundered in the casinos in Cochabamba and Santa Cruz from the profits of cocaine trafficking contributed to the development of the Santa Cruz–Cochabamba–La Paz corridor. During the 1970s, Santa Cruz was the fastest growing urban center in Bolivia. A sleepy, hot, dusty backwater in the 1950s, Santa Cruz became a monument to cattle ranchers, soybean farmers, and drug lords. The growing class of entrepreneurs in the Santa Cruz region demanded a political voice commensurate with its contribution to the growth of the national economy. In Hugo Banzer, they found their voice. They found their patrón.

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USAID in Bolivia

Table 6.2 Production and Value of Principal Crops, 1963–1965 and 1970–1972 Crop

1963– 1965 Quantity (metric tons)

1963– 1965 Total Value (US $1,000)

1970– 1972 Quantity (metric tons)

1970– 1972 Total Value (US $1,000)

Quinoa

10,530

1,033

10,333

1,200

Potatoes

560,670

35,233

685,333

48,933

Dried Beans

9,870

767

12,433

1,167

Yucca

142,670

3,767

232,433

8,400

*

165,067

7,033

191,533

14,067

Oats Barley Barley Hay Wheat Corn (grain) Citrus ‡ Fruits

4,400 56,370 123,333 56,030 276,100 77,130

433 3,470

433 5,033

3,770 5,400 1,667

4,800 65,767 213,133 60,067 280,167 88,733

Bananas and Plantains

212,600

1,633

327,153

4,100

Coffee

5,500

1,467

12,200

3,833

47,095

3,474

71,905

5,924

Sugar Cane

98,830

5,267

1,345,867

8,667

Cotton Fiber

1,670

807

10,133

6,067

Vegetables

Rice

§

5,130 8,933 3,733

Source: Adapted from “Table 2.11: Production of Principal Crops in Bolivia, 1963–65 and 1970–72,” in “Agricultural Development in Bolivia: A Sector Assessment” (USAID Bolivia, August 1974), p. 72. * Notes: includes sweet corn, onions, tomatoes, and green peas † includes sweet potatoes, oca, and papalisa ‡ includes oranges, tangerines, lemons, grapefruit, and limes § not hulled

New Directions for Reaching the Rural Poor

147

Table 6.3 Estimated Disposition of Crops, 1973 (percent) Crop

Consumed on Farm

Sold for Domestic Nonfarm Consumption

Quinoa

55

45

Potatoes

40

60

Dried Beans

35

65

Yucca

60

40

Vegetables

10

90

Oats

40

60

Other * Tubers

40

60

Barley

35

65

Wheat

30

70

Corn (grain)

55

45

†

25

75

Bananas and Plantains

20

80

Coffee

5

18

Rice

30

70

Citrus Fruits

Sugar Cane

100

Cotton Fiber

15

Exported

77

85

Source: Adapted from “Table 2.12: Estimated Disposition of Principal Crops Produced in Bolivia, 1973,” in “Agricultural Development in Bolivia: A Sector Assessment” (USAID Bolivia, August 1974), p. 74. * Notes: sweet potatoes, oca, and papalisa † oranges, tangerines, lemons, grapefruit, and limes

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USAID in Bolivia

Table 6.4 Exports of Principal Agricultural Goods as a Percent of Total Exports, 1951–1972 Year

Total Ag. Exports* (US $1,000)

Total Exports (US $1,000)

Ag. Exports as % of Total Exports

1951

4,195

150,590

2.8

1952

3,185

141,303

2.3

1953

2,205

112,664

2.0

1954

2,447

99,453

2.5

1955

2,056

102,374

2.0

1956

3,891

107,437

3.6

1957

3,595

97,667

3.7

1958

2,916

64,737

4.5

1959

5,292

77,635

6.8

1960

4,344

67,828

6.4

1961

4,604

76,136

6.1

1962

4,425

76,123

5.8

1963

3,943

86,403

4.6

1964

5,060

113,866

4.2

1965

5,957

131,836

4.5

1966

11,857

150,436

7.9

1967

11,714

166,325

7.0

1968

7,736

170,649

4.5

1969

7,530

198,191

3.8

1970

9,986

225,590

4.4

1971

17,929

215,914

8.3

25,011

253,949

9.8

†

1972

Source: Adapted from “Table 1.15: Exports of Principal Agricultural Goods . . . 1951–1973,” in “Agricultural Development in Bolivia: A Sector Assessment” (USAID Bolivia, August 1974), p. 24. Notes: *includes cattle, meat products, leather and hides, Brazil and other nuts, coffee, cacao, coca, rubber, wood, vicuña, llama, sheep, alpaca, cotton, sugar, fresh fruits, quinine, and other medicinal seeds and bark † estimate

New Directions for Reaching the Rural Poor

149

The “Huts and Villages” Reaching back to the 1950s, the US government had enthusiastically supported the goals of the ’52 Revolution with substantial financial resources that affected every development sector. Two programs particularly noteworthy were the National Community Development Program that had engaged thousands of Indian families in community improvement and the land-titling program that provided incentives to farmers on the Altiplano and in high valleys to improve their modest land holdings. Yet the campesino families continued to live in poverty. Regardless, the ownership of land had a profound impact on how the campesinos perceived their role in society and how they identified with their nation. Psychologically, they were no longer Indios. They were campesinos. They took pride in being campesinos and in being recognized as citizens of the Bolivian nation. For the time being, ownership of land and citizenship would suffice. Nevertheless, the question was always an open one—was Bolivia making enough progress to satisfy the aspirations of the rural poor? Washington’s “New Directions” strategy resulted in the Mission supporting the implementation of agriculture, education, nutrition, and health projects, many of which were initiated after Banzer assumed the presidency. Yet despite all of these efforts, the numbers of the poor had grown along with the growth of Bolivia’s population. The campesinos had been promised that the ’52 Revolution would bring great changes in the lives of their families, and every Bolivian president from Paz Estenssoro through Banzer made speech after speech promising that the day was at hand when expectations of the campesinos would be realized. However, when rural families visited La Paz or Cochabamba or Santa Cruz and saw the gains of the middle and upper classes, they must have wondered how long they would have to wait. Meanwhile, in USAID Mission offices a bleak account of Bolivia’s struggle to meet the basic needs of its people shaded the picture painted for Washington. When arguing the case for continued assistance, it is a sobering note that the Mission’s development plan prepared in 1978 described the condition of the Indian population as if not much had changed: The vast majority of the rural inhabitants continue to be poor. In the main, they are small scale farmers who live in conditions of poverty which have improved little since pre-revolutionary days.64

A review of indicators commonly used to measure progress in the 1970s gave meaning to the Mission’s narrative. The GDP for 1975 was approximately $120 for the rural Bolivian, the lowest in South America.

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USAID in Bolivia

Though this represented an improvement when compared with the situation prior to 1952, when most of the indigenous population was not a part of the monetized economy, the majority of campesino families continued to live in poverty.65 Farming methods remained primitive. Though roads touched most areas on the Altiplano and the high valleys and trucks for hauling people and products were ubiquitous, the vast majority of campesinos remained stuck in a deep rut of subsistence farming. Of Bolivians over fifteen years of age, 60 percent were illiterate, and 65 percent spoke Spanish poorly. Only 36 percent of the rural population between the ages of five and nineteen was enrolled in schools as compared with nearly 100 percent for the same age group who lived in urban areas.66 There were twice as many female illiterates as there were male illiterates in rural Bolivia.67 Health problems in rural Bolivia continued to be severe. The infant mortality rate of children under a year old in rural areas was estimated in excess of 250 per thousand.68 The campesinos continued to live in adobe dwellings with little access to a sewage system or potable water. These living conditions and the widespread malnutrition resulting from low family income levels, an inadequate food supply system, and poor family eating habits increased the vulnerability of the campesinos to disease and early death. The USAID Mission’s strategy initiated during the Nixon and Ford administrations united the ideas embedded in the New Directions legislation and the tenets of the ’52 Revolution in common cause. Was the new program with its foci on the agriculture, education, and health sectors overly ambitious? Emphatically yes! But given the requirements for success placed on the USAID bureaucracy by the US Congress and in turn by US taxpayers, the USAID Mission had to continually reach well beyond its grasp. Only with the benefit of hindsight can we now appreciate the complexity of formulating a set of reasonable expectations, particularly when viewed in the context of the unforeseen consequences of population growth, a natural resource base that was extremely difficult to exploit, and Bolivia’s messy political process. Despite the fact that the Mission’s investments in agriculture, education, and health undoubtedly touched the lives of thousands upon thousands of campesinos, the scales for measuring change that could be directly attributed to the US government were inadequate. The methodological challenge was too great. That a quandary existed in the minds of US taxpayers, the Congress, and the Executive Branch regarding the efficacy of development assistance provided by the USAID Mission to Bolivia during the 1970s is fathomable.

New Directions for Reaching the Rural Poor

151

Notes 1. Robert L. Heilbroner, The Great Ascent: The Struggle for Economic Development in Our Time (New York: Harper & Row, 1963). 2. J. William Fulbright, The Arrogance of Power (New York: Random House, 1966). 3. “The New Directions Mandate and the Agency for International Development,” draft (Foreign Affairs and National Defense Division, Congressional Research Service, July 13, 1981), p. CRS-2, Executive Summary. 4. “Quality of Life in the Americas: Report of a U.S. Presidential Mission for the Western Hemisphere” (Nelson Rockefeller Commission), p. i. This version was reproduced by USAID Washington and circulated to its Missions in Latin America. 5. Ibid., p. v. 6. Ibid., pp. 10–22. 7. Ibid., p. 5. 8. Ibid., pp. 56–57. 9. Ibid., pp. 29–31. 10. Ibid., pp. 34–37. 11. Ibid., pp. 33–35. The Inter-American Development Foundation was created to make small grants to address a variety of social and economic problems. 12. Ibid., pp. 34–37. 13. E. F. Schumacher, Small Is Beautiful: Economics as If People Mattered (New York: Harper & Row, 1973) 14. From their website: “The Club of Rome was founded in 1968 as an informal association of independent leading personalities from politics, business and science, men and women who are long-term thinkers interested in contributing in a systemic interdisciplinary and holistic manner to a better world. The Club of Rome members share a common concern for the future of humanity and the planet.” http://www.clubofrome.org/index.php/about-the-clubof-rome/. 15. Donella H. Meadows, Dennis L. Meadows, Jorgen Randers, and William W. Behrens III, The Limits to Growth (New York: Universe Books, 1972). 16. Edgar Owens and Robert Shaw, Development Reconsidered: Bridging the Gap Between Government and People (Lexington, MA: Heath and Company, 1972). 17. Ibid., p. 4. 18. Bartolomé de las Casas, A Short Account of the Destruction of the Indies (London: Penguin Classics, 1992). Las Casas was the most outspoken critic of Spain’s treatment of the indigenous population in the New World. He worked tirelessly to promote legislation to protect the indigenous population. 19. “New Directions Mandate,” p. CRS-2, Executive Summary. 20. Stephen Hellinger, et al., “The Effectiveness of Development Assistance Programs Under ‘New Directions’: Criteria for Assessment” (Washington, D.C.: Congressional Research Service, 1978). 21. “U.S. Overseas Loans and Grants: Obligations and Loan Authorizations July 1, 1945–September 30, 2015 (Greenbook)” (USAID Washington), p. 94. For more details see http://explorer.usaid.gov.

152

USAID in Bolivia

22. Kenneth D. Lehman, Bolivia and the United States: A Limited Partnership (Athens, GA: University of Georgia Press, 1999), p. 159, and Herbert S. Klein, Bolivia: The Evolution of a Multi-Ethnic Society, 2nd ed. (New York: Oxford University Press, 1992), pp. 251–252. 23. Interviews with Edward Coy (Mission director, 1969–1973), Washington, D.C., 1976. 24. Klein, Bolivia, p. 252. 25. Telephone conversation in July 2007 with Scott Eckersley, financial analyst in USAID Bolivia in the early 1970s, who frequently took part in these motorcycle escapades. Also see Lehman, Bolivia and the United States, p. 164. 26. Lehman, Bolivia and the United States, p. 165. 27. “Development Assistance Plan, FY 1975: Bolivia” (USAID Bolivia, November 1973), pp. 29–33. 28. Ibid., pp. 29–31. 29. Ibid., pp. 36–37. 30. Ibid., pp. 13–18. 31. Henrique Cassals, “Analysis of USAID Bolivia Mission Staffing, 1953 to 1979,” draft document (USAID Personnel Office, USAID Bolivia, nd) and “Distribution of Personnel as of June 30, 1948 thru 1976” (Office of Personnel and Manpower, Policy Development Division, Manpower Analysis Branch, USAID Washington, April 1977). 32. The project development officer replaced the capital development (loan) officer. 33. Committee on Government Operations, Permanent Subcommittee on Investigations, 86th Congress, “Administration of United States Foreign Aid Programs in Bolivia,” report 1030 (Washington, D.C.: Government Printing Office, 1960), pp. 2, 24–25. 34. Seymour Rotter, Evaluation Officer, “Rural Development in Bolivia, 1966–1967: An Analysis of Some of Its Major Aspects” (USAID Bolivia, June 1967). Interviews with Rotter, La Paz, Bolivia, April–December 1967. 35. By June 10, 2014, there were 445 evaluation reports for Bolivia listed in the Development Experience Clearing House database covering the period from 1960 to 2013. 36. Interviews with David Jickling and Carl Leonard, Washington, D.C., 2002. Both were USAID officials stationed in Bolivia in the 1970s. Jickling served as a general development officer and Leonard was a PDO. 37. Interview with John Oleson (Mission director, 1973–1976), Washington, D.C., 2013. 38. Interview with Ambassador William Stedman, who worked with Olsen and Kimball, Washington, D.C., 2002. 39. “New Directions Mandate,” pp. 1–3. In terms of the USAID Mission program in Bolivia, see “Development Assistance Plan, FY 1975,” pp. viii–xii, 37. 40. “Development Assistance Plan, FY 1975,” p. 37. 41. “Agricultural Development in Bolivia: A Sector Assessment” (USAID Bolivia, August 1974), pp. 3–12. 42. Ibid., p. 283. 43. “Bolivia: National Nutrition Improvement, Project no. 511-0468, LA/DR-TQ 5” (USAID Bolivia, September 8, 1976), pp. 5–9, and “Bolivian Nutrition Sector Assessment,” pp. 19–34.

New Directions for Reaching the Rural Poor

153

44. “Agricultural Development in Bolivia,” pp. 259–260, 262. 45. “Economic Memorandum on Bolivia, report no. 1546-BO,” (World Bank, March 23, 1977), p. 2. 46. “Agricultural Development in Bolivia,” pp. 276–279. 47. Ibid., pp. 279–285, 304. 48. Ibid., pp. 279–82. 49. “Education in Bolivia: A Preliminary Sector Assessment” (USAID Bolivia, July 1975), pp. 4–6. 50. Ibid., pp. 1–2. 51. “Agency for International Development, Bolivia: Educational Management and Instructional Development, Capital Assistance Paper, AIDLC/P-2036” (USAID Bolivia, May 31, 1974), p. 11. 52. “Agency for International Development, Bolivia: Rural Education I, Capital Assistance Paper, AID-DLC/P-2120” (USAID Bolivia, August 1, 1975), pp. iii, 4, 353. 53. “Bolivia: Health Sector Assessment” (USAID Bolivia, January 1975), pp. 373–374. 54. Ibid., p. 353. 55. Ibid., pp. 65–69, 91–92. 56. Ibid., pp. 453–454. 57. Ibid., pp. 460–461. 58. Ibid., pp. 470–471, and “Agency for International Development, Bolivia: Rural Sanitation, Project Paper, AID-DLC/P-2220” (USAID Bolivia, February 21, 1977). 59. “Bolivia: Health Sector Assessment,” pp. 472–474. 60. “Economic Memorandum on Bolivia,” p. 1. 61. “Bolivia: Health Sector Assessment,” p. 11, and “Economic Memorandum on Bolivia,” p. 2. 62. “Bolivia: Health Sector Assessment,” pp. iv, 10–11, and “Economic Memorandum on Bolivia,” p. 2. 63. “Bolivia: Health Sector Assessment,” pp. iv, 15–17, and “Economic Memorandum on Bolivia,” p. 2. 64. “Development Assistance Plan, 1978,” p. 18. 65. Ibid., p. 5. 66. Ibid. 67. Ibid., p. 19. 68. Ibid., p. 5. Also see Table 2.1, “Comparison of Vital Statistics in Latin America, 1971,” in “Bolivia: Health Sector Assessment,” p. 66.

7 In Pursuit of Basic Needs and Human Rights: James E. Carter Jr., 1977–1981

As we approach the 1980s one thing is not in doubt, namely that the world economy is working badly, indeed dangerously, for practically all nations . . . ends however adverse are not destiny, they can be changed. . . . Let us choose survival as human beings on our small and vulnerable planet. Let us choose life. Let us remember the message of the poet Auden we must love each other or we must die. —From Barbara Ward’s message to the Society for International Development, 1979 World Conference, Colombo, Sri Lanka

Washington: Promoting Human Rights The Stewardship of President Carter

In his run for the presidency, Jimmy Carter declared that he was the candidate of the common man. He girded his campaign with the rhetoric of an outsider and promised to breach the Beltway and return government to the people. Once in office, Carter intoned a passionate commitment to promoting a human rights agenda throughout the world. In 1978, he spoke of the linkage between human rights and US foreign policy: In distributing the scarce resources of our foreign assistance programs, we will demonstrate that our deepest affinities are with nations which commit themselves to a democratic path to development. Toward regimes which persist in wholesale violations of human rights, we will

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not hesitate to convey our outrage, nor will we pretend that our relations are unaffected.1

It was Carter’s concern for human rights that would foster support for a panoply of activities promoting democracy building, endorsed by every president who followed Carter into the White House. Carter’s foreign assistance ideas found expression in USAID’s Congressional Presentation in 1979, which described the development challenge facing rich and poor nations alike: The United States has vital economic, political and humanitarian interests in the future of the less developed countries (LDCs). If the present trend in population growth, environmental degradation, resource depletion, nuclear weapons proliferation, poverty, national rivalries and armed conflicts continue unabated, the world will become an increasingly unpleasant and much more dangerous place in which to live. By the end of this century about six billion people will be crowded together on the globe. Political freedom, and respect for individual rights, may well come under increasing attack. Most of the world could be struggling with massive economic and social problems, and since poverty and economic frustration breed violence, domestically and internationally, the prospects for a stable and tranquil world order would seem bleak indeed.2

This declaration described an interdependent world in which the US economy and society was potentially linked to the aspirations and conditions of the Third World. Supporting poor countries to feed their people remained a top priority of USAID, and US development dollars for agricultural and nutritional activities accounted for the lion’s share of the grant funding provided by the US government during the Carter years.3 Carter selected John Gilligan as the USAID administrator after Gilligan lost his reelection bid for the governorship of Ohio. A professor of government turned practitioner, Gilligan had made his mark with a tart tongue during the Kennedy years as a freshman Congressman. Given Carter’s campaign rhetoric defaming bureaucrats and Gilligan’s tendency for the abrasive quip, it should have come as no surprise that the first thing that USAID professionals heard was Gilligan describing USAID as “over aged, over paid, and over here.”4 Certainly, Gilligan’s alleged remark was not designed to build a bridge to an agency that had seen its budget cut, its personnel numbers decline, and its public support diminish throughout the Nixon and Ford administrations.

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In response to Carter’s desire to promote major reform throughout the Federal bureaucracy, Governor Gilligan pushed USAID to make changes in the way it conducted its business. Convinced that too many bureaucrats were “over here” choking the USAID bureaucracy, Gilligan endorsed a decrease in USAID employees in Washington as a means of streamlining the decisionmaking process.5 Gilligan felt strongly that the life styles of many USAID officers stationed overseas were excessive, particularly when one considered that the target population was the poor. A story is told of Gilligan’s visit to Haiti, a country identified as the poorest of the poor, where he had lunch with the USAID Mission director on his veranda, next to a swimming pool with a resplendent view of the glistening blue Caribbean. When the Mission director’s servant arrived to serve the meal wearing white gloves, Gilligan evidently had seen enough. He returned to Washington, is alleged to have fired the Mission director, and issued a decree prohibiting USAID Mission officials from having swimming pools. He let it be widely known that every USAID officer stationed overseas should think twice about how an inappropriate lifestyle could undermine the US government’s goal of aiding the poor throughout the developing world. Continuing the Quest to Reach the Rural Poor

In the development community, the 1970s was a period of reflection, reappraisal, and enunciation of new models for bringing “equitable growth” to the Third World. The US Congress coupled the “Basic Human Needs” approach supported by the United Nations and the World Bank with the New Directions mandate championed in 1973 to stress that the poor must participate directly in the benefits accruing from the growth of their country’s economy. During the Carter administration, USAID Washington sought to implement a Basic Human Needs strategy by focusing on the well-being of all members of the family unit.6 Though the Latin American and Caribbean Bureau (LAC) in USAID Washington was anxious to move ahead with the Basic Human Needs strategy, funding levels for LAC were modest when compared to funding for other geographic bureaus. Consequently, LAC leadership recommended that USAID resources be concentrated on the Caribbean countries where high unemployment rates in sprawling, crime-ridden urban slums were seen as driving the inhabitants of the Caribbean nations to migrate illegally to the United States.7

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Aspirations and Angst: The USAID Bureaucrat in the 1970s

Since 1969, USAID had shrunk from 17,600 positions to approximately 5,700 positions in 1977, of which approximately 3,650 positions were US citizens.8 An obvious consequence of these sharp cuts was that promotion in USAID was excruciatingly slow. Given the need to measure one’s success in terms of ascent through the ranks to senior levels, it is easy to understand why swells of ennui engulfed many USAID professionals. Further complicating the picture of promotion in USAID was the fact that women and minorities were beginning to be recognized for the important role they played in a bureaucracy that had been dominated for two decades by an “old boy” network and mentality. Republican political appointees were as aggressive as Democrats in showing that they were serious about giving women and minorities a fair chance at the annual promotion panels. Regardless, a small number of alpha males continued to lurk in the hallways of USAID, ever ready to complain about the incompetence of a female or a minority in order to advance their own careers. Women were accepted into the fields of health, nutrition, family planning, and education, but many males held grave reservations about the ability of women to work in developing countries as engineers, agriculturalists, economists, or senior managers, and especially as Mission directors.9 USAID had always been considered a temporary agency, and it was assumed that it eventually would work itself out of a job. However, by the mid-1970s, it was clear that USAID, as a public institution funded by the US government, was here to stay. Instead of indicators of steady progress being made in the developing world, the citizens of many countries were slipping deeper into poverty. The doubling of population in countries throughout Latin America was overwhelming the progress in agriculture, education, and health. During the Carter administration, the status of the foreign service officer reserve was changed to that of a foreign service officer, theoretically giving USAID officers parity with their State Department colleagues. The change in status of USAID officials was accompanied with certificates signed by the secretary of state, which many USAID officials proudly hung on their office walls to bear proof of their newly acclaimed status. USAID and its workforce had finally become a permanent institutional presence on the development front.

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Bolivia: From Political Stability into Financial Chaos

Nearly four years of Banzer’s rule had passed when Bolivia’s second Five-Year Development Plan for the period 1976 to 1980 was published. The new plan acknowledged that most campesino families on the Altiplano and in the high valleys continued to live in poverty. The facts portrayed the depth of Bolivia’s development problem: life expectancy at birth was forty-seven years; mortality for children one and under was 147 per thousand; 60 percent illiteracy for the population over fifteen years of age; and 50 percent of the children living in rural Bolivia suffered from some form of malnutrition.10 To address these problems, Banzer’s government continued to support a two-pronged strategy that tied rapid growth of the economy with improvements in the quality of life of Bolivians living in rural areas. Capital investments to promote mineral, hydrocarbon, and agricultural expansion were continued as the path for expanding and diversifying exports. Most of these investments to support the growth of the economy were loans provided by the World Bank and the InterAmerican Development Bank (IDB), as well as financing from domestic savings. The second Five-Year Plan underscored the criticality of infrastructure development to support the physical integration of the country as crucial to strengthening Bolivia’s export market. To this end, the USAID Mission, the World Bank, and the IDB negotiated loans to support the construction of roads and power transmission infrastructure.11 In addition, Banzer’s second Five-Year Plan identified the role the Bolivian government had to play to improve the quality of life of its citizens. However, the Bolivian government did not have the financial resources that would allow it to adequately support agriculture, health, and education projects to aid subsistence farmers. Banzer once again turned to the US government for financial support to fill this void.12 In the mid-1970s, Banzer, in a meeting in Santa Cruz, avowed to Henry Kissinger, the secretary of state, his desire to return Bolivia to a democratic, constitutional path.13 However, it was not until after the election of Carter that Banzer took concrete steps to support his country’s return to constitutional government. The political environment in which Banzer wished to reintroduce democratic practices was a smoldering cauldron of political parties and personalities covering all points of view from fascist right to communist left. A growing middle class of technocrats, entrepreneurs, and professionals introduced a rich

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variety of progressive ideas that challenged the old guard revolutionaries. These new elements demanded a role in the political machinations that followed Banzer’s announcement to return to constitutional government. An increase in Bolivia’s population since 1950 and large numbers of poor campesinos seeking refuge and opportunity in Bolivia’s towns and cities contributed to the complexity of Bolivia’s political landscape. Adding to Bolivia’s woes was a downturn in the economy during the last years of Banzer’s rule, which did little to calm the restive mood of Bolivia’s citizens as his authoritarian grip on the political process weakened. The situation was exacerbated with a precipitous decline in the value of Bolivia’s exports and an ambitious development program, which consumed Bolivia’s national budget while showing few immediate results that Bolivia’s poor majority could appreciate.14 The establishment of a constitutional government with a democratically elected president was elusive. When the USAID Mission was developing its annual budget request in January 1981, it reported that since July 1978, “Frequent changes in government continue to disrupt development plans and progress severely.” The Mission added that “there have been three general presidential and congressional elections, seven presidents (five of them military) and four military coups”15 since the departure of President Banzer in 1978. In the USAID Mission, USAID staff were forced to sit on their hands while the political situation in Bolivia remained in a state of turmoil. The USAID Mission Pursues Basic Needs for the Rural Poor A Program for Campesinos

Throughout Carter’s administration, the composition and focus of the Mission’s program in Bolivia mirrored the activities undertaken during the Nixon and Ford administrations.16 Spurred on by the Carter administration, the US Congress passed legislation directing USAID Missions to strengthen their efforts to improve the standard of living of the rural poor. The Mission responded by undertaking more intensive studies of the nature and extent of rural poverty in Bolivia. With greater specificity, the Mission identified where the rural poor were located; what the obstacles were to improving their income, health status, and access to education; and how USAID projects could be designed to have more immediate and direct impact on the rural poor.17

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Despite a decline in funding levels during the Carter administration for Latin America and the focus on the Caribbean, Bolivia continued to receive high levels of support during the initial years of the Carter administration. The United States was keen on protecting its development investment in Bolivia, and as long as Banzer was able to sustain political and economic stability, Bolivia continued to receive one of the highest levels of US government assistance in Latin America.18 It was also during the Carter administration that a major initiative to address illicit drug production was undertaken. The USAID Mission’s overarching goal remained unchanged: improve the quality of life of Bolivia’s rural poor. To improve farm production and income, a package including technical experts, agricultural inputs, and training opportunities was designed to reach subsistence farmers.19 Access to basic education in rural areas was to be increased for the children of the rural poor.20 The high incidence of infant mortality in rural Bolivia was to be attacked with the development of a community-based health care system accessible by the campesino families.21 From the Nixon and Ford administrations and into the Carter administration, there was a sustained push from USAID Washington to promote a population program in Latin America. The Mission invariably responded that “The atmosphere in Bolivia is simply not conducive to any form of population control programs due to considerable opposition from the Church and the government of Bolivia.” The Mission argued that in the absence of reliable census data regarding the total population, the population growth rate, and the distribution of the population, it was not feasible to advocate a population control program despite the fact that it could be reasonably anticipated that Bolivia’s population would double by the end of the century.22 Initially the USAID Mission resources for agricultural activities targeted on the rural poor were limited to Bolivia’s southern valleys and the Oriente in the Departments of Santa Cruz and Cochabamba. The Mission had concluded that with limited financial resources, the wise course of action was to invest in areas that had already demonstrated potential for significantly increasing agricultural production. However, as a result of a better understanding of the nature and magnitude of the problems of the rural poor and the new emphasis on basic human needs, the Mission eventually dropped its idea of a tight geographic focus and broadened its reach to include areas in the Departments of Tarija, Chuquisaca, the Pando, the Beni, and Potosi.23 In 1978, Bolivia signed a multiyear Title III agreement with the US government.24 The agreement was for $75 million that was made available to the government of Bolivia over five years. With the local

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currencies generated from the sales of wheat to private millers, an array of development projects were funded to reinforce the Mission’s focus to reach the rural poor that included rural road construction; agricultural service center, pest control, and plant quarantine program development; forestry conservation and small-scale irrigation development; provision of agricultural credit to the poor farmers as well as secondary school scholarships for rural students; and nutrition improvement activities.25 Coca Since Time Immemorial Appreciating the role of coca in the history of Bolivia is central to understanding why Bolivians feel that growing and chewing the coca leaf is an inalienable right. Conversely, many Bolivians see US government efforts at suppressing coca leaf production as smelling of crude Yankee interventionism. The coca bush, grown in Bolivia for over three thousand years, plays an important role in the traditional culture of the Aymara and the Quechua. The coca leaf is a mild stimulant, and Bolivians proclaim its medicinal values for assuaging symptoms of altitude sickness. The poor chew coca leaf to fight pangs of hunger, and bus drivers chew it to help them ward off fatigue during long drives through the high valleys. Campesinos chew it in their fight against the bitter cold of the Altiplano, and miners see it as a source of energy. Mining companies, before the ’52 Revolution, provided coca leaf to their workers as an expected supplement to their meager pay. Bolivians from every walk of life chew the leaf and consume coca blended into teas and medicines.26 Throughout the twentieth century, the government of Bolivia had been a dubious partner on the world scene when the production of illegal drugs was the subject. It was always eager to appear to support accords to control the production, distribution, and use of illegal drugs.27 However, when scrutinizing Bolivia’s record for supporting local institutions critical for enforcing international agreements, one is reminded of historical precedent of the Audiencia of Charcas during the colonial period. When confronted with unpopular decrees that would offer a major challenge to enforce, the president of the Audiencia would lift the Royal Order from his distant monarch above his head three times and say “Yo obedezco pero no cumplo”—“I obey but do not comply.” 28 The twentieth century equivalent of the colonial bureaucrat was not about to play the role of a modern-day Don Quixote and attempt to enforce unpopular laws, particularly when there was no effective enforcement body in Bolivia to put teeth into pronouncements about the evils of coca.

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It was in the Chapare in the early 1970s, where the coca bush was grown primarily for illicit purposes, that the USAID Mission focused its initial efforts for finding alternative crops to displace the coca bush. This was not the first time that the Mission had worked in the Chapare. In the 1960s, the Mission had initiated a series of activities to promote the Chapare as an attractive area for settlement. The Mission funded loans for constructing roads into the Chapare and grants to support the creation of an agricultural extension station and a National Community Development Program office to promote community improvement projects. No USAID Mission official working on these activities in the Chapare in the 1960s could have possibly anticipated that the physical infrastructure being supported with US tax dollars would serve so splendidly the interests of coca bush farmers and narco-traffickers for the next fifty years. In 1972, a $200,000 grant from USAID’s public safety program supported Bolivian police efforts in their antidrug activities. This was followed by an agreement signed in 1975 in which the USAID Mission funded the Agricultural Development in the Coca Zones Project (ADCZP), which supported a series of agricultural research activities in the Chapare that sought profitable alternatives to coca bush production.29 Mission support for the new program represented the frank recognition of Ambassador Stedman and John Oleson, the Mission director, that it was inevitable that the US government was going to continue to push for an antidrug program focused on decreasing coca/cocaine production. Rather than fighting the powers in Washington, Ambassador Stedman felt that it would be smart to promote a program exploring alternative crops and, in the course of implementing the project, demonstrate how difficult it would be to identify a viable economic alternative for small farmers cultivating the coca bush.30 In 1979, a report issued by the General Accounting Office (GAO) addressed the difficult challenge that the Mission was being directed to undertake. The report stated: although current thinking . . . was that the project would be completed in 1983 . . . we had little confidence in even this revised estimate. To develop, test and prove that alternative crops . . . can produce returns competitive with returns available from coca leaf appears a truly longrange, unpredictable objective.31

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This initial effort had yielded little in terms of reducing coca leaf production or identifying alternative crops that would be profitable substitutions for the coca bush.32 During Carter’s administration, the impetus to fight illegal drug production was accentuated. This reflected the Country Team’s growing realization that with the financial backing of Colombian narcotraffickers to secure coca paste, the market for coca leaf was booming in the Chapare. The paste was sent to Colombia for refinement into cocaine before moving the finished product into the international market. The mushrooming demand for cocaine, and the aggressive tactics of Colombian narco-traffickers in organizing and managing the illicit drug market, had resulted in an economic bonanza for Bolivia.33 Midway through the Carter administration, the USAID Mission designed a project to support the Country Team’s goal of reducing coca cultivated in Bolivia by limiting its production to its domestic requirement. The project’s objective was to promote the diversification of agriculture in the Alto Beni, the Chapare, and the Yungas, where it was estimated that twenty thousand farmers cultivated coca leaf. The $8.5 million project was a loan supporting components of road construction, rural electrification, community service, agricultural marketing and processing, and credit designed to support the research activities that had been initially supported by the ADCZP.34 In 1980, General Garcia Mesa, who was alleged to have close ties with cocaine traffickers, led a military coup into power. The US government, which did not recognize Mesa’s government, suspended funding for its projects designed to reduce the production of coca as well as most other USAID Mission-funded projects.35 The Largesse of Other Foreign Donors An important change in the USAID Mission’s approach to programming assistance to Bolivia resulted from its recognition that other donors, both bilateral and multilateral, were playing an increasingly important role in Bolivia. The day had long since passed when the Mission was the only significant player in town. In 1978, the Mission reported that other donor assistance amounted to at least $695 million. Much of this assistance was concentrated on infrastructure for commercial farming, health and sanitation facilities construction in urban areas, vocational and higher education in urban areas, and highway and electrical generation plant construction.36 Though the Mission would be charged by common sense and dictates from USAID Washington to coordinate their efforts across the board with all other donors, the task became

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increasingly difficult with each passing year. (See Appendix 3: Official Development Assistance to Bolivia, Calendar Years 1960–2013.) Telling Stories in the New Yorker Style

For nearly thirty-five years, USAID and its predecessor organizations had been unable to resolve the conundrum of how to convince the US Congress that taxpayer dollars spent on development assistance in the Third World were sound investments. Efforts to identify and coherently describe progress, which would convincingly explain USAID’s accomplishments during the Carter era, fared no better. The chronic political instability that prevailed across Bolivia towards the end of Carter’s administration reinforced the perception that the USAID Mission’s effort was being wasted. In terms of the USAID Mission’s program to implement a Basic Human Needs strategy, its analytical efforts had resulted in a better understanding of the problems of poverty in Bolivia. However, the Mission’s task of tying strengthened institutions to quantifiable improvements in the lives of the rural poor remained tenuous. Examining progress in the education sector for the period from 1970 to 1977 is a case in point. The Mission reported that functional literacy, based on having obtained a fifth-grade education, had risen 3 percent, from 37 to 40 percent; female primary school enrollment had increased from 46 to 72 percent; primary school enrollment had increased from 53 to 80 percent; and the overall school enrollment rate had increased from 56 to 67 percent. For this same period, the number of rural schools had increased from 432 to 730, and the number of rural teachers had doubled. That substantial progress had been made in the education sector that impacted the children of the rural poor was obvious when reviewing mission data.37 However, the degree to which the Mission could reasonably claim that its investments in the education sector were crucial for the achievement of the progress identified above continued to be an open issue. In terms of investments in the health sector, what credit could reasonably be assigned to the USAID Mission for life expectancy improving from forty-six years in 1968 to fifty-two years in 1977? What was the significance of the Mission’s reporting better access by the rural population to improved sewage disposal from 4 percent in 1970 to 11 percent in 1977?38 The Mission’s analytical efforts in the health sector continued to fall short of establishing meaningful linkages between Mission investments to strengthen institutions in the health sector that

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serviced the rural poor with meaningful improvements of the health of Bolivia’s poorest majority. With regard to projects in the agricultural sector, the Mission reported that the annual growth of yields per hectare by small farmers between 1971 and 1976 were 4 percent for potatoes, 7 percent for wheat, 8 percent for yucca, and 11 percent for coffee. Yet no meaningful attempt was made to tie these increases to the Mission’s investments in the agricultural sector.39 Against these modest accomplishments was an array of problems identified by USAID auditors covering the period from 1975 to 1979 that revealed how difficult it was to effect change in the agricultural sector. The “slow implementation” of Mission-funded projects, “inadequate government of Bolivia policies and financial support” for the agriculture sector, and the lack of availability of agricultural inputs including fertilizer and improved seed were some of the constraints to moving the USAID program forward.40 Regarding the management of the technical assistance component funded by the Mission, the auditors identified the lack of “effective counterpart relationships,” “inadequate work plans,” “lack of Spanish proficiency” of some US advisors, and “inadequate mix of technical skills to effectively respond to problem areas” as problems that “adversely affected” the pace and the progress made in the agricultural sector.41 The auditors concluded that it “appears that no progress has been made since 1975 to achieve the USAID’s sector goal of increasing the per capita income and standard of living of rural people.”42 The auditors went on to say, “Per capita gross domestic product for the agricultural sector decreased in real terms at an annual of 1.7 percent compared to an increase of .4 percent during the period 1972–1978.”43 The auditors did acknowledge that there were a number of accomplishments demonstrating progress that suggested that the Mission was headed, though at an agonizingly slow pace, in the direction of strengthening Bolivian institutions in the agricultural sector as a means “to increase per capita income and standards of living of the small farmers or rural poor.” A small slice of the accomplishments identified by the auditors follows: approximately 1,500 settlers received agricultural services designed to facilitate their colonizing an area north of Santa Cruz; access roads were constructed in an area north of Santa Cruz; the Ministerio de Asuntos Campesinos and the Bolivian Institute of Agricultural Technology received technical assistance that resulted in strengthening research, extension, and agricultural planning activities to support poor farmers in the valleys of central Bolivia and the Bolivian lowlands; three agricultural service centers and two seed processing centers were constructed and equipped; a Small Farmer Credit Program

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(SFCP) managed by the Bolivian Agricultural Bank was initiated with loans finds provide by the USAID Mission and the government of Bolivia designated to provide loans to poor farmers; and seventy-nine participants were trained to manage the SFCP.44 Determining a meaningful cause and effect relationship between these accomplishments and the Mission’s heroic goals of improved small farmer agricultural productivity, enhanced farmer income, and quality of life improvements, given the truncated timeframe for achieving these goals, suggests a lack of realism in understanding the complexity of development in Bolivia by all parties engaged in the design and implementation of the Mission’s agricultural portfolio in Bolivia. USAID’s senior leadership in Washington, well aware of the nearly universal perception of USAID’s lackluster performance, directed that a series of impact evaluations be carried out. Doug Bennett, the USAID administrator from 1979–1981, expressed the view that he wanted these evaluations to be success stories of New Yorker quality. He saw these evaluations as “an opportunity to focus on results” and the “way to show Congress and the GAO that AID was minding its bilateral store.”45 In 1980, one of these evaluations was undertaken of the Mission’s rural electrification projects that had been initiated in 1973. In the final report, an elder in a village that was recently electrified, was quoted: Electrification is the principal thing that is going to make our pueblo live, without it, our pueblo is going to die. If there were electric light, those who have migrated to the city would return here. Many have abandoned the pueblo for lack of light and other necessities. —Raul Miranda, sixty-eight-years old, Pucarani, La Paz Highlands46

Throughout rural Bolivia, the evaluation team found that “rich and poor, young and old valued electricity.” The desire to have electricity in their homes ranked in importance with access to education, health care, and potable water. Though the Mission’s rural electrification program reached only 7 percent of the total population of rural Bolivia, it marked an important step in reaching Bolivia’s poor.47 The report describes one poor household in the Cochabamba Valley that benefited from having electricity: It is 8:30 pm. The evening meal has been eaten. Margarita Aguayo de Cayo sits next to the heap of corn kernels located in the middle of the single room adobe hut that she shares with her husband Cecilio. She tucks one leg under her folds of her homespun skirt and begins to select rocks and other paraphernalia from corn that she will grind for

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the next day’s noontime meal. Cecilio is nearby sharpening the blade to his oxen-pulled plow with a flat abrasive stone. Conspicuously, a single light bulb dangles from a black wire suspended from the crossbeam which supports the thatched roof. —Falsuri, Cochabamba Valley48

The tactic of telling success stories did little to change the perception that the USAID Mission to Bolivia was failing in its efforts to reach the rural poor. The issue of rising expectations compounded the problem of measuring success. Politicians in Bolivia and Washington promised support and progress, and the expectations created in the hearts and minds of the campesinos grew beyond what could ever be realistically accomplished. USAID development professionals living and working in Bolivia began to understand that even with the best efforts of the Bolivian government and the generous support of the donor community, meeting the basic human needs of Bolivia’s rural poor was a receding horizon. Notes 1. “Universal Declaration of Human Rights: Remarks at a White House Meeting Commemorating the 30th Anniversary of the Declaration’s Signing,” December 6, 1978, http://www.presidency.ucsb.edu/ws/?pid=30264. 2. “Congressional Presentation: Agency for International Development, Fiscal Year 1979” (USAID Washington, February 1, 1978), pp. 3–4. 3. Ibid., pp. 23, 29–35. 4. The author heard of Gilligan’s quip from USAID colleagues who attended the meeting where Gilligan is alleged to have made the remark. 5. “Congressional Presentation: FY 1979,” pp. 18–20, 85–86. 6. “A Strategy for a More Effective Bilateral Development Assistance Program: An A.I.D. Policy Paper, DN-AAA-216-158/79” (USAID Washington, March 1978), pp. 7–9. 7. “Congressional Presentation: FY 1979,” Annex A, pp. 573–575. 8. Ibid. 9. Regarding Administrator Gilligan’s commitment to affirmative action, see memo from John J. Gilligan, “Our Firm Commitment Within AID to Equal Opportunity and Affirmative Action,” March 31, 1977, with attachment “Affirmative Action Plan.” 10. “Annual Budget Submission, FY 1979” (USAID Bolivia, June 1977), p. 1. 11. “Development Assistance Program” (USAID Bolivia, March 1978), pp. 24–25, 53, and “Government of Bolivia Sector Strategies, Annex I,” pp. 1–6, which was excerpted and translated by USAID Bolivia from the Bolivian government’s “Five-Year Development Plan.” Also see “Economic Memorandum on Bolivia, report no. 1546-B0” (World Bank, March 23, 1977), pp. 24–25.

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12. “Development Assistance Program, March 1978,” pp. 24–25. 13. Kissinger and Banzer met in Santa Cruz with William Rodgers, assistant secretary for Latin American Affairs, and John Stedman, ambassador to Bolivia in the mid-1970s. Kissinger was on his way to an Organization of American States meeting in Chile, where he was going to meet with President Pinochet of Chile. In the meeting, Banzer commented as to how important it was to restore the constitutional process in Bolivia and have an elected president as soon as it was possible. Kissinger made no comment. After the meeting, when Kissinger was being driven to the airport in the company of Rodgers and Stedman, Kissinger brought up the subject of Banzer’s remarks regarding returning Bolivia to constitutional government. Kissinger commented, “Where does Banzer get those crazy [expletive] ideas?” Stedman made no comment but was convinced that Banzer was speaking from the heart. The author got the distinct impression that Stedman was both appalled and shocked by Kissinger’s remark. Interview with Ambassador William Stedman, Washington, D.C., June 21, 2002. In the mid-1960s, Irving Tragen met with Colonel Banzer on several occasions when Banzer was minister of education. Tragen said that Banzer stated to Tragen that he was a staunch supporter of the constitutional process. Tragen stated that he felt that Banzer was sincere. Interview with Irving Tragen, Washington, D.C., November 10, 2015. 14. “Country Development Strategy Statement, FY 1981, Bolivia” (USAID Bolivia, January 1979), pp. 5–18. 15. “Country Development Strategy Statement: FY 1983, Bolivia” (USAID Bolivia, January 1981), p. 1. 16. “Development Assistance Program, 1978,” pp. 251–254. Also see “Annual Budget Submission, FY 1978” (USAID Bolivia, June 1976), pp. 10– 26, and “Country Development Strategy, FY 1981,” pp. 38–44. 17. “Development Assistance Program, March 1978,” pp. 1–79. 18. “Congressional Presentation: FY 1979 Annex A,” pp. 573–575. Also see “U.S. Overseas Loans and Grants: Obligations and Loan Authorizations, July 1, 1945–September 30, 2015,” USAID Washington, p. 94. 19. “Country Development Strategy, FY 1981,” pp. 40–41. Also see Appendix A in “Audit Report: Agricultural Sector, no. 1-511-80-10” (USAID, May 27, 1980), pp. I, 1. 20. “Country Development Strategy, FY 1981,” pp. 41–43. Also see “Bolivia, Rural Education II: Teacher Training, project no. 511-0482” (USAID Bolivia, March 18, 1977). 21. “Country Development Strategy, FY 1981,” pp. 43–44. Also see “Bolivia: Rural Sanitation, project no. 511-0458” (USAID Bolivia, March 18, 1977). 22. “Development Assistance Program, March 1978” pp. 34–35. 23. Ibid., pp. 1–3. 24. John Hatch, Michael Hanrahan, Nancy Hirschhorn, Charles Connolly, Gerald Faich, “An Evaluation of the Bolivian Food for Development Program: Its Institutional Performance and Impact on Farmers 1979–1981” (Rural Development Services for USDA, March 1982), p. 1. 25. Ibid., p. 8. 26. William E. Carter, Gonzalo Riveros, Freddy Arteaga, Mauricio Mamani, and Roberto Choqui, “Traditional Use of Coca Leaf in Bolivia:

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Multidisciplinary Study, Final Report” (La Paz, Bolivia: Museo Nacional de Etnografia y Folklorico, 1978), pp. 161–162. 27. Krishna Kumar, Ernest Carter, and Stan Samuelson, “Appendix E: Coca Plant Cultivation Control in Bolivia,” “A Review of AID’s Narcotics Control Development Assistance Program,” AID Evaluation Special Study no. 29 (USAID Washington, March 1986), pp. 1–2 . 28. Lyle N. McAlister, Spain and Portugal in the New World, 1492–1700 (Minneapolis, MN: University of Minnesota Press, 1984), p. 204. 29. “Drug Control: U.S.-Supported Efforts in Colombia and Bolivia” (Government Accountability Office, November 1988), p. 48. Also see “Annual Budget Submission, FY 1980” (USAID Bolivia, May 1978), pp. 80–82, and Kumar, Carter, and Samuelson, Appendix E in “AID’s Narcotics Control Development,” pp. 17, 1–4. 30. Interview with John Oleson (Mission director, Bolivia, 1973–1976), Washington, D.C., April 10, 2013. 31. After nearly $2 million of expenditures, this research effort ended in 1980. See Kumar, Carter, and Samuelson, Appendix E in “AID’s Narcotics Control Development,” pp. 17, 1–4. 32. Ibid., p. 4, Appendix E. 33. Ibid., p. 1, Appendix E. 34. “Project Identification Document: Development of the Yungas and the Chapare,” in “Bolivia, Annual Budget Submission, FY 1979” (USAID Bolivia, June 1977), pp. 65–72. Also see “Bolivia, Annual Budget Submission, FY 1980” (USAID Bolivia, May 1978), pp. 80–82. 35. “Drug Control: U.S.-Supported Efforts in Colombia and Bolivia” (Government Accounting Office, November 1988), p. 48. 36. “Development Assistance Program,” pp. 47–48. 37. “Country Development Strategy Statement: FY 1982, Bolivia” (USAID Bolivia, January 1980), p. 17. 38. Ibid. 39. Ibid. 40. “Audit Report: Agricultural Sector” (USAID Bolivia), p. ii. 41. Ibid. 42. Ibid., p. i. 43. Ibid. 44. Ibid., pp. 55–66, Appendix G. 45. Douglas J. Bennet, “Impact Evaluation,” Fifty Years in USAID: Stories from the Front Lines, Janet C. Ballantyne and Maureen Dugan, eds. (Arlington, VA: Arlington Hall Press, 2012), p. 71. 46. Edward Butler, Karen M. Poe, and Judith Tendler, “Bolivia: Rural Electrification, Project Impact Evaluation, no. 16” (USAID Washington, December 1980), p. 3. 47. Ibid., p. iv. 48. Ibid., p. 4.

