Wright on Bolivian Lithium: Interesting, but Not Quite Right

It’s not the first time a respected, established journalist has presented a selective view of events in Bolivia.  In general, Lawrence Wright’s New Yorker article “Lithium Dreams” covers a great deal of territory, but lacks objectivity and thorough research in some areas.

Some errors are simple and avoidable, such as misspelling Pablo Solón, Bolivian ambassador to the U.N.’s name, or confusing the timeline of key incidents.  Wright claims, “After President George W. Bush placed Bolivia and Venezuela on a blacklist, saying that neither country was doing enough to combat drug trafficking, Morales and Chavez expelled their respective ambassadors.”  Morales actually expelled Ambassador Goldberg and Chávez followed suit on September 11 four days before the U.S. “decertification” of Bolivia’s antinarcotics initiatives.  Both assertions could have been easily verified by fact-checkers.

Other inaccuracies stem from partial truths or unnecessary hyperbole, and tend to gloss over the complex dynamics at play in Bolivia.  For instance, Wright laments that Bolivia did not take advantage of silver production in the sixteenth and seventeenth century – without recognizing the inherent workings of the Spanish colonial system of extraction and exploitation.

The Uyuni town square in the sunshine in December, 2005. Features children playing by a small monument and a beautiful colonial-style building in the background.
Uyuni town square over four years ago. (Jialiang Gao. December 2005.)

Wright’s statement that “before Bolivia can hope to exploit a twenty-first century fuel, it must develop the rudiments of a twentieth-century economy” narrowly evaluates progress from the perspective of the most-developed nations, placing much of the world in this backward category.  He exaggerates to sustain his hypothesis by inaccurately demoting the largest town near the Salar, Uyuni, to “a mud-brick town perched on the perimeter of the salt flat.”  Although Uyuni is no metropolis, the majority of its buildings are not made from adobe.  Furthermore, although road infrastructure and other transit routes need improvement in many areas of Bolivia, there are several roads leading to Uyuni, not just the single-lane dirt road that Wright describes.

Misreading Morales’ “Obsession” and Bolivian Government Initiatives

It is true that the Morales administration has made little progress on lithium extraction and international contracts to exploit it, and it appears unlikely that this will change in the near future.  It remains unclear how this will impact the currently stable Bolivian economy in the long run.  Yet Wright oddly concludes that unless the Morales administration immediately cuts a deal with multinationals or rushes to extract and sell the lithium themselves, all hope is lost:

“[Morales’s] obsession with preventing the Salar from becoming another Cerro Rico may also keep it from ever becoming a source of Bolivian wealth. Until his regime can come to an agreement with a multinational corporation—or figure out on its own how the mine the treasure in the Salar de Uyuni at a competitive global price—its lithium will remain forever stuck in the brine, as will Morales’s dreams of Bolivian batteries and electric cars.”

Although a high level of international interest currently exists, Wright makes it seem like now is the only time to sell the metal.  He also implies President Morales will likely extend his tenure beyond his elected five-year term, describing his presidency as a “regime,” although Morales repeatedly asserts he will not seek reelection after his second term, in accordance with the Bolivian constitution.  Moreover, suggesting that the Salar is Morales’s “obsession” reveals that the author doesn’t understand how overambitious and overextended Morales and the MAS government are, in fact leaving little time for any single-minded focus.

Wright even refutes his own hypotheses.  He argues that Bolivia is a victim of the “resource curse,” stating that “Bolivia has its own chaotic political history, and a long tradition of failing to use its wealth to develop its infrastructure to provide decent training and education for its citizens.” Yet, several paragraphs later he adds that “the average teacher’s salary has risen by forty percent,” and “some of the money from gas revenues has gone to subsidize school lunches, to create a form of social security for the elderly, and to provide incentives for mothers to keep their children in school.” All of these government programs, initiated during Morales’ tenure, reflect an effort to invest resource income to benefit Bolivians.

Missing the Mark on Hydrocarbons

Wright provides a narrow, incomplete assessment of Bolivia’s natural gas industry and the “nationalization” of hydrocarbons:

“The [nationalization] approach, though popular with Morales’s base, is seen by many economists as shortsighted:  the foreign gas companies that developed the Bolivian natural-gas fields, after their discovery in 2000, have experienced dramatic declines in their profit margins, leaving in doubt their future investments in the country.”

There are many problems with this statement.  First, Wright suggests that the Morales administration’s nationalization initiative cut foreign investors profits.  In fact, the majority lost the bulk of their profits as a result of the Hydrocarbons Law implemented in 2005 during the administration of Carlos Mesa, a source quoted repeatedly in the article.  The “nationalization” process primarily consisted of the purchase of a majority of shares from Chaco and Transredes international consortiums and one refinery from Petrobras.  This was an incredibly costly process for Bolivia, but did not affect all international investment.

Of the remaining foreign investors in the Bolivian gas industry, only one, CHLB, reacted negatively to policy changes and is seeking international arbitration.  All others, including BG, Pluspetrol, Petrobras and Total, continue investing in Bolivia with no apparent plans to pull out.[i] Furthermore, although exploration revealed huge additional natural gas deposits in 2000, existing reserves were already being exploited, contrary to Wright’s assertion of their “discovery in 2000.”

Wright presents further half-truths.  He continues, “Bolivia’s neighbors, meanwhile, have turned to more reliable sources of natural gas.”  It is true that Brazil has begun to actively explore offshore options and has reduced the amount of gas purchased from Bolivia, yet in November 2009 the Brazilian ambassador to Bolivia confirmed that his country would continue to purchase 30 million cubic meters a day until 2019, as previously agreed, and stated that it was probable that the contract could be extended.[ii] Although Argentina discovered its own natural gas reserves, the nation plans to renew its existing contract to purchase Bolivian natural gas on March 26.  The new contract stipulates sales to Argentina of 5 million cubic cm per day for the next three years, gradually increasing to 27 cubic cm per day by 2017.[iii] Furthermore, Bolivia recently signed an agreement with Uruguay to buy natural gas, and Paraguay has also expressed interest.  Regional negotiations are about to begin to identify how to best transport gas throughout the region.

Admittedly, along with lower prices