8 Out of Chaos a New Development Path Emerges: Ronald W. Reagan, 1981–1989

Either we have the moral courage to make sacrifices necessary to put in place a radical new policy, or quite simply, Bolivia will die. —Victor Paz Estenssoro, 19851

Washington: A New Development Agenda

During the presidency of Ronald Reagan, supply-side and trickle-down economics were the rallying cries of a new administration with designs on resuscitating a domestic economy that was perceived as being in decline. On the international scene, battle lines were starkly etched between the United States and Russia’s evil empire. Regarding countries in the Third World, the president thought primarily in terms of assisting them to maintain their stability and unwavering support for the United States in its struggle against international communism. Reagan was wary of undermining dictators who supported the United States. However, in 1982 in a speech before the British Parliament at Westminster Palace, Reagan proposed creating “the infrastructure of democracy—the system of a free press, unions, political parties, and universities.” Shortly thereafter, USAID contracted the American Political Foundation to study the potential for promoting democracy in the developing world.2 This was followed by legislation approved by the US Congress that funded the development of a series of private, nonprofit organizations including the National Endowment for Democracy, the National Democratic Institute, and the International Republican Institute. These new organizations were directed to promote

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democracy and good governance activities in the developing world.3 What had started as a human rights concern during the Carter administration and evolved into a policy of promoting democratic practices in Reagan’s administration was to become a virtual tsunami of democracy and governance interventions enthusiastically promoted throughout the developing world by Bush 41, Clinton, Bush 43, and Obama. Improving judicial systems, strengthening legislatures, creating electoral institutions, promoting a free press, and fortifying democratic practices in municipal government operations became mainline activities for many USAID Missions around the world. In terms of Latin America, the Reagan administration focused on the communist threat in Nicaragua, El Salvador, and Guatemala. Reagan believed that the leftist elements in these countries had an undue advantage because of support coming from the Soviet Union and its Cuban satellite, whose military adventurism continued to be viewed as a menace throughout Latin America. To address this threat, Henry Kissinger, secretary of state during the Nixon presidency, was appointed chairman of the Bilateral Commission on Central America to look at the extent of the Soviet Union’s influence in countries in the region. Kissinger reported that the Soviet Union’s presence had increased significantly in Latin America, and the Soviet Union was funding the training of Latin Americans in a variety of academic and technical fields. The immediate reaction to the Soviet challenge was reinvigorated military, intelligence, and development programs funded by the US government throughout Latin America. In nearly every country in Latin America in which USAID had a presence, funding for participant training programs was increased. Technical and academic training was always supplemented with educational experiences that promoted democratic practices and good governance. Several thousand Latin Americans, including Bolivians, benefited from the surge of both short and long-term training opportunities provided by the US government.4 Another problem that caught the attention of the Reagan administration was coca/cocaine production, which was playing an increasingly important role in the economies of Colombia, Peru, Bolivia, and to a lesser extent Ecuador. Major programs administered by the Drug Enforcement Agency (DEA), the State Department, and USAID, addressing illicit drug production and trafficking in these four countries, would become a key consideration when allocating US assistance to the Andean region.

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USAID Washington

The Reagan administration appointed Peter McPherson to be the administrator of USAID. A tax lawyer in the District of Columbia, McPherson brought to the development business a variety of relevant life experiences. He was reared on a cherry farm in Michigan, was a Peace Corps volunteer in Peru in the 1960s, and was appointed a member of USAID’s Board for International Food and Agricultural Development, whose objective was to promote Land Grant university participation in the agricultural development process. He was inclined to address problems in a straightforward, practical manner, and he moved quickly to put a Reagan stamp on the USAID program. Perhaps McPherson’s most important contribution was the excellent job he did selling USAID’s program to a reluctant congress. Though private sector activity had been an important feature of USAID’s development assistance in the Third World since the 1960s, McPherson underscored its importance as part of the Reagan agenda. The Program and Policy Coordination Bureau in Washington reformulated familiar rhetoric to fit the new administrator’s commitment to put a fresh face on USAID. Themes of policy dialogue, private enterprise, technology transfer, and institutional development became the sacrosanct mantras used to construct McPherson’s “Four Pillars.” The Four Pillars were to be the “means—not ends—for helping people to help themselves and meeting the basic needs of the poor majority of mankind.”5 Every type of development intervention being undertaken in USAID Missions around the world fitted easily into the new paradigm. Mission directors simply reconfigured their portfolios to conform to the new rhetoric. As a part of this process, Missions throughout the USAID world rushed to undertake assessments of the private sector to demonstrate solidarity with the private-sector policy of the Reagan administration. New projects would then emerge that would use the Four Pillars’ buzz words to demonstrate dedication to the proposition that the development path to sustainable success was through US-style market development capitalism. Agriculture, education, and health projects to address the needs of the rural poor continued to be supported, and USAID officials were challenged to seek ways to privatize the activities as a means to reduce the cost of the services to the public sector. From USAID Washington’s vantage point, family planning activities had always been and continued to remain a priority. USAID’s efforts at promoting family planning activities in Latin America during

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the 1960s and the 1970s had resulted in well-established programs in Mexico, Colombia, and Chile that were showing significant results by the time of the inauguration of President Reagan. However, family planning efforts in Bolivia were still regarded with suspicion by the Bolivians for a variety of reasons, including the erroneous belief that the Aymara on the Altiplano were less fecund than people living in lower climes.6 Contracting with the Private Sector

By the early 1980s, a sea change was apparent in the way USAID managed its development program. In its eagerness to reduce the size of the federal government, the Reagan administration accelerated the practice of “contracting out” foreign aid activities. A process that had started in the 1960s and continued through the 1970s, for-profit companies, universities, and private voluntary organizations had become involved in nearly every aspect of the USAID project process. As USAID Missions passed through the 1980s, they became increasingly reliant on these organizations to implement and evaluate grant and loan projects. For this reason, one of McPherson’s concerns was to strengthen the contract selection process by defining a broader role for the USAID contract officer in the project negotiation and implementation process. Contract officers had played a role in the development bureaucracy since the 1940s, when the US government initiated development assistance programs, but their function had not been really well understood by most USAID officials. Contract officers tended to take a mechanical approach to getting their job done. In most cases remote from field operations where contracts for development services were being implemented, contract officers had little opportunity to play a substantive role. They led the process concerned with drawing up contractual agreements and, if time permitted, they would review expenditure reports to determine whether funds were spent in accordance with the contractual agreements. This situation changed markedly when contract officers were directed to take on more substantive responsibilities to ensure the integrity of the contracting process, and by the early 1990s the contract officers played a critical role, especially in the selection process of contractors in Washington and in the USAID Missions. While USAID staff continued to decline, the number of contract officers grew. To demystify the contracting process, contract officers were stationed in the larger Missions to support field operations. Courses were given on

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contracting procedures for USAID employees who were not contract officers but were involved in the contracting process, and Missions hired and trained local staff to perform important ancillary roles in the contracting process. Bolivia: Backing Away from a Financial Abyss Across the region [Latin America], the economic crisis of the 1980s coincided with the demise of authoritarian military regimes and with political democratization. After a decade marked by authoritarianism, political arrangements were to be restructured around the principles of competition, participation, and representation. Constitutions were engineered to define new rules for political behavior, elections were convened to choose political leaders, and civil liberties were enshrined again as the basis for public life. —Catherine Conaghan and James Malloy, Unsettled Statecraft7

The authoritarian rule of Hugo Banzer from 1971 to 1978 was followed by a period of political turmoil and near financial collapse. Hyperinflation, peaking in 1985 at 25,000 percent, a foreign exchange crisis, a huge budget deficit, and a domestic economy that had declined every year from 1981 to 1985 contributed to Bolivia’s economic misfortunes. These problems were further exacerbated by sharp declines in world market prices for Bolivia’s lead ores and hydrocarbons. Devastating floods and droughts triggered by an El Niño had disastrous consequences for struggling Bolivian farmers and added to Bolivia’s financial desolation.8 Political parties and military cliques, reinventing themselves, lurched left and right in futile attempts to seize and steady the chaotic situation in which Bolivia found itself. Finally, in 1982, with one quick fix after another having utterly failed to return the country to a semblance of normalcy, Hernán Siles Suazo was allowed to claim the presidency, which he had won in 1980. During his presidency, the country’s economic crisis deepened, and widespread public dissatisfaction persisted unabated. Amazingly Siles Suazo was able to remain in office despite the fact that the coalition that had brought him to office collapsed. Faced with public pandemonium9 and fiscal chaos, Siles Suazo called for municipal and national elections one year earlier than planned. In 1985, Paz Estenssoro, once again representing the Movimiento Nacionalista Revolucionario, ran for president. His major opponent, Hugo Banzer, representing the Acción Democrática Nacionalista gained

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a plurality of the popular vote. However, the Bolivian Congress, charged with selecting a president when no candidate received 50 percent of the popular vote, awarded the presidency to Paz Estenssoro. Shortly thereafter he signed an agreement, “pacto por la democracia,” with Banzer that sanctified “pacted” democracy, which would be the vehicle for sustaining constitutional government and democratic practice for the next twenty years.10 The immediate problem facing Paz Estenssoro was the economic chaos into which Bolivia had plummeted. He understood that it was imperative to move quickly and decisively if Bolivia was to avoid becoming a failed nation. One of his first actions was to create the Gabinete Económico, to which he appointed Gonzalo Sánchez de Lozada, Juan Carriaga, and Fernando Romero. Also playing an important role in restructuring the national economy was Ronald MacLean Abaroa, who was instrumental in bringing Jeffrey Sachs into the fray. Sachs, an economist, had gained worldwide reputation advising governments on how to transition from a central planning model to a market economy model. This coterie of fresh Bolivian faces remained at Paz Estenssoro’s side throughout the crisis. Despite often clashing with each other, they provided the principal policy recommendations that were basic to fabricating a new development scenario. An immediate and critically important outcome of their efforts was that a brake was put on the hyperinflation that had had the potential of destroying Bolivia’s fiscal integrity and inflicting enormous financial pain on all elements of the society, especially the poor. The International Monetary Fund, the World Bank, and the US government were available to suggest, entice, or even inveigle Paz Estenssoro to follow prescriptions of their invention, but in the last analysis Paz Estenssoro and his Bolivian advisors were responsible for producing Decree 21060, issued on August 29, 1985, that detailed the specifics of the New Economic Policy (NEP). It was a blueprint flush with neoliberal economics, the essence of which was free market capitalism. As such, a new formulation of Rostow’s trickle-down economics dictated the new development agenda that was to carry Bolivia into the twenty-first century.11 The NEP called for a flexible foreign exchange mechanism after an initial currency devaluation of 93 percent and elimination of all price controls on commodities produced in the private sector. Ceilings on interest rates were abolished on all loans and deposits. Public sector wages were temporarily frozen; however, a provision allowed for an eventual 10–20 percent increase of annual wages. Wages in the private sector were to be freely negotiated. Another important aspect of the NEP

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was that direct involvement by the Bolivian government in state-owned and -operated enterprises was significantly reduced.12 The USAID Mission Faces New Challenges

With the restoration of a democratically elected government in 1982, USAID Mission employees returned to work after more than two years of housebound inactivity. What the Mission encountered was a country struggling to overcome a grim financial situation that was having a countrywide impact that was devastating, especially on Bolivia’s poor. The gross domestic product (GDP), having declined by 9 percent in 1982, declined still further by 8 percent the following year,13 which in turn contributed to a public deficit in excess of 16 percent of GDP and a balance of payments deficit approaching 6 percent.14 A key factor at the center of Bolivia’s fiscal mess was the sharp decline in the price of tin on the world market. The Corporación Minera de Bolivia (COMIBOL)’s cost of production for a pound of tin was in excess of $10, while the world price had fallen to $2.20 per pound. Instead of COMIBOL’s production contributing to strengthening the Bolivian economy, the government of Bolivia was obliged to underwrite COMIBOL’s deficits for the period 1980–1985, which significantly contributed to the hyperinflation and the economic chaos that engulfed Bolivia.15 The severe floods and drought of 1983, affecting more than 25 percent of Bolivia’s population, also contributed to Bolivia’s economic problems. It was estimated that over 70 percent of the 1983 harvest was lost, including over 60 percent of the potato crop, the staple crop in Aymara and Quechua communities in the high valleys and on the Altiplano.16 The Mission, working closely with the Embassy, identified three overarching goals: promotion of a stable and open national economy in which the private sector played a larger role, strengthening democratic practice and constitutional government, and support for a narcotics control strategy.17 Unofficially, this became known as the “Three D Strategy: Drugs, Democracy, and Development.”18 These overarching goals would be the major components of the USAID Mission’s program, enduring into the twenty-first century. The Embassy, in tandem with Hank Bassford, the USAID Mission director, began to negotiate the release of $42 million dollars of loans, which had been frozen since the military coup in 1980. In addition, $68 million dollars for new grant projects were approved to strengthen the Bolivian government’s economic analytical capacity, to fortify credit institutions designed to support private business operations, and to

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initiate an Alternative Development strategy in the Chapare to replace coca/cocaine with the production of a variety of licit agricultural products. Additional development investments were focused on the La Paz, Cochabamba, and Santa Cruz corridor, which the Mission believed had the greatest potential for small- and medium-scale enterprise development. Agriculture, education, and health projects initiated in the 1970s continued to focus on the rural poor throughout the 1980s.19 The Mission’s most visible project was the Unidad de Análisis de Políticas Económicas/Economic Policy Analysis Unit (UDAPE), whose implementation was initiated in the early 1980s. Established in the Ministry of Planning,20 UDAPE attracted a group of well-educated and mostly young Bolivian economists who supported Paz Estenssoro and his colleagues in the Gabinete Económico. The UDAPE team played a major role designing the policy framework for the NEP and establishing guidelines for monitoring the NEP’s implementation. UDAPE economists also assisted the IMF and World Bank teams that came to Bolivia to provide advice to Paz Estenssoro and his associates in the Gabinete Económico.21 PL480 Food Assistance and National Emergencies

In response to the drought on the Altiplano, PL480 Title II resources were increased substantially, amounting to $6 million in 1982, $17 million in 1983, and $12 million in 1984.22 To address issues associated with increasing PL480 resources, the USAID Mission asked the Adventist Development and Relief Agency and Food for the Hungry International to join Catholic Relief Services in managing the expanded PL480 program. The Mission also added a senior food aid manager and three supervisors to its own staff to manage the expanded program. The food was distributed through food-for-work programs, which reached into approximately 3,500 rural communities.23 Regarding Title III food aid provided in the early 1980s, a Government Accounting Office (GAO) review prepared in 1984 pointed out that the Title III food assistance program was the “largest US development program on-going in the country with over 100 subprojects either being implemented or completed as a result of local currency generations.”24 Starting in the mid-1980s, PL480 Title II and III programs were once again expanded in response to the nationwide financial catastrophe. In the case of Title II, over $10 million a year was provided, commencing in 1985 through the rest of the decade and into the 1990s.25 Most Title II resources were used to support a safety net designed to provide temporary jobs for the growing numbers of unemployed

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workers, many of whom had lost their jobs as one of the unintended consequences of the NEP. The US government did not want to be perceived as helping to save Bolivia’s economy at the expense of exacerbating the problems of Bolivia’s poor majority population. The Title II food aid was focused on the major cities, including La Paz, El Alto, Cochabamba, Santa Cruz, Oruro, Potosi, and Sucre, where many of the unemployed from the mining and rural areas were headed. According to one estimate, Title II food aid resources played the crucial role in creating more than ten thousand jobs per month for unemployed families in 1988 and 1989.26 Title III resources, which averaged $20 million per year between 1985 and 1990,27 were used to support an array of economic recovery, development, and humanitarian assistance activities. The local currency generated from the sale of PL480 Title III resources supported Missionfunded projects in the credit, rural development, health, and education areas that targeted Bolivia’s poor majority. Local currency generations were also used to cover the operational costs of the UDAPE program.28 David Cohen, the Mission director who followed Hank Bassford in 1985, observed, “These local currencies gave us incredible programming flexibility and agility, as their use did not require Washington approval nor Congressional notification. With them, we were able to start up activities in a highly responsive, catalytic way, enabling us to act faster than any other donor.”29 Coca Bush in the Tropics

With the return of civilian rule in Bolivia, the US Embassy was anxious to secure once again the Bolivian government’s commitment to pursue the war on illicit drug production. Bolivia was facing one of the worst financial crises in its history, and it was wildly optimistic on the part of the US government to think the Bolivian government could rein in the lucrative coca/cocaine industry that employed tens of thousands of Bolivians. Due to the faltering economy, unemployment had doubled and real incomes fell by 30 percent. Between 1983 and 1987, as many as fifty thousand Bolivians in the public sector, including twenty thousand employees of COMIBOL, were fired.30 Meanwhile, coca leaf production was booming, and many farmers in the Chapare were experiencing real income improvements. It was calculated that coca/cocaine production accounted for approximately one third of Bolivia’s agricultural production, as much as half of its export earnings, and the employment of one fifth of Bolivia’s working population. A number of unemployed miners had used their severance pay from COMIBOL to start farming

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the coca bush in the Chapare.31 It was a stunning paradox that the illicit coca/cocaine operation in Bolivia proved to be one of the most robust local businesses to support the safety net for Bolivia’s poor, who were so gravely affected by the austerity program prescribed by the NEP. In this economic quagmire, the US government cajoled a desperate Bolivian government to accept as a goal the eradication of Bolivia’s entire coca leaf production, except for that required for traditional uses. In 1983, the Bolivian government signed a series of agreements with the US government that committed $30 million for narcotics control activities and $58 million for related development assistance activities. Before funds could be disbursed, the government of Bolivia was obligated to sign an agreement supporting a coca control and reduction program that reduced coca leaf production in the Chapare to that which was to be used for legitimate, domestic consumption purposes. A target of four thousand hectares of illicit coca production to be eradicated by 1985 was established. Progress was to be certified annually. The government of Bolivia also agreed to establish a police presence in the Chapare to assist in the enforcement of the interdiction and eradication elements of the antidrug strategy.32 Notwithstanding the major role played by the US military, the chief players in the Country Team were the International Narcotics Matters (INM) Section in the Embassy, responsible for supporting coca eradication efforts; the DEA, with responsibilities for the interdiction of illicit drugs including coca/cocaine; and the USAID Mission that continued to focus on developing licit agricultural opportunities. The Mission’s vehicle to support the Country Team’s antidrug strategy was the Chapare Regional Development Project (CRDP) that was authorized in July 1983, with a $10 million loan and $4.4 million in grants.33 The major objective of the CRDP was to provide coca farmers the means to earn a lawful living. To increase production of licit agricultural crops, funds were designated for “agricultural/forestry production” and “agribusiness development and marketing.” Additional activities were designed to support research, extension, production, and marketing activities in the Chapare.34 A variety of obstacles hindered the successful implementation of the CRDP. Migrants to the Chapare had to learn new agronomic practices, and though the soils for growing the coca bush were satisfactory, these same soils presented a real challenge for the cultivation of the fruit crops promoted by the USAID Mission.35 Furthermore, there was the problem of developing domestic and international markets for the Chapare fruit crop production. Finally, there was the bottom line—the price for coca leaf. As long as the price of coca leaf remained attractive, it would be

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exceedingly difficult, if not impossible, to persuade farmers to practice subsistence agriculture exclusively or grow new crops as an alternative to cultivating coca. The eradication component of the Country Team’s illicit drug production strategy got off to a slow start. A noteworthy factor constraining eradication activities was that the Bolivian government had made no provisions for outlawing even a small fraction of coca leaf production in the Chapare.36 With little progress reducing illicit drug production and a Bolivian economy increasingly dependent on cocaine dollars, the US ambassador, after consultations with Paz Estenssoro, decided to move aggressively to suppress production of cocaine. Interdiction activities were planned and coordinated by the DEA in the Beni and Santa Cruz Departments and supplemented with interdiction efforts in the Chapare supported by the INM. Of note was Operation Blast Furnace executed in in July 1986. Supporters of Blast Furnace asserted that the immediate outcome was that processing and trafficking of illegal drugs came to a virtual standstill in Bolivia. Demand for coca leaf dropped precipitously and requests by Chapare farmers for agricultural inputs being provided by the USAID Mission rose sharply.37 As a result of the perceived success of Blast Furnace, decisionmakers in Washington and La Paz in the State Department, USAID, the DEA, and the US military concluded that if the interdiction effort could be continued and complemented with eradication and an alternative agricultural development program in the Chapare, illicit drug production could be significantly reduced and eventually eliminated in Bolivia.38 Bolivian critics of the US-directed Operation Blast Furnace came to a different conclusion. Operation Blast Furnace was viewed as insignificant. An inconsequential amount of cocaine was seized, twentyone labs destroyed, and one narco-trafficker captured. President Paz Estenssoro had not cleared the operation in advance with the Bolivian Congress, and he was attacked for allowing “a secret yanqui invasion” of Bolivia. The Bolivian Congress demanded that an investigation be undertaken of the president’s role in Operation Blast Furnace with the immediate result being that a dark shadow was cast on Paz Estenssoro’s reputation.39 It was at this juncture that the Bolivian and US governments, and other major donors initiated a series of meetings that were held to review the status and plot the direction of the anti-narcotics program. Late in 1986, the USAID Mission sponsored a conference that included key Mission staff and their counterparts in the Bolivian government. Their task was to develop a plan for the utilization of resources that were presently available to address the objectives of the anti-narcotics

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program.40 The major recommendation that emerged from the conference was that agricultural assistance should be expanded beyond the Chapare to include the high valleys in the Cochabamba Department. It was also recommended that workers associated with the cultivation of coca and the laborers who stomp coca leaves into paste should be provided incentives to leave the Chapare and seek legal employment.41 This was followed by a meeting in Paris sponsored by the World Bank Consultative Group on Bolivia, in which the Bolivian government presented a draft of its Three-Year Anti-Narcotics Plan. The plan provided the outline for activities to be jointly undertaken by the Bolivian government, the US government, and other donors that were supporting the Bolivian government’s anti-narcotics effort.42 Early in 1987, the Bolivian and the US governments agreed to a new Bilateral Framework Agreement that stated the “precise detailed nature of activities and support for them in the areas of interdiction and development,” which was incorporated into the plan.43 During this same period, the United Nations Forum for Drug Abuse Control reaffirmed its support for the strategy promoted by the Bolivian and US governments. In addition the Bolivian Senate approved a law on dangerous substances that identified a set of penalties for illicit narcotics production and trafficking, designated geographic areas in which the coca bush could be legally grown, and prescribed procedures for a voluntary eradication of the coca bush in the illegal geographic areas identified by the Bolivian government. In April, the Bolivian government presented its Three-Year AntiNarcotics Plan to Germany, Spain, Great Britain, and Italy, all of whom were committed to support the plan with financial and technical assistance. In September, the government of Bolivia executed a voluntary eradication program in the Chapare as agreed to in its plan.44 By the end of September, the eradication program in the Chapare was already showing positive results, and the USAID Mission was able to report: The unexpected positive result of this effort has been the eradication of almost 300 hectares by September 30, 1987. This exceeded the USG/GoB agreed upon target of 250 hectares by the same date. While it is too early to know whether these accomplishments will continue, the Mission believes, on current evidence that they will.45

The USAID Mission was always keen on demonstrating the Mission’s support of the Country Team’s goal of limiting coca production to traditional uses. Regardless, David Cohen, the Mission

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director during the mid-1980s, felt it was critical to understand that USAID’s program was only one piece in a complex mix of programs financed by the US government and other donors. Cohen felt strongly that the US government’s anti-narcotics program could only achieve success in the context of “an ongoing and successful drug interdiction and coca eradication program.”46 Because of this, he insisted that all of the many USAID coca-related strategy and project statements include the following: No crop or group of crops or other economic activities provided under USAID development programs will, by themselves, provide sufficient economic incentives for farmers not to grow coca, the market price of which far exceeds that of any other possible alternative agricultural product. Our programs could only succeed in the context of successful eradication and related efforts that would substantially elevate the economic, physical and legal risk of growing coca.47

Strengthening the USAID Mission’s Program in the Private Sector

In the early 1940s when the Bohan Report was prepared, it was clearly understood by Bohan and his colleagues that the private sector was the most important source of national income and employment. A core principle of the strategy discussed by Bohan was that Bolivia’s development engine must be driven by the private sector. As a consequence, Bohan recommended funding a series of activities that supported private sector operations involved in the mining of tin and tungsten, exploitation of hydrocarbons, and constructing roads to link the agricultural production centers in the eastern lowlands to the consumption centers in the high valleys and the Altiplano in the west.48 Throughout the 1950s and 1960s and into the 1970s, the USAID Mission promoted the development of the private sector with assorted financial institutions that provided credit for small farmer operations on the Altiplano and in the high valleys, medium and large farm owners in the Oriente, and small and medium mining operations. When the Reagan administration and Peter McPherson declared that support for the private sector was one of the essential Four Pillars of US assistance, the USAID Mission intensified its focus and resources on the private sector. When Paz Estenssoro’s government decreed the NEP in 1985, the USAID Mission’s support for the revitalization of the private sector was already one of the main components of the Mission’s portfolio.49 Since the mid-nineteenth century, a small number of family-owned companies with investments in mining, banking, commerce, and

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agricultural enterprises had dominated Bolivia’s economy to the detriment of smaller business interests engaged in commerce, farming, and service enterprises. Another factor deterring growth in the private sector was the multitude of street vendors and black marketers operating outside the formal market, who were providing critical products and services. The question was how to incorporate this informal network of businesses into the market economy without curtailing its dynamism. Of even greater significance was the degree to which the huge and exceedingly profitable illicit drug business, operating in the shadows of the Bolivian economy, undermined Bolivia’s political and economic institutions at both national and local levels.50 Adding to these problems was the government of Bolivia’s support for policies and a regulatory framework that were excessively paternalistic. Even worse was the fact that the government of Bolivia tolerated a market place in which corruption was rampant and the bribe was ubiquitous. What should have been a simple act of starting a new business required most prospective entrepreneurs to untangle a web of government regulations. The Bolivian government was perceived as being capricious, and the only way to do business was to be prepared to pay bribes up and down the government’s bureaucratic ladders. Consequently, most investors were reluctant to make any investments other than the most conservative ones. Finally, there was the lack of managerial skills and technical competence critical to the successful expansion of business enterprises.51 The financial chaos prevailing in the early 1980s had negative consequences that were felt throughout the private sector. Bolivia’s stratospheric inflation had contributed to a scarcity of capital for lending by traditional credit and banking institutions, and this in turn had led to production declines and sharp unemployment increases. The financial environment was further constrained because public and private banks, savings and loan associations, and credit unions recovered loan repayments at a fraction of their original value, and potential investors moved their money out of the country or placed it in bank accounts that were denominated in stable foreign currencies. Loans for commercial operations were few and almost exclusively awarded to individuals within the banking community. Another factor that affected efficiency in the private sector was the need for narco-traffickers to launder their money. The narco-businessmen were much less concerned with running a profitable enterprise than they were with laundering their feloniously gained profits.52 It was clear that to energize the economy it was critical that both domestic and foreign capital investments be forthcoming. It was equally

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important that the Bolivian government promote fiscal and tax incentives, improvements in the investment code, and the maintenance of a realistic exchange rate if there was going to be expansion of the private sector. With the implementation of the NEP, there was a substantial devaluation of the currency and the unification of the market and official exchange rates. As recommended by the NEP, most interest ceilings were eliminated, restrictions on imports and exports were removed, and tariff and tax reforms were implemented, as well as a wage freeze for public employees.53 During this period, the USAID Mission’s contribution to the government of Bolivia’s financial restructuring was to address key constraints to increasing productivity in the private sector. Projects were implemented to create a policy and regulatory framework that offered incentives to accelerate the development of the private sector, strengthen the operations of private credit institutions and public financial institutions, and make available credits to the banking system for medium- and long-term loans.54 The Mission also supported the establishment of institutions that had the potential for playing important roles in promoting the smallbusiness sector, including the creation of microcredit institutions. In this regard, the Mission funded the establishment of the Institute for the Development of Business Leaders and Managers that provided training for small-scale enterprises. The Mission also supported the National Confederation of Bolivian Small Businesses with local currency funds generated by the PL480 program that were used to provide credit for small and medium-scale businesses. One of the Mission’s most farreaching contributions during this period was support for the formation of the Foundation for the Promotion of Micro-Enterprises, whose objective was to channel credit to microenterprises initially in La Paz and eventually nationwide. Sustained support was also provided to the National Credit Union Federation, which played a major role in stimulating long-term development of the small- and microbusinesses sector.55 The Mission continued funding activities to strengthen the private sector business operations throughout the 1990s and into the twenty-first century, including the expansion of credit and savings institutions that were targeted to reach the rural and urban poor.56 Health Care for All

The studies undertaken in the mid-1970s by the Ministry of Health and the USAID Mission had provided a clear picture of the problems in the health sector. These analytical efforts contributed to determining the

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direction and the pace at which the USAID Mission would fund projects in the health sector for the next three decades. The Mission’s support for the health sector was grounded in the conviction that the campesino family must be the principal beneficiary of any future effort funded by the US government. With this long-term objective in mind, the Mission assisted the government of Bolivia “to implement a comprehensive, integrated, health sector policy, with appropriate emphasis on the rural areas.”57 PROSALUD, a private, nonprofit health care organization, was selected by the Bolivian government and funded by the USAID Mission to implement a health intervention designed to serve middle- and lowincome populations. With its headquarters in Santa Cruz and regional offices in La Paz, El Alto, Oruro, Cochabamba, Yacuiba, Puerto Ouijarro, Tarija, and Riberalta, PROSALUD developed its operations within the framework of Bolivia’s national health policy.58 Its operations followed three core principles: active participation of the community with PROSALUD; the delivery of quality health services; and the creation of a sustainable financial base that emphasized cost recovery, economies of scale, and diversified services. The USAID Mission’s funding of PROSALUD continued into the twenty-first century.59 Forgiving Loans to Bolivia

President Reagan’s administration recognized that the poorest of the poor countries would be unable to repay development loans provided by the US government. In 1985, the US government, the World Bank, the IMF, and other donor nations participated in a process concerned with forgiving Bolivia’s foreign debt. After several years of negotiation, the US government in 1991 forgave all of the $372 million debt owed by Bolivia including PL480 and development loans.60 The Development Path Reformulated

At the beginning of the Reagan administration, work in the USAID Mission was at a virtual standstill. Chronic political and economic instability had affected nearly every aspect of life in Bolivia. These times were especially hard on the poor. With the ascension of Paz Estenssoro to the presidency and the signing of the NEP, the flow of US assistance put the government of Bolivia on the path to financial stability. Paz Estenssoro provided the leadership and made the hard

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decisions that moved Bolivia back from an abyss of financial oblivion and down a path of austerity and economic recovery. The articulation and execution of the NEP by Paz Estenssoro’s administration marked the end of the ’52 Revolution in the minds of most Bolivians. However, the USAID Mission’s commitment to Basic Human Needs programs in agriculture, education, and health that were designed to improve the lives of Bolivians living in rural areas sustained the core values of the ’52 Revolution beyond the administration of Paz Estenssoro. In concert, though not necessarily always in harmony with its Basic Human Needs activities, was economic assistance provided by the US government to promote a development path that encouraged Bolivia to pursue a free market economy in which the Bolivian government’s role was appreciably diminished. Notes 1. Kenneth D. Lehman, Bolivia and the United States: A Limited Partnership (Athens, GA: University of Georgia Press, 1999), p. 197. 2. https://en.wikipedia.org/wiki/National_Endowment_for_Democracy. 3. https://www.ndi.org/files/2344_newdirections_engpdf_07242008.pdf. 4. “Congressional Presentation: Agency for International Development, Fiscal Year 1990”Main Volume (USAID Washington, January 10, 1989), pp. 178–180, and Frances Hays, “Overview: Education and Human Resources Development Portfolio in Latin America and the Caribbean” (Academy for Educational Development for USAID Washington, October 1987), pp. 7, 12, 20–21, 61. 5. “Congressional Presentation: Agency for International Development, Fiscal Year 1984” Main Volume (USAID Washington), p. 2. 6. “Country Development Strategy Statement: FY 1989–1993, Bolivia” (USAID Bolivia, April 1988), pp. 21–22. 7. Catherine M. Conaghan and James M. Malloy, Unsettling Statecraft: Democracy and Neoliberalism in the Central Andes (Pittsburgh, PA: University of Pittsburgh Press, 1994), pp. 3–4. 8. For a description of the collapse of the Bolivian economy, see “Bolivia Project Paper: Policy Reform, project no. 511-0571” (USAID Bolivia, April 2, 1983), pp. 5–8, and “Bolivia: Country Economic Memorandum, Report No. 7645-BO” (World Bank, September 15, 1989), pp. 3–10. 9. Conaghan and Malloy, Unsettling Statecraft, p. 123. 10. Ibid., p. 128. 11. Sachs would claim intellectual parenthood for the NEP. However, the lion’s share of credit belonged with Sánchez de Lozada and Carriaga. Sachs brought a group of students to Bolivia who assisted in compiling the data that was provided to the IMF and the World Bank. The USAID Mission provided invitational travel for the students. Interviews, telephone conversations, and email exchanges with David Cohen (deputy and mission director in Bolivia in the 1980s), Washington, D.C., January 2013–January 2015. Also see Conaghan and Malloy, Unsettling Statecraft, pp. 143–145, 196–197, 201–202.

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12. Clark Joel, Mission Economist, “Evaluation of the First Year of Operation of the Government of Bolivia’s New Economic Program” (USAID Bolivia, September 6, 1986); Clark Joel, “Summary and Analysis of the Government of Bolivia Reactivation Program” (USAID Bolivia, July 27, 1987); “Bolivia: Updating Economic Memorandum, Report No. 7278-BO” (World Bank, June 2, 1988), pp. 6–14; and “Bolivia: Financial Sector Assessment,” draft final report (Price Waterhouse for USAID Bolivia, February 22, 1991), pp. 7–17. 13. “Pricing and Investment Policies in Bolivian Agriculture, Report No. 5198-BO” (World Bank, July 2, 1984). Foreword 14. “Congressional Presentation: Agency for International Development, Fiscal Year 1985, Annex III,” LAC vol. 1 (USAID Washington), p. 24. 15. “Updating Economic Memorandum, No. 7278” pp. 38–39. COMIBOL had developed a huge bureaucracy with 70 percent of its employees working in administration while only 30 percent worked in production, which significantly contributed to the excessively high cost of their mining operations. 16. “Congressional Presentation: FY 1985,” Annex III p. 24. 17. Ibid., pp. 24–25. 18. Interview with David Cohen. 19. “Congressional Presentation: FY Year 1985,” Annex III pp. 24–25. 20. “Congressional Presentation: Agency for International Development, Fiscal Year 1985,” Annex III LAC, (USAID Washington), p. 291, and “Bolivia Project Paper: Technical Support for Policy Reform, project no. 511-0616” (USAID Bolivia, July 20, 1992), pp. 2–3. 21. Interview with David Cohen. Cohen said that Sánchez de Lozada had complained to Cohen that “He [Sánchez de Lozada] was very annoyed at having to provide the details necessary for USAID to contract the things he needed, but, he conceded, he could always trust that he would get what he asked for on a timely basis, something no other donor could offer him.” When reviewing the performance of UDAPE, an evaluator remarked, “The quality of UDAPE studies continues to be commendably high. UDAPE’s primary clients give it uniformly high marks across the spectrum of products produced.” See “Executive Summary” in “Evaluation of UDAPE and the Policy Reform Project” (Management Systems International for USAID Bolivia, May 17, 1991), p. 9, and Kenneth P. Jameson, “Executive Summary” in “Interim Project Evaluation: Policy Reform Project, AID-Bolivia” (USAID Bolivia, July 1988), pp. 1–7. 22. “U.S. Overseas Loans and Grants: Obligations and Loan Authorizations, July 1, 1945–September 30, 2015 (Greenbook),” USAID Washington, p. 94. For more details, see http://explorer.usaid.gov. 23. “An Assessment of the Impact of USAID’s PL-480 Title II and Title III Programs on the Poor in Bolivia” (Strategies for International Development for USAID Bolivia, June 1995), p. 20. 24. “Review of the PL-480 Title III Food for Development Program” (Government Accounting Office, June 1984), p. 8. 25. “U.S. Overseas Loans and Grants (Greenbook),” p. 94 26. “Impact of USAID’s PL-480 Title II and Title III,” p. 20. 27. “U.S. Overseas Loans and Grant (Greenbook),” p. 94 28. “Final Report: External Evaluation PL 480 Title I/III,” 511-0000.01 (Checchi and Company Consulting, Inc., for USAID Bolivia, December 29,

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1990), pp. i–iii, 1–2, 5–11 (for credit, pp. 17–37; for rural development, pp. 38– 58; for health, p. 59–69; and for education, pp. 70–72). Also interview with David Cohen. 29. Interview with David Cohen. 30. “Updating Economic Memorandum, Report No. 7278,” pp. 38–39. 31. Ibid.; Lehman, Bolivia and the United States, pp. 198–199; and “The Andean Strategy Reconsidered: Towards a Sensible International Drug Policy” (The Drug Policy Foundation, Washington, D.C., March 1992), p. 14. 32. “Drug Control: U.S.-Supported Efforts in Colombia and Bolivia, GAO/NSIAD-89-24” (Government Accounting Office, November 1988), p. 49. Also see “Bolivia Project Paper: Chapare Regional Development, Loan No. 511-T-067 and project no. 511-0543” (USAID Bolivia, May 31,1983), pp. 19–21, and “Project Authorization: Chapare Regional Development, Loan No. 511-T-067 and Project No. 511-0543” (USAID Washington, July 29, 1983), p. 1. 33. “Project Authorization,” p. 4. 34. Ibid., p. 1. 35. “Drug Control, GAO/NSIAD-89-24” (Government Accounting Office, November 1988), p. 65. It was estimated that only twenty-five thousand families could be supported by licit agricultural activities in the Chapare. As a result of the profitability of coca leaf production, the population in the Chapare in the mid-1980s was estimated to be approximately seventy-four thousand farm families or between 220,000 to 270,000 persons with perhaps as many as thirty to eighty thousand temporary residents, including coca leaf stampers, merchants, and narcotics middlemen. Also see Appendix E in “A Review of AID’s Narcotics Control Development Assistance Program,” AID Evaluation Special Study no. 29 (USAID Washington, March 1986), p. 5. 36. Drug Control, GAO/NSIAD-89-24” (Government Accounting Office, November 1988), p. 64. 37. Ibid., pp. 52–53. Also see “Project Authorization, Chapare Regional Development,” pp. 9–10. 38. “Andean Drug Strategy, Hearing Before the Subcommittee on Western Hemisphere Affairs of the Committee on Foreign Affairs, House of Representatives, 102nd Congress, First Session,” (Washington, D.C.: Government Printing Office, 1991), pp. 44–45; interviews with Norma Jean Parker, (Director of the Office of Andean Affairs, Latin America and the Caribbean Bureau, USAID Washington), Washington, D.C., November 1992; and “Project Authorization, Chapare Regional Development,” p. 9. 39. Lehman, Bolivia and the United States, p. 200. 40. “Bolivia Project Paper: Chapare Regional Development Amendment no. 2, Loan No. 511-T-067 and Project No. 511-0543” (USAID Bolivia, November 23, 1987), p. 9. 41. Ibid., p. 1, Annex E. 42. Ibid., p. 9, Annex E. 43. Ibid., p. 10, Annex E. 44. Ibid., pp. 9–10, Annex E. 45. Ibid., p. 10, Annex E. 46. “Bolivia Project Paper, Chapare Regional Development,” pp. 7–8. 47. Quote provided by David Cohen.

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48. Merwin L. Bohan, “Report of United States Economic Mission to Bolivia” (State Department, August 15, 1942), pp. 1–26. 49. For policy guidance relating to private sector development, see “A.I.D. Policy Paper” (Bureau for Program and Policy Development, USAID Washington, May 1982); “A.I.D. Private Enterprise Development, revised” (Bureau for Program and Policy Development, USAID Washington, March 1985); and “Blue Print for Development: The Strategic Plan of the Agency for International Development” (USAID Washington, June 1985). Regarding private sector development in Bolivia, see “Country Development Strategy: FY 1989–1993,” pp. 16–17, and “USAID/Bolivia: FY 1990–1991 Action Plan” (USAID Bolivia, January 1989), pp. 4–5. 50. “Bolivia Project Paper: Strengthening Financial Markets, AID/LAC/P534/CR P-419, Project No. 511-0598” (USAID Bolivia, June 23, 1989), pp. 4– 8. Also see “Bolivia, Country Economic Memo. Report No. 7645-BO” (World Bank), pp. v, 14, 43–46. 51. “Strengthening Financial Markets,” pp. 4–8. 52. Ibid. and interview with Cohen. 53. “Strengthening Financial Markets,” pp. 4–8. Also see Bolivia, Country Economic Memo, Report No. 7645-BO, pp. v, 14, 16–19, 43–46. 54. “Strengthening Financial Markets,” pp. 1–3. 55. “Bolivia Project Paper: Micro and Small Enterprise Development, AID/LAC/P-452, Project No. 511-0596” (USAID Bolivia, August 19, 1988), pp. 10–11, and (Amendment No. 2) “Micro and Small Enterprise Development, Project No. 511-0596” (USAID Bolivia, February 3, 1993) pp. 1–2. 56. “Micro and Small Enterprise Development,” Amendment No. 2; William Fisher, Jeffrey Poyo, and Ann Beasley, “Evaluación del proyecto de desarrollo de la micro pequeña empresa en Bolivia, Informe Técnico Gemini No. 42” (Gemini Project for USAID Bolivia, June 1992); and “USAID/Bolivia Economic Growth Program: Increased Income for Bolivia’s Poor,” pp. 1–2. http://bolivia.USAID.gov/US/2EO.htm. 57. “Bolivia: Health Sector Assessment” (USAID Bolivia, January 1975), pp. 353–354. 58. Ibid. and “PROSALUD 1975” (Management Sciences for Health, nd) pp. 1–2. http://www.prosalud.org/prosalud.html. 59. “Health Sector Assessment,” pp. 453–454, and William Newbrander, Carlos J. Cuellar, and Barbara K. Timmons, “The PROSALUD Model for Expanding Access to Health Services” (Boston, MA: Management Sciences for Health, Inc., no date), pp. 2–3. 60. “Bolivia: From Stabilization to Sustained Growth, Report No. 9763BO” (World Bank, October 1, 1991), pp. 27–29, and “Country Development Strategy: FY 1989–1993,” p. 8.

9 The War on Drugs with a Development Agenda: George H. W. Bush, 1989–1993

Good evening. This is the first time since taking the oath of office that I felt an issue was so important, so threatening, that it warranted talking directly with you, the American people. All of us agree that the gravest domestic threat facing our nation today is drugs. Drugs have strained our faith in our system of justice. Our courts, our prisons, our legal system, are stretched to the breaking point. The social costs of drugs are mounting. In short, drugs are sapping our strength as a nation. Turn on the evening news or pick up the morning paper and you’ll see what some Americans know just by stepping out their front door: Our most serious problem today is cocaine, and in particular, crack. . . . [Tonight I am announcing a strategy that] looks beyond our borders, where the cocaine and crack bought on America’s streets is grown and processed. —George H. W. Bush, “Address to the Nation,” September 5, 19891

Washington: Bush’s Hot War in the Andes The Cry to Reform USAID

Even before George Herbert Walker Bush (Bush 41) was elected president in 1988, voices throughout the US Congress were calling for the reform of USAID. Though the US public generally supported the idea of assisting poor nations, the US government’s foreign aid program was seen as an ineffective vehicle requiring a major fix.2 Many Americans believed that most countries in Latin America were worse off

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than they had been in the 1960s when President Kennedy declared the Alliance for Progress. Near the end of the Reagan administration, the House of Representatives appointed Lee Hamilton, a Democrat from Indiana, and Benjamin Gilman, a Republican from New York, to lead a bipartisan task force to review the foreign assistance program.3 The task force was directed to identify the current objectives of the foreign aid program and make recommendations that would lead to restructuring of over twentyfive years of legislation and congressional restrictions imposed on the managers of the foreign assistance program.4 The task force’s analysis of the legislation noted that USAID had thirty-three separate objectives and seventy-five priorities for economic assistance. In addition, there were 288 separate congressional reporting requirements, which the Government Accounting Office (GAO) recommended could be substantially reduced. It was also noted that decision making in USAID was heavily burdened by legislative earmarks for country-specific allocations amounting to 98 percent of the economic supporting assistance category and 49 percent of the development assistance category. A stunning conclusion of the report was: accountability of U.S. foreign assistance is extensive but ineffective. Accountability is focused on anticipating how assistance will be used, rather than on how effective it is and has been used. . . . The burden of excessive Congressional and A.I.D./Washington accountability keeps mission staff at their desks rather in the field, creates a complex bureaucratic process that prevents flexible programming, and turns attention away from the important task of evaluation. It leaves Congress and A.I.D. staff focusing on plans not results.5

Implicit in the task force’s commentary was the idea that the legislation was as much to blame for USAID’s poor performance as was USAID itself. It came as no surprise when Congressman Hamilton wrote in an op-ed piece for the Washington Post, “The American foreign economic aid program is in trouble. In a changed world, it is trying to do too much with too little, with outdated legislation, misdirected bureaucracy and diminished flexibility. It is time for an overhaul.”6 When the USAID administrator, Alan Woods, a holdover from the Reagan administration, went before congress with President Bush’s foreign assistance package in February 1989, he praised what had become commonly known as the “Hamilton-Gillman Report.” Woods supported the report’s recommendations for legislation to amend the Foreign Assistance Act of 1961 to promote greater coherence in the US

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government’s development efforts and less restrictive legislative guidance. It was recommended that USAID be given greater flexibility by eliminating congressional earmarks and removing limitations on shifting spending between development sectors such as agriculture, education, and health. It was also recommended that USAID’s reporting requirements to Congress be significantly reduced.7 Woods died in office early in Bush 41’s administration, and it appears that there was little interest, outside of his immediate associates in USAID, to follow through with a legislative program that would point USAID in the direction of his recommendations. Wood’s replacement, Ronald Roskens, went through the motions of promoting internal management changes. Letterheads were changed, a new logo was designed, but there were no changes of any real consequence. If Roskens had any impact, it could be measured in terms of the ennui that crept into USAID offices reflecting Roskens’s phlegmatic style. When a new foreign assistance bill was signed in November 1990, it showed little evidence that any of the recommendations proposed by the HamiltonGilman task force or by Woods had significantly impacted the foreign assistance appropriations process.8 Woods had started the Bush 41-era with a rhetorical flourish that ultimately failed to meaningfully influence the legislative process. However, Bush 41 would not give up easily when it came to reforming USAID. The notion persisted that USAID could be better managed, and changes in its organization and process could lead to a more robust agency for delivering development assistance. Near the end of Bush 41’s term of office, a presidential commission concerning the management of USAID programs was created. George Ferris, a prominent leader in financial circles in downtown Washington D.C., who actually had been involved in delivering technical assistance as a consultant to USAID in the field of capital markets development, chaired the commission. The commission’s report was presented in April 1992 to President Bush. It found that USAID was: burdened with objectives and earmarks imposed by both the Executive Branch and Congress—39 objectives at last count. Many of AID’s management problems flow from policy confusion. AID’s career staff numbers have spiraled downward in the last decade while its programmatic and geographic scope has increased.9

There is no evidence to suggest that the US Congress or USAID bureaucrats ever took the Ferris Report seriously. Perhaps the basic problem was one of timing, for the report was delivered to Bush 41 at

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the time he was leaving office. It is important to note that in each of these efforts to reform USAID, there is no evidence that any person involved in the analysis of the USAID process or in the preparation of the reports had reviewed what USAID had done in a country setting. Both teams judged USAID after already having reached the conclusion that USAID’s process for delivering foreign assistance was broken and needed fixing. Democracy and Governance Interventions Become the Newest Silver Bullets I come before you and assume the presidency at a moment rich with promise. We live in a peaceful, prosperous time, but we can make it better. For a new breeze is blowing, and a world refreshed by freedom seems reborn; for in man’s heart, if not in fact, the day of the dictator is over. —George Herbert Walker Bush, “Inaugural Address,” January 20, 1989

Development assistance to promote democracy and governance (D&G) activities had long been a modest dimension of USAID’s portfolio. Leadership training in rural communities, municipal development activities, promotion of efficacious tax regimes, training labor leaders in the art of negotiation, and public safety programs to strengthen rule of law objectives were elements in many USAID portfolios. However, from the 1950s to the 1960s and into the 1970s, support for election processes and political party development had been the sinister domain of the CIA. Until the 1980s, it had been the policy of the US government that it should avoid appearing to be involved in the internal operations of a foreign country’s public and private organizations concerned with politics and elections. A momentous factor that contributed to USAID getting involved in planning and implementing D&G projects was the murder of two AFLCIO representatives who had traveled to El Salvador in 1981 to conduct a review of the potential for supporting a program of land reform. At the time of the murders, USAID had a large presence in El Salvador, and there were members of the US Congress who generated considerable pressure to solve the murders. It was in this context that USAID started its rule-of-law project in El Salvador. Henceforth, USAID field missions were encouraged on an ever-increasing basis to promote a broad array of D&G activities. At one point during the Reagan administration, Bob

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Dean, who was the deputy to National Security Advisor Frank Carlucci, advocated that serious consideration should be given to abandoning all projects that were not in direct support of democracy development. Dean’s argument was that investments in the traditional sectors of development—health, education, and agriculture—were wasted investments because work in those sectors was not sustainable.10 The 1984 Kissinger Commission Report on Central America had also endorsed the US government’s direct involvement in D&G activities, and the Latin American and Caribbean Bureau (LAC) accelerated the promotion of D&G activities. It was during the administration of Bush 41 that Jim Michel, formerly a lawyer in the State Department and ambassador to Guatemala and a strong advocate of democracy interventions, was appointed assistant administrator of LAC. He enthusiastically pushed democracy initiatives in country programs throughout Latin America. High on Michel’s list were activities to reform justice systems, election processes, and local legislative bodies. He also felt compelled to encourage the development of projects that promoted a free press and transparency in government operations. In the meantime, USAID was scrambling to find D&G experts to bring into its bureaucracies in Washington and the field who could design and implement D&G interventions. Many USAID officials who were looking for ways to advance their careers reinvented themselves as D&G experts. Like Yankee merchant seamen who sang the virtues of the Declaration of Independence and the US Constitution to Latin Americans at ports of call in the nineteenth century, Americans were once again openly proselytizing the merits of US-style democracy. Bush 41 took the ball from Reagan and pushed the State Department to run a D&G flying wedge all the way down to Tierra del Fuego. The Bush administration’s success in institutionalizing capacity for promoting, designing, and implementing D&G interventions throughout the USAID world was a significant accomplishment. An intriguing outcome of USAID financing democracy interventions was that it denied the US government the rationale it had used to covertly fund D&G interventions throughout the Cold War era. Bush 41’s War on Drugs in the Andes

When Bush 41’s administration assessed the situation in Latin America, the single most important issue was illicit drug production and its exportation to the United States. Early in his administration, Bush 41 sent a message to Latin Americans that he would deal with the drug

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problem head on and was not above using the US military to make a point in his war on drugs. On December 20, 1989, Operation Just Cause was launched with the 82nd Airborne leading the charge against Manuel Noriega, a suspected drug dealer, CIA informant, and the head of the Panama Defense Force. Latin Americans viewed with mixed emotions the spectacle of Noriega being hustled out of Panama to noxious rock music, standing trial in Miami, Florida, and being found guilty in a federal court. Bush had brandished Teddy Roosevelt’s big stick against drug dealers, and Panama had been an auspicious place to resuscitate gun boat diplomacy of an earlier twentieth century vintage. In early 1990, Bush 41 met in Cartagena with the presidents of Bolivia, Colombia, Peru, and Ecuador to discuss their participation in a program to address the issue of illegal drug production in the Andes. The immediate outcome of their meeting was the Cartagena Declaration issued on February 15, 1990, in which Bush committed in excess of $1 billion of US government funds for Alternative Development programs in Bolivia, Colombia, Peru, and Ecuador. The presidents of Bolivia, Colombia, and Peru reiterated their support in February 1992 at the Summit in San Antonio by declaring that “the Cartagena Declaration . . . laid the foundation for the development of a comprehensive and multilateral strategy to address the problems of illegal drugs.” An assortment of activities was articulated, including strategies for promoting drug control, prevention, and demand reduction.11 In Latin America, Bush 41’s hot war on drugs had replaced the Cold War. Bolivia: New Leadership and a New Economic Policy

With the exception of Hugo Banzer heading the Acción Democrática Nacionalista, leadership passed to a new generation of political activists, including Gonzalo Sánchez de Lozada, head of the Movimiento Nacionalista Revolucionario, and Jaime Paz Zamora leading the Movimiento Nacionalista Revolucionario de Izquierda (MIR). In the presidential election in 1989, Sánchez de Lozada won a plurality of the popular vote with 26 percent. However, in a congressional runoff, Paz Zamora, who placed a close third with 22 percent in the popular vote was chosen. Paz Zamora had formed a coalition with Hugo Banzer who gained 25 percent of the popular vote.12 Despite the substantial progress that had been made on the financial front, the situation inherited by Paz Zamora was acute. Bolivia’s economy remained fragile, with a majority of its population continuing to live in poverty. Large elements in labor and student circles continued to voice vociferous opposition to the New Economic Policy (NEP), and

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demonstrations throughout the country protesting the austere economic program were a constant feature of daily life. On the positive side, the inflation rate that reached an astronomical 25,000 percent near the end of Siles Suazo’s term in office dropped to a mere 11 percent by the end of 1987. The average rate of increase of the consumer index dropped from 11,750 percent in 1985 to 15 percent in 1987.13 Progress was made with external creditors to service Bolivia’s large financial debt, a debt that had been exacerbated by sharp price declines on the international market for tin and natural gas.14 Despite these signs pointing to the success of the stabilization program, Bolivia’s balance of payments position was deteriorating at an alarming rate. The Central Bank predicted a balance of payment deficit of $234 million for 1987 and $329 million for 1988.15 Paz Estenssoro’s adherence to the NEP resulted in stabilizing the economy and laid the foundation for economic recovery. However, the measures promoted in the NEP cut deeply into the pockets of the ordinary Bolivian, and the social impact of NEP reforms placed the heaviest burden on the lower and middle classes. In 1986, it was calculated that the purchasing power of the average Bolivian was down 70 percent when compared to the early 1980s. Per capita income fell from $1,178 in 1980 to $789 in 1987, with a rural family’s annual income averaging $140. Nationwide unemployment ranged between 20– 30 percent.16 Despite his critical election rhetoric, Paz Zamora had accepted the NEP strategy. There was a strong consensus that Paz Estenssoro had done the right thing, and Paz Zamora must push forward on the recovery path dictated by the NEP. The profits from the illegal drug industry were arguably the most serious problem facing the Paz Zamora government. Laundering huge profits at the gaming tables in Santa Cruz and Cochabamba and through accommodation windows in the banking system throughout Bolivia was an illicit activity of major proportions. Drug profits helped finance construction booms in Santa Cruz and Cochabamba and put better wages in the pockets of farmers and service employees throughout the La Paz–Cochabamba–Santa Cruz corridor. A conservative estimate of $600 million of coca/cocaine earnings had entered the Bolivian economy in the late 1980s, representing approximately 15 percent of Bolivia’s gross domestic product. This more than compensated for the precipitous decline in the value of the country’s legal exports, which in 1987 was $400,000 below the figure estimated for the early 1980s.17 Paz Zamora was determined to face the fundamental problem of how to grow a legal economy in an open and free market in the face of the huge, illicit drug trade.

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The USAID Mission’s Development Drama Continues

Throughout Bush 41’s administration, the US government’s paramount goal was to assist Bolivia in achieving political and economic stability. This goal was inextricably linked to the US preoccupation with reducing Bolivia’s dependence on coca bush cultivation and in turn cocaine production. The USAID Mission needed a strategy to promote rapid and sustained economic growth benefiting all of Bolivia’s citizens while simultaneously disabling a major industry in Bolivia—cocaine production and distribution.18 To achieve its goal, the Mission supported a broad spectrum of projects, including an economic stabilization program, agricultural development activities in the coca-producing areas, D&G activities that had the potential for nationwide impact, basic health improvement and population control activities, and natural resource management activities.19 The Mission’s strategy to address this expansive assortment of objectives seemed contradictory to those in its revised Action Plan, reviewed in Washington early in 1989: to reduce the number of objectives it will pursue, and look for ways to continue to eliminate objectives and consolidate our portfolio. We simply cannot accommodate the “Chinese menu” of objectives without dissipating our financial and staff resources. There is always a temptation to respond positively to the myriad of objectives and new mandates that emerge in AID/W, whether or not they make pragmatic sense in this country context.20

Despite what was proclaimed in the Action Plan, the USAID Mission continued to fund its “Chinese menu.” The temptation to seek solutions for all of Bolivia’s development problems with a vertiginous array of interventions was difficult to moderate when US resources were so plentiful, due to the funding that accompanied Bush 41’s war on drugs. Though health, education, and private sector projects continued to be significant dimensions of the Mission’s program, only PL480, Alternative Development, and D&G projects are discussed below. The PL480 Food Assistance Program: Food Security Issues and Policy Reform

In 1990, Bush 41 signed into law the Food, Agriculture, Conservation and Trade Act, which included the first comprehensive reformulation regarding how PL480 food resources were to be applied. The new

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legislation directed that Title III resources be used to promote policy reform measures that would address key food security issues.21 Between 1991 and 1994, the PL480, Title III program in Bolivia received $84 million22 and, as in the past, the Bolivian government continued to import wheat through the Title III program that was sold to local millers. The local currency generated by the sales of the wheat was used to supplement USAID Mission-funded projects including the Santa Cruz integrated wheat research, production, and marketing project and the Chapare Regional Development Project (CRDP).23 In the course of negotiating the uses of the local currency generations, the US and Bolivian governments identified several significant policy issues that were subsequently addressed by the Bolivian government with support from the US government. An example was the Bolivian government’s agreement to establish a national environmental defense fund that included passing a new environmental law, drafting regulations for facilitating the implementation of the new law, and articulating a plan to strengthen environmental enforcement agencies.24 A Country Team Strategy to Reduce Coca/Cocaine Production

Although the degree to which the Bolivian economy was held hostage to coca/cocaine production was a subject of a sustained debate between the Bolivian and US governments, both parties agreed that the production of illicit drugs was a massive factor in the Bolivian economy. Clark Joel, the USAID Mission’s senior economist, using an estimate of eightyeight thousand metric tons for the 1989 coca leaf production, calculated direct employment that resulted from coca production was between 150,000 and 180,000 Bolivians. He further estimated that the total direct and indirect effect of coca leaf production on the incomes of Bolivians ranged from $412–683 million annually and the total value of coca leaf from $504–812 million with the value of illicit drug related exports ranging from $222–373 million.25 Using these estimates as a base, Joel projected that illicit coca exports ranged annually between 20–32 percent of the total exports of Bolivia.26 Regardless of the lack of exactness of Joel’s data and his estimates, there was agreement in the Country Team that the taint of coca/cocaine was pervasive throughout the Bolivian economy. In the minds of many Bolivians, particularly farmers struggling to make a livelihood in the Chapare, there was little doubt that coca leaf had become the newest El Dorado. By the late 1980s, the US government’s assistance to support Bolivia’s efforts to curtail production of coca leaf and suppress the flow

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of illegal drugs was seen as a failure.27 When reviewing the status of the eradication program, the GAO concluded that: In August 1987, Bolivia agreed to eradicate 1,800 hectares . . . of coca by August 1988. This target was met during June 1988. However, the amount of new coca being planted far exceeded the amount being eradicated. During 1987, an estimated 3,300 additional hectares of coca was placed into production, bringing the total area under cultivation to 40,300 hectares. Bolivia’s control suffers from the lack of clear legislation outlawing coca cultivation and supporting government control and eradication programs.28

In the absence of Bolivian legislation to put teeth into a counternarcotics strategy, skepticism regarding eradication targets was warranted in the official US community. All elements of the Country Team agreed on the need for an Alternative Development program to reduce production of coca leaf.29 However, in the Country Development Strategy Statement (CDSS) prepared by the USAID Mission in the spring of 1988, which articulated development assistance to Bolivia for the period 1989 through 1993, the Alternative Development program was acknowledged, but only barely. The Mission identified a litany of problems, including declining gross domestic product, unemployment ranging between 20–25 percent and underemployment nearly 25 percent, a weak agricultural marketing infrastructure that contributed significantly to increased child malnutrition, rapid population growth, degradation of the natural resource base, one of the highest infant and maternal mortality rates in Latin America, and weak democratic traditions and institutions. Fourteenth on a list of fourteen problems cited was the production of coca/cocaine, which was described “as wide spread and nefarious.”30 The language of the CDSS had a mind-numbing, liturgical rhythm that tended to obfuscate the real importance of any one item. Perhaps that was the intent of Ray van Raalte, the mission director, who had little desire to describe a development program that depended on an antidrug production rationale. Well known for his brainy, low-key style, van Raalte argued that the prospects for bringing development to the Chapare were reasonable, but to identify the program as Alternative Development was merely linguistic cosmetics and misleading. He was concerned that by tying the major thrust of the Mission’s program to an Alternative Development strategy, the Mission’s development program would be tarnished should the drug control program fail to achieve its objectives.

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In the process of approving the CDSS, Chargé d’Affaires David Greenlee commented that the US government’s major concern was to support the Bolivian government in stimulating “economic growth through structural reform and to ensure that the benefits of such growth are widely shared” as a means of deepening the democratic process in Bolivia. Greenlee urged the USAID Mission to “keep a close watch on the Bolivian government’s coca substitution program in the Chapare.”31 From the Embassy perspective, the antidrug and Alternative Development programs were the highest priorities. Near the end of the Reagan administration, van Raalte authorized modifying the CRDP to expand its activities into the high valleys of the Cochabamba Department. One of the main objectives of the amended project was to promote out-migration from the Chapare and in turn support activities to improve small-farmer agricultural production in the Departments of Cochabamba, Santa Cruz, Chuquisaca, and Potosi to discourage migration from these areas into the Chapare.32 Shortly before the inauguration of Bush 41, Bob Gelbard arrived on the Bolivian scene as the new US ambassador. Brash, bright, demanding, and described by many as arrogant, Gelbard had been a Peace Corps volunteer in Bolivia in the early 1960s. He had a deep knowledge of Bolivia and its history. His Spanish was excellent, and his passion for Bolivia was palpable. A career foreign service officer, this was Gelbard’s first posting as an ambassador, and he was anxious to win his spurs. Van Raalte, a thoughtful bureaucrat, was no stranger to development issues in South America, having served with USAID in Ecuador and Brazil. Gelbard and van Raalte were a study in contrasts. They were destined to clash. When Bush 41 signed the Cartagena Agreement, the Country Team was informed that a hefty amount of the $1.1 billion pledged by Bush would go to support Bolivia’s war on drugs. Gelbard was quick to react; he was extremely anxious to execute an anti-drug strategy emphasizing that his Country Team and the USAID Mission fully embraced the Alternative Development strategy. It was at this point that the Mission’s development program in the Chapare and the high valleys of the Cochabamba Department was transformed from being just another project in the Mission’s portfolio to being a program that was central to the Mission’s agenda in Bolivia. Ideas flew back and forth between the Mission and the Embassy with Gelbard pushing hard on van Raalte to fashion language that would demonstrate the seriousness of the problem and the intent of the Country Team to utilize the proposed increase of funds to the greatest advantage possible. Tension between the USAID Mission and the Embassy sizzled.

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Van Raalte had a deputy director, Bob Kramer, who was in sharp and open disagreement with him in terms of how the program should be presented. The disagreement added fuel to a smoldering fire that was gathering throughout the USAID Mission. There were elements of the Mission staff that feared that the Embassy was only interested in eradicating coca and was willing to sacrifice the entire Mission’s development assistance program to achieve the interdiction and eradication objectives. From the State Department’s perspective in Washington, the real problem was the mess in Colombia, where drug lords were threatening to take over the Colombian government. This must never be allowed to happen in Bolivia. Gelbard had his marching orders, and pity any slow moving bureaucrat who got in his way! Gelbard was the impatient Fortenbras to van Raalte’s cautious Hamlet. Van Raalte argued that a development program that aggressively promoted licit crop production in the coca-producing areas could coexist and be successful without tying it directly to the performance of the Embassy’s eradication program managed by the International Narcotics Matters Section and the Drug Enforcement Agency’s interdiction program. Gelbard wanted a Country Team approach that underscored the interdependence of the three programs— eradication, interdiction, and Alternative Development. Van Raalte feared that if the Embassy’s eradication program and the DEA’s interdiction efforts failed, the USAID mission’s program would also be seen as a failure, regardless of what was achieved on the development front. Gelbard found the USAID director’s musings intolerable. The consequence was that after months of incessant bureaucratic infighting, van Raalte was recalled to Washington. An old Bolivian hand, Carl Leonard, a master at working the USAID system in Latin America, replaced van Raalte. Leonard sought another old USAID Bolivia hand, Tex Ford, to return to Bolivia. Ford, a modern-day development caudillo, had recently retired from USAID, received Leonard’s urgent call for help and came flying into Bolivia from the Philippines to run the Mission’s Alternative Development program. He managed the USAID Mission’s Alternative Development effort out of an office in Cochabamba, and almost immediately the pace of implementing the Alternative Development strategy picked up. The amount of land in cultivation for licit crops in the Chapare increased significantly, reflecting the massive support provided by the Mission and other donors, including the United Nations Capital Development Fund.33 Roads were being constructed throughout the Chapare; agroindustry facilities with credits provided by the USAID Mission were mushrooming; investments in electricity, health clinics, and schools to

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improve the quality of life of campesino families spread throughout the Cochabamba Department.34 Midway through 1991, the Mission proposed that the Cochabamba Regional Development Project (CORDEP) take over where the Chapare Regional Development Project (CRDP) was to leave off. At the Washington review, the Mission reiterated the US government’s goals of economic growth, strengthened democratic institutions, and the elimination of illicit narcotics production. The rationale to support CORDEP remained essentially the same: “The USAID [Mission’s] Alternative Development Program is part of an overall USG-GOB effort to reduce and ultimately eliminate the production and processing of illegal coca in Bolivia.” As such, the Mission’s role continued to be one of pursuing the fundamental transformation of the Bolivian economy from one that was overly dependent on the sale of coca/cocaine to an economy that was diversified and sustainable, in which cocaine had no role. Within the rubric of Alternative Development, a series of projects to operate in the Department of Cochabamba was funded, including “Export Promotion,” “Micro/Small Enterprise Development,” “Private Agricultural Organizations,” “National Rural Household Survey,” “Drug Awareness and Prevention,” “CARE Community Development,” “Child Survival PVO Network II,” “Innovative Radio Learning,” “Alternative Electricity,” “Farm to Market Roads,” “Natural Resources Management,” and “PL480 Title II Food for Work.” The contractor, Development Associates, Inc., was once again selected to provide technical assistance for the agricultural production and marketing component and was directed to develop a monitoring and evaluation system to track progress of the refashioned Alternative Development program.35 When formulating the request for additional funding for the Alternative Development program, the USAID Mission was able to declare: many of the farm production goals of the original project have been met. The AID-funded . . . experimentation stations and extension services in the Chapare are in place and are meeting a growing demand for services from farmers. The stations are producing and placing improved planting materials. Fruit crops have been developed which are marketable and which, therefore, are finding receptivity among farmers of the area. Likewise, the High Valleys component has achieved many of its goals.36

Regarding eradication and interdiction activities, there was ample evidence that the joint effort of the United States and Bolivia was a

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failure.37 The total number of hectares of coca leaf reported eradicated from 1987 through 1990 was approximately 13,500 hectares, contrasted with the twenty-four thousand new hectares put into coca leaf production from 1987 through 1990.38 In terms of interdiction, the best estimates for 1990 indicate that less than 0.09 percent of illicit coca leaf production was seized, 0.16 percent of coca paste was seized, 1 percent of coca base was seized, and 0.16 percent of cocaine was seized.39 In 1990, CORDEP was authorized for $80 million. To broaden the geographic scope of the Mission’s Alternative Development program, the new project stated that economic opportunities should be available for laborers outside of the Chapare who were presently employed in coca/cocaine production activities. This provision was viewed as critical if the objectives of CORDEP were to be achieved. When seeking approval for CORDEP, the Mission stressed the importance of the Bolivian government vigorously pursuing eradication and interdiction programs. To this end, the Bolivian government passed legislation that strengthened institutions that supported the Country Team’s interdiction and eradication goals.40 CORDEP contained a number of provisions that addressed the issue of monitoring the reduction of coca leaf production that was in excess of local consumption needs. Communities in the Chapare that wanted to receive funding were required to receive certification by the National Directorate for Agricultural Conversion/Dirección Nacional de Reconversión Agricolo (DIRECO), the organization responsible for managing the government of Bolivia’s coca conversion program. DIRECO was required to certify that a community had eradicated at least one quarter of the hectares of coca that it had produced in 1988.41 DIRECO also had to certify that the individual farmers had reduced the number of hectares on which they produced coca by 10 percent to be eligible to receive agricultural inputs and/or credit provided by the project.42 The key to the success of the project in the minds of Country Team bureaucrats was: if coca prices can be kept low enough, as they were during 1990, rural families in both zones will prefer non-coca related strategies. Therefore, it should be reiterated that the success of this project and indeed USAID’s Alternative Development Strategy, is absolutely dependent on keeping farmgate coca prices low by the continued successful implementation of the government of Bolivia’s law enforcement and interdiction programs.43

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Democracy and Governance

The rationale for supporting D&G interventions in Bolivia was tied directly to the US government’s objective of suppressing production of coca/cocaine.44 As the USAID Mission began to analyze D&G issues, each issue splintered into a multiplicity of questions that demanded answers before interventions could be reasonably undertaken in the D&G sector. Was it possible to do a comprehensive D&G sector assessment or should each of the D&G components be analyzed separately? If done separately, would critical interrelationships between core D&G institutions be neglected? What was the logical sequence of D&G activities? Should the rule of law interventions precede all other interventions in the D&G sector? How important was the installation of accounting systems in the executive branch to attack the pervasive problem of corruption? Should training be supported for journalists who could report to Bolivian citizens on the development process concerned with implementing D&G interventions? The process of assessing the nature of the problem in Bolivia, designing the first activities to be funded, and even overseeing the implementation of the projects was invariably undertaken by consultants—some new to the USAID business, some working out of political science departments of US universities, and USAID retirees with public sector management credentials. The D&G consultant—the “expert”—usually argued for a holistic approach. The expert would contend that all bottlenecks or constraints had to be addressed if meaningful progress was to be made. When dealing with democracy development, was it not better to err on the side of trying to do too much? Without reaching boldly, could one ever grasp something so basic, yet as ephemeral, as seeding democracy? Initial projects for reforming the judiciary, the legislature, and the electoral processes were classic rolling designs with experimentation and innovation being the modus operandi. An important study undertaken was the “Administration of Justice in Bolivia: An Introductory Overview, Background Study,” authored by Walter Guevara. Walter had served in the Bolivian Congress prior to joining the USAID Mission to work in the D&G office. For several years, Guevara was at the center of almost all of the D&G work concerned with the design and implementation of D&G projects. US consultants and Mission foreign service officers would come and go, but Walter was always there to provide continuity and validate the Mission’s interventions from a Bolivian perspective.

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Judicial Reform: Bolivia and the United States in Full Accord During the Bolivian presidential election in 1988, Paz Zamora was uncompromising in attacking the performance of the Bolivian judiciary. He described the judicial process as inefficient, corrupt, and politically biased. He vowed to make judicial reform a priority of his administration. Paz Zamora’s actions as president followed close on the heels of his campaign rhetoric. Luis Arce Gómez, a former minister of the interior who had been indicted by a Miami grand jury on drug trafficking charges, was being tried by the Bolivian Supreme Court for malfeasance and other charges resulting from his participation in the government of Luis Gárcia Mesa. Early in his administration, Paz Zamora declared that the Supreme Court was incapable of promptly adjudicating the Arce Gómez case and allowed Arce Gómez, without the benefit of due process, to be extradited to the United States, where he stood trial and was convicted for drug trafficking.45 It was in this environment that the USAID Mission was anxious to move forward as quickly as possible to support judicial reform. After having created an immense pile of studies of the problems in the judicial sector, the Mission drafted a modest proposal that was funded with an equally modest sum of $500,000.46 Thus began a long-term process of the US government supporting the government of Bolivia in strengthening its judicial system. Initially the project called for developing a draft law for the public prosecutorial system, improving the data processing system for the Supreme Court, and undertaking a more detailed assessment of the judicial sector.47 In January 1990, President Paz Zamora issued a decree that called for the structural reform of the judicial system, and in May 1991 he issued a decree establishing the National Council for Reform and Modernization of the Judicial Power.48 The National Council was directed to draft a law that would prescribe the role of the Public Ministry, which was to be responsible for judicial process. On November 15, 1991, the National Council provided President Zamora with recommendations for reforming the judicial process. A draft Judicial Organization Law accompanied the recommendations of the National Council.49 The US Embassy and the USAID Mission had worked closely with Paz Zamora’s government throughout the entire process, assuring Zamora that there would be generous support provided by the US government for judicial reform.50 The Mission’s next move was to propose a comprehensive judicial reform project with components reaching into almost every nook and cranny of Bolivia’s judicial system. Among the activities to be supported was creating a pilot case-tracking system for the criminal

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process; developing an accounting and financial control system for the Judicial Treasury; undertaking a judicial personnel and training needs assessment; training of judges, prosecutors, and court officials; designing a variety of software computer applications for the judicial sector that would be specific to Bolivia’s judicial system; publishing and distributing basic Bolivian and non-Bolivian legal material among judges, prosecutors, and law faculties; providing a printing press to the Supreme Court; sponsoring commercial arbitration seminars; and funding the National Commission for the Improvement of Justice.51 There were critics working with the USAID Mission who argued for a more moderate approach, but the key decisionmakers in the Mission were anxious to press forward with a holistic approach that addressed every problem in the judicial reform sector. With approximately $2 million provided by the Mission and a $1 million commitment by the Bolivian government, the next phase to transform the Bolivian judicial sector was funded in 1990.52 Expectations in the mission soared with a vision that Bolivian citizens could look forward to judicial power being dispensed by the Bolivian state without consideration of race, social status, or income. Strengthening the Legislature and the Electoral Process The overall goal to promote democratic practices led the USAID Mission also to fund activities designed to strengthen the electoral process and bolster an independent legislature. The Bolivian Congress was perceived as ineffective and unlikely to play a meaningful role in consolidating democracy in Bolivia. On the other hand, a strengthened congress could play a crucial role in revising existing laws and creating urgently needed new legislation.53 To develop a consensus among members of the Bolivian Congress regarding how to strengthen the congress from an institutional perspective, particularly with regard to creating administrative and support systems, the Mission funded a program that allowed Bolivian congressional leadership to see how legislative bodies worked in other parts of the world. Funds were also provided to allow both the lower and upper houses of Congress to develop a legislative database.54 Nearly every D&G program in Latin America funded by USAID had an electoral component; Bolivia was no exception. It had been determined that the election that returned Paz Estenssoro to power in 1985 had been open, free, and fair; however, Bolivia’s extremely tight budgetary situation severely limited the support that the Bolivian government could provide to the National and Departmental Electoral Courts. The Mission, after extensive consultation with the Country

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Team, concluded that it was important to strengthen the core institutions in the electoral process.55 With the same grant that was designed to strengthen the legislative process, the Mission funded activities to consolidate Bolivia’s electoral process, including the development of a master plan for general and municipal elections scheduled for 1989, automation of local electoral registries in the four largest districts, and development of a course for the trainers who prepared officials responsible for supervising the election process.56 The War on Drugs in the Homeland Drives the Development Agenda in Bolivia

The US government’s war on drugs in the homeland was the driving force behind USAID Bolivia’s development agenda and the attendant largesse of US government resources that flowed to Bolivia. Beyond the projects designed to encourage farmers to grow licit agricultural products and to create institutions to promote democratic practices, the Mission continued to provide support for health initiatives and private sector development. It was understood that at the very least, a decade would pass before these investments would begin to demonstrate their sustainability. In the early 1990s, systems to measure progress by the end of the twentieth century for each of the major activities funded by the Mission were institutionalized. Regarding the US government’s goal to eliminate the production of illicit narcotics, it was assumed that no matter how well USAID Mission’s activities contributed to increasing the production and sales of fruit crops and, in turn, job creation and income improvements, these accomplishments would never result in the eventual reduction and disappearance of the illicit commercialization of the coca leaf unless the NAS and the DEA, working with their counterparts in the Bolivian government, were successful in their eradication and interdiction efforts. Farmers in the Chapare would continue to grow the coca bush as long as it put money in their pockets. Only if the Bolivian government put real pressure on farmers by enforcing laws concerned with the production and distribution of coca leaf would it be able to curtail the production of coca leaf to levels that matched domestic consumption requirement. It all came down to what farmers could reasonably expect to get for their agricultural labors and to what degree politicians in La Paz supported the US-funded anti-drug program. In the mid-1990s, when the US government’s anti-drug program in Bolivia was formally evaluated, it was determined to have had mixed results. The interdiction57 and eradication58 efforts clearly had not

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succeeded to the degree that Country Team planners had hoped. On the other hand, the USAID Mission’s Alternative Development program provided Bolivian farmers in the Chapare bountiful opportunities to cultivate agricultural products as an alternative to growing the coca bush. No expenses were spared to push seeds, pesticides, fertilizer, equipment, and credit to facilitate the production of tropical fruit crops. The Mission appeared to ask the right marketing questions and followed up with solutions to get bananas, pineapples, and oranges to market across a network of roads constructed with Mission funds.59 Regardless, the attitude prevailed throughout the Chapare that “nothing can compete with coca,” and the search for new sources of income on the part of Bolivia’s rural poor continued to be a herculean ordeal. In the early 1980s, thousands of Bolivians moved into the Chapare, searching for a job or a small parcel of land to take part in the huge profits generated by the coca/cocaine boom. By the early 1990s, it was estimated that the thousands of farmers who cultivated the coca bush received “less than 2 percent of the final multimillion-dollar profits”60 from the international cocaine market. A worldwide economic enterprise that had exploited once again Bolivia’s rich natural resource base—first silver, then tin, now coca—had handsomely rewarded a small group of narco-trafficker bosses. Notes 1. George H. W. Bush, “Address to the Nation,” September 5, 1989, http://www.presidency.ucsb.edu/ws/?pid=17472. 2. “Report of the Task Force on Foreign Assistance to the Committee on Foreign Affairs,” US House of Representatives, 101st Congress, 1st Session, House of Representatives, Document 101-32 (Washington, D.C.: Government Printing Office, 1989), p. 26. 3. Ibid., p. v. 4. Larry Nowels, “Foreign Aid Reform Commissions, Task Forces, and Initiatives: From Kennedy to the Present,” in Security by Other Means, Lael Brainard, ed. (prepublication form, Washington, D.C.), p. 5, http://pdf.usaid.gov/pdf_docs/Pcaab460.pdf. 5. “Report of the Task Force for Foreign Assistance,” p. 27. 6. Lee H. Hamilton, “To Make Foreign Aid Work,” Washington Post, April 2, 1989, p. C7. 7. “Woods Advocates New Policy for New Era,” Front Lines, US Agency for International Development, vol. 29, no. 2, March 1989, p. 1. 8. “Bush Signs Foreign Assistance Act, Appropriations Total $14.6 Billion,” Front Lines, US Agency for International Development, vol. 29, no. 11, December 1989, p. 1.

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9. George P. Ferris, Jr., “The President’s Commission on the Management of AID Programs, Report to the President: An Action Plan,” April 16, 1992, pp. 4–5. 10. Reflects the author’s conversations with Robert Dean throughout 1990. Dean served as special assistant to President Reagan and was a senior director at the National Security Council. 11. “Declaration of San Antonio, San Antonio Summit, February 26–27, 1992.” 12. https://en.wikipedia.org/wiki/Gonzalo_Sánchez_de_Lozada. 13. “Bolivia, Country Development Strategy Statement, 1989–1993” (USAID Bolivia, April 1988), pp. 1–7. 14. Ibid., p. 8. 15. Ibid., 16. “Agency for International Development, Congressional Presentation, Fiscal Year 1989, Annex III, Latin America and the Caribbean” (USAID Washington, nd), p. 298. 17. “Bolivia Agricultural Sector Review, April 6, 1992, Report No. 9882BO” (World Bank, April 6, 1992), pp. viii, 36–39 and Lehman, Kenneth D., Bolivia and the United States: A Limited Partnership (Athens, GA: University of Georgia Press, 1999), pp. 198–199. 18. “Executive Summary” in “Country Development Strategy Statement, 1989–1993,” and “USAID/Bolivia, FY 1990–1991 Action Plan” (USAID Bolivia, January 1989), p. 1. 19. “Country Development Strategy Statement, 1989–1993” “Congressional Presentation, Fiscal Year 1989,” Annex III, pp. 289–302; “Action Plan, FY 1989– 1990, Bolivia” and “USAID/ Bolivia FY 1990–1991 Action Plan.” 20. “USAID/Bolivia FY 1990–1991 Action Plan,” p 3. 21. Roberta K. van Haeften, “Title III: How it Works,” LACTECH Bulletin No. 12, LAC TECH Project (USAID/LAC/RSD, June 1995), pp. 1– 3. Bolivia became eligible for Title III assistance because it met the food deficit criteria established in the legislation, i.e. the daily per capita calorie supply in the country was less than 2,300 calories per person per day; the country was unable to meet its food security requirements through domestic production or imports due to a shortage of foreign exchange; and the mortality rate for children under five years of age was in excess of 100 per 1,000 live births. 22. “U.S. Overseas Loans and Grants, Obligations and Loan Authorizations July 1, 1945 – September 30, 2015,” p. 94. (Greenbook) For more details see http://explorer.usaid.gov. 23. van Haeften, “Title III, How It Works,” pp. 2–3. 24. “An Assessment of the Impact of USAID’s PL-480 Title II and Title III Programs on the Poor in Bolivia” (USAI D Bolivia, June 1995), p. 52. 25. Clark Joel, Table 1 in “Foreign Economic Assistance Requirement to Compensate for Lost Income from Coca and to Cover the Investment Requirement of the Alternative Development Program” (USAID Bolivia, March 19, 1990). 26. Clark Joel, “Table III: Data on Bolivian Exports” (USAID Bolivia, nd). See the estimates discussed in Madeline Barbara Léons and Harry Sanabria, “Coca and Cocaine in Bolivia: Reality and Policy Illusion,” in Coca, Cocaine,

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and the Bolivian Reality, eds. Léons and Sanabria (Albany, NY: State University of New York Press, 1997), pp. 16–20. 27. “Drug Control: U.S.-Supported Efforts in Colombia and Bolivia,” GAO/NSIAD-89-24 (Government Accounting Office, November 1988), pp. 50– 51. 28. Ibid., p. 3. 29. Ibid., pp. 50–51. 30. “Bolivia Country Development Strategy, 1989–1993,” pp. 1–70. 31. Ibid., covering letter signed by David N. Greenlee, chargé d’affaires, a.i., US Embassy, La Paz, Bolivia. 32. “Chapare Regional Development, Amendment No.2, Loan Number 511-T-067 and Project No.511-0543” (USAID/Bolivia, November 23, 1987), p. 1. 33. “The Alternative Development Program: Assessment and Options, December 1994” (Development Alternatives, Inc. for USAID Bolivia, December 1994), pp. 4–5, 13–14. 34. Ibid., Table 20, “Results of USAID Alternative Development Efforts in Cochabamba, 1983–1994,” and Table 21, “Results of UNDCP Alternative Development Efforts.” 35. “Bolivia Project Paper: Cochabamba Regional Development,” Project no. 511-0617 (USAID Bolivia), pp. 1–3. See note 36. 36. “Cochabamba Regional Development, Project No. 511-0617,” p. 1. 37. “Alternative Development Program: Assessment and Options, December 1994,” Table 1. 38. Ibid., Table 8, “Coca Eradication and Incentive Payments, 1987–1994” and Table 9 “The Progression of Hectares Planted to Coca in the Chapare.” 39. Ibid., Table 10, “Summary of Results Interdiction of Coca and Derivatives.” 40. “Cochabamba Regional Development, Project No. 511-0617,” p. 2–3. The Bolivian legislation that formed the basis for the eradication program was the Bolivian Coca and Controlled Substance Law of 1988 (Law 1008). See p. 3 of the same document. 41. The National Directorate for Agricultural Conversion/Direccion Nacional de Reconversion Agricola (DIRECO) in the Ministry of Campesino Affairs was responsible for monitoring coca production and implementing the program that paid farmers to reduce the production of coca. See “Reducciones de Cultivos v.s. Precio de Coca (CBBA) Gestion 1990, Informe Anual 1990,” DIRECO. 42. “Cochabamba Regional Development, Project No. 511-0617,” p 1. 43. Ibid., p. 6. The emphasis in the cited quotation was in the original memorandum. 44. “Semi-Annual Report, Period Ending September 30, 1991, November 10, 1993" (USAID Bolivia, nd), pp. 80–85, 128–164, and 179. Also see “USAID/Bolivia, FY 1990–1991 Action Plan,” pp. 69–75. 45. “Justice Sector Project, Project Authorization, Amendment No. 2, 5110609” (USAID Bolivia, September 28, 1990), pp. 1–3. 46. “Convenio de Donacion entre La Republica de Bolivia y Los Estados Unidos de America, para El Proyecto de Sector Justicia, 8 de septiembre de 1988, Proyecto No. 511-0609/Grant Agreement between the Republic of

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Bolivia and the United States of America for Justice Sector Project, September 8, 1988. Project No. 511-0609” (USAID Bolivia, September 8, 1988), p. 2. 47. “Justice Sector Project Authorization, Amendment No. 2, Project No. 511-0609” (USAID Bolivia, September 28, 1990, pp. 3–6. 48. “Decreto Supremo No.22793, Jaime Paz Zamora, Presidente Constitucional de la Rebulica. May 9, 1991,” Annex B of “Bolivia Project Paper, Administration of Justice, No. 511-0626, 1992," (USAID Bolivia, May 9. 1991), pp. 64, 66. 49. Ibid., p. 64. 50. Letter to Charles Bowers, Embajador de los Estados Unidos from Dr. Luis Ossio Sanjinés, Vice-Presidente Constitucional de la Republica y Presidente del Consejo Nacional de Reforma y Modernizacion del Poder Juducial, Subject: Donación AID 511-0626, June 9, 1992. Also see “Bolivia Administration of Justice Project Paper, 511-0626, Annex A, 1992" (USAID Bolivia, 1992), p. 65A. 51. “Justice Sector Project, Project No. 511-0609” (USAID Bolivia, September 28, 1990), pp. 7–13. Also see “La Paz 10328, Amendment of Justice Sector Project (511-0609) and Request for Authorization, July 27, 1990,” cable from USAID Bolivia for Norma Parker, LAC/DI, USAID Washington. 52. “Justice Sector Project,” p. 24. 53. Alan Post, “Environment in Which Legislative Reform Is to Be Evaluated” (USAID Bolivia, 1988), pp. 1–2. 54. “Bolivia: Democratic Institutions Project Paper, 511-0610” (USAID Bolivia, August 1988), pp. 12–13. 55. Ibid., pp. 4–8. Also see Walter Guevara, “Action Memorandum for the Director: Democratic Institutions Project, 511-0610” (USAID Bolivia, August 31, 1988), pp. 2–3. 56. Ibid., p. 13. 57. “Alternative Development Program: Assessment and Options, December 1994,” Table 2, “Value Added to Illicit Coca Leaf”; Table 3, “Value Added Coca Paste Production”; Table 4, “Value Added Coca Base Production”; and Table 5, “Value Added Hydrochloride Production.” 58. “Appendix I: USAID’s Alternative Development Program in Bolivia,” in “Drug Control, Efforts to Develop Alternatives to Cultivating Illicit Crops in Colombia Have Made Little Progress and Face Serious Obstacles” (Government Accounting Office, February 20020, pp. 23–24. 59. “Alternative Development Program: Assessment and Options, December 1994,” Table 18, “Area of Crops in Compact Plantings of Selected Crops in the Tropical Zone of Cochabamba”; Table 19, “Volume and Value of Production and Average Weighted Price of Selected Crops in the Chapare, 1993 and 1994”; and Table 20, “Results of USAID Alternative Development Efforts in Cochabamba1993–1994.” 60. James Painter, Bolivia and Coca: A Study in Dependency (Boulder, CO: Lynne Rienner Publishers, 1994) p. 139.

10 USAID’s Development Surge: William J. Clinton, 1993–2001

Every Dollar we devote to preventing conflicts, to promoting democracy, to stopping the spread of disease and starvation brings a sure return in security and savings. —William J. Clinton, State of the Union Address, February 4, 1997

Washington: USAID Reinvented, Reorganized, and Relocated

“It’s the economy, stupid!” Such was the battle cry of James Carville and his pack of Democratic Party operatives working enthusiastically to get out the vote for Bill Clinton in the fall of 1992. International affairs, including the problems of economic development in the Third World, appeared to be matters of little consequence to Democrats working to deny Bush 41 a second term. However, the visibility of USAID would change when Brian Atwood was nominated to be USAID’s new administrator. Atwood had just finished a stint as the director of the National Democratic Institute, which was managing a host of democracy and governance (D&G) interventions throughout the developing world. Given USAID’s programming focus on building democratic institutions, the USAID administrator’s job appeared to be a good fit for Atwood. Atwood asked Carol Lancaster to be his deputy. Lancaster had served in the Carter administration as an economist in the State Department and was on the faculty of the School of Foreign Service at Georgetown before and after her tour with the Carter administration. Also waiting in the wings since the Carter days when he served as the deputy assistant secretary for state for human rights was Mark Schneider. During the interim, he had worked at the Pan American Health Organization. Schneider had earlier served with the Peace Corps

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in El Salvador. With this rich background in Latin American affairs, he was well qualified to lead the US government’s development effort in Latin America. Schneider brought an abundance of intellect and enthusiasm to the office each day and soon was tagged with the sobriquet, “the energizer bunny.” Atwood was committed to resuscitating an agency whose employees felt they had been badly treated during Bush 41’s administration, particularly during the period when Ronald Roskens had been the USAID administrator. Atwood promised a participatory management style. He gave nearly everyone his e-mail address and encouraged as much face-to-face communication as the system would tolerate. In the early stages of his leadership, Atwood appeared to relish the public forum in which major problems were candidly discussed with USAID employees. In an agency-wide meeting held in July 1993, he proclaimed, “We cannot preach democracy if we cannot practice it.”1 Atwood generated a sense that USAID was on the move again and would recapture the spirit of an earlier era. One of Atwood’s first acts was to restore the old USAID logo of the handshake between partners, abandoned by Roskens and company. Though Atwood proclaimed that it would be a leaner and more focused agency, the panoply of activities supported during his era recalled the 1960s when USAID supported projects that ranged across the entire spectrum of development challenges. With enthusiasm, Atwood signed on to the strategy of sustainable development that was percolating through the international aid community. The 1987 report by the Brundtland Commission, Our Common Future, defined sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” More specifically it was recognition that to balance economic, social, and environmental needs, there had to be limits to global development.2 Regardless of the rhetoric, the substance and emphasis of the US government’s development program under the direction of the Clinton administration remained essentially the same as that pursued by Bush 41’s administration. Assistance to Latin America continued to rest on the belief that “the consolidation of still fragile democratic institutions in our own hemisphere is the most cost-effective investment for the US government and its citizens.”3 The relationship between high levels of poverty in Latin America and illegal immigration to the United States by its neighbors provided another rationale for funding activities in Latin America to strengthen democratic institutions and address the problems of poverty, environmental degradation, corruption, and inadequate

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health care and education systems. The sustained flow into the US market of illicit drugs provided the rationale for the support of USAID programs that funded agricultural products as an alternative to coca and poppy production in the Andes.4 The Clinton administration underscored the important role USAID had to play in strengthening markets for US products in Latin America. Poor people, weak institutions, and bad policies all contributed to a weak local business climate and slowed the export of US products into the markets of the developing world. The Clinton administration made the case that humanitarian and economic assistance administered by USAID contributed directly to improving living standards of the poor and facilitated their entry into a world market economy.5 USAID Is Reinvented

President Clinton was anxious to demonstrate to the US public that his administration could govern efficiently and be results oriented.6 Early in his administration, Clinton signed into law the Government Performance and Results Act (Results Act) and described it as: an important first step in the efforts to reform the way the federal government operates and relates to the American people. The law simply requires that we chart a course of action for every endeavor that we take the people’s money for, see how well we are progressing, tell the public how we are doing, stop the things that don’t work and never stop improving the things that we think are worth investing in.7

The legislation called for the creation of efficient management systems that were to be institutionalized throughout the federal government. A key factor of the reform movement was the establishment of reporting systems that were results oriented and timely. Nearly every senior manager throughout the US government wanted to take part in this presidential initiative, which was popularly known as “reinventing government.” Atwood was quick to have USAID opt into the program described in the Results Act. In the name of “reinventing,” “rightsizing,” and “streamlining” USAID to meet Clinton’s 12 percent reduction target of federal employees and in light of declining funds for operational expenses for the USAID program, Atwood initiated a 20 percent reduction of USAID officers and personal services contractors and began closing USAID posts around the world.8

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In a statement before the Senate Subcommittee on International Economic Policy, Export, and Trade Promotion in 1997, Atwood claimed that the USAID staff had been reduced by over 2,700 positions, senior management was cut by 38 percent, project design time reduced by 75 percent, the number of regulations reduced by 55 percent, twentysix Missions had been cut, and six additional Missions would be closed by 1998. Atwood assured the committee that “All of these actions are designed to ensure that every dollar appropriated to the agency [USAID] can bring taxpayers the best possible return of their investment.”9 Included in the personnel cuts were more than one hundred highly qualified, senior USAID officers. The rationale was that room was needed for fresh blood with new ideas to carry the management burden. The result was that a number of excellent younger officers, including women and minority employees, worked their way into senior positions sooner than anticipated. An unintended consequence was that a number of key positions were left unfilled or staffed with younger officers who had the barest of qualifications for the positions they were to occupy. The Project and Its Process Reinvented?

The perception persisted that USAID was still not organized to deliver economic assistance efficiently. For a number of years, the project and the process in which the project was embedded had become suspect. One assistant administrator for the Latin America and Caribbean Bureau (LAC) during Bush 41’s administration had derisively referred to projects as “little green patches” on the map of Latin America, as if it were the project that had significantly constrained the US government’s development efforts in Latin America. It was argued by certain senior officials who had Atwood’s ear that if USAID was going to represent itself as being reinvented, the project concept—and the time-consuming project design process—had to go. As a consequence, Atwood decreed that projects no longer existed, and the word project was banished from USAID-speak. USAID now had activities. It was a semantic sleight of hand that was meant to solve many of USAID’s bureaucratic woes and allow USAID to make giant strides in solving development problems around the world. For nearly fifty years, the project process had been the means for identifying, planning, implementing, and evaluating the project. Now suddenly, the project and its process, which had been so deeply ingrained in the USAID psyche, no longer existed. As a consequence, many USAID officials found it difficult to talk about the development process without referring to projects and the process in which they were

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embedded. The problem was compounded by the fact that all other development agencies talked only in terms of projects. For a time semantic confusion reigned. There was another casualty in the reinvention process. For more than twenty years, project development officers (PDO) in Washington and USAID Missions had played the key roles in overseeing the design, the implementation, and the evaluation of grant and loan funded projects. With the demise of projects, the position of the PDO was eliminated from the USAID personnel rolls. Why? Well if one didn’t have projects, why did one need a PDO? Seating Arrangements Impact the State-USAID Relationship

Since the 1960s, most of USAID’s workforce in Washington, D.C., had been colocated with the State Department’s workforce in a building in Foggy Bottom close to the Potomac River. The building had two distinct parts—“Old” and “New” State. Old State was constructed in the early 1940s and originally housed a few offices of the War Department until it became home to the State Department in the late 1940s. In the 1960s, a large addition was added to Old State that became known as New State, and State and USAID offices were located throughout the building. USAID and State officials entering Old State would have passed under a large, fresco mural painted in the early 1940s when the building housed the War Department. The mural, titled “America the Mighty,” proclaimed the Four Freedoms—freedom of speech, freedom of worship, freedom from want, and freedom from fear—that were being defended by a menacing array of war paraphernalia, including fearsome raptors that flew above the democratic fray. When the State Department assumed responsibility for the building in 1954, the mural was no longer judged appropriate because of its intimidating military images, and it was covered with plywood and drapery. However, in the mid-1970s, the mural was resurrected with the title “Defense of Human Freedoms.” The fact that the mural was certainly inspired by the works of Diego Rivera, the Mexican utopian communist, as well as the fireside chats of President Roosevelt, is no small irony.10 Though there were often rumors that State was short of office space and would have liked USAID banished to some exotic place such as Buzzard Point, it was not until Atwood became administrator that USAID was virtually forced to vacate its offices in the State Department and move to the newly constructed Ronald Reagan Building in D.C.’s Federal Triangle. The easy, informal, collegial relationships that had been fostered over the years between State and USAID officers at all levels in their respective bureaucracies was for the most part lost. There

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was a sense that USAID and its staff had been orphaned from the official foreign affairs community. Bolivia: Pacted Democracy Prevails

By 1991, the Bolivian economy was showing positive signs of expansion, as evidenced by a gross domestic product (GDP) growth rate of more than 4 percent and a corresponding increase of per capita income of 2.1 percent, after several years of decline. Another positive sign was the decline of inflation by 15 percent in 1991.The improved economic climate had stimulated modest domestic investment, though foreign investment in the Bolivian economy was negligible.11 With this successful implementation of the New Economic Policy (NEP), the government of Bolivia had restored donor confidence in its ability to cope with a complex and difficult financial situation. Gonzalo Sánchez de Lozada Energizes the Development Agenda, 1993–1997

On August 6, 1993, eight months after the Clinton and Gore team took office in Washington, Sánchez de Lozada, the Movimiento Nacionalista Revolucionario (MNR) presidential candidate, and his handpicked vicepresidential candidate, Victor Hugo Cárdenas, were sworn into office. Cárdenas, leader of the Movimiento Revolucionario Tupac Katari de Liberación (Kataristas)12 had drawn his support from Aymara communities in the La Paz District. In the national election, the combination of the MNR and Kataristas attracted Indian communities to participate in the national election—an important symbolic step in promoting democracy in Bolivia. The MNR-Katarista ticket led the first phase of the general election with 36 percent of the vote. When the MNR-Katarista alliance joined with the Movimiento de Bolivia Libre/Free Bolivia Movement and Unidad Cívica Solidaridad/Union of Civic Solidarity (UCS), the newly formed coalition laid claim to 55 percent of the popular vote and held seventy-nine of 130 seats in the Chamber of Deputies and eighteen of twenty-seven seats in the Senate.13 Sánchez de Lozada had spent a part of his youth living in the Washington, D.C., area and attended the University of Chicago where he had studied literature and philosophy. After finishing his university studies, he returned to Bolivia to manage his family’s profitable mining properties. In 1985, Sánchez de Lozada was elected senator from Cochabamba, and shortly thereafter he was selected by Paz Estenssoro to be the planning minister, which allowed him to play a major role in

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the implementation of the NEP. Now it was his turn to be president, and he relished the prospect of being in charge. Once in office, Sánchez de Lozada moved swiftly, promoting a series of economic, political, and social reforms intended to have far-reaching consequences. One of his earliest reforms was an amendment to the constitution proclaiming that Bolivia was a multiethnic, multicultural nation. What followed was a torrent of legislation designed to integrate all Bolivians, regardless of their race, into a society in which the struggle for justice would be played by rules that would be fairly and equitably applied. The Popular Participation Law, the Electoral Reform Law, the Education Reform Law, the Administrative Decentralization Law, the Pension Reform Law, the Judicial Sector Reforms Law, the Forestry Law and Regulations, the Agrarian Reform Law, and Health Sector Restructuring were all measures promoted by Sánchez de Lozada’s administration and intended to spread the benefits of development more broadly.14 Sánchez de Lozada never wavered in his support of the NEP. To this end he promoted the Capitalization Law, which resulted in restructuring and reducing the role of the Bolivian government in a number of public entities including the national railroad and the petroleum, airline, telephone, and electric companies. In the process of implementing the Capitalization Law, several public firms were auctioned off to multinational corporations. The intent of the Capitalization Law was that profits from the sale of these companies were to be used to create a social security fund to benefit Bolivia’s poor. In a “panglossian” world, this was neoconservatism at its most imaginative. However, in a number of cases in which public business operations were sold at auction, the result was financial misfortune.15 From Dictator to Defender of the Constitutional Process: Hugo Banzer Suárez, 1997–2001

In 1997, Hugo Banzer and Jorge Fernando Quiroga Ramírez, as the presidential and vice-presidential candidates on the Acción Democrática Nacionalista (ADN) ticket, were the frontrunners in the first phase of the national election with 22 percent of the popular vote. The Movimiento Nacionalista Revolucionario de Izquierda (MIR), once again led by Paz Zamora, closely followed with 20 percent of the vote. Despite five years of reforms, which had the potential of reaching deep into the political and social fabric of the life of Bolivia’s citizens, the MNR trailed with 18 percent of the vote. In the next phase of the election, Banzer successfully put together a coalition of the ADN, UCS, MIR, and Conscience of the Homeland that captured the presidency as

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well as seats in the Congress. Pacted democracy had prevailed once again. Banzer had successfully made the transition from military dictator in the 1970s, when dictatorships were the order of the day throughout much of South America, to an elected president in an era in which the overwhelming number of candidates for high office in South America had followed a constitutional path to the presidency.16 Banzer’s government continued to follow the development path prescribed by the NEP, including supporting a series of privatization activities allowed for in the Capitalization Law. In close collaboration with the United States, Banzer launched Plan Dignidad, designed to move aggressively in suppressing illegal drug production and trafficking. A major initiative to support this effort was the creation of a special security force to eradicate illegal coca leaf production in the Chapare.17 During the last years of his presidency, Banzer faced a number of problems, including lower prices for Bolivia’s exports, the collapse of Argentina’s economy and the subsequent reduction of remittances sent to Bolivia, and a sharp drop in illicit cocaine revenues. Each of these problems contributed to significant malaise in the Bolivian economy. Banzer’s problems were further complicated by the protests of citizens in Cochabamba when their community water systems were privatized and their water prices rose sharply. Citizens rioted and police sent in by President Banzer fired on the crowd, killing and injuring several people.18 In July 2001, Banzer resigned, having been diagnosed with lung and liver cancer, and his vice president, Jorge Quiroga, completed Banzer’s presidential term. The USAID Mission: A New Style with Vintage Substance The USAID Mission Is “Reengineered”

During the Clinton administration, USAID Bolivia traveled an extremely bumpy, bureaucratic road. Voices from Foggy Bottom proclaimed that USAID was going to be reengineered and in the process reinvented from top to bottom, with the intended result being a leaner and better-managed agency.19 Many Mission employees viewed the call for reengineering with skepticism. They were concerned that in a process of being reinvented, the Mission would lose control of its development agenda. In this disquieting atmosphere, both Bolivian and US employees in the Mission pondered a number of issues. Was there a possibility that the Alternative

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Development program would be shut down because Bolivia’s counternarcotics effort was falling short of achieving the eradication targets mandated by the US government’s counternarcotics certification requirement? What was the real reason that the Mission was told to expect a budget cut in 1995 of $100 million to $67 million? The staff, which was directly involved in project oversight, felt severe pressure in being forced to plan for huge budget adjustments without sufficient time to consult with their government of Bolivia counterparts.20 Another cause for concern arose when the Mission was notified that an agency-wide downsizing plan called for the reduction of the Bolivian staff by 25 percent. If in fact this came to pass, which Bolivian colleagues would be dismissed? Rumors were rife in the Embassy and the Mission that USAID was going to be merged into the State Department. A number of foreign service officers in the Embassy seemed to be giving off airs that the merger was nearly a fait accompli, reinforcing the general feeling in the Mission that USAID officers were viewed as nothing more than second-class citizens by the Foreign Service.21 Regardless of these concerns or perhaps because of them, Lou Lucke, an immensely talented USAID manager and the acting Mission director, decided to “plunge” into an experimental pilot exercise.22 The Mission’s principal task was to organize teams for managing each of the Mission’s strategic objectives (SO) and accomplish this while continuing the development job that US employees and Bolivians keenly felt was their priority and responsibility.23 Nearly all of the Mission’s staff and many contract employees were involved directly in the reengineering exercise. After several months, the USAID Mission emerged with a blueprint for monitoring each SO. Virtually every official in the Mission was assigned to one of the strategic objective teams (SOT). Each SOT’s membership consisted of technical, financial management, contract, administrative, and program officials. The SOT was expected to meet on a regular basis and conduct its business in a participatory manner. Grade and position were no longer to be considerations when the SOT was making decisions effecting the implementation of Mission-funded activities. It was an entirely new way of doing business in the USAID Mission.24 One of the most important outcomes of organizing Mission personnel around SOTs was the empowerment of the foreign service national, the Bolivian career employee, who would over time be the binding agent of the SOT. In the 1990s, important changes occurred in the project auditing process. Bolivian firms would henceforth undertake audits of grantfunded projects implemented by Bolivian organizations with project

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funds earmarked for that purpose. Grants awarded to US organizations operating in Bolivia would be audited by the Defense Contracting Auditing Agency (DFCAA) at the contractor’s home office in the United States, where all financial documentation was to be maintained. Audits were done on a sample basis, and only occasionally would US auditors conduct audits in the field. The USAID Mission in Bolivia had the option of calling for a special audit if it suspected gross mismanagement. However, if such an audit was called for, the Mission had to pay for the services of the auditor. Consequently, millions of development dollars spent by US contractors working in Bolivia were not audited or received only the most perfunctory financial review. Adding to the audit problem was that USAID Mission officials had difficulty gaining access to the audit findings reported by the DFCAA. Given the complexity of the development environment in Bolivia, the lack of rigorous financial auditing appears to have been a serious shortcoming in USAID’s management system.25 The USAID Mission’s Program

In February 1993, the USAID Mission, in its first presentation of the Clinton era, stated that it supported the country team’s transcendent goals of reducing the production of illicit cocaine, strengthening democratic institutions, and fostering economic growth. The Mission further declared that its program was squarely in line with the Clinton administration’s foreign policy, which was to directly support “democracy, free markets, and sustainable development.”26 Identifying USAID Mission-funded projects with overarching SOs, which was a bureaucratic exercise that had started in the last days of the Reagan administration and continued throughout Bush 41’s administration, was heralded as a strategic planning exercise designed to lead USAID up a path to bureaucratic nirvana. It was in this context that the USAID Mission proudly announced that its number of SOs had been reduced from fifteen in 1988, to nine in 1989, to six in 1990, to five in 1993.27 In fact, with the exception of projects in the education sector, program content had not diminished. Projects were merely regrouped to fit within the rubric of the five SOs. By reducing the number of SOs to five, the Mission claimed that it would be easier for its managers to maintain a tighter focus in their quest “to manage for results.”28 Throughout Clinton’s administration, the same five SOs would remain in place in Bolivia and were expressed for the most part as follows: illicit coca eliminated from the Chapare, social base of democracy broadened, increased employment and income opportunities

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for Bolivia’s poor, improved health of the Bolivian population, and degradation of forest, water, and biodiversity resources reduced.29 Each year at program reviews in the Mission and in Washington, there would be seemingly endless discussions regarding the appropriateness of the current wording of each of the SOs. Words would be pondered and parsed without having any discernible impact on the development program itself. An illusion would be created that from the breathless heights of La Paz to the hallowed halls of the Reagan building, everyone was in sweet accord that development would surely be advanced in Bolivia. The art of the pettifogger would rise to ethereal levels of excellence, tingling the nerve endings of most of the assembled bureaucrats who managed to stay alert. The one new addition to the Mission’s portfolio during the Clinton era was the Sustainable Forestry Management Project (BOLFOR). The fact that there was a significant overlap of projects from one administration to another had always been the case, regardless of a new administration’s claims of making dramatic changes in the substance of its program. A critical aspect of the US government’s support of the NEP during this period was the direct transfer of US dollars to assist the government of Bolivia in addressing its chronic balance of payments crises. The Mission continued to support the PL480 Title II program that provided food to the urban poor in payment for their participation in food-for-work activities in urban areas. This program had been initiated in the Reagan administration and provided a crucial safety net helping to protect the urban poor from the negative effects of the NEP.30 It was not until the mid-1990s that an information technology (IT) system was effectively adopted by the USAID Mission to identify, collect, analyze, and report performance data systematically. Performance data for activities funded by the Mission was to be assessed against mutually agreed upon, established baselines. Most of the accomplishments discussed in this section were identified through the use of IT systems established and monitored by the USAID Mission to Bolivia in collaboration with its contractors and government of Bolivia counterparts.31 Alternative Development Program The Country Team continued to support a comprehensive strategy, which merged elements of eradication, interdiction, and Alternative Development.32 The problems inherent in implementing an Alternative Development program were exacerbated by an increasingly unstable political situation in the Chapare. In the early 1990s, Evo Morales, a

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populist politician who had worked as a labor organizer in Potosi, moved to the Chapare. There Morales built a large, clamorous political base that advocated ending the ban limiting the production of coca leaf. Thousands of former miners, bringing with them organizational skills and fervor for political action, had moved into the Chapare in the late 1980s, when the government of Bolivia drastically reduced employment in most of the national mining enterprises. The Aymara and Quechua from the Altiplano and the high valleys, who were used to working through campesino confederations to find political space, added their voices to the political cacophony that was spreading throughout Bolivia. Cocaleros33 in the Chapare claimed that their education and health services were inadequate, and they felt besieged by a La Paz government that had little sympathy for their harsh living circumstances. Their alienation was compounded by the US government, which was perceived as pulling the strings and paying the bills for the eradication and interdiction programs that attacked the cocalero’s economic livelihood.34 Throughout the 1990s, the USAID Mission continued to fund activities in the Chapare designed to improve the production and marketing of licit agricultural products. These efforts were supplemented with support from a number of foreign donors, including the European Union and the United Nations. It is estimated that foreign assistance from all donors between 1998 and 2002 for Alternative Development activities “exceeded $110 million and represented 4 percent of international assistance to Bolivia during this period.”35 By the end of the 1990s, the USAID Mission reported that following several years of support of in-country agricultural research and the provision of a steady stream of subsidized agricultural inputs to farmers, there were significant production increases of bananas, pineapples, and palm hearts. In addition, the construction of over three thousand kilometers of all-weather roads and one hundred bridges in the area greatly contributed to improving the Chapare farmer’s access to domestic markets and those in neighboring countries. Support for the establishment of sixty-five agribusinesses that invested over $25 million in the Chapare also facilitated the marketing of fruit production. The cumulative impact of these activities was reflected in an increase of $15 million of fruit crop production leaving the Chapare in 1999. Between 1992 and 1999, the wholesale price of bananas increased 460 percent, due to the improved quality of bananas grown in the Chapare, which in turn was attributed to the USAID-funded technical assistance provided to Chapare farmers.36

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Early in the new millennium, an evaluation was undertaken of the USAID Mission’s Alternative Development program. The team noted that from 1997 to 1999, the eradication program pursued in the Chapare by the Bolivian government, with support provided by the Narcotics Affairs Section, had resulted in a decline from 45,800 hectares to 18,900 hectares in coca leaf production. For the same period, the team estimated that seventy thousand hectares were in licit agricultural crops. This same period also marked a 400 percent increase in the price of coca leaf and a rapid increase in coca leaf production in the Yungas, where there was no eradication program. Attracted by the profits to be made in coca leaf production, many farmers from the Chapare were driven to seek new areas in the Oriente to cultivate the coca bush. The evaluation team observed that although income from licit crops increased, it was apparent that licit crop prices could not keep pace with coca prices on a country- or region-wide basis because as coca leaf production was reduced in one area because of forced eradication, it emerged in other areas. It was a simple matter of supply and demand.37 Despite aggressive efforts by the Bolivian government to execute eradication activities in close coordination with the US government, the number of hectares in the production of coca showed only modest decreases, suggesting that the goal of limiting coca production to domestic consumption would continue to be a challenge. Many of the same farmers who were being paid by the National Directorate for Agricultural Conversion with funds provided by the US government to stop growing coca had pushed deeper and deeper into the dense tropical rainforests of the Chapare and Santa Cruz, where they planted the coca bush beyond the easy reach of Bolivian law enforcement agencies. There is little evidence that the interdiction program jointly supported by the Bolivian government and the DEA had sufficient impact to significantly reduce the movement of cocaine into international markets. Market forces reverberating from the Atlantic community created temptations to which Bolivian farmers easily succumbed.38 Democracy and Governance Bolivia is ranked number two in the Transparency International index on corruption. That is because we probably paid not to be number one! —Anonymous Bolivian39

Corruption Is Endemic. Bolivians shared the perception that corruption was endemic in both public and private sectors. Even Paz Estenssoro,

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who led the ’52 Revolution with the intention to build a modern state free of the corrupt practices of military officials, government bureaucrats, mining moguls, and absentee hacendados, had instituted a system in the 1950s of bribery by giving his henchmen money from the public treasury to ensure that they would do his bidding.40 Nearly every time Bolivia went through one of its periodic financial crises and turned to the international community for assistance, the subject of corruption would be discussed. There would be gnashing of teeth and verbal assurances on the part of Bolivian politicians that they would clean up their act. There might even be short periods of lip-service compliance before a return to the practices of the ancien régime. Citizens’ Participation in the Municipalities. With Sánchez de Lozada’s election in 1993, support for strengthening the democratic process became the foundation for fulfilling his vision of a nation in which all citizens could fully participate in economic, social, and political life. The passage of the Popular Participation Law (PPL), in conjunction with the Administrative Decentralization Law, was essential to realize Sánchez de Lozada’s vision of a nation free of racism.41 The intent of the PPL was to give the ordinary citizen greater access to the democratic process at the grassroots level by affirming the legal status of indigenous communities, campesino associations, and labor organizations. The Administrative Decentralization Law created 311 urban and rural municipal jurisdictions, later expanded to 314, in which the citizenry of each municipality was vested with political and economic power. Twenty percent of national tax revenues were to be transferred to the municipalities, giving the citizenry the economic muscle to plan and implement activities in the municipality. Additionally, the PPL promoted the creation of organizations composed of citizens in urban barrios42 and rural indigenous communities to monitor the municipal budgeting and expenditure process as well as the services being provided by their municipalities.43 When Sánchez de Lozada announced his initiative promoting greater participation, he asked for support from the US government, and Carl Leonard, the USAID Mission director at the time, was quick to respond. The Mission immediately set out to design an activity that was to be a complement to the PPL. Shortly thereafter, Vice President Victor Hugo Cárdenas met with Vice President Gore in La Paz in 1993 and in Washington the following year to discuss the USAID Mission’s support of the PPL. Carol Lancaster and Mark Schneider met with Cárdenas later in 1994 and reaffirmed US support for democracy activities in Bolivia. When the USAID Mission’s Democratic Development and

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Citizen Participation (DDCP) Project was approved in January 1995, it was the US government’s first concrete action to implement the recommendation made at the Fourth Summit of the Americas to promote popular participation activities throughout Latin America.44 The objective of the DDCP Project was to strengthen citizen participation at the municipality level. In 1995, when the project was about to commence, it was estimated that $200 million would be available for public works and services for the municipalities from foreign donor funds and revenue provided by the government of Bolivia. The government of Bolivia and the USAID Mission agreed that citizens should receive training to participate in the municipality’s project planning, budgeting and implementation process, and to monitor the administration of the municipality’s development funds.45 Another innovative aspect of the DDCP Project was to build a model of participatory management involving twenty pilot municipalities. The lessons learned from this innovative approach were to be replicated nationally. A complementary objective of the DDCP Project was to improve the accessibility for all Bolivian citizens to electoral institutions at municipal, regional, and national levels by developing community registries and supporting the implementation of a voter registration process in communities.46 Preserving Tropical Forests in the Oriente Bolivia is a country of rugged, spectacular topography, great natural beauty and unparalleled biodiversity. USAID’s support has demonstrated that the challenge of sustainably managing its fragile lands can be harnessed to benefit the people dependent on the natural resource base while contributing to globally important conservation goals. Development assistance programs are often challenged by policy makers and the general public to show “cause and effect,” something that can be difficult in the short run. —Thomas M. Catterson, environmental consultant, February 200047

Since the mid-1970s, consideration of the environmental factor in the development equation had become increasingly important throughout USAID. In the top echelon of USAID’s Washington bureaucracy, the position of the environmental coordinator was created and given an office in close proximity to the administrator. The word was promulgated throughout the USAID world that every project financed by the US government must be reviewed in terms of the project’s potential environmental consequences. Eventually an environmental

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determination was required for each USAID project funded by the US government. Initially the analysis was perfunctory, due to the lack of USAID professionals to undertake environmental determinations, and as a result, the requirement for a number of years was a low hurdle on the path to completing a project’s design. When a retrospective study of the environmental sector in Bolivia was completed in 2000, it had this to say about USAID Bolivia’s environmental work: In the entranceway to the building in La Paz, there is a plaque commemorating fifty years of partnership between the United States and Bolivia. It is a pertinent reminder of a long-term relationship that has channeled US assistance into practically all corners of the country and all development sectors of Bolivia. One sector where that assistance has only recently been targeted over the last two decades but where, nevertheless, the impacts seem to have [been] significant, is the environment sector.48

The assessment went on to say that there was a “very limited written record” of the nature of the activities supported by the USAID Mission in the environmental sector. One of the principal reasons for undertaking an assessment was to construct a historical record to identify the legacy of activities in the environmental field on which future programs of an environmental consequence could be undertaken.49 The thrust of the USAID Mission’s strategy in the environmental sector was grounded in the appreciation that Bolivia was a biodiversity hotspot of exceptional affluence. Its fifty-three million hectares of forest made it one of the most forested countries in the tropics.50 Given Bolivia’s rich natural resources base, the Mission recognized that if sustainable development were to be achieved, proper management of these resources by both the private and public sectors was crucial. Consequently, the USAID Mission funded projects focused on the efficient management of natural resources, with particular emphasis on the vast expanse of tropical lowland forests in the Oriente.51 The BOLFOR Project, which was initiated in the mid-1990s, became the platform for the Bolivian government effort to manage its tropical forests rationally. The major thrust of the BOLFOR Project was to certify by an independent authority that forests in the Oriente were being managed in a sustainable manner. To obtain certification for a particular forest, an approved management plan had to clearly state the goal for the forest seeking certification. The plan also had to ensure that all participating parties involved would receive an equitable share of the benefits; indigenous rights would be recognized and respected;

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harvesting rates of forest products would be sustainable; and forest management activities would have minimal adverse environmental impact on wildlife, biodiversity, and water resources.52 An important step in the process of certification was the 1996 Forestry Law, which provided the policy framework in which certification was promoted by the BOLFOR Project. The law recognized the rights and responsibilities of indigenous peoples when it came to the use of the forests in which they lived.53 By the mid-1990s, nearly five hundred thousand hectares were in the process of being certified, and the BOLFOR Project was working with a number of municipalities and indigenous groups in the preparation of forestry management activities that had the potential of covering more than 625,000 hectares. By 1999, the area of tropical forests independently, voluntarily, and internationally certified had increased to 667,000 hectares, placing it first in Latin America and second globally. An additional 480,000 hectares were in the process of being certified.54 Health, Population, and Nutrition In the 1990s, the health status of most Bolivians continued to be described in grim terms, especially for those living in rural areas. A rugged and fragmented geography, widely dispersed and isolated settlements, low levels of education, and limited economic opportunities were circumstances that relentlessly conspired against the Bolivian government’s ability to reach effectively into rural Bolivia with health services. Adding to the woes of women living in rural areas was the fact that they had nearly twice as many children compared to women from urban areas. When interviewed, rural women claimed that they had twice the number of children than they actually wanted. A Demographic Health Survey funded by USAID that was conducted in 1994 revealed that only 7 percent of rural women used modern contraceptives compared with 25 percent of women living in urban areas.55 The Mission’s Strategic Plan for the period FY 1998–FY 2002 declared that its health and family planning program was designed “to stimulate local governments and NGOs to improve the quality of health services according to established technical norms and culturally acceptable standards.”56 The Mission further stated that it was critical that the Bolivian government support a variety of family planning programs, including child survival activities. A key recommendation was that community, municipality, and NGO health delivery systems throughout Bolivia must be significantly improved,57 and in this regard the Mission emphasized that it was essential that specialized technical training for field health workers throughout Bolivia be conducted.58

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USAID Bolivia also recognized the value of the participatory approach, which emphasized the role of the community-based health practitioner working with the local population in defining problems and developing solutions. There was also recognition of the value of incorporating traditional health practices into Western-oriented health care practices.59 Throughout the 1990s, PROSALUD continued to be at the center of the Mission’s response to addressing Bolivia’s basic health care needs. Though it had not yet realized financial sustainability, PROSALUD had progressed satisfactorily in addressing problems related to cost recovery. As a consequence, the Mission decided to establish an endowment to assist PROSALUD in its pursuit to achieve institutional sustainability.60 By the late 1990s, PROSALUD consisted of a network of twenty-eight health centers located throughout Bolivia that serviced three hundred thousand people yearly. The focus of PROSALUD centers were children six and under and pregnant women. These centers provided a wide range of basic health services, including outpatient consultations as well as specialist care in gynecology, obstetrics, and pediatrics.61 The success of PROSALUD was judged to be due to a number of factors including a decentralized, well-managed network of clinics located throughout Boliva and a referral hospital supported by a national office and six regional offices. Other important factors were a human resource system in which advancement was based on merit and a financial base which emphasized cost recovery, economics of scale, and diversified services. Certainly the active participation of the community through community health courses and a community advisory committee played a key role in driving the system. As important as all these elements were, it was the integrated, comprehensive package of high quality health services offered twenty-four hours a day, 365 days a year that has been key to the success of PROSALUD.62 In addition to the Mission’s support of the PROSALUD program, it played a major role in assisting the Bolivian government to improve reproductive health services, support national health education campaigns, and promote social marketing projects for contraceptives.63 In a culture and political environment that was instinctively cautious about population control policies, such projects were significant accomplishments. Nationwide, it was reported that between 1994 and 1998 infant mortality declined from seventy-five to sixty-seven deaths per thousand live births and the percentage of malnourished children under five, as measured by weight for age, fell from 16 percent to 8 percent. During this same period, the percentage of pregnant women who sought prenatal care from a trained provider increased from 53 to 65 percent,

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and the number of births attended by a trained provider increased from 47 to 57 percent.64 Given the USAID Mission’s perseverance in providing assistance to the health sector since the 1970s, the Mission could reasonably claim a significant share of the credit for Bolivia’s progress in addressing the basic health needs of Bolivia’s population. Putting Plata in Poor People’s Pockets Since I was twenty, I have spent a lot of time roaming the world on rickety, old buses in an attempt to reach the outbacks of many developing countries. One such occasion was in fall 2003 when I took a bus over a dusty mountain road from Cochabamba to Aquili. Usually a bus ride gives me an opportunity to get a feel for the countryside and also strike up conversations with all kinds of people. On this particular occasion I was seated next to a young Peace Corps volunteer. After a couple of hours of conversation in which we talked about recent political events in La Paz, I asked what the development problems were in her community. This line is usually good for several more hours of conversation. However, on this occasion her answer was direct and to the point. “No hay plata en los bosillos.” Translated— there isn’t money in people’s pockets. In other words, there weren’t jobs in these rural communities, and consequently many of the men were forced to seek employment elsewhere. I was stunned by the obviousness of her response. I was so conditioned by the complicated answers that one heard in the Program Office of an USAID Mission or the Economic Section of an embassy that I spent the rest of the bus ride just thinking about her answer—“No hay plata en los bosillos.” —Larry Heilman, Aquili, Bolivia, 2003

It was during the 1970s that the idea of microlending to the rural and urban poor, especially women, appeared as the newest silver bullet to stimulate the development of micro- and small-businesses from Bangladesh to Brazil. A variety of experiments were launched, all grounded in the belief that the poor were potentially good credit risks and possessed the skills to engage successfully in microenterprise activities if the interest rates of microloans were reasonable. In 1987, microcredit came to Bolivia through Foundation for the Promotion of Micro-Enterprises (PRODEM), a nonprofit organization created by a group of Bolivian entrepreneurs. From the outset, USAID Bolivia funded technical assistance for structuring and managing PRODEM, as well as its operating costs and the capitalization of its portfolio.65 Basic to PRODEM’s approach was to organize its clients into solidarity groups whose members were collectively responsible for repaying the

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loans to its members. Market ladies, family microbusinesses, and campesinos working small parcels of land were typical of the clientele to receive micro financing from credit institutions operating throughout Bolivia.66 By 1989, it was estimated that PRODEM had assisted seven thousand microenterprises that were provided loans averaging $300, and by 1992, PRODEM had reached forty-five thousand microenterprises with more than $28 million in funding from USAID.67 It was also reported that street venders and microproducers had formed small groups to obtain PRODEM loans. Each group got a lump sum that they divided among themselves. After using the funds for the intended purpose, each group then collected the money owed and paid PRODEM a lump sum. Of the fourteen thousand loans made to these subgroups of street venders and microproducers only two individuals defaulted; $302 of the $2 million was lost.68 In the early 1990s, the board of directors of PRODEM made the decision, with the USAID Mission’s support, to create BancoSol, a nonprofit microenterprise bank that assumed PRODEM’s lending operations in urban areas including La Paz, El Alto, Santa Cruz, and Cochabamba. BancoSol was permitted to provide traditional banking services to its clientele, thus strengthening its reach into poor urban communities.69 By the mid-1990s, PRODEM and its affiliate, BancoSol, had provided microfinancing to seventy thousand clients, of whom 65 percent were women. In 1998 BancoSol’s portfolio had grown to include 81,500 clients, and in 2000, BancoSol extended its reach still further with loans for micromortgages for housing and short-term working capital for private microenterprises.70 Crises in Microfinance Institutions In microfinance circles, Bolivia is often thought of as the model for commercial microfinance. Bolivia is known for its successful microfinance institutions (MFIs) that have transformed from their original status as NGOs into regulated commercial institutions, including BancoSol, the first and perhaps best-known transformed microlender. These MFIs constituted a thriving microfinance industry operating largely on commercial principles through the mid-1990s.71 —Elisabeth Rhyne, Development Alternative, Inc.

In the late 1990s, a host of problems surfaced in the microfinance industry as a result of microlending NGOs changing their status to regulated commercial institutions. Excessive overlending by the MFIs,

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significant modifications in the way the MFIs conducted their business operations, and the altering of the relationship between consumers and lending institution were some of the more obvious differences between an NGO-based operation and that of a microlending commercial operation. These changes contributed to a crisis in the microfinance sector that started in late 1999, “in which borrowers became overindebted and institutions suffered dangerously high delinquency and falling profits.”72 By the end of 2000, the number of microenterprise loans that were outstanding was approximately four hundred thousand, which covered an estimated six hundred thousand to one million microenterprises. The loan portfolio associated with these microenterprise loans was $379 million, which represented approximately 10 percent of the overall loan portfolio of the financial sector.73 During 1999 and 2000, all microlenders recorded sizeable client loss rates when compared with the past. BancoSol lost 25 percent of its clients, and PRODEM lost 45 percent of its clients during this period.74 BancoSol had traditionally played a key role in providing solidarity group loans for microenterprises. Its performance placed it at the top of the Bolivian banking industry during the mid-1990s. Though BancoSol was hit hard by the microfinance crisis, it retained a leading market position in the microfinance sector. At the end of 2000, it was serving approximately sixty-one thousand clients through thirty-seven branches that were located mainly in urban areas. Its loan portfolio was $78 million, and over half the loans were to solidarity groups, with the remainder to individuals. The average size of loans was $1,276.75 The biggest issue that resulted from the crisis with regard to loans to solidarity groups was the degree to which the solidarity groups would continue to feel responsible for repaying their loans. Hence the sustainability of these institutions was seriously jeopardized. Other Donors’ Contributions The number of foreign donors and their financial assistance continued to grow, supporting Bolivia’s needs in virtually every development sector. There were eight multilateral donors, some of which received financial resources from the US government, and fifteen bilateral donors whose combined contributions averaged $500 million a year, with the most active donors being the World Bank, IDB, United Nations Development Programme, Germany, the Netherlands, Spain, and Japan. Additionally, eight Latin American countries had technical assistance agreements with Bolivia.76 The USAID Mission recognized the critical nature of other donors’ contributions and attempted to coordinate their efforts to the

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greatest extent possible. In the 1960s, this had been a nice thing to do, time permitting. By the 1990s it was imperative that donor efforts be coordinated. However, it was an immense chore taxing the best efforts of the Mission’s small program staff. (See Appendix 3: Official Development Assistance to Bolivia, Calendar Years 1960–2013.) A Summing Up

As the new millennium turned the calendar on nearly sixty years of US assistance to Bolivia, the USAID Mission could claim a long list of significant accomplishments for nearly every project funded by the US government. However, Bolivia continued to be a country with profound problems in every development sector. Despite more than a decade of political stability and the Bolivian government’s effort in concert with an ever-growing donor community to chart a development path that embraced the NEP with programs that provided basic social services, the majority of Bolivia’s population was struggling to survive. Between 1990 and 1996, the per capita incomes of the bottom 25 percent of the population dropped by 20 percent in real terms. An overwhelming 88 percent of the rural population was poor with 80 percent estimated to be living in extremely poor circumstances on incomes estimated at $14 or less a month. Despite, or perhaps because of the NEP reforms, Bolivia’s dual economy persisted with a small group of upper- and middle-class entrepreneurs resting on top of a vast population composed of the rural and urban poor.77 Development for the poor of Bolivia was a slow, breathless slog up high mountains. Early in the twenty-first century, the USAID Mission moved from its La Paz location on the Prado in Sopocachi down the road to Obrajes. The new and spacious Mission was tucked away down a side street where few Bolivians would venture unless they had specific business to transact with the Mission. In an attractive pink building protected by a high wall, the Mission was a short drive from La Florida and Calacoto, where most of the US citizens lived. Once in the building, one never need leave the premises during the workday, for it had an excellent cafeteria in an attractive setting where USAID employees could get a good meal at a reasonable price. A new management system had been designed and tested to inspire the entire USAID Mission to work in a collaborative, participatory fashion. The Mission and its development agenda were perceived by Washington as important, and most USAID employees were hopeful that Bolivia would continue to be a good place to climb virtual development mountains.

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Notes 1. “Atwood Meets with Support Staff,” Front Lines, US Agency for International Development, vol. 33, no. 8, September 1993, p. 5. 2. United Nations World Commission on Environment and Development, Report of the International Commission on Environment and Development: Our Common Future (1987), https://en.wikisource.org/wiki/Brundtland_Report /Chapter_2._Towards_Sustainable_Development and “Strategies for Sustainable Development” (USAID Washington, March 1994), pp. 1–15. 3. “Annex IV: Latin America and the Caribbean, U.S. Agency for International Development Budget Justification, Fiscal Year 2001” (USAID Washington, nd), p. 5. 4. Ibid., pp. 5–8. 5. USAID Washington reported that between 1990 and 1995, US exports to developing countries had expanded by $99 billion. See “Agency Performance Report 1995” (USAID Washington), p. 1. 6. “Reengineering Partnerships in USAID’s Program” (USAID Washington, May 1997), p. 1. Also see “Making a Difference for Development: Reengineering the U.S. Agency for International Development Program Options” (USAID Washington). 7. Betty Snead, “Managing for Results: USAID Plays Key Role in Reinventing Government,” Front Lines, US Agency for International Development, vol. 33, no. 8, September 1993, p. 4. 8. J. Brian Atwood, “Toward the New USAID: A NPR Progress Report” (USAID Washington), p. 21. 9. Administrator J. Brian Atwood’s testimony before the Senate Subcommittee on International Economic Policy, Export, and Trade Promotion, Washington, D.C., February 26, 1997, http://www.usaid.gov/press/spe_test /testimoney/1997/test071.htm. 10. “Lobby Mural, America the Mighty” (State Department handout, nd), and “21st Street Lobby Mural” (State Department handout, nd). 11. “Program Objectives and Action Plan (1993–1997)” (USAID Bolivia, February 1992), p. 1, and “Bolivia: Updating Economic Memorandum,” report no. 11123-BO (World Bank, October 8, 1992), p. i Executive Summary I and pp. 1–3. 12. Named for an Aymaran revolutionary who died in 1781. 13. https://en.wikipedia.org/wiki/Bolivian_general_election,_1993. 14. “USAID Bolivia Strategic Plan, FY 1998–2002” (USAID Bolivia, April 3, 1997), pp. 6, 23. Also see “Annex I: Legal and Regulatory Framework,” in “Bolivia Project Paper: Democratic Development and Citizen Participation,” project no. 511-0634 (USAID Bolivia). 15. Brooke Larson, “Democratic Progress or Peril? Indigenous and Popular Mobilization in Bolivia,” in Democratic Deficits: Addressing Challenges to Sustainability and Consolidation Around the World, Gary Bland and Cynthia J. Arnson, eds. (Washington, D.C.: Woodrow Wilson International, 2009), p. 185. Also see “Annex H: Political Background,” in “Democratic Development and Citizen Participation” (USAID Bolivia). 16. https://en.wikipedia.org/wiki/Bolivian_general_election,_1997. 17. “Dignity Plan: Technical Alternative Development Program” (Unit for the Analysis of Defense Policies, Ministry of National Defense, Government of Bolivia, August 1999). Also see “Plan Dignidad, document técnico principal:

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Estrategia boliviana de la lucha contra el narcotráfico, 1998–2002” (Government of Bolivia, June 1999), and “Plan Dignidad, un llamado a la cooperación internacional: Estrategia boliviana de la lucha contra el narcotráfico, 1998–2002” (Government of Bolivia, June 1999). 18. Oscar Olivera and Ted Lewis, Cochabamba! Water War in Bolivia (Cambridge, MA: South End Press, 2004), pp. 33–49. 19. Olivier Carduner, “Reengineering at USAID/Bolivia: Why We Did What We Did,” Reengineering Best Practices no. 3 (USAID Washington, March 1996), pp. 1–2. 20. Ibid., p. 1. 21. Ibid., p. 1. 22. Ibid., p. 1. 23. Ibid., pp. 3–5. Also see the foreword in the same document that was prepared by Lewis Lucke, acting director, USAID Bolivia. 24. Ibid., pp. 5–9. 25. The material in this section reflects the conclusions of the author that were reached as a result of interviews with USAID Mission Controller Donald Jackson, January 9, 2004, and a number of his staff including Raquel Peñalosa, chief accountant. The majority of the financial management (FM) staff had been with the Mission for more than five years. A number of the FM employees observed that the government of Bolivia’s accounting staff was much improved, which was reflected in the financial reporting that was required of the government of Bolivia to be submitted to the Mission for Mission-funded activities. 26. “USAID/Bolivia Action Plan, FY 1994–1995” (USAID Bolivia, February 1993), p. 2. 27. Ibid., p. 2. 28. Interview July 10, 2003 with Carl Leonard, USAID Mission Director to Bolivia. Also see “USAID Bolivia Strategic Plan, FY 1998–2002, April 3, 1997” prepared by the USAID Mission to Bolivia, p. 7. The strategic objective dealing with assistance to the education sector was eliminated. The U.S. government had supported education projects in Boliva since the 1940s. Recommndations grew out of the education reform promoted during Sánchez de Lozada’s presidency that resulted in a plan to deliver “basic education to the entire school age population.” Though it was recognized by the leadership in the USAID Mission that Bolivia’s extremely low level of development and high level of poverty were reflections of the general lack of education for the majority of Bolivia’s population, the USAID Mission reluctantly cut its education program using the rationale that the donor community had grown to the point that other donors could be relied upon to fill in where the USAID mission left off. 29. “Strategic Plan: FY 1998–2002,” (USAID Bolivia April 3, 1997) pp. 21, 36, 49, 61, 74. 30. “Budget Justification: FY 2001,” pp. 16–17. 31. Ibid., pp. 16–37. 32. “Strategic Plan: FY 1998–2002,” pp. 74–89 and “Annex E: CounterNarcotics,” pp. 27–31. 33. Bolivians working in coca/cocaine business production. 34. “Final Report: Assessment of the USAID/Bolivia Alternative Development Strategy” (Development Associates, Inc., for USAID Bolivia, July 25, 2003), p. ii.

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35. Lykke E. Anderson and José Luis Evia, “The Effectiveness of Foreign Aid in Bolivia: Final Report” (USAID Bolivia, September 23, 2003), p. 28. 36. “Budget Justification: FY 2001,” pp. 35–37. 37. “Assessment of the Alternative Development Strategy,” pp. ii–iii. 38. Anderson and Evia, “Effectiveness of Foreign Aid,” pp. 28–29. Also see “Assessment of the Alternative Development Strategy,” pp. ii–iv. 39. “Administration of Justice Technical Assessment & Design Mission: Final Report” (Management System International for USAID Bolivia, May 2003), p. 77. 40. Interview with Walter Guevara, La Paz, Bolivia, January 2004. Guevara had been a congressman in the 1980s before he joined the USAID Mission as a local hire working on the D&G portfolio. He stated that Paz Estenssoro was a master at using graft and corruption to maintain his power. In the early days of the ’52 Revolution, Paz Estenssoro would meet nearly every morning with a few key henchmen and decide how to use money to control the system. Paz Estenssoro lived simply and had simple tastes. His house in Tarija was like a “Protestant Church,” very simple. Paz Estenssoro used money to control others because he understood that they were more interested in money than in power. Paz Estenssoro wanted power and was not terribly interested in money. In the 1980s when he returned to the presidency, Paz Estenssoro provided salary supplements to the senior officials in his government, which were funded by the USAID Mission. Pacted democracy, which was initiated in 1985, resulted in the emergence of a spoils system, which was perceived by Guevara as “riddled with graft and corruption.” 41. “Budget Justification: FY 2001,” pp. 21–24. 42. Neighborhoods. 43. Gonzalo Sánchez de Lozada, “Reglamento de la ley de participacion popular: Decreto Supremo No. 23813, Law No. 1551,” April 20, 1994. Also see “USAID/Bolivia Action Plan, FY 1996–1997” (USAID Bolivia, February 27, 1995), p. 57; “Democratic Development and Citizen Participation,” pp. 1–7; and “Bolivia Democratic Development and Citizen Participation: Final Report, 1996–2003” (Chemonics International, Inc., for USAID Bolivia, November 2003), pp. 3–12. 44. “Action Plan: FY 1996–1997,” p. 57. On January 11, 1995, the “Donación USAID no. 511-0634: Convenio de donación de projecto entre la República de Bolivia y el gobierno de los Estados Unidos para el proyecto de desarrollo democrático y participacion ciudadana,” was signed. The basis for the agreement between the United States and Bolivia was the “Bolivia Project Paper: Democratic Development and Citizen Participation, Project No. 5110634.” 45. “Democratic Development and Citizen Participation,” pp. 16–42. 46. Ibid., p. 7. 47. Thomas M. Catterson, preface to “Retrospective Study of USAID Support to the Development of the Environment Sector in Bolivia” (USAID Bolivia, February 2000). 48. Ibid., p. 1. 49. Ibid. 50. “Budget Justification: FY 2001,” p. 31. 51. “Bolivia Project Paper: Sustainable Forestry Management, AID/LAC/P-910, Project No. 511-0621” (USAID Bolivia, September 25, 1993),

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pp. III-1–7, and “Appendix A: Bolivia,” in “Review of USAID’s Natural Forest Management Programs in Latin America” (Consultants to Environmental Policy and Institutional Strengthening Indefinite Quantity Contract with USAID Bolivia, March 2002), pp. A-1, A-2. 52. “Budget Justification: FY 2001,” pp. 31–33. Also see “Strategic Plan: FY 1998–2002,” pp. 61–73, and “Sustainable Forestry Management,” pp. III-12–13. 53. “Strategic Plan: FY 1998–2002,” pp. 61–73. 54. “Budget Justification: FY 2001,” pp. 31–33. 55. “Strategic Plan: FY 1998–2002,” pp. 49–50. 56. Ibid., p. 51. 57. Ibid., p. 50. 58. “Annex 2: Global Field Support,” in “USAID Bolivia Results Review and Resource Request (R4): Fiscal Years (FY) 1996–1999” (USAID Bolivia, April 1997), pp. 1–3. 59. “Strategic Plan: 2004–2008,” draft, pp. 28–34, and “USAID Bolivia County Strategic Plan 2005–2009,” unrestricted version (USAID Bolivia, April 6, 2005), pp. 23–30. 60. “Country Activity Plan: Strategy Statement for Bolivia 1997–1998” (Partnerships for Health Reform, Abt Associates, Inc., for USAID Bolivia, May 1997), pp. 21–22. 61. “Budget Justification: FY 2001,” pp. 27–29. 62. William Newbrander, Carlos J. Cuellar, and Barbra K. Timmons, “The PROSALUD Model for Expanding Access to Health Services” (Boston, MA: Management Health Services), p. 3. 63. “Budget Justification: FY 2001,” pp. 27–29. 64. Ibid. 65. “Bolivia Project Paper: Microfinance, AID/LAC/P-957, Project Number 511-0637” (USAID Bolivia, August 3, 1995), pp. 15–23. 66. ARIES: Assistance to Resource Institutions for Enterprise Support, “Management Training for Micro and Small Enterprise Intermediaries: Key Issues in Designing Microenterprise Program” (Nathan Associates, Inc., for USAID Bolivia, August 1990), p. 88. 67. “Bolivia Project Paper: Microfinance,” pp. 7–12. Also see “46 Years of Working Together” (USAID Washington), pp. 16–17; “Bolivia Project Paper: Micro and Small Enterprise Development, AID/LAC/P-452,” Project No. 5110596 (USAID Bolivia, August 19, 1988), pp. Summary 2–4; and Amendment no. 2 in “Micro and Small Enterprise Development,” pp. 1–10. 68. Jane Sevier Johnson, “By Sparking Microenterprise, Project Benefits Bolivia’s Poor,” Front Lines, US Agency for International Development, vol. 30, no. 1, March 1990, p. 10. 69. Amendment no. 2 in “Micro and Small Enterprise Development,” p. 2. 70. “Bolivia Project Paper: Microfinance,” pp. 1, 16–17, and “46 Years of Working Together,” p. 16. 71. Elisabeth Rhyne, “Commercialization and Crises in Bolivian Microfinance” (Development Alternative, Inc., for USAID Bolivia, November 2001), p. 1. 72. Ibid.

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73. Ibid. 74. Ibid., p. 15. 75. Ibid., p. 4. 76. “Budget Justification: FY 2001,” p. 17. 77. “Strategic Plan: FY 1998–2002,” p. 36.

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11 A Commitment to Empowering All Bolivians: George W. Bush, 2001–2009

What I want to tell you, compañeras and compañeros, what I dream of and what we as leaders from Bolivia dream of is that our task at this moment should be to strengthen anti-imperialist thinking. . . . We have no other choice . . . if we want to defend humanity we must change [the] system, and this means overthrowing US imperialism. —Evo Morales, “I Believe Only in the Power of the People,” December 25, 20051

Washington: The Dismemberment of USAID

During his run for the White House in the year 2000, George W. Bush (Bush 43) professed little interest in nation building, which augured poorly for players in the foreign aid community. On the campaign trail, Bush’s criticism of the efforts of the Clinton administration in Bosnia and Kosovo intimated that he would promote a noninterventionist posture when it came to international affairs. Shortly after winning the election, he appointed Andrew Natsios as administrator of USAID. No stranger to the development scene, Natsios served in USAID during Bush 41’s administration as the head of the Office of Foreign Disaster Assistance. Natsios then moved a peg higher in the USAID bureaucracy as assistant administrator for the Humanitarian Response Bureau, which was organized to respond to failed nation scenarios and natural and manmade disasters. Natsios had served in a Civil Affairs unit with the US Army Reserves during the Gulf War; was vice president of World Vision, one of the premier private voluntary organizations working in the disaster relief and humanitarian assistance field; and immediately

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before joining Bush 43’s administration, was chairman of the Massachusetts Turnpike Authority in charge of the “Big Dig” in Boston.2 Natsios had a reputation for relishing demanding tasks and was considered an excellent selection for the administrator’s job. One of Bush 43’s early activities was to visit his Mexican counterpart, President Vicente Fox, at his ranch in Mexico. Dressed in ranch garb, the two presidents declared with abrazos a fresh beginning for Mexican-US relations. This was followed by the first State dinner held in Bush 43’s White House, at which President Fox was the honored guest. It appeared that the number one priority in the Western Hemisphere would be to address the problem of illegal immigration. Fox was also anxious to make a deal with the US president to shore up Mexico’s faltering economy. This would all change with the terrorist attack on the Twin Towers on September 11, 2001. What had started out so splendidly, with Bush and Fox exchanging assurances that Mexico and in turn Latin America would be a Bush priority, was lost with Bush’s declaration of war on international terrorism. As a direct result of the 9/11 attack, the lion’s share of the US government’s foreign assistance was allocated to Iraq and Afghanistan. During Bush 43’s administration, a chorus of newly elected leaders in Nicaragua, Ecuador, and Bolivia, predisposed to sympathize with President Hugo Chávez of Venezuela, challenged the US government’s primacy in Latin America. Chávez formed a strategic alliance with his mentor, an ailing Fidel Castro, and traveled throughout Latin America, soliciting support for his Bolivarian revolution in his fight against Yanqui imperialism. Chávez promised to support a development program to improve the lives of the poor throughout Latin America, and he was quick to match his rhetoric with petro-dollars that he spread throughout the region.3 The Dismemberment of USAID The bipartisan story of deterioration [of USAID] over four different administrations (two Republican and two Democrat) may seem a bit dry, full of small, apparently inconsequential steps, but together those steps have carved a regrettable path, one with deleterious consequences for development and one that illustrates how good intentions can have systemic dysfunctions. . . . 4 USAID is merely illustrative of general principles of organizational dynamics. The constant urge of each new administration—the new secretary, administrator, or director—to reorganize, to leave a mark, to

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perfect the organizational structure more often than not results in shifting without commensurate perfecting, because there is no perfect organizational structure. Every structure has strengths and weaknesses. Moving the lines on an organizational chart solves certain problems and creates others. Worse still, the problems that are most often addressed are the ones most public, but not necessarily the most problematic. . . . 5 USAID has gone from an independent development agency to ever greater policy and organizational integration with the Department of State. With that integration, the distinction between development policy and foreign policy is, like the Cheshire cat, harder and harder to discern; not a great deal of difference remains other than their two distinct smiles.6 —Gerald F. Hyman, Center for Strategic and International Studies

A turf battle dragged on, administration after administration, with the State Department consistently seeking to strengthen its control over USAID affairs. Jim Baker, Bush 41’s secretary of state, would have disemboweled USAID had he had the opportunity, whereas Warren Christopher was inclined to a more benign approach. Madeline Albright, secretary of state during Clinton’s second term, was keenly interested in development matters, particularly women’s participation and democracy issues. She was also a strong advocate for USAID reporting directly to State. Throughout the Clinton administration, Atwood fought doggedly to preserve USAID’s lead role as the US government’s development assistance vehicle.7 However, during Bush 43’s administration, the State Department achieved the preeminent role in administering the US government’s development assistance program. Bush 43’s actions reflected a fixation on the part of his advisors to put a new face on the US government’s foreign assistance program. Bush 43 did not want to go to Congress and ask for new resources to be administered by an agency that was seen as being “slow, cumbersome, and unimaginative.”8 The Millennium Challenge Corporation for Reaching the Poor In November 2002, President Bush proposed the creation of the Millennium Challenge Account (MCA),9 underscoring the administration’s determination to take a different approach to assisting the poorest of the poor nations. The MCA compact for development would target poor nations “that root out corruption, respect human rights and adhere to the rule of law . . . invest in better healthcare, better

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schools and broader immunization . . . and have more open markets and sustainable budget policies.”10 While in Mexico for a conference on financing development activities, Bush 43 proclaimed that: We must tie greater aid to political and legal and economic reforms. And by insisting on reform, we do the work of compassion. The United States will lead by example. I have proposed a 50 percent increase in our core development assistance over the next three budget years. Eventually, this will mean a $5 billion annual increase over current level. . . . These new funds will go into a new Millennium Challenge Account, devoted to projects in nations that govern justly, invest in their people, and encourage economic freedom.11

To address the goals identified for the MCA, the Millennium Challenge Corporation (MCC) was created with a board of directors, including the secretary of state as chairman and the USAID administrator. Though Andrew Natsios argued strenuously to keep the MCC under direct control of USAID, the MCC would have its own staff and offices and would be subject to policy guidance provided by the board—not USAID.12 Many development professionals working in USAID viewed the MCC as a wasteful duplication of effort. President’s Emergency Plan for AIDS Relief Early in his administration, Bush 43 created the President’s Emergency Plan for AIDS Relief (PEPFAR), designed to attack the HIV/AIDS pandemic. To oversee the PEPFAR program, the Office of US Global AIDS Coordinator was established under the nominal leadership of the State Department. Components of the Departments of State, Defense, Commerce, Labor, Health and Human Services, Peace Corps, and USAID were identified to implement the PEPFAR program.13 Natsios argued that USAID had an excellent history of managing AIDS activities as an integral part of its heath initiatives and should continue to have the lead responsibility for directing this presidential initiative. However, USAID was viewed as “too staid, too bureaucratic, too ossified to handle the new, large, signature program”14 by the new crowd in Bush 43’s White House. The USAID Administrator: The Headless Horseman of Federal Triangle During Bush 43’s second term, the Bureau of Policy and Program Coordination was abolished, and its functions were subsumed within the State Department. The immediate impact of this decision was to leave the USAID administrator without a staff to manage USAID’s in-house process of formulating economic development and humanitarian

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assistance policies. In addition, the administrator no longer had the staff to lead the annual review vital to assessing the program and budgeting requirements of Missions throughout the USAID world. Gone, too, was the intellectual competence in USAID responsible for identifying and disseminating “lessons learned” to the international community of development practitioners. In sum, the USAID administrator was left with a program, but the capacity to give the program direction was gutted and the survival of USAID’s institutional memory seriously threatened.15 Another significant change during Bush 43’s administration was the creation of the Office of the Director of US Foreign Assistance (DFA), which addressed Secretary Condoleezza Rice’s ideas concerning the relationships between diplomacy, security, and foreign assistance. In this new institutional arrangement, the director of DFA reported directly to the secretary of state.16 When Randall Tobias, formerly a senior executive in the pharmaceutical industry and head of the administration’s Global AIDS Initiative, replaced Natsios as the USAID administrator, he also became the first director of the newly created DFA. Sensing where his superiors in the State Department wanted to go with the creation of DFA, he focused his attention almost exclusively on the State side of his responsibilities, giving short shrift to his role as the USAID administrator.17 USAID officers could not help but wonder what USAID’s role within the State Department would be in the future. Would US government efforts be exclusively focused on emergency assistance tasks and responding to failed nation scenarios? Would there be resources for long-term development investments in the agriculture, health, education, and democracy and governance (D&G) activities? Would USAID be allowed to mutate to meet the challenges of the twenty-first century? These were major concerns of USAID officers as they pondered their future. USAID’s Long March in Search of Credibility

Since the earliest days of the Point Four program, officials in USAID and its predecessor organizations had worked diligently to create a project system in which the accomplishments could be critically assessed. Regardless, it had been commonplace to blame the project system as a major culprit undercutting the effectiveness of US economic assistance. No aspect of the project system was immune from acerbic criticism: analytical requirements for undertaking a project were too stiff or not rigorous enough, project designs were overly prescriptive or not

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detailed enough, and the bureaucratic layers for project review were too few or too many. In the face of a steady stream of criticism from the US Congress, the general public, and pundits of all stripes, USAID and its predecessor agencies were constantly faced with having to modify the system in which projects were rooted, whether it needed modification or not. USAID was especially criticized for its shortcomings in identifying and reporting accomplishments, which could be directly linked to its projects. Given the vast number of projects, it was extremely difficult for Washington to chronicle performance that could be reasonably linked to a USAID Mission’s annual investment. This led some of the more exasperated critics of USAID’s system to remark, “If you don’t know where you are going, any road will get you there.” One of the cruder criticisms of the system was uttered by Otto Passman, a congressman from Louisiana who was chairman of the House Foreign Aid Appropriations Subcommittee from 1954 to 1976. Passman, who was alleged to have quipped that USAID projects were like “loose goose s**t. They’re all over the place.” It was in the early 1990s that USAID aggressively began to pursue the design and installation of an information technology (IT) system for collecting, storing, reviewing, analyzing, and reporting performance measures for each anticipated development accomplishment or outcome. However, it was not until late in the Clinton administration that a sufficiently large cadre of IT personnel was in place in USAID Missions and USAID Washington, on contract and grantee teams funded by USAID Missions, and in host countries, to manage the hard and software systems that could support a management information system that provided efficacious program and project performance data on a sustained basis. Most of the significant accomplishments reported by the USAID Mission to Bolivia, identified during the Clinton and Bush 43 administrations in Chapters 10 and 11, reflect the successful execution of the USAID Mission’s IT system managed by the troika of the Bolivian government, the USAID Mission, and the USAID Mission’s contractors and grantees. Bolivia: Democracy Runs a Rough Road

The picture in 2001 for the majority of Bolivians was bleak. Economic stagnation and social unrest had fostered a climate that threatened to undermine the constitutional process, which had been in play for fifteen years. Since 1985, national and municipal elections had democratically transferred power from one coalition of political parties to another.

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Throughout this period, at the urging of the International Monetary Fund (IMF), the World Bank, and the US government, five successive Bolivian presidential administrations had steadfastly pursued the implementation of a macroeconomic stabilization policy that included the privatization of several national enterprises. However, the majority of Bolivians had grown impatient with their government’s apparent inability to significantly reduce poverty after fifteen years of macroeconomic policies designed to buttress the economy. Despite the fact that it was recorded in the 2001 national census that 59 percent of the population lived on earnings below the poverty line, as contrasted with 71 percent reported in the 1992 national census,18 a general sense prevailed that the Bolivian government was not doing enough. Bolivia remained one of the poorest countries in Latin America, and populist politicians of emerging parties on the left were constantly reminding their constituents that the older, established political parties were steeped in corruption. Throughout the 1990s, farmers in the high valleys demonstrated in increasing numbers against government efforts to reduce coca production in the Chapare. The turn into the twenty-first century found campesinos, students, miners, and the urban poor involved in demonstrations throughout Bolivia aimed at a government that was seen as remote and indifferent to the problems of Bolivia’s poor majority population. Election of Gonzalo Sánchez de Lozada in 2002

In the first round of the 2002 presidential election, no candidate was even close to receiving sufficient votes to be elected. The Movimiento Nacionalista Revolucionario (MNR), whose candidate was Sánchez de Lozada, received 23 percent of the vote, and the Nueva Fuerza Republicana, led by Manfred Reyes Villa, received 21 percent of the vote. The Movimiento al Socialismo (MAS), led by Juan Evo Morales Ayma, a newcomer to the presidential election scene, also received 21 percent, edging Reyes Villa out of second place by 721 votes.19 The Acción Democrática Nationalista, which was the leading vote getter in the 1997 election when they put candidate Hugo Banzer in the presidency, received a mere 3 percent of the vote in the 2002 election.20 The split results left the three frontrunners in a virtual tie that moved the presidential election into the Bolivian Congress. The MNR formed a coalition with the Movimiento de Izquierda Revolucionaria and the Unidad Cívica Solidaridad that secured the presidency for Sánchez de Lozada.21 By the slimmest of margins, he was the president once again and pacted democracy had prevailed for the time being. The election

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results revealed just how fragmented the political scene was and did not bode well for sustaining a meaningful constitutional process in an environment with such brittle political alliances.22 Initially Sánchez de Lozada was preoccupied with the tedious process of establishing his coalition’s presence in the executive branch with the selection of cabinet members and filling positions throughout the Bolivian government’s bureaucracies to reward members of his coalition. In the meantime, Morales focused on securing support in the Congress as well as strengthening his political base on the Altiplano, in the high valleys, in the coca producing areas, and in the mining communities. Since the water disputes in the Cochabamba Valley, Morales had played an increasingly important role in mobilizing cocaleros, campesinos, and miners to support his cause, which in effect had translated into a public outcry against the evils of globalization. In an effort to gain political traction, Sánchez de Lozada proposed a twelve-point program designed to promote greater citizen participation in the political process, including the creation of a national referendum mechanism that would have increased citizen involvement in the constitutional process. It was too little too late; Sánchez de Lozada’s conciliatory efforts were lost in the political tumult that followed his election.23 Pacted Democracy Succumbs to Street Brawling

Sánchez de Lozada’s inauguration was followed almost immediately by raucous protests initiated by Morales and his supporters. Large crowds demonstrating for Morales roamed the streets of La Paz, invading public buildings and destroying millions of dollars of property. There was a shootout between the military and the national police in which hundreds of demonstrators were injured and over thirty deaths were reported. During this period, the horrific specter of the hanging of President Villarroel on a lamppost outside of the Presidential Palace in 1946 by a savage mob surely must have flashed across Sánchez de Lozada’s mind.24 In October 2002, Morales called for more demonstrations. He declared that Sánchez de Lozada was about to bargain away Bolivia’s patrimony. There had been a deal in the works dating back to the presidency of Jorge Quiroga to sell Bolivia’s liquefied natural gas to a US energy firm based in California. In the minds of the Bolivian public, the proposed transaction was particularly galling because the liquefied natural gas, which would be moved via a pipeline from Tarija, would transverse Chile down to the Pacific. Roads throughout Bolivia were

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blockaded, and demonstrators created a choke point at El Alto, denying La Paz the critical food supplies that came through El Alto from the Altiplano. Demonstrators clashed with the military in the streets of El Alto and La Paz; sticks of dynamite were thrown by some of the demonstrators; and the military, trying desperately to contain the demonstrators, retorted with small arms fire. Casualties reached well over a hundred with at least sixty deaths.25 Morales claimed that Sánchez de Lozada was without a legitimate mandate to govern. The president searched for allies, but none were to be found. Even his vice president, Carlos Mesa Gisbert, deserted him. Alone and looking confused, Sánchez de Lozada announced on national television on October 17, 2003, that Morales and his followers were hijacking the constitutional process. To avoid further bloodshed, Sánchez de Lozada offered his resignation, which the Bolivian Congress formally accepted, and the Congress swore in Carlos Mesa as president. In a technical sense, the democratic process had survived. Sánchez de Lozada with his family flew by helicopter to Bolivia’s international airport and retreated to Florida and finally to Chevy Chase, in Maryland, where he had spent several years during his youth.26 The Mesa Interlude

Nearly every effort that Mesa made to placate Morales was frustrated. An early move on the part of Mesa’s government was to cancel a contract with the French company that held a water concession in El Alto. Morales responded by charging Mesa with “a lack of morals and ethics. . . . Carlos Mesa is with the Yankees, not with the poor.”27 Mesa declared that he would establish a constituent assembly for the purpose of amending the Hydrocarbons Law, and he called for a referendum to address the question regarding the exploitation of Bolivia’s natural gas resources. In July 2004, Bolivians voted overwhelmingly that the country should move to exploit the country’s natural gas resources deposits, including their exportation. Regardless, Morales continued to lead protests throughout the highlands to keep pressure on Mesa to quit the presidency. Mesa once again tried to calm the situation by leading a congressional effort that passed legislation to establish a 32 percent direct tax on hydrocarbon production. Funds from this tax were to be used to support social programs aimed at the poor. After a brief pause, demonstrations resumed, particularly in La Paz. No matter what Mesa did to mollify Morales and his foot soldiers, tensions continued to mount.28

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It would be several weeks before Mesa understood the depth of Bolivia’s financial crisis. In an address on national TV in January 2004, Mesa spoke to his fellow citizens about the gravity of Bolivia’s financial plight. He explained the crisis in plain terms so that every Bolivian could comprehend the depth of the financial predicament that the country was facing. The Bolivian government had spent far in excess of what it could generate to cover the national budget. The numbers that Mesa presented were straightforward: the deficit was an astronomical 40 percent of the anticipated revenues needed to fund the national budget. Mesa made it clear that the gloomy financial picture was every Bolivian’s problem and that every Bolivian had a role to play to help the country recover from its financial nightmare. Mesa announced that he would go to Washington to seek aid, and an impromptu meeting was announced by the State Department inviting the donor community to come to Washington to develop a plan to meet Bolivia’s financial emergency.29 It was a replay of the horrendous financial quagmires of 1955 and 1985. This time, however, there was a much larger donor community to work with the US government, the IMF, and the international development banks to see Bolivia through yet another financial crisis.30 The political pressures on Mesa were interminable as he maneuvered to stake out a position that would assure that Bolivia’s hydrocarbons would be exploited to the advantage of all Bolivians. However, without a national political base and with little support in Congress, Mesa’s presidency was never able to gain traction. It was clear that Morales never intended to cooperate with Mesa, regardless of how hard Mesa worked to find courses of action that could address Bolivia’s financial difficulties. After months of public demonstrations that destroyed any suggestion that a constitutional process was in play, Mesa resigned in March 2005, pleading that “this was the only way to avoid a bloodbath. . . . They have tied my hands in every way to keep me from going forward. We have done everything we can.”31 Chief Justice of the Supreme Court Eduardo Rodríguez Veltzé replaced Mesa in June 2005. Soon after assuming the presidency, Rodríguez decided to move up the elections that were scheduled for 2007 to December 2005.32 Morales Is President of the Republic

It was a foregone conclusion that Morales would be the MAS candidate for president, and he chose as his running mate a left wing ideologue, Alvaro García Linera, who was well known and respected in the indigenous community. MAS’s most serious challenge came from Jorge

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Quiroga, representing the Social and Democratic Power Party (PODEMOS). Both presidential candidates supported nationalization of the country’s hydrocarbons, proclaiming that they were the innate patrimony of the people. Every reasonable precaution was taken to ensure that the election would be fair, including swearing in tens of thousands of election judges. Within a couple of hours after the polls closed, Jorge Quiroga conceded defeat. The official count gave Morales 54 percent of the vote, and PODEMOS was a distant second with 29 percent. The election of Morales gave Bolivia its first majority president of the post-revolution period. MAS also won seventy-two of 130 seats in the House of Delegates and twelve out of twenty-seven seats in the Senate. The election turnout was a stunning 85 percent.33 Born in 1959 in an Aymara ayllu34 on the Altiplano, Evo Morales had been at one time or another a llama herder, village footballer, baker, bricklayer, trumpet player, miner, labor leader, cocalero, and national legislator who connected with Bolivia’s poor to stand against the economic, political, and social elites who had run Bolivia since its conquest by Spain. He was Bolivia’s first indigenous president. The last time an Indian had attempted such an audacious undertaking was Túpac Katari, when he headed a rebellious army of Indians and attempted to seize La Paz. Katari prophesied, just before being drawn and quartered by his colonial masters, that he would “come back as millions.”35 On January 21, 2006, Morales entered Tiwanaku, the preColumbian seat of Aymara power on the Altiplano. Accompanied by tens of thousands of cheering Aymara and Quechua supporters, Morales was dressed in an ancient tunic and hat and held a traditional staff of office. Aymara priests solemnly blessed his victory.36 Two days later, Juan Evo Morales Ayma was sworn in as president at the historic Congressional Palace on Plaza Murillo, before Bolivia’s legislators and presidential delegations from around the world.37 A New Constitution During the presidential campaign in 2005, Morales had declared his intention to convene a constituent assembly to draft a new constitution that would address the issue of indigenous rights. The representatives to the assembly, convoked in August 2006, were sharply divided. The rhetoric was passionate, and several governors in the Oriente broke relations with Morales over issues of land reform, the split of tax proceeds generated by the sales of hydrocarbons between departments, and provisions to limit the power of regional authorities. After a boisterous debate and several incidents of violence, a constitutional

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referendum was undertaken in which 61 percent voted to approve a new constitution. Key provisions of the new constitution allowed the highest branches of the judiciary to be elected, ownership of land to be limited to a maximum of five thousand hectares, and permitted two successive presidential terms of five years each. The new constitution also called for elections to be held in December 2009.38 With the successful acceptance of the new constitution, Morales directed the preparation of a National Development Plan, which was essentially nationalistic and isolationist in character.39 Nationalization Throughout the campaign, Morales had declared his intention to nationalize the natural gas industry, and on May 1, 2006, Labor Day, Morales signed a decree that stated that all hydrocarbons reverted to ownership by the state. Two days later, he ordered Yacimientos Petroliferos Fiscales de Bolivia (YPFB) engineers, backed by the Bolivian military, to seize control of oil and gas fields. The deal offered by the Morales’s government was that YPFB would pay companies for their services, and companies in turn would be offered approximately 50 percent of the value of their production, with the exception of some of the largest companies, which would receive 18 percent of the value of their production.40 The Morales government undertook the process of nationalizing companies that had been privatized during the administrations of Sánchez de Lozada and Banzer. All private and foreign state-owned enterprises concerned with the transport and sales of hydrocarbons were nationalized, as were selected electricity and mining enterprises. During this period, there was a significant increase of mineral and hydrocarbon revenues that contributed to annual increases from 2005 to 2007 of public investments in excess of $1 billion. The increase of revenues enabled the government of Bolivia to support a national pension plan for Bolivians over sixty and provided cash transfers to families with children in school to encourage their continued attendance. Conversely, investment in the private sector of $164 million in 2007 was the lowest level in more than ten years.41 Bolivia and the US Struggle in Their Search for Accommodation

Upon election of Morales to the presidency, Ambassador David Greenlee advised a nonconfrontational approach that translated into the State Department’s formal position, which was to applaud Morales for his commitment to fair and free elections. The State Department

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emphasized that the Morales government would be judged by its commitment to continue on a democratic, constitutional path and expressed a desire to work with Morales to seek solutions that would be mutually satisfactory. Morales stated he was interested in obtaining US funds for increasing agricultural production, but not at the expense of reducing coca production in Bolivia. He was unyielding in his conviction that Bolivia had the right to grow coca and that the cocaine problem should be solved in the countries that consumed cocaine.42 He was adamant that “there will be zero cocaine, zero drug trafficking, but not zero coca.”43 It was in this environment that provocations on the part of Morales resulted in a deteriorating relationship with the US government. The Morales government instructed the USAID Mission to discontinue funding of the technical assistance component of its forestry activities, which had successfully laid the foundation for preserving the tropical forests in vast parts of the Oriente. In 2008, the US ambassador, Philip Goldberg, was declared persona non grata after having been accused by Morales of supporting regional autonomy movements that were erupting in the Oriente. Shortly thereafter, Bolivia’s ambassador in Washington was expelled. Bush’s next move was to assert that Bolivia had “failed demonstrably” to live up to its “obligations under international counternarcotics agreements.” Regardless, Bush declared that bilateral assistance would be continued, declaring that it was “vital to the national interests of the United States.” At the same time, he recommended ending Bolivia’s participation in the Andean Trade Promotion and Drug Eradication Act (ATPDEA). Shortly thereafter, Bolivia’s participation in ATPDEA was terminated. After thirty-five years of operations in Bolivia, the Drug Enforcement Agency (DEA) was told to leave, and all USAID-funded Alternative Development activity in the Chapare was suspended. This was followed by the Bolivian government’s demand that all USAID-funded D&G activities be terminated.44 The USAID Mission’s Program: More of the Same

In a 2005 document outlining a five-year strategic plan, the USAID Mission cited a litany of tribulations that painted a picture of economic and social malaise harking back to the 1940s: Bolivia is landlocked and relatively sparsely populated. . . . It is one of the poorest countries in the Western Hemisphere, with a per capita income currently estimated at about $869 per year. Bolivia still has the second highest level of infant, child and maternal mortality in the

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hemisphere after Haiti. . . . National income is highly skewed, with about 60% of the Bolivian population living in poverty, and 24% living in extreme poverty, while around 20% of the population accounts for 64% of national income. Rural poverty stands at 80%. Real economic growth is negligible due to, among other factors, low levels of domestic and private investment, high levels of government corruption and inefficiency, limited and poor-quality productive infrastructure, and low productivity rooted in low levels of education and health.45

The statement warned that the high levels of poverty were at “the root of serious and recurrent social and political unrest.”46 It catalogued a long list of issues, including land tenure, salaries of teachers and the national police, efforts of the government of Bolivia to forcibly eradicate the production of coca leaf, and unhappiness over rising electricity and water rates. Each of these issues was noted as a potential “flashpoint” around which Bolivians could coalesce and challenge the legitimacy of any Bolivian president, regardless of their political party or ideology.47 The USAID Mission’s analysis of Bolivia’s economic performance described a bleak scene. From 1990 through 1998, the annual gross domestic product (GDP) increase had averaged 4.4 percent; however, for the period 1999 through 2003, GDP had slowed to an annual increase of 1.9 percent. When viewed in the context of Bolivia’s population growth rate of 2.7 percent, real growth in the economy was negative. On a per capita basis, the GDP declined from $1,069 in 1998 to $864 in 2003, one of the lowest in South America. A number of factors had contributed to the erosion of Bolivia’s financial position, including the precipitous fall in the value of Bolivia’s exports in the world market, a sharp drop in domestic and foreign investment, reduced remittances from Bolivians working in Argentina, and adverse climatic conditions that negatively impacted productivity in the agriculture sector.48 Against this gloomy economic backdrop was a picture of significant improvements in the lives of the average Bolivian. Infant mortality had dropped by 50 percent, and primary school completion rates had increased from 55 to 79 percent.49 No matter how angry they might be with the politicians in La Paz, most Bolivians, whether living on the Altiplano, in the high valleys, or in the Oriente would have to admit to having better access to education and public health facilities than in the past. Nevertheless, the problem was that the vast majority of Bolivians were poor. They were poor in relative terms, and they were poor in absolute terms. The United Nations, the USAID Mission, and many members of the international donor community were constantly

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reminding Bolivians and their politicians that the majority of Bolivians lived in a state of poverty.50 The Program

The USAID Mission’s program and its projects were structured around five strategic objectives (SOs): (1) increased citizen participation in the Bolivian democratic system; (2) increased income for Bolivia’s poor with emphasis on targeted communities; (3) improved health of the Bolivian population; (4) reduced degradation of forest, water, and biodiversity resources; and (5) illegal coca eliminated from the Chapare.51 PL480 resources were to be used to support “impoverished families in the poorest regions of the country to achieve sustainable improvements in income.” As such, the PL480 program fit neatly into the SO concerned with “increased income for Bolivia’s poor with emphasis on targeted communities.”52 The Mission also pressed forward with resources to help the Bolivian government pursue the goals of the New Economic Policy, which included support for Bolivia’s chronic balance of payments problem. To assist in ameliorating this problem, the US government pledged an estimated $1.3 billion for debt relief to be provided in the coming years.53 After the countrywide demonstrations in October 2003, there were new initiatives by the Mission’s Office of Transition Initiatives (OTI) for the remodeling of schools and the provision of computers designed to strengthen education in the Chapare and in El Alto.54 Once again, the Mission was prepared to charge ahead with the rekindled idealism of a modern-day Don Quixote even after the modernday Túpac Katari55 emerged to challenge what he perceived as the status quo in Bolivia supported by the USAID Mission. Strengthening Democratic Practices and Promoting Good Governance

Since the USAID Mission’s D&G program had been initiated in the late 1980s, it had funded activities focused on judicial reform, the creation of a transparent and accessible electoral process, and the devolution of decisionmaking to the municipality. For each of these areas, the Mission had taken an incremental approach that had yielded significant progress when viewed from a twenty-year perspective. Any successes claimed in the D&G field by the US government reflected the strong support provided by Bolivian government at the highest levels. A policy framework in the form of legislation provided confirmation of the

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assiduous support of every president from Jaime Paz Zamora through Tutu Quiroga. The Justice Sector At the heart of the Mission’s strategy to transform the judicial sector was the Mission’s steadfast commitment to institutionalize a new Code of Criminal Procedures (CCP) throughout Bolivia’s criminal justice system. The Mission’s resolute support for the development of CCP and its promulgation in 1999 was recognized as foundational to transforming the judicial sector.56 Important activities funded by the Mission to buttress the CCP included support for the creation of a Public Defenders Office and the Forensic Medicine Institute. To address the issue of accessibility of the justice system, assistance was provided to establish integrated justice centers (IJCs) in some of the most underserved areas of Bolivia. In addition, a network of approximately one hundred Bolivian non-governmental organizations (NGOs) was established that advocated a more transparent, independent, and accessible judicial system.57 The Mission reported that between 2005 and 2009, over one hundred thousand cases were resolved by IJCs. Most of the IJC users were persons of limited resources, and 60 percent of the cases were for women who turned to the IJC to address their grievances. The Mission also funded pilot programs designed to centralize administrative services in judicial institutions. Included in this effort was the Judicial Branch Notification Center in Cochabamba, where the number of notifications carried out by the Center more than doubled, and the number of failed notifications was reduced from 40 to 2 percent. Another essential activity funded by the Mission was the installation of an automated casetracking system, which contributed to improving the transparency of the administration of justice throughout Bolivia. A related accomplishment was the success of the Participation and Justice Network, composed of civil society organizations that encouraged seventy judges to post in public places the five thousand sentences that these judges rendered. Undergirding any effective judicial system is awareness of the laws that form the foundation for implementing the rule of law. In this regard, the USAID Mission supported the creation of a comprehensive database consisting of more than forty thousand laws, which was accessible in every department throughout Bolivia.58 When the justice sector program was evaluated in 2003 by Management Systems International, Inc., (MSI), it was observed that “There have been great strides over the past decade and the achievements of the reforms [administration of justice programs] and the

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role of USAID in effectively and continuously promoting them are impressive.” A major finding was that with the “advent of the CCP” it was the consensus of all the Bolivians interviewed by the MSI evaluation team that the criminal justice system was “more transparent, efficient, effective and accessible.” However, the evaluation team stated that “while cases are moving a great deal faster than under the old inquisitorial procedure, only 1% result in trial, and all of the others are settled by some other mechanisms.”59 The evaluation team asserted that the Mission’s effort was “remarkable,”60 given the historical circumstance that prevailed in Bolivia and characterized the effort of institutionalizing the CCP as a critical “work in progress” with a multitude of hurdles yet to negotiate.61 Participation in Local Government The USAID Mission continued to support its Democratic Development and Citizen Participation (DDCP) project to strengthen citizen participation in the planning and budgeting functions of their municipality and develop skills to track the implementation of development projects funded and managed by their municipality.62 The first phase of the DDCP Project was to promote a “participatory municipal management” model emphasizing transparency, accountability, and participation.63 A large in-country training program prepared 140,000 Bolivians to play a critical role to monitor the implementation of municipality improvement activities. In addition, nine hundred officials of prefectures, subprefectures, and municipalities received training to improve their financial management and administration skills.64 Using the experience obtained from twenty pilot municipalities, “best practices” were replicated in over 160 municipalities.65 Evaluation of those municipalities indicated that citizen participation in meetings with mayors was “significantly higher;” there were “significantly higher rates of citizen demands on municipal governments;” and, even more importantly, there were “significantly higher rates of satisfaction” with municipal governance. These modest results, gleaned from a final evaluation of the DDCP Project in November 2003, strongly suggested that the Bolivian government was moving in the right direction in its effort to support greater and more meaningful participation in local government.66 Citizen Participation in Elections Since the late 1980s, there had been a nonstop effort by the government of Bolivia and the USAID Mission to increase greater participation in

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elections at the national and municipal levels.67 The dramatic increase from just over one million people voting in the 1994 election to nearly three million in the 2004 election may be partially attributed to USAID’s direct support for the development of electoral infrastructure critical to staging fair and free elections. In addition, funding provided by the Mission for the creation of Bolivian NGOs, whose goal was to encourage participation in the democratic process at the grassroots level, contributed to strengthening citizen participation in the electoral process.68 In the new millennium, Bolivia Transparente, a consortium of Bolivian NGOs that received support from the USAID Mission, monitored elections to insure the integrity of the election process. An indicator of the of the success of Transparente was the August 2008 referendum in which 2,575 volunteers from NGOs participating in Transparente covered a total of 1,770 polling stations. These volunteers included a significant presence of young voters and campesinos from rural areas.69 It has been suggested by several observers of Bolivia’s political scene that the persistent labors of the US government to encourage greater participation of Bolivians to vote in elections, to join organizations that promoted democratic practices, and to seek meaningful roles in the affairs of their communities has contributed to raising the political consciousness of Bolivians from all walks of life. This sustained commitment of the US government reaching back to the 1960s to promote citizen participation in democratic practices at all levels of the society is not dissimilar from Morales’s call to mobilize an army of the rural and urban poor, the Quechua and Aymara, cocaleros and sindicalistas, and students and miners to join his crusade to create a civil society in which all Bolivians can share in the country’s patrimony. Improved Access to Health Service

The USAID Mission declared in its 2005 Strategic Plan that it was imperative, given the “recent social and political upheavals” in Bolivia, that the Mission’s health strategy include “empowering communities to play more meaningful roles in health program planning and implementation.”70 This empowerment objective complemented the Mission’s principal goal of developing a nationwide network of public and private health facilities that provided quality health services to all Bolivians.71 A plethora of health, family planning, and nutrition activities was designed to encourage good breastfeeding and weaning practices; to strengthen voluntary testing for HIV/AIDS; to promote the social marketing of contraceptives, including condoms for disease

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prevention at low cost commercial facilities in both urban and rural areas; and to expand training opportunities for health workers in environmental health, demographic analysis, and epidemiological surveillance.72 To strengthen accountability of the health system, the Mission had worked closely with the Bolivian government and USAID Missionfunded private voluntary organizations and contractors in creating a health service statistical program. Data was collected for establishing baselines against which to measure performance in three priority areas: infant mortality, vaccine immunization coverage for children under five years of age, and modern contraceptive prevalence.73 In 2009, the USAID Mission reported that the health activities it supported had significantly contributed to strengthening Bolivia’s national health outreach infrastructure. PROSALUD was performing more than 930,000 health consultations annually in forty-one public health centers and mobile units located in eight of Bolivia’s nine departments. In addition, USAID funding benefitted a network of thirtyfour local and international NGOs working in forty municipalities that facilitated access to quality health services for over 850,000 people annually. The Mission also provided support to ten national HIV/AIDS surveillance and reference centers to improve the diagnosis and treatment of sexually transmitted infections.74 As a result of these achievements, the Mission declared that the US government’s assistance, which had been provided year after year starting in the 1940s, had meaningfully contributed to improved infant mortality and longevity rates for Bolivians throughout the country.75 (See Table 11.1.) Yet, hard questions remained to be answered. Would the government of Bolivia be able to generate the resources necessary to sustain the host of public and private institutions in a national health system so profoundly impacting the lives of poor people throughout Bolivia? Or was Bolivia destined to be beholden to donors’ generosity for delivering basic health services for the foreseeable future?

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Table 11.1 Health Status Indicators Infant Mortality 1 and Under*

Infant Mortality † 5 and Under

1960

179

1965

Maternal ‡ Mortality

Female Life Expectancy at Birth

Male Life Expectancy at Birth

289

45

42

162

264

46

44

1970

144

231

48

45

1975

127

199

50

48

1980

112

170

54

52

1985

99

147

56

56

1990

85

123

425

61

58

1995

71

100

390

63

61

2000

60

77

334

65

63

2005

44

58

305

67

64

2010

35

44

253

69

66

2013

31

39

222

69

67

Source: World Bank Development Notes * The number of infants dying before reaching one year of age per 1,000 live births in a given year. † The probability per 1,000 that a newborn baby will die before reaching age five, if subject to age-specific mortality rates of the specific year ‡ The estimated number of women who die from pregnancies per 100,000 live births.

mortality

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Year

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Protection of Tropical Forests [The new Forestry Law is] a pride for the nation and an example for the continent. —Gonzalo Sánchez de Lozada, president of Bolivia76

Since the 1990s, a major feature of the USAID Mission’s environmental program has been protecting Bolivia’s vast tropical forests located predominantly in the Oriente. To achieve this objective, the Mission supported a community forestry program, which promoted “the interdependence of community forestry initiatives with large forestry manufacturers and exporters and municipal governments to maximize the productive and sustainable use of Bolivia’s forest lands.”77 During Bush 43’s administration, Bolivia was recognized as a world leader in developing a program for protecting its tropical forests. Evidence of this accomplishment was that nine million of its thirty-two million hectares of designated forestlands were operating with approved management plans. Among the specific accomplishments supported by the Mission were the creation of the Pampas del Yacuma protected area of more than six hundred thousand hectares, the largest protected area within a municipality in Bolivia; the negotiation of more than fifty strategic alliances between community forest operators and the private sector; and the titling of four million hectares of forestlands.78 A number of factors contributed to the successful development of the sustainable forestry program on a national scale. Certainly the formation of a policy framework during Sánchez de Lozada’s administration was a critical factor in getting the tropical forest program moving in the right direction. The Forestry Law, the 1994 Popular Participation Law, and the 1995 Administration Decentralization Law laid the foundation on which forestry interventions could succeed. The recognition that successful implementation of a sustainable forestry program required a blending of public and private institutions to equitably and efficiently exploit the vast forestry resource was important to moving the project forward. Not to be overlooked, should this effort of protecting Bolivia’s vast forest in the Oriente be sustained by the Bolivian government after USAID funding comes to a conclusion, is its potential contribution to reducing the risks of climate change and the preservation of the world’s biodiversity.

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Economic Opportunities for Bolivia’s Poor through PL480 Programs

As previously discussed, when the US Congress passed the Food, Agriculture, Conservation, and Trade Act in 1990, food security was identified as the central objective of PL480 food assistance programs. In turn, USAID Washington directed its Missions to implement food aid projects that focused on improving food security in developing countries.79 In Bolivia, the Adventist Development Relief Agency (ADRA), Cooperative for Assistance and Relief Everywhere (CARE), Food for the Hungry International (FHI), and Save the Children (SC) were selected to implement the new PL480 Title II Development Assistance Program (PL480/DAP).80 The project proposed to reach one million campesinos living on the Altiplano and in the high valleys in the Departments of Chuquisaca, Potosi, and Cochabamba in nearly one thousand different settings. The NGO cooperators, ADRA, CARE, FHI, and SC, agreed to undertake a mix of development activities that would contribute to increasing household incomes and improve the health of the people in their project areas. To say that this project was a bold development venture is an understatement.81 The strategy promoted by the USAID Mission and employed by the NGO cooperators for increasing household incomes was multifaceted and exceedingly complex. Technical agricultural training was provided to more than eight thousand farmers each year between 2002 and 2008.82 As a result, over one hundred producer organizations were strengthened to work with groups of farmers to address agricultural production and marketing problems.83 Using food aid proceeds, more than one thousand kilometers of roads were constructed, improved, and/or maintained to provide nearly forty-four thousand rural households with easier access to market.84 Sixty irrigation systems were completed with command areas totaling eight hundred hectares that benefited more than 2,500 rural households.85 In addition there were credit, land reclamation, integrated watershed management, and soil conservation activities promoted by the cooperators that were executed throughout their project areas. Regarding the objective to improve the health of campesinos in the project areas, an equally complex blend of activities was undertaken by the four cooperators. They installed community and family water systems, provided instruction in maintenance of the systems installed, and provided basic instruction in family hygiene. In terms of physical accomplishments for the period from 2002 to 2008, the percentage of

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households with “year-round access to new or improved safe water sources” increased in the ADRA program from 58 to 70 percent; in the CARE program from 44 to 83 percent; in the FHI program from 30 to 67 percent; and in the SC program from 59 to 88 percent. For access to latrines for the same period, the increase in the ADRA program was from 19 to 75 percent; in the CARE program from 20 to 80 percent; in the FHI program from 22 to 55 percent; and in the SC program from 31 to 43 percent. Given the extent of the health educational programs being provided by the cooperators and the installation of water systems, it is reasonable to assume that the their efforts have contributed to significant improvements in the morbidity status of campesino families in the PL480/DAP project area.86 When the program ended in 2008, the final evaluation confirmed the validity of the cooperator’s claims that their programs contributed to significant household income increases annually.87 In fact, the evaluation reported that in the ADRA program, incomes more than doubled from $941 to $1,986. In the CARE program, farmer income nearly tripled from $602 to $1,699. In the SC program, farmer income more than tripled from $513 to $1,673, and in the FHI program, farmer income also more than tripled from $577 to $1,793.88 Alternative Development

During the initial years of Bush 43’s administration, grant funds to support the counter-narcotics efforts of the Narcotics Affairs Section, DEA, and the USAID Mission continued to pour into Bolivia. Other donors, including the European Union and the UN, supplemented the US government’s counter-narcotics efforts.89 The centerpiece of the Mission’s Alternative Development program was managed by Agricultural Cooperative Development International/Volunteers in Overseas Cooperative Assistance (ACDI/VOCA), a private, nonprofit organization, which had been operating in Bolivia for nearly forty years. In 2001, ACDI/VOCA partnered with the Mission and the Bolivian government to manage an integrated rural development program in the Yungas. Basic to the ACDI/VOCA operation in the Yungas was its approach to work with “local residents and governments to implement community-driven social and economic development projects” as a means “to meet basic human needs and alleviate poverty by improving social and economic conditions.”90 Having successfully established themselves in the Yungas, ACDI/VOCA signed a cooperative agreement in 2005 that extended their work into the tropical regions of the Cochabamba Department with

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a focus on the Chapare. The new project, the Integrated Community Development Fund, received $42 million from the Mission to implement activities in the Yungas and the Chapare. In both regions, ACDI/VOCA projects had a lofty set of objectives including strengthening “social capital and community development through increased access to public goods and services;” increasing “participation of local leaders, local governments and citizen organizations in community development processes to strengthen ownership, sustainability and support for economic activities;” improving “the welfare of poor rural families in isolated areas, taking into consideration gender and the environment;” and supporting “emergency and immediate-impact activities to mediate conflict, preserve social peace and respond to crises.”91 The challenges were immense. The big question was whether the USAID Mission had encouraged ACDI/VOCA to reach well beyond what was reasonably achievable. For more than thirty years, the US government had promoted a counter-narcotics strategy in Bolivia composed of three components: Alternative Development, eradication, and interdiction. In the late 1980s, the Alternative Development program, designed to steer agriculture away from cocoa production, became the raison d’être for the USAID Mission’s program in Bolivia. In the tropical regions of the Department of Cochabamba and the Yungas, the Mission’s interventions resulted in substantial increases of licit agricultural products, although the marketing of the tropical agricultural produce continued to be difficult. In the case of the tropical regions of the Department of Cochabamba, the USAID Mission was flush with accomplishments attesting that the production of licit agricultural crops was advancing and went hand in hand with improving the lives of Bolivians. In 2008, it was estimated that the annual value of banana, palm heart, and pineapple exports from the Cochabamba tropics reached $21 million, a 400 percent increase over 2001 export estimates.92 For the period between October 2006 and September 2007, the Mission reported that the net family income of farmers living in the Cochabamba tropics and producing licit agricultural products was $2,297 compared with the national average of $1,350 for rural families. Another important indicator of success reported by the USAID Mission was that over 3,600 full-time jobs were generated as a result of licit agriculture sales.93 The investments in agricultural production were complemented with investments in the improvement and/or construction of roads and bridges to facilitate the marketing of agricultural products and in education and health

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infrastructure to improve the quality of life of the families in the Cochabamba tropics.94 In the Yungas, the USAID Mission reported that in 2008 the wholesale value of agricultural products leaving the area was $49 million and that the annual value of coffee and cacao exports increased from $7 million in 2001 to $17 million in 2008. From 1999 to 2008, the Mission also supported the maintenance and/or improvement of over three thousand kilometers of roads and the construction of seventy-five kilometers in the Yungas. It was also reported that from 2004 to 2006, the Mission supported the development of rural electrification infrastructure that reached more than four thousand families in the Yungas.95 Central to achieving the goal of the US government’s antidrug strategy was the role of the Bolivian government. Whether defining the legislative framework or supporting the Bolivian institutions mandated to lead the efforts linked to licit agricultural development, eradicating coca in farmers’ fields, or interdicting illicit coca products, Bolivian leadership was the key to success. When Bolivian leadership was strong, the program had the appearances of being a success at least in the short term. When this leadership was missing, the program faltered. The lack of jobs remained at the heart of Bolivia’s problem. As long as there was a demand for coca leaf, and in the absence of enough realistic options for putting plata in the pockets of Bolivia’s poor majority population, Bolivians continued to push deeper and deeper into the tropics in search of green gold. USAID Mission’s Response to Crisis

Immediately following the resignation of Sánchez de Lozada, Ambassador Greenlee and members of his Country Team searched for answers regarding what had gone wrong in Bolivia. There was the conviction in the Country Team that the indigenous community in El Alto and on the Altiplano misunderstood the intentions of the US government. Perhaps it was because the Aymara had been ignored for too long.96 Ambassador Greenlee requested that the USAID Mission explore what could be done immediately to push US government resources into El Alto, the Altiplano, and the Chapare. Greenlee was justifiably concerned about the intensity of the anti-US sentiment expressed during the October demonstrations. His attitude was that any “band-aid” would do as long as it showed the US government in a positive light. No amount of assistance was too small as long as it could demonstrate the willingness of the US government to help Bolivians,

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particularly in El Alto.97 Shortly after the countrywide demonstrations in October 2003, the OTI was established in the USAID Mission. It was directed to design and implement activities that would immediately demonstrate that the US government was sensitive to the needs of Bolivians.98 OTI designed a series of activities that delivered assistance on a priority basis to areas that were identified as harboring anti-US sentiments. Over two hundred schools were rehabilitated “serving more than 30,000 students in El Alto, the Altiplano, and other marginalized communities.” As a part of this effort, classrooms were refurbished and computer laboratories installed. In addition, internet centers were established in the rural areas of La Paz, Cochabamba and Santa Cruz Departments that reached an estimated fifteen thousand students and municipality workers.99 Given the resentment toward the United States expressed by Bolivians who received this assistance, it is debatable how long the good will lasted. Between 2006 and 2008, the US government provided over $2.9 million in humanitarian aid and emergency assistance. This program assisted in bringing relief to thousands of people affected by natural disasters and attendant economic losses in municipalities throughout the country.100 Certainly the relief assistance temporarily enhanced the lives of tens of thousands of Bolivians. Whether the food and shelter assistance improved the image of the US government in the minds of Bolivians over the long term is at best problematic. The Importance of Measuring Performance

Since the early 1990s, the USAID Mission, working closely with its contract and grantee teams and the government of Bolivia, established and refined baselines against which to mark performance in the health and population, agriculture, natural resource, and D&G areas. A major concern was to identify specific improvements in the areas of morbidity, mortality, longevity, contraceptive prevalence, agricultural production, income improvements, employment generation, forestry management, and D&G institutional development. With systems in place to collect, review, and report performance data, the Mission was in the best position in its history to determine the impact activity by activity, strategic objective by strategic objective, and year by year. Throughout Bush 43’s presidency, a virtual mountain of data was available on a semi-annual basis for Mission managers and USAID Washington staff in the Latin American and Caribbean Bureau. In addition, an annual report was prepared that articulated refinements in the USAID Mission’s

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strategy, reported performance for each Strategic Operating Team, and detailed the course of action to be pursued by the Mission for each strategic objective.101 One variable that should always be considered when assessing the quality of a USAID Mission’s program is the performance of its Mission director. As described in Chapter 3, the job of the Mission director, particularly in Bolivia, was an exceedingly demanding one. Between 1991 and 2005, the author made several visits to the Mission and interviewed over one hundred Mission employees, it became clear that the leadership by Carl Leonard, Lew Lucke, Frank Almaguer, and Liliana Ayalde was key to the sustained successful performance of the Mission. Leonard played a central role in defining the Mission’s portfolio. Leonard was followed by Lucke, who led the process of restructuring the Mission’s portfolio into SOTs, and Lucke’s immediate successors, Frank Almaguer and Liliana Ayalde, played critical roles in institutionalizing the IT process that captured the Mission’s performance and reported it to Washington. Despite the USAID Mission’s capacity to report performance systematically, two questions remained. Could the Mission alter the perception held by a multitude of critics of USAID’s work in Bolivia that development in Bolivia was in fact a mission impossible? The perception also persisted that the USAID vehicle for providing assistance was a broken delivery mechanism. Could these views be changed with performance data that suggested otherwise? Put in perspective, these two issues had cast long shadows over the US government’s development program in Bolivia for more than sixty years. Notes 1. Speech by Evo Morales, “I Believe Only in the Power of the People,” December 22, 2005, recorded by Adam Saytanides and translated by Ricardo Sala, http://www.countercurrents.org/bolivia-morales221205.htm. 2. http://en.wikipedia.org/wiki/Andrew_Natsios. 3. Monte Reel and Peter Baker, “Bush Theme of Doubling Latin Aid Is Seen as Misleading Bolivia,” Washington Post, March 9, 2007, p. A14. 4. Gerald F. Hyman, “Foreign Policy and Development: Structure, Process, Policy, and Drip-by-Drip Erosion of USAID” (Washington, D.C.: Center for Strategic and International Studies, September 2010), p. 2, http://csis.org/files /publication/100923_Hyman_ForeignPolicyAndDevel_Web.pdf. 5. Ibid., p. 33. 6. Ibid., p. 1. 7. Ibid., pp. 7–12. 8. Ibid., p. 21.

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9. Christopher Marquis, “New System Begins Rerouting US Aid for Poor Countries,” Washington Post, February 22, 2004, p. A1. 10. “Notes from Natsios,” Front Lines, November/December 2002, p. 3. 11. “Fact Sheet: The Millennium Challenge Account” (USAID Washington), p. 1. 12. Ibid. 13. Hyman, “Foreign Policy and Development,” p. 19. 14. Ibid. 15. Ibid., pp. 5, 6, 17, 24. 16. Ibid., pp. 23, 24. 17. Ibid. 18. Mitchell A. Seligson, “Democracy Audit: Bolivia 2002, Version 9” (University of Pittsburgh for USAID Bolivia, February 11, 2003), p. 9. 19. Some observers of the election credit Morales’s good showing to the negative remarks made publicly against him by Manuel Rocha, the US Ambassador to Bolivia at the time of the 2002 election. Sánchez de Lozada obtained the political consulting services of Carville and Associates, which appears to have contributed to Sánchez de Lozada gaining first place in the general election. The role of Carville and Associates is documented in the film Our Brand Is Crisis, which was directed by Rachel Boynton. 20. Seligson, “Democracy Audit,” pp. 28–29. 21. Ibid. 22. Eduardo A. Gamarra, “Conflict Vulnerability Assessment: Bolivia” (Florida International University for USAID Bolivia, June 2, 2003), p. 8. 23. Seligson, “Democracy Audit,” p. 10. 24. “Background Notes: Bolivia” (Bureau of Western Hemisphere Affairs, State Department, March 8, 2012), http://www.state.gov/r/pa/ei/bgn/35751.htm. 25. Ibid. 26. Ibid. 27. Juan Forero, “Bolivian Leader Says He Now Has Wide Support,” New York Times, March 10, 2005, p. A12. 28. “Background Notes: Bolivia.” 29. Carlos D. Mesa Gisbert, “Mesa pide sacrificio a los bolivianos,” La Prensa (La Paz, Bolivia), January 5, 2004, p. 8A. 30. “USAID/Bolivia Country Strategic Plan: 2005–2009, unrestricted version” (USAID Bolivia, April 6, 2005), pp. 44–45. 31. “World in Brief: The Americas: La Paz, Bolivia,” Washington Post, March 16, 2005, p. A19. 32. “Background Notes: Bolivia.” 33. https://en.wikipedia.org/wiki/Bolivian_general_election,_2005. 34. The ayllu is the traditional form of a community in the Andes, especially among Quechuas and Aymaras. Its roots reach deep into the preColumbian era. 35. Alvaro Vargas Llosa, “No Left Turn,” New York Times, December 27, 2005, p. A23. 36. Monte Reel, “Bolivia Nods to Indian Roots,” Washington Post, January 22, 2006, p. A18. 37. Monte Reel, “For Bolivian Majority, a New Promise,” Washington Post, January 23, 2006, p. A1.

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38. Monte Reel, “Bolivian Leaders Cut Ties with Morales,” Washington Post, November 21, 2006, p. A24. Also see Jonas Wolff, “Challenges to Democracy Promotion: The Case of Bolivia” (Washington, D.C.: Carnegie Endowment for International Peace, March 2011), p. 4. 39. Juan Antonio Morales, “Bolivia in a Global Setting: Economic Ties,” in Unresolved Tensions: Bolivia Past and Present, John Crabtree and Laurence Whitehead, eds. (Pittsburgh, PA: University of Pittsburgh Press, 2008), pp. 230– 231. 40. Wolff, “Challenges to Democracy Promotion,” pp. 4–5. 41. Ibid. 42. Juan Forero, “Bolivia’s Knot: No to Cocaine, but Yes to Coca,” New York Times, February 12, 2006, p. A24. 43. http://en.wikipedia.org/wiki/Evo_Morales. 44. Wolff, “Challenges to Democracy Promotion,” p. 9. 45. “Bolivia, Strategic Plan: 2005–2009,” p. 1. 46. Ibid. 47. Ibid. 48. Ibid., pp. 63–64. Also see “Annex IV: Latin America and the Caribbean, Bolivia,” in “U.S. Agency for International Development Budget Justification, Fiscal Year 2001” (USAID Washington), pp. 15–16. 49. “Bolivia, Strategic Plan: 2005–2009,” p. 1. 50. Ibid., p. 3. 51. Ibid., pp. 19–35. 52. “Title II Food Security Program: Improved Economic Sustainability in Food Insecure Areas” (USAID Bolivia, April 2009), pp. 1–2. The restructuring of the Mission’s PL480 program was described in http://bolivia.usaid.gov/US/6Fs.htm. The site was entitled “USAID Bolivia, Title II Food Security Program, Improved Economic Security in Food Insecure Areas.” Websites come and go at an ever-increasing rate. The revision of most websites is constant. At the time when this data was posted early in the first decade in the twenty-first century, there was no other data available to the general public for measuring each strategic objective. Evidently this website was removed from the world-wide-web when USAID Bolivia ceased to operate in Bolivia. The author has a hard copy of this posted material in his files as well as other primary and secondary source materials referred to in the preparation of this case study. It is the intent of the author that these documents be given to an institution that is archiving materials relating to Bolivia’s development in the modern era within six moths after the publication of this case study. 53. “Strategic Plan: 2005–2009,” pp. 10, 44–45. 54. The Office of Transition Initiatives (OIT) was established in Bolivia after countrywide demonstrations in October 2003. The accomplishments to which OIT contributed were described in a document which has since been removed. See comment in note 52. 55. Túpac Katari was a leader of an indigenous rebellion against the Spanish Empire in the 1780s. 56. “Bolivia, Strategic Plan: 2005–2009,” pp. 45–49. Also see “Report to Congressional Requesters: Foreign Assistance: U.S. Democracy Programs in Six Latin American Countries Have Yielded Modest Results,” GAO-03-358 (Government Accounting Office, March 2003), p. 89.

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57. “U.S. Agency for International Development, Budget Justification Fiscal Year 2001, Annex IV, Latin America and the Caribbean, Bolivia” (USAID Washington), pp. 19–21, and “Bolivia, Strategic Plan 2005–2009,” pp. 45–54. Also “USAID/Bolivia, Democracy, Increased Citizen Confidence in Democratic Institutions and Processes” pp. 1. This website has been removed from the internet. See comment in note 52. 58. “USAID/Bolivia, Democracy, Increased Citizen Confidence in Democratic Institutions and Processes,” USAID Bolivia, pp. 1–2. This website has been removed. See comment in note 52. 59. “Administration of Justice Technical Assessment & Design Mission: Final Report” (Management System International for USAID Bolivia, May 2003), p. 3. 60. Ibid., p. 5. 61. Ibid., p. 6. 62. “Budget Justification: FY 2001,” pp. 19–21, and “USAID/Bolivia Country Strategic Plan: 2004–2008, draft” (USAID Bolivia, August 26, 2003), pp. 14–21. 63. Roberto Laserna, “Democratization, Local Initiatives, and Citizenship in Bolivia, 1994–2004,” in Participatory Innovation and Representative Democracy in Latin America, Andrew Selee and Enrique Peruzzotti, eds. (Washington, D.C.: Woodrow Wilson Center Press, 2009), pp. 136–137. 64. “Budget Justification: FY 2001,” pp. 19–21, and “USAID/Bolivia Action Plan: Fiscal Years 1995–1996” (USAID Bolivia, April 1994), pp. 9–19. Also see “USAID/Bolivia Action Plan: FY 1996–1997” (USAID Bolivia, February 27, 1995), p. 53, for accomplishments reported by USAID Bolivia in the D&G sector. 65. “Bolivia Democratic Development and Citizen Participation Final Report, 1996–2003” (Chemonics International, Inc., for USAID Bolivia, November 2003), pp. 7, 16–22. 66. Ibid., p. 7. 67. Norma Parker, “Action Memorandum for the Director: Democratic Institutions Project, 511-0610” (USAID Washington, August 31, 1988). 68. Laserna, “Democratization, Local Initiatives,” pp. 136–137. Also see “Final Report: Democratic Development and Citizen Participation Project Evaluation” (Development Associates, Inc., for USAID Bolivia, January 10, 2003). 69. “USAID/Bolivia, Democracy, Increased Citizen Confidence in Democratic Institutions and Processes,” pp. 1–2. This website has been removed. See comment in note 52. 70. “Bolivia, Strategic Plan: 2005–2009,” p. 24. 71. “USAID/Bolivia, Health Programs, Improved Health of Bolivians,” pp. 1–3. This website has been removed. Also see “Bolivia, Strategic Plan: 2005– 2009,” pp. 23–30. See comment in note 52. 72. “Bolivia Country Strategic Plan: 2004–2008,” draft, pp. 29–32. 73. “Bolivia Country Strategic Plan: 2004–2008,” draft, p. 28. 74. “USAID/Bolivia, Health Programs, Improved Health of Bolivians,” pp. 1–3. This website has been removed. See comment in note 52. 75. It is estimated that life expectancy at birth was forty-seven years in 1978. See “Development Assistance Plan” (USAID Bolivia, March 1978), p. 5. It had improved to sixty-seven years in 2009. See “USAID Country Health

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Statistical Report, Bolivia,” Analysis, Information Management & Communications Activity Project (MasiMax Resources, Inc., for USAID, December 2009), p. 4. It is estimated that the infant mortality rate of children one year and under was 147 per 1,000 live births in 1978. See “Development Assistance Plan” (USAID Bolivia, March 1978), p. 5. In 2009, it is estimated that the infant mortality rate for children one year and under had improved to forty-five per 1,000 live births. See “USAID Country Health Statistical Report,” p. 7. 76. “USAID Bolivia Strategic Plan: FY 1998–2002” (USAID Bolivia, April 3, 1997), p. 67. 77. “USAID/Bolivia, Sustainable Economic Growth and Environment Increased Sustainable Livelihoods Through Promotion of Natural ResourcesBased Business and Productive Opportunities,” pp. 1–3. This website has been removed. Also see “Bolivia, Strategic Plan: 2005–2009,” pp. 31–37. See comment in note 52. 78. “USAID/Bolivia, Sustainable Economic Growth and Environment Increased Sustainable Livelihoods Through Promotion of Natural ResourcesBased Business and Productive Opportunities,” pp. 1–3. This website has been removed. Also see “Review of USAID’s Natural Forest Management Programs in Latin America, Appendix A. Bolivia, March 2002,” USAID Washington, pp. A 1–3. See comment in note 52. 79. Anne Beasley, “A Description of the Title II Program and Its Impact on Beneficiaries” (USAID Bolivia, July 1992), pp. 1–4 and “The Final Evaluation of the FY2002–2008 Bolivia Title II Development Assistance Program, April, 2009, Revised” Roberta van Haeften, Jeffery Bentley, Alfredo Fernandez, and Judiann McNulty for USAID Bolivia and the Title II Cooperating Sponsors: ADRA, CARE, FHI, and SC, p 1. These references described the origins of the Mission’s food security program. See comment in note 52. 80. “Title II Program and Its Impact, 1992,” pp. 1–4; “Final Evaluation,” p. 3; and “Title II Food Security Program,” pp. 1–2. 81. von Halften, “Final Evaluation,” pp. 1–3. 82. Ibid., p. 103. 83. Ibid., pp. 104–105. 84. Ibid., pp. 149–150. 85. Ibid., p. 162. 86. Ibid., pp. 62–63. 87. Ibid., p. viii. 88. Ibid., p. 108. In 2004, the Mission reported that in the first phase of the program over one million farmers had received assistance in the project area that laid the groundwork for agricultural production increases, which contributed to their household incomes rising to over $1,700 from 2002 to 2003. In contrast, the average household income in the region dropped by 10% to $1,300 for the same period. With these positive results in hand and after addressing some project design issues, the USAID Mission pushed forward with the PL480/DAP project. See “USAID/Bolivia Annual Report FY 2004” (USAID Bolivia, January 8, 2004), p. 9. Also see “PL480 Title II Final Impact Evaluation, FY 1997–2001: Cycle Evaluation, Final Evaluation Report” (The Louis Berger Group, Inc., for USAID Bolivia, April 15, 2002), pp. 2, 21–22. By 2008, farmers had more than doubled their income and the value of sales through forward contracts and producers associations increased from just

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$30,000 in 2002 to almost $1.6 million in 2008. Also see USAID’s Legacy in Agricultural Development: 50 Years of Progress (Bureau for Food Security, USAID Washington, November 2013), p. 104. 89. “Bolivia, Strategic Plan: 2005–2009,” pp. 24, 10, 13, 37–44. 90. “Integrated Community Development Fund, Bolivia: Final Report” (ACDI/VOCA Report for USAID Bolivia, March 2013), p. 7. 91. Ibid. 92. “USAID/Bolivia Integrated Development Program, Economic Diversification of Coca Growing and Associated Area Is Increasingly Sustainable,” pp. 1–2. This website has been removed.The following data was available on this website: the annual value of banana exports from the Cochabamba tropics increased from $1.7 million in 2001 to $11.4 million in 2008; banana exports to Argentina and Chile grew from 600,000 boxes in 2001 to 3.7 million boxes in 2008, and the annual value of palm heart exports from the Cochabamba tropics increased from $2 million in 2001 to $9.4 million in 2008. See comment in note 52. 93. Ibid., pp. 1–2. 94. Ibid. From 1999 to 2008, the USAID Mission supported the improvement of 2,500 kilometers of roads and the construction of eighty-four bridges in the Cochabamba tropics. 95. Ibid. 96. Reflects conversations that the author had with a number of members of the Country Team, including the ambassador and the deputy director of the USAID Mission to Bolivia, during October 2005. 97. Ibid. 98. E-mail November 10, 2012, from David Cohen, Mission director to Bolivia from 1985–1987, to the author. 99. “USAID/Bolivia, Office of Transition Initiatives,” p. 1. This website has been removed. See comment in note 52. 100. “USAID/Bolivia, Title II Food Security Program, Improved Economic Sustainability in Food Insecure Areas,” p. 2. This website has been removed. See comment in note 52. 101. “USAID/Bolivia Annual Report, FY 2002” (USAID Bolivia, March, 2002); “USAID/Bolivia Annual Report, FY 2003” (USAID Bolivia, January 6, 2003); and “USAID/Bolivia Annual Report, FY 2004” (USAID Bolivia, January 8, 2004).

12 Ending USAID’s Development Drama: Barack H. Obama, 2009–2013

To lead, a nation must lead in a direction that others will follow. Wise policy depends equally on a shrewd sense of the possible, for a nation that dissipates its energies and attention on things that do not lie within the realm of the possible is to likely find that it has both neglected to do what was necessary and failed to secure its desires. —Andrew F. Westwood, Brookings Institute1

Washington: The Merry-Go-Round Reconstructing USAID?

USAID’s new administrator, Dr. Rajiv Shah, was expressing his concerns to USAID employees about the current state of affairs in the agency, when he quoted the remarks John Kennedy made in 1961: No objective supporter of foreign aid can be satisfied with the existing program—actually a multiplicity of programs. Bureaucratically fragmented, awkward and slow, its administration is diffused over a haphazard and irrational structure covering at least four departments and several other agencies. The program is based on a series of legislative measures and administrative procedures conceived in different times and for different purposes, many of them now obsolete, inconsistent, and unduly rigid, and thus unsuited for our present needs and purposes.2

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That Shah was drawing a parallel with the situation that both he and President Kennedy encountered in the US government’s foreign assistance agency was obvious. Shah then reiterated the message that President Obama had carried to the United Nations’ General Assembly, where the president outlined a “comprehensive strategy for international development” and a “vision for elevating the role of development, placing it on equal footing with diplomacy and defense.” A critical part of this effort would be a “renewed, modern, rebuilt USAID to carry out that vision,” so that the USAID could reclaim its position as the world’s premiere development agency. Shah pressed ahead with a series of actions that were designed to restore USAID’s central planning and budgeting function that had been transferred to the State Department during Bush 43’s administration.3 To restore the programming and budgeting process in USAID for development and humanitarian assistance, Shah established the Office of Budget and Resource Management in 2011.4 He also established the Bureau of Policy, Planning, and Learning to lead USAID’s policy analysis and strategic planning process, to play a lead role in coordination within the donor community, to oversee a revitalized program and project evaluation capacity, and to strengthen USAID’s memory of “lessons learned” culled from seventy years of US government aid experience.5 During Hillary Clinton’s tenure at the State Department, USAID was directed to partner with the State Department in the Quadrennial Diplomacy and Development Review (QDDR). The QDDR, which mimicked a similar planning exercise conducted by the Defense Department, was developed to provide a “blueprint for elevating American ‘civilian power’ to better advance our national interests and to be a better partner to the US military.”6 Obama’s Latin American Focus

At the Summit of the Americas in April 2009, President Obama stressed the need to establish “an equal partnership” with all heads of state. He urged the Latin American leadership to “renew the common stake that we have in one another.” He identified several areas for collective action, including the creation of a microfinance growth fund, the development of an energy and climate partnership, and aggressive action in the Americas to reduce the flow of illicit drugs. Regarding Cuba, Obama signaled a new direction in US policy toward Cuba. “Over the past two years, I’ve indicated, and I repeat today, that I’m prepared to have my administration engage with the Cuban government on a wide

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range of issues—from drugs, migration, and economic issues, to human rights, free speech, and democratic reform.”7 Challenging the Colossus of the North

The issues of Cuba and the war on drugs had been the subjects of ongoing exchanges between President Obama and leaders throughout the Americas, and both issues surfaced again at the Summit of the Americas held in Cartagena, Colombia, in April 2012. Cuba being denied the right to participate in the Summit of the Americas was debated, and the United States was encouraged to consider supporting Cuba’s full partnership in the inter-American system. In addition, the United States was pressed to end its fifty-year trade embargo of Cuba. Given the direction in which most of the nations in the Americas were leaning, it appeared that Cuba’s recognition as a legitimate participant in the inter-American system was gaining momentum.8 Another issue examined at Cartagena was the need to consider different tactics for the war on drugs. A strong sense prevailed among Latin American partners with the United States that the war was a stalemate. These leaders described the war on drugs as “a debilitating waste of blood and treasure,” and they felt compelled to seek “an honorable withdrawal from a seemingly unwinnable war.” One of the US government’s staunchest partners, Colombia’s president, Juan Manuel Santos, spoke for exploring alternatives to the strategy presently in place, and Otto Perez, Guatemala’s president, argued for an open debate on the issue of the legalization of illicit drugs.9 Did these questions about Cuba and the drug war, posed by leaders throughout Latin America, simply dispute the traditional positions defended by the US government, or represent a serious challenge to the Colossus of the North?10 In 2011, the Community of Latin American and Caribbean States (CELAC), consisting of thirty-three nations in the Western Hemisphere, was established to serve as a forum where political issues of mutual concern could be discussed. The United States and Canada were excluded from membership in CELAC.11 Bolivia: The Morales Perspective

In December 2009, Evo Morales and his vice president, Alvaro García Linera, were reelected by 64 percent of the votes cast. His party won eighty-eight of 130 seats in the Chamber of Deputies and twenty-six out of thirty-six seats in the Chamber of Senators. Placing a distant second with 26 percent of the votes cast was Manford Reyes Villa representing

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the Plan Progresso para Bolivia-Convergencia Nacional. With such overwhelming support in the National Assembly and a new constitution strengthening the role of the executive branch, Morales pledged to move the country even more aggressively down a “communitarian” socialist path. He again expressed his conviction that Bolivia suffered from a multitude of problems exacerbated by its participation in a global marketplace that was dominated by multinational corporations with the United States leading the pack. Anticipating increased profits from Bolivia’s industrialization and exploitation of lithium reserves, Morales predicted a “great leap forward.” His vision included public investments in education, health, and transportation as the basis for pursuing tangible development gains for the poor.12 Morales’s electoral mandate, which was grounded in the indigenous community, strengthened his commitment to the participation of the indigenous population in all branches and at all levels of government. When he attempted to implement policies benefitting the Bolivian economy but harming the indigenous population, Morales found angry and effective opposition. Shortly after his election, he terminated the subsidy for gasoline, and prices for gas and food jumped by 73 percent, provoking nationwide protests. In this instance, the poor joined the privileged to force Morales to reestablish the gasoline subsidy. Later in the year, when police attempted to curtail demonstrations of indigenous groups protesting the construction of a road through their protected area in the Oriente, Morales incurred their wrath and was portrayed as an insensitive highlander who had little appreciation of their basic needs. The voice of the people was loud and clear, and Morales canceled the road project. Not long after, the Morales government held elections for the highest judicial courts to broaden participation in the judicial process as mandated by the new constitution. The majority of the voters did not vote, which was interpreted as a show of dissatisfaction with Morales’s government over the gas subsidy and Oriente road issues.13 Coca and Cocaine

Morales was resolute in his conviction that Bolivians had the right to grow coca. If the cocaine problem must be solved, he made it clear that would have to be resolved in those countries that consumed cocaine— not in Bolivia. Morales planned to support the expansion of the production of the coca bush to twenty thousand hectares as part of a strategy to promote new uses for the coca leaf. The United States wanted to limit Bolivia’s production of the coca bush to approximately four thousand to six thousand hectares that was calculated to be Bolivia’s

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current domestic demand. In the meantime, the United States had continued to support efforts to interdict the smuggling of coca leaves, cocaine, and precursor chemicals, as well as government of Bolivia efforts to investigate and prosecute drug trafficking organizations.14 However, by 2013 the US government’s antidrug efforts had been all but terminated, and the US Embassy gave several aircraft, including eight Huey helicopters, to assist the Bolivian government in their interdiction efforts.15 Relations with the United States

During President Obama’s first year in office, officials in the State Department made a determined effort to normalize relations with the Bolivian government. On several occasions senior officials met with high-level Bolivian officials, including consultations between Secretary Clinton and Bolivia’s minister of foreign affairs, David Choquehuanca.16 A bilateral framework between the two countries was signed in November 2011, in which there was agreement that Bolivia and the United States would exchange ambassadors as a first major step in normalizing relations between the two countries. This in turn led to discussions in which the possibility of continuing to provide development assistance was reviewed. It was anticipated that this assistance would support health and economic development projects as well as activities associated with fighting the production and trafficking of illicit narcotics.17 Morales’s Popularity

By January 2013, Morales had been president for eight years. It had been a period of relative political stability coupled with exceptional economic good fortune. Throughout this period, Morales’s mandate to govern continued to be supported by well over 60 percent of the voting population. His unwavering commitment to indigenous rights and a development philosophy of economic communitarianism continued to resonate with the indigenous majority. The major factor generating the healthy economic picture was the demand on the international market for Bolivia’s petroleum and mineral exports. Certainly an important element that contributed to increased Bolivian government revenues was the passage in 2005 of a new hydrocarbons law that imposed significantly higher royalties and required foreign firms then operating under “risk-sharing contracts to surrender all production to the state energy company in exchange for a

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predetermined service fee.”18 Over the past decade, export revenues had increased sharply from roughly $2 billion to $10 billion. This in turn resulted in the government of Bolivia’s surge in public spending and employment. There was also a significant increase in domestic incomes and minimum wages. Due to universal complaints about an increase in inflation resulting in the rise of food prices and local transportation costs, the Bolivian government put in place price controls on a number of basic commodities, including rice, flour, bread, milk, and sugar that appeared to be effective. In addition, the government provided financial support in an effort to stabilize the wholesale price of sugar, flour, and wheat. Certainly contributing to Morales’s popularity were the cash payments the government provided to seniors, pregnant women, and students. These payments reached 3.3 million people. In addition, it was reported that nine hundred thousand persons over the age of sixty were granted pensions.19 Morales’s Historical Perspective

Morales views Bolivia’s history, commencing from the Spanish conquest to the present era, as one in which the exploitation of the indigenous population by white elites has been pervasive. Though the ’52 Revolution brought fundamental changes to the indigenous community, from Morales’s perspective the ’52 Revolution is a distant historical event that had run its course. Despite access to land, education, health care, the ballot, and identification as a campesino, the vast majority of the indigenous population is poor by any standard. Meanwhile, the white class has remained perched on the pinnacle of the political, economic, and social pyramid. White elites prospered in the urban areas and from their agricultural estates in the Oriente. When President Gonzalo Sánchez de Lozada, after having fled Bolivia, sold his family mining operations for in excess of half a billion dollars, what was a poor campesino to believe about the distribution of Bolivia’s vast mineral resources? When US Ambassador Manuel Rocha warned that Bolivia could lose access to US assistance and the US market for its textiles if Morales were elected president when he ran against Sánchez de Lozada in 2002, how had the words of this US ambassador fallen on the ears of the rural and urban poor?20 Morales and his Latin American compañeros in Ecuador, Venezuela, Nicaragua, and Cuba viewed the United States as an extension of the Spanish colonial rule that had taken much from the native peoples and given little in return. Furthermore, had not Morales beat the United States at their own game—a democratic election? Now it was Morales’s turn to address the

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evils of white capitalism and take revenge after 450 years of foreign exploitation of his people. The USAID Mission’s Final Act

Early in the Obama administration, the USAID Mission funded a series of evaluations of USAID activities to determine which activities should continue to receive US government assistance. Coffee production in the Yungas had been supported for nearly two decades with Alternative Development funding, and a study concluded that due to excellent climatic and soil conditions, there remained considerable scope for increasing yields and improving the quality of the coffee.21 The evaluation of its family planning and reproductive health activities identified “best practices” and “lessons learned” that would be incorporated in new and ongoing USAID Mission-funded health, nutrition, and family planning interventions.22 A study was undertaken to review the results of public-private partnerships that were promoted in the forestry activities implemented in the Oriente. The study concluded that these partnerships represented a successful model to be replicated in the future when designing forestry activities.23 An evaluation of the USAID Mission-funded Administration of Justice (AOJ) program noted that Bolivians enjoyed greater access to the justice system than they did prior to the initiation of the Mission-funded program in the late 1980s.24 However, there was no intention on the part of the US government to fund activities in the AOJ sector given the negative attitude of Morales regarding the US government’s involvement in the democracy and governance sector. Health, Nutrition, and Family Planning

The thrust of the USAID Mission’s health, nutrition, and family planning program was to support the Bolivian government’s Health Sector Strategy articulated in Bolivia’s National Development Plan for 2010–2020. The goal, which the Mission shared with the Bolivian government, was to provide improved access of health services to the rural, indigenous population, which has been one of the core objectives of the Mission’s support reaching back to the 1970s.25 To reach Bolivia’s most vulnerable population—women and children five years and under—the Mission supported the Ministry of Health’s Intercultural Family and Community Health program that reached into rural communities throughout Bolivia. The Mission focused on the expansion of emergency obstetric and neonatal care networks in

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communities throughout Bolivia. In addition, the Mission provided technical assistance, training, and commodities to communities that had extremely high incidences of malnourished children.26 The number of recipients of health, family planning, and nutrition services provided through PROSALUD and other private, nongovernment organizations supported by the Mission since 2007, included 618,000 prenatal care consultations for expectant mothers; forty thousand “essential newborn care” consultations; 205,000 nutrition programs for children under five; 362,000 cases of child diarrhea treated; 143,000 children immunized with third dose of DPT3; more than 784,000 family planning/reproductive consultations; and 1.8 million couples protected from unwanted pregnancies.27 In PROSALUD, the USAID Mission had found a Bolivian partner that was providing modestly priced health services throughout Bolivia to more than six hundred thousand Bolivians each year. In its final report, the Mission commented that PROSALUD’s health services are “virtually self-sustaining.” Was this to say that Bolivia had established a national health care system that it could afford? Certainly this issue needs to be studied in greater depth. PROSALUD has become an international model for similar efforts at expanding health services in Nicaragua, Peru, Haiti, and Zambia.28 Alternative Development

Since 2005, Agricultural Cooperative Development International /Volunteers in Overseas Cooperative Assistance (ACDI/VOCA) had managed the Integrated Community Development Fund (ICDF). This USAID Mission-funded project consisted of a comprehensive range of development activities implemented throughout the Yungas and the tropical regions of Cochabamba Department.29 Of the $42 million that USAID provided ACDI/VOCA to operate in Bolivia, $24 million had been invested by ICDF in direct grants for over 680 development activities that reached into thirteen municipalities. Early in December 2009, ICDF was directed by the USAID Mission to shut down its operations in the Cochabamba Department because of the political instability in the region and concentrate its efforts exclusively on the Yungas. With the remaining resources, ICDF focused its program on community development activities of which sanitation, potable water, and education were the most popular.30 Also of consequence were activities concerned with improving the production and marketing of tropical crops with an emphasis on coffee, cocoa, and bananas.31 ICDF helped producers’ associations in coca-eradication zones that were

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easily accessible to improve the volume, quality, and marketability of their licit crops. The Mission, through the ICDF mechanism, also continued to support the expansion of micro-, small-, and medium-sized enterprises that concentrated on introducing innovative agro-business technologies as a means of generating employment and increasing incomes in rural areas.32 In December 2012, ICDF operations ended after seven years of activity in the Yungas and the tropical regions of the Cochabamba Department.33 ICDF’s final report meticulously documented that ICDF, over the life of the project, had reached into over four hundred communities in which forty-two thousand families had benefited directly from ICDF activities. Activities supported by ICDF had generated $4.7 million in sales; had directly contributed to the planting of over two thousand hectares in licit crops; and had created more than 4,500 full-time jobs.34 The report also identified the specific nature of the activities that were the “bits and pieces” fundamental to achieving meaningful quality of life improvements of the rural poor in the project area. ICDF played the major role in the construction of eight new health facilities and supplied equipment to forty-four existing health facilities in the Yungas. In addition, ICDF supported health campaigns that involved disseminating information to over five hundred women on the detection and prevention of cervical cancer, targeting school-aged children with information on the importance of dental care, and aiding in the prevention of leishmaniasis, a disease transmitted by sandflies.35 ICDF guided a community development process that resulted in the construction of twenty-five water systems and the renovation or expansion of seven existing water systems; the connection of 3,600 households to potable water systems; the construction of eight sewage systems and six public toilets areas; the installation of toilets for students in thirty-two schools; and the installation of bathrooms, each including a toilet, sink and shower in over 1,200 private households. These projects benefited more than 6,800 families.36 Working closely with local education and municipality officials in the Yungas, ICDF concentrated its efforts on improving access to primary and secondary education. ICDF provided funding for the construction of 115 new classrooms in thirty-four schools, which accommodated a total of 2,800 primary and secondary school students. Each new classroom was “large, comfortable and well illuminated” and “properly equipped with desks and chairs.” ICDF also provided most of the schools separate bathroom facilities for male and female students. For each school, ICDF sought the active involvement of a parents’

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committee that was encouraged to provide in-kind support. From the municipality, ICDF required a cash contribution. ICDF also “conducted a detailed needs assessment of the furniture and equipment needs” of 374 additional schools also in the Yungas. To meet the specific needs of each school surveyed, twenty-five thousand pieces of furniture, including desks, chairs, blackboards, and bookcases were distributed. As a result of these investments it was estimated that approximately sixteen thousand students benefited.37 ICDF, in close coordination with USAID, identified a number of agricultural products including coffee, plantain, stevia, cacao, and honey that had good potential for reaching local, national, and international markets. For each of the products, ICDF followed a similar process of delivering technical assistance. The first concern was to identify interested farmers and explain to them the conditions to which they had to agree before joining a group that would take training in a field setting. ICDF training activities focused on learning from peers in grouptraining sessions that were implemented in the communities of the participating farmers. During these sessions, producers were able to discuss problems and possible solutions for each phase of the production cycle. The participants received approximately eighty-five hours of training over a six to nine month period. General topics touched upon were land preparation, soil management, crop reproduction, weeding, control and prevention of pests and disease, and instruction related to harvesting and postharvest processing.38 Environment and Energy

Activities concerned with protecting Bolivia’s rich biodiversity and encouraging sustainable agriculture were key elements in the Mission’s support for agricultural production activities in the Yungas and the Chapare and forestry activities in the Oriente.39 The El Alto–Lake Titicaca Pollution Management Project, initiated in 2008, was designed to promote pollution abatement and protect water resources within the El Alto–Bahiá Cohana watershed. The Integrated Development and Conservation in the Bolivian Amazon Project continued to focus on the protection and sustainable use of the tropical forests in fifteen municipalities in the Northern La Paz and Beni Regions and Santa Cruz. As in its predecessor, the Sustainable Forestry Management Project, the focus was to encourage community participation in the management of their forest resources.40

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USAID Bolivia at the End of the Road

Since the early 1990s, a rigorous effort had been made by the Mission to strengthen the process of identifying, collecting, analyzing, and reporting performance data for each of its projects. That there was a sea change in the Mission’s ability to pinpoint performance is evident when reviewing the reports for the ICDF and PROSALUD. As the Mission moved through the first decade of the twenty-first century, the reporting clearly demonstrates that development assistance activities funded by the US government were achieving the goals identified by Mission management. Despite frequent displays of hostility by Morales toward the US government and in turn toward the USAID Mission, genuine progress in the health and Alternative Development areas had been made. Certainly Morales was aware of this progress. Given his hostility, did it make sense to continue a USAID program? Were there matters of US self-interest that could form the basis for continuing an aid relationship with Bolivia? These questions became immaterial, because on May 1, 2013, Morales announced the expulsion of USAID. He was quoted as saying “Some institutions of the United States Embassy continue to conspire against . . . the people [of Bolivia] and especially against the country. . . . We have decided to expel USAID from Bolivia.”41 Morales went on to say that the expulsion was in response to comments by Secretary of State John Kerry, who was quoted as saying, “The Western Hemisphere is our backyard. . . . It’s critical to us.” These comments, Morales said, reflect that the United States “still has a mentality of domination, of subjugation.”42 It could be argued that Morales was calling for an end of the USAID program given that the total economic assistance provided by USAID had slipped dramatically from $60 million provided in FY 2002 to $17 million projected for FY 2013. With a presidential election coming in 2014,43 Morales undoubtedly calculated that he had more to gain politically than what was being lost economically by closing down the USAID Mission. Among the many ironies that might be cited in the departure of USAID from Bolivia is the realization that the US foreign assistance program was ended by the type of leader that the US government wanted to emerge—one who was elected in the most democratic elections ever held in Bolivia, who emerged from the majority indigenous community, and who typically pursued the hopes and needs of the poorest of the poor.

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Postscript

On October 12, 2014, Evo Morales was elected to a third term by 60 percent of the voters. In a victory speech from the balcony of the Presidential Palace, he proclaimed, “This victory is the victory of the anti-colonialists and the anti-imperialists.” Morales won in eight of the nine Departments including Santa Cruz Department, which had formerly been the opposition’s stronghold. Morales’s party, Movimiento al Socialismo, would continue to dominate the legislative branch by winning twenty-five of thirty-six seats in the Senate and eighty-eight of 130 seats in the Chamber of Deputies. Though the Constitution that was ratified in 2005 stipulated a two-term limitation for the presidency, the Supreme Court ruled that Morales’s first term should not count because it had been interrupted while the new constitution was being considered. Now the question on everyone’s mind is whether there will be a fourth term for Morales.44 Morales continues to proclaim that he is an anti–free market capitalist and that Bolivia’s natural resources are the exclusive patrimony of the Bolivian people. Since the beginning of his presidency, he has successfully negotiated agreements that have represented sound financial investments for the foreign oil companies,45 who in turn have paid billions of tax dollars into the government of Bolivia treasury. Since Morales took office in 2006, the per capita gross national income has moved from $1,000 to $2,550 in 2013. One of the immediate consequences has been that the number of Bolivians living in extreme poverty has been significantly reduced. In the context of an expanding economy, a balanced budget, and a budget surplus, it appears that Morales has adopted a development path that is moving in the direction of redressing the iniquities experienced by Bolivia’s indigenous population since the Spanish conquest.46 Notes 1. Andrew F. Westwood, Foreign Aid in a Foreign Policy Framework (Washington, D.C.: Brookings Institution, 1966), p. 1. 2. “Dialogue: Insights from Administrator Dr. Rajiv Shah,” Frontlines, October 2010, p. 3. 3. Ibid. and remarks by Dr. Rajiv Shah, “Reinventing USAID to Meet 21st Century Development and Security Challenges” at the National Press Club, Washington, D.C., June 18, 2010. Also see “Congressional Presentation: The Act for International Development, A Program for the Decade of Development; Objectives, Concepts and Proposed Program” (International Cooperation Agency, May 23, 1961), pp. 8–10.

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4. Michael Casella, “USAID Budget, History, Structure, and Challenges” (USAID Washington, November 2012). 5. Susan Reichle, “USAID: Policy, Planning and Learning” (Bureau for Policy, Planning, and Learning, USAID Washington, and February 6, 2012). Also see “Evaluation Learning from Experience: USAID Evaluation Policy” (USAID’s Evaluation Policy Task Team, Office of Learning, Evaluation, and Research, Bureau for Policy, Planning, and Learning, USAID Washington, January 2011). 6. Authorized in the Presidential Policy Directive on Global Development (PPD-6) and articulated in USAID’s Policy Framework for 2011–2015. 7. http://www.whitehouse.gov/the_press_office/Remarks-by-the-Presidentat-the-Summit-of-the-Americas-Opening-Ceremony. 8. Jackie Calmes, “Trade, Energy and Drugs Are Topics for Obama at Summit of the Americas,” New York Times, April 13, 2012, p. A10. 9. Mary Speck, “A White Flag in the War on Drugs,” Washington Post, April 13, 2012, p. A17; Calmes, “Trade, Energy and Drugs,” p. A10; and Juan Forero, “More Latin Leaders Say U.S. Anti-Drug Policy Is Failing,” Washington Post, April 11, 2012, p. A8. 10. Scott Wilson, “Obama, On More Equal Footing, Off to Americas Summit,” Washington Post, April 13, 2012, p. A3. 11. http://www.cepr.net/blogs/cepr-blog/celac-speaking-for-latin-americaand-the-caribbean. 12. “Background Notes: Bolivia” (Bureau of Western Hemisphere Affairs, State Department, March 8, 2012), http://www.state.gov/r/pa/ei/bgn/35751.htm. 13. Ibid. 14. Ibid. 15. “Bye, Bye, American Pie,” Economist, May 11–17, 2013, p. 40. 16. Jonas Wolff, “Challenges to Democracy Promotion: The Case of Bolivia” (Washington, D.C.: Carnegie Endowment for International Peace, March 2011), p. 10. 17. “Background Notes: Bolivia.” 18. 2014 CIA World Factbook, http://www.theodora.com/wfbcurrent /bolivia /bolivia_economy.html. 19. Fernando Molina, “Why Is Evo Morales Still Popular? The Strengths of the MAS in the Construction of a New Order,” Nueva Sociedad 245 (May–June 2013), presented in “Bolivia Rising,” July 28, 2013. 20. Conversations with members of the Country Team in Bolivia, including Ambassador David N. Greenlee, December 2005. Also see James F. Siekmeier, The Bolivian Revolution and the United States, 1952 to the Present (University Park: Pennsylvania University Press, 2011), pp. 170–171. 21. “Annex: Regional Perspectives,” in “Bolivia, Foreign Assistance Program Overview: Congressional Budget Justification, Foreign Operations, Fiscal Year 2012” (State Department with USAID Washington), p. 724. Also see “Case Study: Putting Bolivian Specialty Coffee on the World Map” (USAID Bolivia, April 15, 2011). 22. “Foreign Assistance Overview: FY 2012,” p. 724, and “Program Overview: Health Program” (USAID Bolivia, October 2011). 23. “Foreign Assistance Overview: FY 2012,” p. 724. 24. Ibid.

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25. Ibid., pp. 721–724. Also see “Annex: Regional Perspectives,” in “Bolivia, Foreign Assistance Program Overview: Congressional Budget Justification Presentation, Foreign Operations, Fiscal Year 2013” (State Department with USAID Washington), pp. 746, 748–749, and “Health Program.” 26. “Foreign Assistance Overview: FY 2012,” p. 724. 27. “As of May 2013, USAID Has Ended Its Programs in Bolivia: What Types of Projects Is USAID Currently Supporting in Bolivia?” (USAID Bolivia, February 24, 2014), http://www.usaid.gov/news-information/fact-sheets/usaid -bolivia. 28. “Health Program USAID Bolivia;” Deborah Caro, “Health Strategy Portfolio Review: FY2005–FY2009” (Global Health Technical Assistance Project for USAID Bolivia, December 2010), pp. ix–x; and “Center for Health Market Innovations, PROSALUD,” http://healthmarketinnovations.org/program /prosalud. 29. “Integrated Community Development Fund, Bolivia: Final Report” (ACDI/VOCA Report for USAID Bolivia, March 2013), p. 7. 30. Ibid., p. 4. 31. “Case Study: Improving Marketability and Production in the Cocoa Sector” (USAID Bolivia, April 15, 2011); “Putting Bolivian Specialty Coffee on the World Map”; “Case Study: Leveraging Market Demand for Organic Bananas” (USAID Bolivia, April 15, 2011); and “Case Study: Building an Export Banana Industry Case Study” (USAID Bolivia, April 15, 2011). 32. “Foreign Assistance Overview: FY 2012,” p. 724, and “Foreign Assistance Overview: FY 2013,” pp. 746, 749. 33. “Integrated Community Development Fund,” p. 4. 34. Ibid. 35. Ibid., pp. 31–32. 36. Ibid., pp. 25, 28. 37. Ibid., p. 30. 38. Ibid., p. 37. 39. “Foreign Assistance Overview: FY 2013,” pp. 749–750. 40. “Program Overview: Sustainable Development and Environment Program” (USAID Bolivia, October). 41. William Neuman, “U.S. Agency Is Expelled from Bolivia,” New York Times, May 1, 2013, http://www.nytimes.com/2013/05/02/world/americas /bolivian-president-expels-us-aid-agency.html. 42. Ibid. 43. “Bye Bye, American Pie,” Economist, May 11–17, 2013, p. 40. Also see “U.S. Overseas Loans and Grants: Obligations and Loan Authorizations; July 1, 1945–September 30, 2015 (Greenbook)” (USAID Washington), p. 94. For more details see http://explorer.usaid.gov and “USAID Bolivia Country Profile” (USAID Bolivia, September 2012). 44. Carlos Valdez, “Bolivia’s Morales Secures Third Term,” Washington Post, October 13, 2014, p. A7; William Neuman, “President of Bolivia Claims Victory in Election,” New York Times, October 13, 2014, p. A3; and https://en.wikipedia.org/wiki/Bolivian_general_election,_2014. 45. http://www.latinnews.com/component/k2/item/32846-bolivia --oil-companies-say-new-deals-are-profitable...%20%20%20%20.html.

Ending USAID’s Development Drama

287

46. Neuman, “President of Bolivia Claims Victory in Election,” and Nick Miroff, “Bolivia’s Morales Plays Politics at High Altitudes,” Washington Post, October 7, 2014, p. A8.

13 Past Is Present

Nothing is built on rock: for all is built upon sand, but let each man build as if the sand were rock. —Jorge Luis Borges1

Partner or Patrón: Seventy Years of Searching for a Development Path

One measure of the strength of the US and Bolivian partnership is the degree of self-interest that each party realized from the relationship. In the early 1940s, when the US government was searching for partners to join the Allied cause in order to secure strategic raw materials, the US government promoted an economic diversification strategy designed to assist the Bolivian government in breaking the stranglehold that tin had on the Bolivia economy. In addition, there was modest support for education and health activities to address the needs of the majority indigenous population. At that time, both Bolivian and US leadership perceived the proposed deal as a good one that addressed their respective national interests. During the Truman presidency and for the next forty-five years, halting the spread of communism into Latin America became the rationale for the US government’s assistance program to Bolivia. Grant programs funded by the US government during the Eisenhower administration to provide access for the general population to agriculture, education, and health improvements buttressed the goals of the ’52 Revolution. Credits provided by the Export-Import Bank to promote a diversification strategy financed a development path strongly endorsed by Paz Estenssoro. This development path was critical for sustaining the Bolivian government in its struggle to keep abreast of the

289

290

USAID in Bolivia

changes demanded by Bolivians anxious to realize the expectations of the ’52 Revolution. As the program passed from the 1950s through the 1960s and into the 1970s, the development path supported by the US government reflected an ever-increasing awareness of the importance of focusing on Bolivia’s majority population living in the high valleys and on the Altiplano. The Humphrey Amendment to the 1961 Foreign Assistance Act, the Zablocki Amendment to the 1962 Foreign Assistance Act, Title IX Legislation of the Foreign Assistance Act in 1966, the New Directions strategy that was mandated during the Nixon/Ford administration, and the Basic Human Needs strategy of the Carter administration were all variations on a theme designed to reach Bolivia’s poor majority and address core needs in the agriculture, education, and health sectors. An economic development justification complemented an anticommunist rationale that underscored the US government’s assistance throughout this entire period. With the meltdown of the Bolivian economy in the 1980s, when political and economic chaos nearly prevailed, there was an abrupt change in the development strategy pursued by the Bolivian government. In concert with the US government, Paz Estenssoro led in the design of the New Economic Policy (NEP) that outlined a neoliberal development path underscoring the tenets of free market capitalism. To buttress the NEP, a variety of activities to strengthen the private sector were added to the USAID Mission’s portfolio. From the 1980s and on into the twenty-first century, the Mission continued support for health interventions focused on the rural poor and initiated an Alternative Development strategy to diversify agricultural activities in the coca producing areas of Bolivia. The Alternative Development strategy reflected the US government’s national security concern about coca/cocaine production and trafficking in Bolivia and became the basis of a new partnership with Paz Estenssoro and his successors Paz Zamora, Gonzalo Sánchez de Lozada, Hugo Banzer, and Jorge Quiroga. Throughout this period, relationships were constantly strained as each party attempted to direct the use of Alternative Development funding to its own political agendas. The issue was further complicated by the controversial provision of military assistance by the US government to curb the coca crop and trade in the name of Alternative Development. With the presidency of Evo Morales, the partnership with the US government, as it related to the Alternative Development strategy and its attendant components—interdiction and eradication—deteriorated. It is an immutable law of development that a development effort must have

Past Is Present

291

the resolute commitment of the host government to succeed. To operate otherwise is folly. In the case of the counternarcotics program, when Bolivian government support was manifest, program success was always substantially higher. When the Bolivian government’s support wavered, often because of domestic political pressure, the program faltered seriously. A Quick Look Back at Seventy Years of US Government Assistance

It would be satisfying to finish this story with an unambiguous statement about the impact of nearly seventy years and more than $4.6 billion of US economic and humanitarian assistance provided to Bolivia.2 I discovered in the course of my research a virtual mountain of reports identifying accomplishments starting in the 1950s and continuing throughout the Obama administration. However, a myriad of complex and confounding issues befuddle the best-intentioned evaluator cum historian. Political, economic, and humanitarian questions complicate every attempt to measure the impact of USAID and its predecessors. How does one put a price on the life of an infant who survived as a result of an immunization shot or an oral rehydration packet provided by USAID? Even more challenging is the issue of retrospectively measuring the impact of nutrition improvement, basic education, and primary care health systems designed to meet the essential needs of children. What percent of credit can a USAID Mission claim when it was only one of many donors that have worked on curriculum development in primary education for more than thirty years? How does one calculate the value of multiyear investments to strengthen institutional capacity in the agriculture, health, education, and transportation sectors when for years many of these institutions flourished, but when donor assistance was discontinued the institutions languished? How much of the benefit can USAID claim for building roads into the Chapare that are used to move bananas, oranges, and pineapples from farm to market but also have provided narcotraffickers access to a market for their illicit drug products? In a constantly shifting and unstable political environment, to what degree must both Bolivian politicians and USAID Mission staff share the failure of development interventions financed by the US government? How much of the decision to support development interventions is a function of hard-nosed US government national security interests, and how much reflects a humanitarian instinct that runs deep in US society? Should one use different cost benefit ratios to determine whether the

292

USAID in Bolivia

return on investment is sufficient to have warranted supporting these two different investments? Yet another factor to be considered is that at least 25 percent of the economic assistance expenditures were for Security Support Assistance and Food Aid (PL480), where impact in development terms is difficult to measure systematically.3 While there is no statistical analysis that will prove the $4.6 billion has been efficiently spent, major accomplishments in each development sector receiving US government assistance was described for each administration. Overall, the United States and Bolivia can point to a beneficial partnership, which like all partnerships has its high and low points. Some of the highlights are mentioned below: Funding for health activities supported by the US government, which started in the 1940s and continued to 2013, has had a widespread, positive impact on the quality of life of Bolivians throughout the country. The building of PROSALUD’s institutional capacity represents a supreme, enduring achievement. The US government’s efforts in agriculture were hampered at times by the periodic lack of support by the Bolivian government for the institutions promoted by the US government in the agriculture sector. Regardless, the US government must be given a large measure of credit for the agricultural production gains in the Oriente and the agricultural production increases in the context of an Alternative Development strategy in the Chapare and the Yungas. Responding to a key component of the ’52 Revolution, the US government supported educational reform for almost fifty years with important contributions to teacher training, curriculum development, education administration rationalization, and school construction. Education sector funding was withdrawn to reduce the Mission’s management load with the understanding that other donors would pick up the slack. After only fifteen years, there are strong indications that the US government’s support for the rational management of tropical forest resources in the Oriente has paid substantial development dividends. Financial assistance and PL480 commodities provided by the US government in the mid-1950s and mid-1980s played a key role in saving Bolivia from economic catastrophe. Finally, there is the US government’s support of Bolivian government efforts to strengthen the electoral process and the devolution of decisionmaking to municipalities. Both activities

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293

contributed to the progress made in Bolivia in building a civil society. If economic development is to be sustainable, the support provided by the US government beginning in the 1960s promoting democratic practices and attitudes throughout Bolivian society may represent the most important contribution made by US taxpayers. The democracy and governance measures promoted and supported by US economic assistance gave voice to the needs of the rural poor as large numbers of campesinos were newly franchised and enabled to vote in local and national elections. Delivering Economic Assistance: Who’s on First?

Throughout the 1950s and early 1960s, it was the US official, particularly the technician—the agriculturalist, the health practitioner, the highway engineer and the school teacher—who controlled the project process including the identification, design, implementation, and evaluation functions. Starting in the late 1960s, there was a significant reduction in the number of US employees working in USAID Mission, which coincided with a dramatic increase in the number of for-profit companies (FPCs) and nongovernmental organizations (NGOs) to implement USAID-funded projects. Beginning in the mid-1970s, the employees of FPCs and NGOs were given increasing responsibilities for the management and evaluation of USAID projects, identifying and analyzing performance indicators for USAID Mission’s strategic objectives, and the design function of projects under the supervision of USAID project development officers. At present, USAID officials are concerned with preparing documentation that requests the services of FPCs and NGOs; managing the process that selects FPCs and NGOs; negotiating the terms of contracts and grants with FPCs and NGOs; and continues to monitor the work of FPCs and NGOs. However, even the USAID monitoring function has been significantly reduced due to the increased responsibilities that have been awarded to the foreign service nationals who play key roles on the strategic objective teams. An integral part of the task of the USAID official is to communicate realistic expectations, which are shared with FPCs and NGOs and the host country counterpart. The relationships, which evolve, are dynamic and reflect all the complexities of the development process and the personalities involved in the project process. To play a consequential role in the process, the USAID official must devote adequate time to

294

USAID in Bolivia

participate meaningfully in the project process from project identification through its final evaluation process. At present, too many basic functions in the project process have been left to FPCs and NGOs. This may be a question of inadequate staffing in the Mission, flawed guidance from Washington, or inexperience on the part of the USAID official in the field. These are management issues that warrant serious attention by senior managers in Washington and the field. What can be done to assure that US dollars for development are well spent? Unless a USAID Mission management team is in place to rigorously review annually the status of each project/activity/strategic objective in the Mission’s portfolio, the USAID Mission will never know if a project is making sufficient progress to warrant the sustained expenditure of US taxpayer dollars. The Dismemberment of USAID

Since the Carter administration, there has been a steady drumbeat declaring that USAID is a lackluster institution incapable of realizing the US government’s development agenda. Yet there is no data that establishes a cause and effect linkage between the USAID delivery mechanism and the failure of the specific resources provided by USAID to have a positive impact. Certainly the turf battle that has dragged on during administration after administration, with the State Department consistently seeking to strengthen its role as it relates to who manages USAID affairs, has not resulted in an improved USAID. In Washington and in the field there should be no misunderstanding who is the paramount chief—the State Department. In reality, the State Department always has been the paramount chief. But, USAID must be allowed to be the “hands-on” agency that directly manages the development process from budgeting to implementing the US government’s development assistance program. Listening to Bolivians

In the course of doing my research, I visited Bolivia for extended periods during the first decade of the twenty-first century and informally interviewed a couple of hundred Bolivians of all social classes and ethnicities. I talked with miners deep in the shafts of Cerro Rico; Bolivian Marines on swift river boats in the Chapare; farmers on the Altiplano and in the high valleys; businessmen and young adults from the middle class in Santa Cruz; store keepers in La Paz; Rotarians in Oruro, Sucre, Santa Cruz, and La Paz; students at the University of

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295

Chuquisaqui in Sucre; and taxicab and bus drivers throughout Bolivia. What did they think about the US government’s aid program? Most answered that they really did not know much about it, but ventured that when aid did get to Bolivia, politicians in La Paz probably stole it. Whether if one were a successful businessman from Santa Cruz or an Aymara farmer from the Altiplano, no one wanted to pay taxes because they were sure that the taxes went straight into the pockets of the politicians. When asked what you want most out of life, the answers were uniform—a job for me and health and educational opportunities for my children. The aspirations of Bolivians are not much different from those of US citizens. All development efforts undertaken by the US government in any country throughout the world should start with this basic understanding. A Harsh Reality

In July 2005, it was reported in the local newspaper, El Potosí,4 that the Potosi Department had the highest infant mortality rate in Bolivia and by inference one can conclude, one of very highest infant mortality rates of any region in Latin America. While almost all areas in Latin America have experienced major advances in child survival rates, the Potosi Department, because of its isolation, poor soils, depletion of mineral resources, and lack of job opportunities, has slipped further and further behind the rest of Latin America. The gross historical irony is that it was at Potosi that a mountain of silver was mined that contributed to the first wave of globalization that joined Europeans, Asians, and Africans in the commercial revolution that took off in the sixteenth century. This revolution transformed the nature of capitalism throughout the world and contributed to laying the foundation for the success of US entrepreneurs on the world economic stage during the nineteenth and twentieth centuries. Throughout the spring and into the summer of 2015, discontent in Potosi with Morales’s presidency was running hot. Rancorous street demonstrations by the citizens of Potosi were daily affairs. They felt that the president had delivered on his promises to bring progress to the rest of Bolivia but had ignored Potosi. A new airport, better health and education facilities, investments to promote new industries, and jobs, jobs, jobs were their immediate demands. Had Morales ignored Potosi, the city where he got his start as a labor leader? Is it a matter of there not being enough resources in Bolivia to go around, or is it a problem of unreasonable expectations on the part of the citizens of Potosi? Are the

296

USAID in Bolivia

events in Potosi a prologue to yet another tumultuous period of political and economic pandemonium in Bolivia? What About Tomorrow?

The US foreign assistance program has always been driven by our national interest, with the US government’s application of development assistance reflecting a concern to balance activities that realized economic growth with humanitarian considerations in the recipient countries. Since the inception of development assistance in the 1940s, the US government has been the major architect of economic policies that have driven the creation of a global marketplace. Tailored interventions financed by the US government have been fashioned by USAID Missions in most developing countries, including Bolivia, to strengthen their participation in the global economy. The United States emerged victorious from the Cold War, which should have validated the free market, capitalistic approach that the United States has pursued at home and in developing countries around the world. However, a number of populist politicians in Latin America see their countries suffering from a myriad of problems exacerbated by their participation in a global market inherently linked to capitalism. Many of these politicians, including Evo Morales of Bolivia, have challenged the value of the US government’s development interventions pursued in their countries. President Morales is currently advancing an alternative economic model reflecting his hostility to neoliberal solutions that he views as preserving the elites at the expense of the poor. In the twenty-first century, we are beginning see more clearly that there is great commonality in the problems US citizens are facing with those we have identified in the developing world. We struggle every day in our Congress and in our great public bureaucracies with a domestic agenda concerned with preserving the social compact implicit in our Constitution regarding health, education, and employment issues. The essence of our US agenda is the substance of our struggle to promote change in the developing world. Notes 1. Jorge Luis Borges, “From an Apocryphal Gospel,” in In Praise of Darkness, Norman Thomas di Giovanni, translator (New York: E.P. Dutton, 1974), p. 107.

Past Is Present

297

2. “U.S. Overseas Loans and Grants: Obligations and Loan Authorizations, July 1, 1945–September 30, 2015 (Greenbook)” (USAID Washington), p. 94. For more details see http://explorer.usaid.gov. 3. Ibid. 4. “En Potosí mueren más niños que en cualquier regíon de Latinoamérica,” El Potosí (Potosi, Bolivia), July 8, 2005, p. 6.

Appendix 1

USOM/USAID Mission Staffing: Bolivia, 1953–1979 Year

USDH

FSN

Other USG

1953

21

21

21

63

1954

41

30

5

76

1955

57

47

7

111

1956

77

53

7

20

157

1957

99

81

7

15

202

1958

107

156

7

13

282

1959

97

131

6

12

246

1960

65

91

2

8

166

1961

61

106

5

1

173

1962

65

136

3

9

213

1963

70

202

4

276

1964

65

159

7

231

1965

59

178

5

4

287

1966

56

177

13

64

310

1967

59

181

17

59

316

1968

62

154

18

48

282

1969

54

154

12

28

248

1970

36

132

9

26

203

Contract

Total

continues

299

US Economic Assistance to Bolivia by Presidential Administration (in millions) Current US$ Pres. Admin.

Constant 2014 US$

USAID

Food Aid

Total US Econ. Asst.

USAID

Food Aid

Truman

5.40

2.80

0.00

41.88

20.21

0.01

Eisenhower

191.20

156.80

24.60

1253.65

1.017.18

179.96

Kennedy/Johnson

292.20

201.10

62.30

1,692.51

1,169.99

179.96

Nixon/Ford

212.40

162.10

46.00

857.76

652.02

187.57

Carter

179.88

103.49

66.91

509.74

300.81

181.73

Reagan

468.40

191.15

230.2

888.19

359.39

442.46

Bush 41

515.24

322.29

129.16

820.33

510.21

208.20

Clinton

986.04

409.44

198.87

1,375.92

578.81

280.31

Bush 43

1,447.09

495.75

164.82

1,742.03

603.24

198.47

Obama

312.78

115.52

10.45

331.90

122.77

11.18

Total

4,610.63

2,160.4 935.19 9,513.91 5,334.63 2,045. 2 30 Source: “U.S. Overseas Loans and Grants: Obligations and Loan Authorizations, July 1, 1945–September 30, 2015 (Greenbook)” (USAID Washington), p. 94. For more details, see http://explorer.usaid.gov.

Appendix 2

301

Total US Econ. Asst.

Appendix 3

US Economic Assistance to Bolivia, Fiscal Years 1946–2014 (in millions) Fiscal Year/ Presidential Admin.

Current US$ Total US Econ. USAID Asst.

Constant 2014 US$ Food Aid

Total US Econ. Asst.

USAID

Food Aid

1946/Truman

0.40

3.94

1947/Truman

0.40

3.56

1948/Truman

0.40

3.25

1949/Truman

0.40

3.14

1950/Truman

0.50

3.99

1951/Truman

0.50

3.78

1952/Truman

1.50

1.50

10.92

10.92

1953/Truman

1.30

1.30

9.29

9.29

1954/Eisenhower

15.80

7.50

0.30

111.61

52.98

2.12

1955/Eisenhower

27.00

11.00

16.00

189.25

77.10

112.15

1956/Eisenhower

28.10

25.40

2.70

191.98

175.53

18.45

1957/Eisenhower

27.30

23.30

4.00

179.80

153.46

26.34

1958/Eisenhower

22.40

22.40

143.17

143.17

1959/Eisenhower

24.90

24.50

0.40

156.74

154.22

2.52

1960/Eisenhower

15.00

14.80

0.20

93.12

91.88

1.24

1961/Eisenhower

30.70

27.90

2.80

187.99

170.85

17.15

1962/Kennedy

36.60

32.20

3.40

221.86

195.79

20.61

0.01

continues

303

304

USAID in Bolivia

Fiscal Year/ Presidential Admin.

Current US$

Constant 2014 US$

Total US Econ. Asst.

USAID

Food Aid

Total US Econ. Asst.

USAID

Food Aid

1963/Kennedy

63.00

35.80

16.10

377.23

214.36

96.40

1964/Johnson

77.20

60.50

13.40

456.69

357.90

79.27

1965/Johnson

18.80

9.40

3.90

109.30

54.65

22.67

1966/Johnson

37.30

28.40

6.30

212.30

161.64

35.86

1967/Johnson

19.20

15.50

1.50

106.04

85.60

8.28

1968/Johnson

18.60

8.60

8.30

99.32

45.92

44.32

1969/Johnson

21.50

10.60

9.40

109.77

54.12

47.99

1970/Nixon

8.00

3.00

3.60

38.76

14.53

17.44

1971/Nixon

11.70

3.70

6.90

53.95

17.06

31.82

1972/Nixon

60.00

55.60

4.40

264.04

244.68

19.36

1973/Nixon

27.30

17.00

10.30

115.17

71.72

43.45

1974/Nixon

47.10

38.50

8.30

185.52

151.64

32.69

1975/Ford

25.80

20.10

5.10

92.12

71.77

18.21

1976/Ford

29.30

22.40

6.20

97.83

74.79

20.70

1976.9/Ford

3.20

1.80

1.20

10.38

5.84

3.89

1977/Carter

45.55

35.79

6.68

141.87

111.48

20.81

1978/Carter

53.17

34.29

16.51

155.14

100.06

48.19

1979/Carter

51.08

28.90

18.98

137.98

78.07

51.27

1980/Carter

30.09

4.51

24.74

74.76

11.20

61.47

1981/Reagan

12.74

2.29

9.53

28.84

5.17

21.58

1982/Reagan

19.71

2.12

16.40

41.75

4.50

34.74

1983/Reagan

63.01

11.38

49.19

127.81

23.09

99.79

1984/Reagan

78.03

52.35

22.07

152.90

102.57

43.24

continues

Appendix 3

Fiscal Year/ Presidential Admin.

Current US$

305

Constant 2014 US$

Total US Econ. Asst.

USAID

Food Aid

Total US Econ. Asst.

USAID

Food Aid

1985/Reagan

50.61

18.38

29.50

95.98

34.86

55.94

1986/Reagan

74.63

38.42

32.18

138.38

71.24

59.67

1987/Reagan

78.00

28.72

36.54

141.47

52.09

66.27

1988/Reagan

91.66

37.48

34.85

161.06

65.86

61.23

1989/Bush 41

80.33

36.46

33.44

135.74

61.61

56.51

1990/Bush 41

109.15

58.43

33.83

177.98

95.28

55.17

1991/Bush 41

155.24

100.32

36.75

244.47

157.98

57.87

1992/Bush41

170.54

127.08

25.14

262.15

195.34

38.65

1993/Clinton

133.33

86.37

26.85

200.20

129.68

40.32

1994/Clinton

90.51

50.78

20.33

133.00

74.62

29.88

1995/Clinton

65.46

31.92

19.53

94.20

45.94

28.10

1996/Clinton

86.73

30.47

38.95

122.52

43.04

55.02

1997/Clinton

132.51

52.00

31.82

183.94

72.19

44.17

1998/Clinton

110.11

51.76

18.50

150.99

70.98

25.37

1999/Clinton

134.70

57.16

20.06

182.39

77.39

27.16

2000/Clinton

232.68

48.97

22.83

308.67

64.96

30.29

2001/Bush 43

187.83

119.49

16.85

243.30

154.77

21.83

2002/Bush 43

196.12

70.25

11.77

250.01

89.55

15.01

2003/Bush 43

221.40

65.40

47.74

276.95

81.81

59.71

2004/Bush 43

178.50

47.10

20.64

217.90

57.49

25.19

2005/Bush 43

165.67

53.16

13.50

196.08

62.91

15.97

2006/Bush 43

199.97

44.52

17.50

229.22

51.04

20.06

2007/Bush 43

139.67

38.41

18.76

155.88

42.87

20.94 continues

306

USAID in Bolivia

Fiscal Year/ Presidential Admin.

Current US$

Constant 2014 US$

Total US Econ. USAID Asst.

Food Aid

Total US Econ. Asst.

USAID

Food Aid

2008/Bush 43

157.93

57.42

18.07

172.69

62.78

19.75

2009/Obama

84.74

23.24

6.69

91.58

25.12

7.23

2010/Obama

90.83

43.95

-0.14

97.33

47.10

-0.15

2011/Obama

86.41

37.05

3.90

90.81

38.94

4.10

2012/Obama

40.51

9.78

41.84

10.10

2013/Obama

2.81

1.79

2.85

1.81

2014/Obama

7.48

-0.29

7.48

-0.29

4,610.63

2,160.42

9,513.91

5,334.63

Cumulative Fiscal Year, 46–14

935.19

2,045.30

Source: “U.S. Overseas Loans and Grants” [Greenbook],http://explorer .usaid.gov. Prepared by USAID Economic Analysis and Data Services. Notes: In 1976, the US government changed the fiscal year from July– June to October–September. The Transition Quarter (TQ) reports the three month adjustment period of July, August, and September in 1976.

Appendix 4

Development Assistance to Bolivia, Calendar Years 1960–2013 (in millions) Donor

1960–2013 (constant 2013 US$)

DAC Countries, Total*

20,580.69

Australia

1.22

Austria

183.29

Belgium

678.79

Canada

595.41

Czech Republic

2.23

Denmark

797.09

Finland

16.47

France

610.12

Germany

2,793.33

Greece

0.05

Ireland

9.00

Italy

466.98

Japan

2,120.20

Korea

46.34

Luxembourg

19.92

Netherlands

1,784.85 continues

307

308

USAID in Bolivia

Donor

1960–2013 (constant 2013 US$)

New Zealand

0.78

Norway

222.65

Poland

0.34

Portugal

0.01

Spain

1,313.99

Sweden

692.46

Switzerland

872.83

United Kingdom

448.86

United States

6,903.47

Non-DAC Countries, Total

3.37

Israel

2.42

Kuwait

0.03

Russia

0.09

Chinese Taipei

0.41

Thailand

0.02

Turkey

0.34

United Arab Emirates

0.06

Multilateral, Total

10,104.97

Climate Investment Funds

0.64

European Union Institutions

1,545.00

The Vaccine Alliance

19.36

Global Environment Facility

19.75

Global Fund

59.08 continues

Appendix 4

Donor

1960–2013 (constant 2013 US$)

International Atomic Energy Agency

2.56

International Bank for Reconstruction and Development

17.42

International Development Association

2,940.09

Inter-American Development Bank, Fund for Special Operations

3,847.35

International Fund for Agricultural Development

74.70

International Monetary Fund—Concessional Trust Funds

398.56

Nordic Development Fund

40.38

OPEC Fund for International Development

44.35

Joint UN Programme on HIV/AIDS

0.63

UN Development Programme

345.60

UN Population Fund

61.98

UN High Commissioner for Refugees

2.60

UN Children’s Fund

154.55

UN Regular Programme for Technical Assistance

71.72

UN World Food Programme

291.95

Other Multilaterals

166.71

All Donors, Total

30,689.02

309

Source: The Organization for Economic Cooperation and Development (OECD) and International Development Statistics (IDS) online databases. Prepared by USAID Economic Analysis and Data Services, December 17, 2015. Note: *DAC (Development Assistance Committee) members constitute a forum for discussing development issues. The DAC is an integral part of OECD.

Appendix 5

Mission Directors, Bolivia Year

Director

1951–1954

Oscar M. Powell

1955–1957

Ross Moore

1958–1960

Rey Hill

1961

William P. Hughes (acting?)

1962–1964

Alex Firfer

1965–1968

Irving G. Tragen

1969–1973

Edward W. Coy

1973–1976

John R. Oleson

1977–1979

Frank B. Kimball

1979–1980

Abe Peña

1980–1981

Malcolm H. Butler

1982–1985

Henry Bassford

1985–1987

David A. Cohen

1987–1990

G. Reginald van Raalte

1991–1994

Carl H. Leonard

1995–1996

Lewis Lucke (acting)

1996–1999

Frank Almaguer

1999–2005

Liliana Ayalde continues

311

312

USAID in Bolivia

Year

Director

2005–2008

Michael Yates

2008–2009

Peter Natiello

2009–2010

Kenneth Ellis

2010–2013

Wayne Nilsestuen

2013

Janina Jaruzelski

Appendix 6

Key Indicators, Bolivia PEOPLE Population

10,561,887 (2015)

Urban

32% (2015)

Rural

68% (2015)

Population Growth

0.3% (2015)

Human Development Index

119/188 (2015)

GOVERNANCE Females in Parliament

53% (2015)

Transparency Corruption Perceptions Rank

103/175 (2014)

ECONOMIC GDP (US$ millions)

$34,176 (2013)

GDP growth (annual %)

5.4% (2014)

10-year average

5% (2014)

Merchandise exports (US$ millions)

10,560 (2014)

Merchandise imports (US$ millions)

12,882 (2014)

Pct. of pop. living on under $1.90/day

7.7% (2013)

Income share of poorest 20%

2% (2013)

Income share of richest 20%

59% (2013)

Youth unemployment (ages 15–24)

4.9% (2013)

Annual inflation

5.8% (2014) continues

313

314

USAID in Bolivia

EDUCATION Completion rate, primary gross

89.4% (2013)

Female completion rate

89.7% (2013)

Male completion rate

89% (2013)

Public education expenditure (% of GDP)

6.4% (2013)

Youth literacy rate (ages 15–24)

100% (2013)

Children out of school, primary

272,823 (2013)

Of which are female

50.3% (2013)

Of which are male

49.7% (2013)

HEALTH Prevalence of TB (per 100,000 pop.)

196 (2013)

Deaths from malaria (per 100,000 pop.)

2 (2012)

Stunting (% children under 5)

27 (2012)

Fertility rate (children per woman)

4 (2008)

Modern contraceptive prevalence

24% (2008)

Births attended by skilled health staff

66% (2008)

Improved water source (% of pop.)

90% (2012)

Public health expenditure (% of GDP)

4.8% (2013)

Source: Data provided by USAID Economic Analysis and Data Services, December 2015.

Chronology

1941

US Government (USG) signs tin agreement with Government of Bolivia (GOB). Bohan team representing USG arrives to La Paz to survey economic development prospects.

1942

Bohan Report recommends USG program for economic development. USG signs agreements with GOB for procurement of tungsten, cinchona, and rubber. Cinchona Procurement Office established in La Paz. Rubber Reserve Company established an office in La Paz. Health and Sanitation Division of the Institute of InterAmerican Affairs (IIAA) established in Bolivia. US Department of Agriculture designated to implement IIAA program in Bolivia with health and agriculture elements to support rubber collection effort.

1943

Agreement signed with GOB to support the InterAmerican Agricultural Service.

1944

Inter-American Education Foundation operational in Bolivia. Export-Import Bank approved $10 million credit for Cochabamba-Santa Cruz road. Bolivian Development Corporation, jointly managed by GOB and USG, established to implement aid program.

1947

USDA sends team to Cochabamba to initiate an agricultural program.

315

316

USAID in Bolivia

1951

Punto Cuatro General Agreement signed in La Paz. USOM Mission established in La Paz to implement aid program. Agriculture, health, and education teams implementing development projects throughout Bolivia.

1952

1952 Bolivian Revolution. Paz Estenssoro comes to power leading the Movimiento Nationalista Revolucionario. USOM Mission reports 39 Americans and 400 Bolivians working with the Agriculture, Health, and Education Servicios.

1953

Milton Eisenhower mission goes to Bolivia to investigate need for aid program. Eisenhower administration approves an aid package for Bolivia. Bolivia’s National Agrarian Law passed.

1955

PL480 program initiated in Bolivia. Paz Estenssoro announces the completion of the Santa Cruz–Cochabamba road.

1962

USAID Mission established in Bolivia to replace USOM. Alliance for Progress program (grants and loans) initiated in Bolivia. Supports agriculture, education, public administration, private sector, mining, and infrastructure (road, aviation, and electricity) development. GOB develops a 10 Year Plan for Development. Triangular Plan established with USG funding to support the Cooperación Minera de Bolivia.

1966

USAID Mission promotes Title IX guidance of the Foreign Assistance Act supporting community development, agrarian reform, and agriculture programs.

Chronology

1973

New Directions guidance applied by USAID Mission.

1975

Sector assessments for agriculture, health, and education to identify the problems of the rural poor majority undertaken by USAID Mission in support of the New Directions guidance.

1979

Basic Human Needs guidance applied by USAID Mission.

317

Intensive analysis of the problems of the rural poor majority undertaken by the USAID Mission. 1983

Chapare Regional Development Project authorized. Country Team evolves a counter narcotics program composed of USAID Bolivia promoting an Alternative Development strategy; Embassy (International Narcotics Matters Section) promoting eradication; and the Drug Enforcement Agency (DEA) promoting interdiction. Major health program initiated by USAID Mission.

1985

GOB’s New Economic Policy sets a new development path for the GOB.

1988

The USAID Mission promotes democracy and governance (D&G) projects.

1990

Cochabamba Regional Development Project authorized. Major private sector projects including micro credit projects initiated.

1992

USAID Mission supports environmental initiatives.

1996

The USAID Mission is organized by Strategic Objective Teams.

2005

Integrated Community Development Fund project funded by USAID Mission and implemented throughout the Yungas and the Chapare.

2012

DEA expelled from Bolivia. All USAID-funded Alternative Development activity in

318

USAID in Bolivia

the Chapare suspended. GOB informs the USG that USAID-funded D&G activities be terminated. 2013

President Morales announces the expulsion of the USAID Mission. USAID leaves.

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Wennergren, E. Boyd, and Morris D. Whitaker. The Status of Bolivian Agriculture. New York: Praeger, 1975. Wessel, Kelso Lee. “An Economic Assessment of Pioneer Settlement in the Bolivian Lowlands.” PhD diss., Cornell University, 1968. Westwood, Andrew F. Foreign Aid in a Foreign Policy Framework. Washington, D.C.: Brookings Institution, 1966. Wilkie, James W. The Bolivian Revolution and U.S. Aid Since 1952. Los Angeles, CA: University of California Press, 1969. Wolff, Jonas. “Challenges to Democracy Promotion: The Case of Bolivia.” Washington, D.C.: Carnegie Endowment for International Peace, 2011. Zondag, Cornelius H. The Bolivian Economy, 1952–1965: The Revolution and Its Aftermath. New York: Praeger, 1966. Zondag, Cornelius H., with assistance from Manuel Valderrama and Rolando Kempf-Mercado. “Problems in the Economic Development of Bolivia.” Draft manuscript prepared for USOM Bolivia, 1956.

Index Acción Democrática Nacionalista (ADN), 219–220, 247–248 accountability: Bush 43 Strategic Plan for health care access and, 258–259; coca conversion and eradication program monitoring, 204; congressional task force analysis of USAID, 192–193; criticism of USAID practices, 131–132; in USAID Missions, 95; USOM function, 61 Acheson, Dean, 25 Act for International Development (1950), 40 Administration Decentralization Law (1995), 261 Administration of Justice (AOJ) production, 205, 256–257, 279 Adventist Development and Relief Agency, 178–179 AFL-CIO representatives, murder of, 194–195 agrarian reform, 56–58, 89, 113, 124(n77) Agrarian Reform Decree (1953), 68 Agrarian Reform Law, 56–57 Agreement for Technical Cooperation, 42 Agricultural Cooperative Development International/Volunteers in Overseas Cooperative Assistance (ACDI/VOCA), 263–264, 280– 282 Agricultural Development in the Coca Zones Project (ADCZP), 163–164 agricultural production: agricultural credit programs, 68–69; Altiplano, 7; Bohan Report, 29– 31; Brazilian Shield, 14; cinchona cultivation and collection, 28; colonos, 15–18; distinguishing features of the ecological zones,

9–11(table); encouraging immigration into the Oriente, 71– 73; estimated disposition of crops, 1973, 147(table); exports of principal goods as a percent of total exports, 148(table); financial impact of the drug industry, 197; intervening high valleys, 13; obstacles to Servicio changes, 70–71; Peace Corps volunteers, 117; potato production, 112; production and value of principal crops, 146(table); rubber production, 27; Santa Cruz Plain, 14. See also coca production Agriculture, US Department of (USDA), 27, 29 agriculture assistance and investment: bias in USAID expenditures, 140; Carter’s human rights agenda prioritizing, 156; development research, 44–45; D&G investment, 195; economic diversification strategy in the Oriente, 34, 65, 67; evaluating USOM Bolivia, 77; Institute of Inter-American Affairs responsibility for, 22; measuring USAID program performance, 166–167; Mission expansion of geographical reach, 161–162; Point Four implementation, 43– 45, 69–70; Point Four personnel, 60–62; programs for subsistence farmers, 139–141; replacing the USAID bureaucracy with a social development corporation, 129– 130; research and extension stations, 44–45, 65, 67; research stations, 1974, 66–67(table); USAID projects strengthening Bolivia’s Ministry, 108 AIDS relief, 244

327

328

USAID in Bolivia

air transportation sector: Mission objective, 108 Airgrams, 103 Albright, Madeline, 243 Alianza para el Progreso: Cuban paramilitary coup attempt, 91–92; initial conception of, 88; project completion, 118–119; Rockefeller report on, 128–130; US agencies advancing the role of, 97–99 Allied Powers, Bolivia’s declaration of support for, 35–36 Almaguer, Frank, 267 alpaca production, 111–112 Alternative Development program: components of the program, 264– 265; Country Team strategy for coca reduction, 202; evaluation under Clinton, 225; implementation under Clinton, 223–224; reengineering the Mission, 220–222; support under Clinton, 223–224; USAID program evaluation under Obama, 280–282. See also counter-narcotics programs Altiplano: 1952 Revolution, 56; population demographics, 5–12, 12(table), 15, 56, 139–141 Amazon Rain Forest, 13–14 American Political Foundation, 171– 172 analytical phase of the foreign assistance program, 34–35 anarchy, 40–41 Andean Trade Promotion and Drug Eradication Act (ATPDEA), 253 Andrade, Victor, 18, 22–23, 63 animal husbandry projects, 111–112 Arce Gomes, Luis, 206 Argentina: vital statistics comparison, 143(table) Arguedes, Antonio, 132 The Arrogance of Power (Fulbright), 127–128 Atabrine, 28 Atlantic Charter, 22 Atwood, Brian, 213–216, 243 Audiencia of Charcas, 162

audit function (USAID), 132; measuring USAID program performance in the 1970s, 165– 168; reengineering USAID Mission under Clinton, 221–222 authoritarian regimes: Banzer’s transition to democracy, 219– 220; economic crisis of the 1980s, 175–177 Ayalde, Liliana, 267 Aymara, 15, 23; Che Guevara’s search for a revolution, 120; Kataristas, 218 Baker, Jim, 243 Banco Agricola de Bolivia (BAB), 27, 68, 140, 145 Banco de Mineral de Bolivia (BMB), 30 BancoSol, 232–233 banking sector: Export-Import Bank, 31, 33, 41–43, 47–48, 108, 289– 290; microlending programs, 231–232; USAID Mission goals, 108–109 Banzer Suárez, Hugo: commitment to democratic reform, 169(n13); economic crisis of the 1980s, 175–176; Five-Year Development Plan, 159–160; Kissinger and, 169(n13); leadership transition, 196–197; pacted democracy, 219–220; Torres’s ouster from the presidency, 134–135; trickledown economics, 144–145; 2002 election, 247–248 Barrientos, René, 100, 132–133 Basic Human Needs approach, 157, 160–166, 187 Bassford, Hank, 177–178 Bay of Pigs, 91 Bell, David, 96–99 Beni Plains, 14 Bennett, Doug, 167 births: South America’s vital statistics comparison, 143(table). See also infant mortality bismuth production, 48 Bleidner, Jim, 69–70

Index 329

Bohan, Merwin, 29 Bohan Mission, 47–48 Bohan Report, 29–34, 73–74, 183 Bolivia Transparente, 258 Bolivian Agricultural Bank (BAB), 27, 68, 140, 145 Bolivian Development Corporation (BDC), 31–33, 41, 48–49, 56–58, 72 “bottom-up” economic model, 89 Brazil: vital statistics comparison, 143(table) Brazilian Shield, 14 Brundtland Commission, 214–215 Burdick, Eugene, 90 Bureau of Mines, 29 Bureau of Policy, Planning, and Learning, 274 bureaucracy of USAID, 2; authority over the audit function, 132; cuts and reorganization during the 1970s, 158; decisionmaking process in the Missions, 102–103; leadership of Oleson and Kimball, 138; losing touch with the needs of the rural poor, 130– 131; Rockefeller advocating reorganization of, 129–130 bureaucratosclerosis, 129, 156–157 Busch, Germán, 23 Bush 41 (George H.W.) administration: democracy and governance initiatives, 195, 205; intent to dismember USAID, 243; political and economic stability as aid goals, 198; USAID reform package, 192–193; war on drugs, 195–196, 199–204, 208–209 Bush 43 (George W.) administration: D&G program goals, 255–256; economic opportunities for Bolivia’s poor, 262–263; Emergency Plan for AIDS Relief, 244; expulsion of Bolivia’s ambassador, 253; health care access, 258–259; improving assessment strategies, 266–267; judicial reform, 256–257; noninterventionist posture and dismemberment of USAID, 241–

245; project evaluations, 138; protection of tropical forests, 261; response to political and economic crisis, 265–266; supporting citizen participation in elections, 257–258; supporting participation in local government, 257; USAID administration, 244– 245; USAID Mission program and strategic objectives, 255; USAID’s search for credibility, 245–246 cables, 102–103 caciques, 25 campesinos: agricultural production credit, 68; health care plan for all Bolivians, 141–144; income improvement through coca production, 179–180; land reform, 113; 1952 Revolution, 55–58; Peace Corps Volunteers and, 116–118; potato production, 112; sheep, llama, alpaca, and wheat production, 111–112; USAID’s mandate for management role, 107–108; USAID’s rural development plan, 111. See also agricultural production; indigenous people capital development officers (CDOs), 94 Capitalization Law, 219 Cárdenas, Victor Hugo, 218–219, 226 Carriaga, Juan, 176, 187(n11) Cartagena Declaration (1990), 196, 201 Carter (Jimmy) administration: antidrug policy, 163–164; campaign rhetoric on human rights, 155–157; global expansion of assistance to Bolivia, 164–165; USAID bureaucratic reform, 158 Carville, James, 213, 268(n19) Castro, Fidel, 91, 119–120, 128–129, 242 Catavi massacre, 24 Catholic Relief Service (CRS), 109– 110

330

USAID in Bolivia

cattle production, 67, 69–70, 140 Central Bank, 197 Central Intelligence Agency (CIA), 91, 100, 120, 132, 194 central planning, economic, 176 Chaco, 15; clash with Bolivia over resource wealth, 23 Chapare region, coca production in, 14, 163, 179–180 Chapare Regional Development Project (CRDP), 180–181, 198– 199, 203 Chávez Frías, Hugo Rafael, 242 Chávez Ortiz, Nifio, 57 child mortality rate, 210(n21), 260(table). See also infant mortality Chile: leftist and ultranationalist ideologies, 133; vital statistics comparison, 143(table) China: development path models, 119 cholos, 56. See also campesinos Christopher, Warren, 243 cinchona bark, 25–26, 28, 32 Cinchona Procurement Office (CPO), 25–26 Civil Service System project, 107– 108 Clinton, Hillary, 274, 277 Clinton (Bill) administration: Alternative Development program, 223–224; Bush 43 criticism of interventionist posture, 241; concerns over lack of efficient assistance delivery, 216–217; continuing projects and new additions under, 222–223; D&G programs, 225–227; efficient management reform, 215–216; foreign donor growth, 233–234; health, population, and nutrition missions, 229–231; microlending programs, 231–233; realignment of D&G strategies, 213–215; reengineering the SO, 222–234; reengineering the USAID Mission, 220–222; Sánchez de Lozada’s development promotion, 218– 219; State Department-USAID

relationship, 217–218; sustainable development strategy, 214–215; tropical forest preservation, 227–229; USAID accomplishments and deficits, 234 Club of Rome, 130 coalition governments. See pacted democracy coca production: alternatives to, 200; Banzer’s collaborative plan with the US, 220; Bush 41 administration assistance goals, 198–204; Bush 43 Mission goals, 255; demographics of, 189(n35); economic contribution, 145; historical role in Bolivian life, 162–164; income improvement through, 179–180; intervening high valleys, 13; Morales’s commitment to, 253, 276–277; political pushback against eradication programs, 223–224; Reagan’s antidrug agenda, 172; Three D Strategy, 177; USAID program evaluation under Obama, 281. See also Alternative Development program; counternarcotics programs and policies Cochabamba Regional Development Project (CORDEP), 203–204 Cochabamba-Santa Cruz highway, 32–33, 41–44, 46–47, 63, 108 Code of Criminal Procedures (CCP), 256–257 coffee production, 279 Cohen, David, 179, 182–183, 188(n21) Cold War, 39 Colombia: vital statistics comparison, 143(table) colonos (agricultural laborers), 15–17 COMIBOL, 56, 144–145, 177, 179. See also mining sector Comité Boliviano de Fomento Lanero (COMBOFLA), 97, 112 communist regimes: development models, 119–120 communist threat: Alianza as weapon against, 88; Eisenhower’s

Index 331

criticism of Truman, 53–54; Milton Eisenhower’s defense of the Revolution, 63; Ovando embracing leftist ideologies, 133; Reagan administration’s tensions with Russia, 171–172; USOM as bulwark, 62 community development, 113–116, 124(n85) Community of Latin American and Caribbean States (CELAC), 275 Congressional Presentation (CP), 3 conspiracy theory, Morales’s view of USAID as part of, 1 constitution, Bolivian: indigenous rights, 18; Morales’s constitutional reform, 251–252; multiethnicity and multiculturality amendment, 219 construction projects, 115; drug money laundering, 197. See also infrastructure contract officers, 174–175 Cooperative for Assistance and Relief Everywhere (CARE) program, 262–263 corn production, 67 Corporación Boliviana de Fomento (BDC), 31–33, 41, 48–49 corporate sector: expanding modern agricultural practices to campesinos, 139–141; Ovanda administration’s dissatisfaction with USAID, 132; replacing the USAID bureaucracy with a social development corporation, 129– 130; restructuring USAID, 98; strengthening the Mission in, 183–185. See also private sector corruption: as element of Bush 43 development compact, 243–244; endemic nature in public and private sectors, 225–226; judicial reform combating, 206; Paz Estenssoro’s use as control mechanism, 237(n40); US taxpayers’ perception of, 61 Cotoca Colony, 72 counter-narcotics programs and policies: alternative development

programs under Bush 43, 263– 265; Banzer’s collaborative plan, 220; during Bolivia’s financial crisis, 179–183; Bush 41 administration, 195–196; Cartagena Summit outcome, 275; components of, 264; Country Team strategy for coca reduction, 199–204; effect on reengineering USAID Mission, 221; historical role of coca in Bolivian life, 163– 164; mixed results, 208–209; Reagan administration policy, 172; USAID Mission program under Clinton, 222–234. See also Alternative Development program Country Development Strategy Statement (CDSS), 200–204 Country Team organization, 103– 104, 103(fig.) coups d’état: Barrientos seizing power from Paz Estenssoro, 100; CIA role in Cuban military coup attempt, 91; military coup by Garcia Mesa, 164; MNR overthrow of Peñaranda, 24; MNR’s urban insurrection, 41 credibility, Mission, 131–132, 245– 246 Cuba: CIA role in military coup attempt, 91–92; development models, 119–120; Obama’s foreign policy, 274–275; Punta del Este Charter, 91–92; Reagan’s focus on the communist threat in Latin America, 172 Cuban Yellow corn, 67 currency stabilization, 28–29, 32, 176–177 Dean, Bob, 194–195 deaths: health status indicators, 260(table); murder of AFL-CIO representatives, 194–195; South America’s vital statistics comparison, 143(table) debt, Bolivia’s, 197 Decade of Development, 89–91 decentralization of power, 226

332

USAID in Bolivia

decisionmaking process in the Missions, 102–103 democracy and governance (D&G) initiatives: Bush 41 administration D&G initiatives, 205; Bush 43 goals, 243–244, 255–257; Carter’s human rights agenda, 156; Clinton administration, 213–214, 225– 227; CORDEP support, 203; judicial reform, 206–207; legislative and electoral strengthening, 207–208; linking development assistance with, 97– 99; Morales’s call for the termination of US programs, 253; Reagan’s infrastructure of democracy, 171–172; as silver bullet for aid programs, 194–195; strengthening citizen participation in municipal politics, 226–227; Three D Strategy, 177–178 Democratic Development and Citizen Participation (DDCP), 226–227 democratic governance (Bolivia): Banzer’s reintroduction of constitutional government, 159– 160, 169(n13); Banzer’s transition from dictatorship to democracy, 219–220; economic stagnation threatening, 246–247; Paz Estenssoro’s pact with Banzer to sustain, 176; protests against Sánchez de Lozada’s pacted democracy, 248–249 development agenda, 1–2; analytical phase, 34–35; decisionmaking process in the Missions, 102–103; defining the US strategy, 29–30; FDR’s core values for foreign policy, 22; funding the Bohan Report recommendations, 31–32; Henry Wallace’s state visit, 35– 36; lack of documentation for, 2– 4; reengineering the USAID Mission under Clinton, 220–222; securing strategic materials, 25– 28; slow start of the bilateral program, 32–33; as US selfinterest, 28–33

Development Assistance Program, FY 1975, 135 Development Loan Fund, 94 development models, 4; Paz Estenssoro’s state capitalism, 58; reformulation under Reagan, 186–187; Rostow’s capitalist system, 88–89; Russia, China, and Cuba, 119–120; “trickledown” economic model, 33–34, 88–89, 130, 144–145, 171, 176 Development Reconsidered: Bridging the Gap Between Government and People (Owens), 130–131 Dillon, Douglas, 91 dismemberment of USAID: Bush 43 administration, 241–245 diversification, economic, 14, 33–34, 57, 163–164 downsizing, 221 drought, 178–179 Drug Enforcement Agency (DEA), 172, 202, 253 drug industry: money laundering, 197; US development assistance program, 29. See also coca production; counter-narcotics programs and policies Dulles, Allan, 91 Dulles, John Foster, 53, 63 duration of USAID projects, 96–97 earmarks, 192 ecological subsystems, 7, 9– 11(table), 13–14 Economic Cooperation Administration, 54 economic crises, Bolivia’s: corruption stemming from, 226; following Banzer’s authoritarian rule, 175–177; impact on the private sector, 184–185; Mesa’s plea for US help, 250 economic growth: Banzer’s FiveYear Development Plan for 19761980, 159; increasing Santa Cruz’s political voice, 145; microlending programs, 231–232; as model for Banzer presidency, 134–135; under Morales, 277–

Index 333

278, 284; multiyear development strategy, 134–135; success of NEP, 218 economic models: “bottom-up,” 89; Paz Estenssoro’s state capitalism, 58; “trickle-down” economic model, 33–34, 88–89, 130, 144– 145, 149–150 economic performance (Bolivia): Bohan Report describing, 29–30; coca production decline contributing to economic downturn, 220; crisis in the microlending industry, 232–233; effect on NEP on lower and middle classes, 196–197; open markets as element of Bush 43 development compact, 243–244; roots in social and political unrest, 253–255; stagnation threatening democratic processes, 246–247; trickle-down model, 33–34; Truman Doctrine, 39–40; USOM buttressing, 80–81 economic policy (US): US capitalism as Bolivian policy, 2–3 Economic Policy Analysis Unit (UDAPE), 178, 188(n21) economic reforms: Sánchez de Lozada administration, 218–219 economic stabilization program, 58 Ecuador: vital statistics comparison, 143(table); illicit drugs, 196 education: campesinos’ lack of progress, 150; D&G investment replacing investment in, 195; evaluating USOM Bolivia, 78– 79; goals of the 1952 Revolution, 74–75; measuring USAID program performance, 165; Peace Corps volunteers building schools, 117; Point Four implementation, 43, 45–46; Point Four personnel, 60; replacing the USAID bureaucracy with a social development corporation, 129– 130; for the rural poor, 141; USAID Mission support for curriculum development, 108– 109; USAID program evaluation

under Obama, 281–282; USAID’s declining investment, 236(n28); USOM stability and continuity, 65 Eisenhower (Dwight D.) administration, 49(n7); criticism of Truman, 53–54; JFK’s review of development program, 90; report on economic conditions, 63–64; “trade not aid,” 53–54; USOM Bolivia form and function, 58–62. See also USOM Bolivia El Niño effects, 175 El Salvador, 172; murder of AFLCIO representatives, 194–195 elections: Banzer and Paz Estenssoro, 175–176; Banzer’s attempt at political reform, 159–160; of Bill Clinton, 213; Bush 43 administration supporting citizen participation, 257–258; ending military rule in 1940, 23–24; Mesa’s resignation, 250; MNRKatarista ticket, 218–219; Morales’s new constitution, 252; Morales’s presidential campaign, 250–251; Morales’s reelection in 2009, 275–276; Morales’s reelection in 2014, 284; 1997 election, 219–220; role of Carville and Associates in the 2002 elections, 268(n19); Sánchez de Lozada’s election in 2002, 247–248; USAID push for democracy initiatives, 195 electoral process: legislative and electoral strengthening under Paz Zamora, 207–208 electrification projects, 167–168 Embassy, US, 103–104, 105(fig.) emergency assistance, 178–179, 266 Emergency Plan for AIDS Relief (PEPFAR), 244 empowerment: Bush 43 Strategic Plan for health care access, 258– 259 environmental law, 199 environmental quality: tropical forest preservation, 227–229, 261;

334

USAID in Bolivia

USAID Mission program under Clinton, 222–234; USAID program evaluation under Obama, 282 evaluation system, 137–138, 165–168 exchange rate system, 43 Export-Import Bank (Ex-Im; US), 31, 33, 41–43, 47–48, 108, 289–290 failed projects, 79–80 family planning: Bush 43 Strategic Plan for health care access, 258– 259; as excuse for Peace Corps expulsion, 133; Health Sector Assessment, 142; 1970s push for population programs, 161; Peace Corps activities, 117–118; PROSALUD evaluation, 230– 231; Reagan policies, 173–174; USAID program evaluation under Obama, 279–280 fascism, 21–22 fear, freedom from, 22 Federación Sindical de Trabajadores Mineros de Bolivia, 24–25 Ferris, George, 193–194 Ferris Report, 193–194 financial crises. See economic crises, Bolivia’s Firfer, Alex, 106–107, 111 fiscal administration reform: as obstacle to development assistance, 43 Fitzgerald, Dennis “Doc,” 76, 97–98 Five-Year Development Plan, 159 Five-Year Plan for health, 142 Flack, Joseph, 46–47 Food, Agriculture, Conservation and Trade Act (1990), 198–199 food assistance: Bolivia’s eligibility for Title III, 210(n21); Bush 41 administration plan, 198–199; Bush 43 administration plan, 262–263; continuation under Clinton, 223; Food for Peace, 109–110; during national emergencies, 178–179; PL480, 55 Food for Peace, 109–110 Food for Peace Act (1966), 109

Food for the Hungry International (FHI), 178–179, 262–263 food programs: potato production, 112. See also agriculture food security, 198–199, 269(n52) Ford, Tex, 202 Ford (Gerald) administration: population program, 161; project management and monitoring, 136 Foreign Assistance Laws, 89, 131, 192–193 Foreign Economic Assistance Act (1950), 40 foreign exchange: multiyear development strategy, 135 Foreign Ministers of the American Republics, 22 Foreign Operations Administration (FOA), 54 foreign service nationals (FSNs), 62, 221 foreign service officers (FSO), 96– 97, 158 foreign service reserve (FSR) officers, 96–97 forest management: Bush 43 Strategic Plan, 261; Morales stops support for forestry, 253; USAID program evaluation under Obama, 282 Forestry Law (1996), 229, 261 forestry management project, 223, 227–229 forgiving loans, 186 Foundation for the Promotion of Micro-Enterprises (PRODEM), 185, 231–232 Four Freedoms, 22 Four Freedoms mural, 217 Four Pillars (McPherson), 173 Fox Quesada, Vicente, 242 Free Bolivia Movement, 218–219 fruit production, 224 Fulbright, William, 127–128 funding: coca eradication program, 203–204; community development, 114–115, 124(n85); cuts under Johnson and Nixon, 127–128; education for the rural poor, 141; projects under the

Index 335

Johnson administration, 139 García Linera, Alvaro, 250–251, 275 García Mesa, Luis, 164, 206 Gelbard, Bob, 201–202 geography: Altiplano, 5–12; intervening high valleys, 13; Oriente, 13–15 Geological Service Organization (GEOBOL), 110–111 Germany: foreign donor increases, 233–234 Gilligan, John, 156–157 Gilman, Benjamin, 192 global projects: creation and goals of USAID, 92–93 Goldberg, Philip, 253 Good Neighbor Policy, 21, 35–36, 53, 88 Gore, Al, 226 governance: Banzer’s reintroduction of constitutional government, 159–160; Bush 41 administration D&G initiatives, 205; democracy and governance as silver bullet for aid programs, 194–195; indigenous people’s demand for a voice in, 24–25; role of the Bolivian government in US antidrug strategy, 265. See also authoritarian regimes; democracy and governance (D&G) initiatives; democratic governance; individual presidents government, Bolivian: role in USAID management, 107–108; rural development funding, 115. See also Alianza para el Progreso Government Accounting Office (GAO), 192, 200 Government Performance and Results Act, 215–216 grant funding, 114–115, 124(n85), 141, 252–253, 265 Greenlee, David, 201, 252–253, 265 growth rate: South America’s vital statistics comparison, 143(table) Guachalla, Luis Fernando, 28

Guatemala: CIA training of Cuban exiles, 91; Reagan’s focus on the communist threat, 172; US foreign aid under Eisenhower, 54 Guevara, Che, 91, 119–120 Guevara, Walter, 205, 237(n40) Gulf Oil Company, 133 Haiti, 157 Hamilton, Fowler, 97–99 Hamilton, Lee, 192 Hamilton-Gilman task force, 192– 194 health care and health conditions: Bush 43 Strategic Plan, 258–259; Clinton administration mission, 229–231; community-based system for campesino families, 161; D&G investment replacing investment in, 195; evaluating USOM Bolivia, 78; funding the Bohan Report recommendations, 31–32; health initiatives in the 1970s, 141–144; health Servicio, 74; health status indicators, 260(table); improved health through PL480 programs, 262– 263; indigenous medicine, 17–18; Institute of Inter-American Affairs responsibility for, 22; measuring USAID program performance, 165–166; Point Four implementation, 43, 45; Point Four personnel, 60; PROSALUD funding, 185–186; rubber collection, 27; USAID mining sector support, 110–111; USAID program evaluation under Obama, 279–282; USOM stability and continuity, 65 Health Sector Assessment, 142 hegemony (US): Bolivia’s view of US involvement in Vietnam, 133 Heilbroner, Robert L., 127(quote) Henderson, Douglas, 100 High Valleys, 12(table), 13 highway system, 30–32, 108. See also Cochabamba-Santa Cruz highway; infrastructure Hill, Rey, 76

336

USAID in Bolivia

Hochschild mining operation, 48 housing: microlending programs, 232 Hull, Cordell, 31–32 human resources: USAID Mission support for projects, 108–109 human rights: Carter’s campaign rhetoric, 155–157 humanitarian concerns, 54 Humphrey Amendment (1961), 89, 290 hydrocarbon development: clash with Bolivia over resource wealth, 23; clash with Paraguay over, 23–24; economic prosperity under Morales, 277–278; increasing exports under Banzer, 144–145; leftists’ criticisms of US policy, 133; Mesa’s tax proposal, 248– 249; Morales’s nationalization of, 252; Morales’s new constitution, 251–252; 2004 election campaigns, 251; US national interests supporting, 47–48 immigration, 71–73, 214–215 income levels: campesinos’ lack of economic progress, 149–150; South America’s vital statistics comparison, 143(table) indigenous people: claiming a voice in national government, 25; colonial history, 15–18; health problems, 17–18; Morales’s election victory, 251; Morales’s historical perspective of Bolivia, 278–279; Morales’s reelection in 2009, 276; 1952 Revolution, 55– 58; role of coca leaf production, 162–164; Sánchez de Lozada’s vision of freedom from racism, 226; US government focus on, 290. See also campesinos industrialization, 97–99 infant mortality: Basic Needs programs, 161; colonial history, 17–18; Health Sector Assessment, 142; health status indicators, 260(table); improvements in, 270–271(n75); Potosi region, 295–296;

PROSALUD evaluation, 230– 231; South America’s vital statistics comparison, 143(table); Title III assistance eligibility, 210(n21) inflation rate, 197 information technology (IT): analyzing performance data, 223 infrastructure: Banzer’s Five-Year Development Plan, 159; Bohan Report recommendations, 30–31; Cochabamba-Santa Cruz highway, 32–33, 41–44, 46–47, 108; community development projects, 115; IIAA and Ex-Im funding, 42–43; immigration into the Oriente, 73; Reagan’s infrastructure of democracy, 171– 172; USAID bureaucrats’ experience in La Paz, 101–102; USAID construction in the Chapare, 14; USAID loans, 94; war on drugs, 202–203 Inside Foreign Aid (Tendler), 97 Institute of Inter-American Affairs (IIAA), 22, 27, 29, 41–43 Institute of Occupational Health, 110–111 institution building, 81 institutionalization of USAID, 158 Integrated Development and Conservation in the Bolivian Amazon Project, 282 integrated justice centers (IJCs), 256 Inter-American Conferences, 21 Inter-American Development Bank (IDB), 135, 140, 159, 233–234 Inter-American Economic and Social Council (ECOSOC), 91–92 Inter-American Education Foundation, Inc. (IAEF), 22 Inter-Departmental Committee on Scientific and Cultural Cooperation, 21 International Cooperation Agency (ICA), 54, 90 International Monetary Fund (IMF), 43, 80, 176, 247 International Narcotics Matters (INM), 180

Index 337

intervening high valleys, 13 investment code, Bolivia’s, 135 isolationism: Morales’s National Development Plan, 252 Japan: foreign donor increases, 233– 234 jobs: coca production, 179–180; food aid during national emergencies, 178–179; mining, 29–30; role of the Bolivian government in US antidrug strategy, 265; US officials of the Point Four Mission, 42 Joel, Clark, 199 Johnson, Hank, 109 Johnson (Lyndon B.) administration: projects funded under, 139–141; USAID grant and loan reviews, 95 judicial reform, 195, 205–207, 255– 257 Katari, Túpac, 251, 269(n55) Kataristas, 218 Keenleyside, Hugh, 43 Keenleyside Report, 53(quote) Kennan, George, 40 Kennedy (John F.) administration: communist presence in Bolivia, 99–100; creation of USAID, 92– 94; criticism of aid programs, 273–274; Decade of Development, 89–91; Fitzgerald’s criticism of development assistance reform, 97–98; food assistance projects, 109–110; Peace Corps, 116–118; recruiting young professionals to government service, 106–107; taxpayers’ perceptions of corrupt assistance practices, 87–88; USAID grant and loan reviews, 95 Kerry, John, 283 Kimball, Frank, 138 Kissinger, Henry, 159, 169(n13), 172 Kissinger Commission Report on Central America, 195 Kramer, Bob, 202

La sangre del cóndor (film), 133 labor conditions, 27 labor movement, 24–25, 133 labor unrest, 26–27 Lake Titicaca, 8 Lancaster, Carol, 213–214, 226 land reform, 56–58, 113 land tenure, 68–69 Land Tenure Center (LTC; University of Wisconsin), 113, 124(n77) languages: distinguishing features of the ecological zones, 9–11(table) Latin American and Caribbean Bureau (LAC), 157–158, 195 laundry cooperative, 117 leadership: turnover in political activists, 196–197 leadership training, 194 Lechín Oquendo, Juan, 24–25, 41, 55–56, 58, 99–100, 133 legislation, Bolivian: Banzer’s coalition, 219–220; legislative and electoral strengthening under Paz Zamora, 207–208; MAS wins in 2004, 251; Morales’s reelection in 2009, 275; strengthening citizens’ participation, 226–227; USAID push for democracy initiatives, 195 Leonard, Carl, 202, 226, 267 Leonard, Olen, 44 liberation theology, 130–131 life expectancy, 142, 260(table), 270– 271(n75) “limits of growth” concept, 130 literacy, 18, 150, 165 living standards: Banzer’s Five-Year Development Plan to improve campesinos’, 159–160; campesinos’ lack of progress, 150; increase despite economic malaise, 254–255; Point Four personnel, 60; USAID bureaucrats’ experience in La Paz, 101–102 llama production, 111–112 Logical Framework of USAID, 131– 132

338

USAID in Bolivia

logo, USAID, 214 Lovett, Robert, 98 Lucke, Lew, 221, 267 Lynch, Kevin, 116–117 MacLean Abaroa, Ronald, 176 macroeconomic stabilization, 247 Magruder, Calvert, 27 malaria eradication, 27, 78, 108 malnutrition, 142 manufacturing: securing strategic materials, 26–27 Mao Zedong, 119 market economy model, 176 Marshall Plan, 39–40, 88 Massachusetts Turnpike Authority, 242 Maternal and Child Health (MCH) Department, 144 McGraw-Warren company, 33, 46 McNamara, Robert, 98 McPherson, Peter, 173, 183 Mesa Gisbert, Carlos, 249–250 Metals Reserve Corporation (MRC), 25–26 Mexico: US relations under Bush 43, 242 Michel, Jim, 195 microenterprises, 185 microlending programs, 231–233 military, Bolivian: Barrienteos coup, 100; ousting Torres from the presidency, 134; seizing control of oil and gas fields, 252 military assistance and intervention (US): coca eradication, 180; FDR’s foreign policy pillars, 22– 23; Marshall Plan, 39–40; Reagan’s democracy building agenda, 172 military socialism, 23 Millennium Challenge Account (MCA), 243–244 Millennium Challenge Corporation (MCC), 244 mineral resources: Altiplano, 5–6; bismuth, 48; economic diversification, 144–145; increasing Bolivia’s debt, 197; increasing exports under US aid

programs, 144–145; US development assistance targeting, 28–33; US national interests supporting development of, 47– 48; US securing strategic materials, 25–28 mining sector: balancing the price of tin and the wages of miners, 26– 27; Bohan Report recommendations for, 30; living conditions of the miners, 17; miners’ demand for a labor movement, 24–25; nationalization of, 133–134; Peace Corps volunteers, 116–117; role of coca leaf production, 162; USAID mission assistance, 110– 111 minorities in USAID, 158 Mission director, 59–60 money laundering, 145, 197 Moore, Ross, 76 Morales Ayma, Juan Evo, 241(quote); Bolivians’ right to grow coca, 223–224, 276–277; economic growth, 277–278; expulsion of USAID from Bolivia, 1–2, 283, 290–291; growing discontent in Potosi, 295–296; historical perspective of Bolivia, 278–279; Mesa’s frustration with, 249–250; nationalization of hydrocarbons, 252; presidential campaign, 250– 251; protests against Sánchez de Lozada’s pacted democracy, 248– 249; reelection in 2009, 275–276; reelection in 2014, 284; renegotiating US-Bolivia relations, 252–253; Sánchez de Lozada’s election in 2002, 247– 248; strengthening his political base, 248 Moscoso, Ted, 97 Movimiento al Socialism (MAS), 247–248, 250–251 Movimiento Nacionalista Revolucionario (MNR), 24, 26, 41, 56, 100, 196–197, 218–219, 247–248

Index 339

Movimiento Nacionalista Revolucionario de Izquierda (MIR), 196–197, 219–220 Movimiento Revolucionario Tupac Katari de Liberación, 218–219 multiethnicity and multiculturality, 219 multiyear development strategy, 134– 135 murder of AFL-CIO representatives, 194–195 Mutual Security Agency, 54 Mutual Security Program, 62 nation building: criticism of US efforts in Third World programs, 90 National Community Development Program (NCDP), 113–116, 124(n85) National Credit Union Federation, 185 National Development Plan, 252 National Directorate for Agricultural Conversion (DIRECO), 204 national interests: development assistance as, 28–33, 289–290; Kennedy’s war on poverty in Latin America, 87–88; reflection in development strategy, 4 National Tax Policy Commission, 107–108 nationalism: Morales’s National Development Plan, 252; Ovando embracing radical politics, 133; Paz Estenssoro’s, 41 nationalization programs, 23, 56, 133 Natsios, Andrew, 241–242 natural gas resources, 248–249, 252 natural resources. See hydrocarbon development; mineral resources; mining sector; tin production “New Directions” approach to Foreign Assistance legislation, 131, 157 New Economic Policy (NEP): Banzer’s support for, 220; coca production and, 180; elements of, 176–177; Mission objectives under Bush 43, 255; parenthood

of, 187(n11); protests against, 196–197; Sánchez de Lozada’s commitment to, 218–219; signs of economic growth, 218; transition to the Clinton administration, 223 Nicaragua, 172 1952 Revolution, 18, 55–58, 63, 74– 75, 118–119 Nixon (Richard M.) administration: overextended expectations of USAID, 150; population program, 161; project management strategies, 136; restructuring the foreign assistance bill, 128; Rockefeller’s reorganization strategy, 129–130; taxpayers’ perceptions of corrupt assistance practices, 87–88; Torres’s ouster from the presidency, 134 Noriega, Manuel, 196 Nueva Fuerza Republicana, 271 nutrition levels: Altiplano campesino families, 139–140; Carter’s human rights agenda prioritizing, 156; Clinton administration mission, 229–231; USAID program evaluation under Obama, 279–280. See also food assistance Obama (Barack) administration: end of USAID programs, 283–284; evaluation of USAID programs, 284; focus on Latin America, 274–275; normalizing relations with Bolivia, 277; project evaluations, 138; renewal and rebuilding of USAID, 274 Office of Budget and Resource Management, 274 Office of the Coordinator of InterAmerican Affairs, 22 Office of Transition Initiatives (OTI), 265–266, 269(n54) oil. See hydrocarbon development Oleson, John, 138, 163 open village forum, 114 Operation Blast Furnace, 181

340

USAID in Bolivia

Operation Bootstrap, 97 Operation Just Cause, 196 Operation Tycoon, 98 Organization of American States (OAS), 91–92 Oriente, 13–15; agricultural research and demonstration, 44–45, 65, 67; Bohan Report recommendations for development, 31; colonization of, 71–72; economic diversification strategy, 34; encouraging immigration into, 71–73; High Valleys, 13; 1952 Revolution, 56–58; population distribution and density by region, 12(table); rubber production, 27 Ovando, Alfredo, 132–133 Owens, Ted, 130–131 pacted democracy: Banzer Suárez, 219–220; Morales’s demonstrations, 248–249; political instability threatening Bolivia’s democratic processes, 246–247; Sánchez de Lozada’s election in 2002, 247–248 Panama: Noriega arrest, 196 Paraguay: clash with Bolivia over resource wealth, 23; vital statistics comparison, 143(table) parliamentary system, 23–24 Passman, Otto, 98, 246 paternalistic policies, 184 Paz Estenssoro, Victor, 171(quote); agrarian reform, 57–58; Bolivia’s control of the development process, 99–100; corruption and graft as power tool, 237(n40); economic crisis of the 1980s, 175–176; educational goals of the Revolution, 74–75; electoral oversight, 207–208; institutionalized corruption, 225– 226; Milton Eisenhower’s support of, 63–64; nationalist cause, 41; New Economic Policy, 176–177, 187(n11), 197; 1952 Revolution, 55; reform-based platform, 24; Sánchez de

Lozada’s ministry, 218–219. See also USOM Bolivia Paz Zamora, Jaime: electoral loss to Banzer, 219–220; judicial reform, 206–207; legislative and electoral strengthening, 207–208; protests against NEP, 196–197 Peace Corps: anti-Vietnam War protests, 133; creation and role of, 116–118; potato production initiative, 112; Torres’s expulsion of, 133 Peñaranda, Enrique, 23–24, 36 people, demographics of, 15–18 performance of USAID programs: Bush 43 Strategic Plan for assessing, 259; congressional task force analysis, 192–194; evaluation system, 137–138; improving assessment strategies, 266–267; information technology adoption for analyzing, 223; justice sector programs, 256–257; measuring program performance, 165–168; US perception of USAID ineffectiveness, 165, 168 Peru: leftist and ultranationalist ideologies, 133; vital statistics comparison, 143(table) petroleum. See hydrocarbon development Petroleum Code (1955; Bolivia), 133 picketing, 117–118 PL480, 55, 64, 178–179, 198–199, 223, 262–263 Plan Dignidad, 220 Plan quinquenal de desarrollo económico y social , 1972–1977, 135 Plaza, Galo, 128 Point Four: agriculturalist in Bolivia, 69–70; credibility and effectiveness, 245–246; economic diversification, 42–43; form and function, 59–62; implementation in agriculture, education and health, 43–46; origins of, 39–42; oversight agencies, 54 Point Four General Agreement for Technical Cooperation (1951), 43

Index 341

political instability: Evo Morales’ expanding influence, 223–224; as root of economic malaise, 253– 255; runup to Bolivia’s revolution, 40–41; US government response to crises, 265–266; US perception of USAID’s ineffectiveness, 165– 166 political participation, strengthening, 226–227, 257 political reform: Banzer’s reintroduction of constitutional government, 159–160 pongueaje (servitude of Indian labor), 25 Popular Participation Law (PPL), 226, 261 population: Clinton administration mission, 229–231; distribution and density by region, 12(table); 1970s push for population programs, 161; South America’s vital statistics comparison, 143(table). See also family planning potato production, 112, 117, 146(table)–147(table) poverty: analysis of the nature and extent of rural poverty, 160–161; Banzer’s Five-Year Development Plan, 159; campesinos’ lack of economic progress, 149–150; direction efforts and participation towards the rural poor, 157–158; economic opportunities for Bolivia’s poor under Bush 43, 262–263; failure of macroeconomic stabilization, 247; health care plan for all Bolivians, 141–144; health problems among the Indians, 17– 18; increasing under “trickledown” economics, 130; Kennedy’s war on, 87; living standards increase despite economic malaise, 254–255; microlending programs, 231–232; pushback against coca eradication programs, 223–224; sustainable

development strategy, 214–215; USAID losing touch with the needs of the rural poor, 130–131 Powell, Oscar, 42, 76, 79 prenatal care, 230–231 presidential task force on aid programs, 90–91 private sector: Reagan agenda policies, 173–175; rebuilding Bolivia’s economy after the crisis, 177–178; strengthening the Mission in, 183–185; USAID mining sector support, 110–111; USAID Mission goals, 108–109. See also corporate sector privatization under Banzer, 220 program strategy, 2 project budget submission (PBS), 95 project development officer (PDO), 136, 217 PROSALUD, 186, 229–230, 279– 280 protests: Banzer’s military action against, 220; Bolivians challenging the appropriateness of foreign assistance, 128–129; growing discontent with Morales in Potosi, 295–296; New Economic Policy, 196–197; against Sánchez de Lozada’s pacted democracy, 248–249 Public Defenders Office, 256 Public Roads Administration (PRA), 29, 32–33 Puerto Rico: industrial development, 97 Punta del Este Charter, 91–92 Quadrennial Diplomacy and Development Review (QDDR), 274 Quechua, 15, 23, 120 quinine, 28 Quiroga Ramírez, Jorge Fernando, 219–220, 248, 250–251 racism, Sánchez de Lozada’s vision of freedom from, 226 radical politics, 133–134 railroad, 14

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USAID in Bolivia

raw materials: US securing strategic materials, 25–28 Reagan (Ronald) administration: democracy and governance projects, 194–195; forgiving loans to Bolivia, 186; Latin America’s communist threat, 172; private-sector support, 174–175, 183–185; reformulating the development path, 186–187; review of foreign assistance program, 192–194; USAID Washington staffing and agenda, 173–174 reform of USAID: Bush 41 food assistance program, 198–199; congressional appeal in the 1980s, 191–194; results-oriented reform, 215–216 reform parties, 23–24 regime change (Bolivia): Banzer replacing an ousted Torres, 134– 135; Banzer’s attempt at political reform, 159–160; Ovando’s military coup, 132. See also coups d’état; specific individuals reproductive health services, 230– 231. See also family planning resources: Morales’s negotiated agreements, 284; Office of the Coordinator of Inter-American Affairs, 22; proposed sale of liquefied natural gas, 248–249; Spanish conquest, 15; tropical forest preservation, 227–229. See also hydrocarbon development; mining sector; tin production results-oriented reform, 215–216 revolution: chronic political instability after World War II, 40–41; Punta del Esta proclamation, 91–92 Revolution of 1952, 18, 55–58, 63, 74–75, 118–119 revolutionary ideology, 133–134 Reyes Villa, Manfred, 247–248, 275 Rhodes, Stacy, 117 Rice, Condoleezza, 245 rice research, 67–68 Rio de Janeiro Conferences, 22–23

Rocha, Manuel, 268(n19), 278 Rockefeller, Nelson, 22, 128–130 Rodríguez Veltzé, Eduardo, 250 “rolling designs,” 94–95 Romero, Fernando, 176 Roosevelt (Franklin D.) administration: Bolivia’s support of the Allied cause, 33–35; Good Neighbor Policy and Four Freedoms, 21–23; MNR coup, 24–25; obtaining raw materials for the war effort, 25–28; selfinterest governing development assistance, 28–33; vice presidential visit to Latin America, 35–36 Roskens, Ronald, 193, 214 Rostow, Walt, 88–89 Rotter, Sy, 137 rubber, 25–27 Rubber Reserve Company (RRC), 25–27 rural development, 111; Banzer’s Five-Year Development Plan to improve the quality of life, 159– 160; Carter’s goal to improve the living standards, 160–165; measuring USAID performance, 165–168; population distribution and density by region, 12(table). See also campesinos; poverty Russia: development models, 119– 120 Sachs, Jeffrey, 176, 187(n11) Salamanca, Daniel, 23 Sánchez de Lozada, Gonzalo, 188(n21); development agenda, 218–219; election of 2002, 247– 248; NEP parenthood, 187(n11); 1989 elections, 196–197; Paz Estenssoro’s economic restructuring, 176; resignation of, 249; role of Carville and Associates in the 2002 election, 268(n19); selling off family mining operations, 278; strengthening democratic processes, 226–227 Santa Cruz region, 145

Index 343

Santa Cruz-Cochabamba highway. See Cochabamba-Santa Cruz highway satellite tracking, 133–134 Schlesinger, Arthur, 88 Schneider, Mark, 213–214, 226 Schumacher, E.F., 130 self-government: role of underdeveloped countries in designing aid programs, 90–91 self-interest (US), development assistance as, 28–33, 289–290 Servicios: agriculture, 65, 67–71, 108; creation of, 43–44; education, 75; health, 45, 74; highway construction, 73–74; introduction of Point Four programs, 48 Shah, Rajiv, 273–274 sheep production, 111–112, 117 Siles Salines, Luis Adolfo, 132 Siles Zuazo, Hernán, 41, 55, 197 silver, 6, 145 Siracusa, Ernie, 134 Small Farmer Credit Program (SFCP), 166–167 Small Is Beautiful: Economics as if People Mattered (Schumacher), 130 small-business sector, 185, 231–233 smallpox, 17–18 Social and Democratic Power Party (PODEMOS), 250–251 social development: Alianza para el Progreso, 88 social unrest: as root of economic malaise, 253–255; threatening Bolivia’s democratic processes, 246–247 socialism: Toro’s “military socialism,” 23 “soft” loans, 94, 115 Soviet Union: Ovando embracing leftists politics, 133; Reagan’s focus on the communist threat in Latin America, 172; Torres’s loan negotiations, 134 soybean cultivation, 14 Spain: foreign donor increases, 233– 234

Spanish conquest, 15 special interests governing US policy, 129 speech, freedom of, 22 stabilization, economic, 196–197 The Stages of Economic Growth: A Non-Communist Manifesto (Rostow), 88–89 Stalin, Joseph, 119 Standard Oil, 23 State, US Department of: hydrocarbon and minerals development, 47–48; InterDepartmental Committee on Scientific and Cultural Cooperation, 21; US development assistance plan, 28–29; USAID’s colocation with, 217 state capitalistic model, 58 Stedman, John, 163, 169(n13) steel production, 133–134 strategic materials, 25–28 strategic objectives (SO), 221–234, 255, 266–267 subsidies: USAID “soft” loans, 94 subsistence farmers, 139–141, 161 sugar production, 68 Summit of the Americas (Cartagena, 2012), 275 supply-side economics, 171–172 sustainable development strategy, 214–215 Sustainable Forestry Management Project (BOLFOR), 223, 228– 229 Tamborada Experiment Station, 44, 66 (table) tax laws, 107–108, 113 tax reform as obstacle to development assistance, 43 technical assistance specialists, 98 Technical Cooperation (TCA), 40 Technical Cooperation Administration (TCA), 54 temporary status of USAID, 158 Tendler, Judith, 97 Thorpe, William, 110 Three D Strategy, 177

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tin, 6, 24–27, 41, 48, 58, 63, 80, 145, 177 Title I resources, 109–110 Title II resources, 109–110, 178–179, 269(n52) Title III resources, 161–162, 178– 179, 198–199, 210(n21) Title IX resources, 89, 114–115 Toro, David, 23 Torres, Juan José, 117–118, 133–134 trade agreements: open markets as element of Bush 43 development compact, 243–244; SovietBolivian, 133 “trade not aid,” 53–54 Tragen, Irv, 38(n50), 84(n50), 100, 106–107, 111, 114, 115, 137, 169(n13) transportation: Bohan Report recommendations for highway construction, 30; Chapare region, 14; dangerous roads in the high valleys, 13 Triangular Plan, 110–111 “trickle-down” economic model, 33– 34, 88–89, 130, 144–145, 149– 150, 171–172 tropical forests, 227–229, 253, 261, 282 Truman (Harry S) administration: Eisenhower’s criticism of, 53–54; global development assistance, 39–40; origins of the Point Four program, 41–42; self-interests governing assistance, 289 Truman Doctrine (1947), 39 tungsten, 25–27 The Ugly American (Burdick), 90 ultranationalism, 133 Unidad Civica Solidaridad, 247 Unidad de Análisis de Políticas Económicas (UDAPE), 178, 188(n21) United Nations Development Programme, 140, 233–234 United Nations Forum for Drug Abuse Control, 182 universal suffrage, 56

University of Wisconsin, 113, 124(n77) urban insurrection, 41 Uruguay: vital statistics comparison, 143(table) U.S. Steel, 133–134 USOM Bolivia: agricultural research and demonstration, 65, 67; colonization of the Oriente, 71– 73; economic projects, 80–81; evaluating, 76–79; form and function, 58–62; highway construction, 73–74; institution building, 81; Mutual Security Program, 62; project failures, 79– 80; role and scope of the project, 64–65 Utah State University (USU), 111– 112, 139 van Raalte, Ray, 200–202 Venezuela: Nixon’s visit, 87–88; USLatin American relations under Bush 43, 242; vital statistics comparison, 143(table) Vietnam War, 115, 127–128, 133 Village Level Workers (VLW), 114 Village Project Committee, 114 Villarroel, Gualberto, 24–25 violence: murder of AFL-CIO representatives, 194–195 vital statistics for countries in South America, 143(table) voting rights, 18, 56 Wallace, Henry, 35–36 want, freedom from, 22 war on drugs. See counter-narcotics programs and policies War on Poverty, 127–128 Ward, Barbara, 155(quote) Washington Post, 192 water access, 220, 248, 262–263 wheat production, 111–112, 146(table)–147(table), 161–162 women: bureaucratic role, 158; health status indicators, 260(table); microlending programs, 231–232 Woods, Alan, 192–193

Index 345

World Bank: Banzer’s economic policy, 159; bias towards commercial agriculture projects, 140; coca eradication plan, 182; foreign donor growth, 233–234; forgiving loans, 186; investments, 135; Paz Estenssoro’s New Economic Policy, 176–177 World War II, 1; Bolivia’s declaration of support for the Allied Powers, 33–36; FDR’s Four Freedoms, 22; Peñaranda’s aspirations for Bolivia’s participation, 23– 24 worship, freedom of, 22

Yacimientos Petroliferos Fiscales de Bolivia (YPFB), 23, 47–48, 252 Yungas, 13; agriculture research stations, 66(table); Alternative Development, 279–281, 292; coca production, 225; counternarcotics strategy in, 264–265; education programs, 281–282; geography, 5, 9–10(table); population distribution and density by region, 12(table); rural development, 263–265; sustainable agriculture, 282 Zablocki Amendment (1962), 89, 290 Zebu cattle, 67 Zilveti Arce, Pedro, 48

About the Book

After Bolivia had received more than $4.7 billion from the US government to support 70 years of development efforts, why would Evo Morales abruptly expel USAID from the country in May 2013? The answer, alleges Lawrence Heilman, is rooted in a complex slice of history beginning with US assistance to Bolivia during World War II. Heilman explores that history from the perspectives of both the US and Bolivia, presenting a tapestry of mutual benefits and conflicting interests. He appraises the ideas and personalities that determined US foreign aid policies/programs across successive administrations ranging from Franklin D. Roosevelt to Barack Obama; the political and economic context that shaped Bolivia's development aspirations; and the goals/strategies of the AID mission in Bolivia that guided its decisions about specific projects. The result is an in-depth picture of USAID in one country, but also important insights into US aid policy overall. Lawrence C. Heilman is research associate in the Anthropology Department at the Smithsonian National Museum of Natural History. He served twenty years with USAID as a senior foreign service officer.

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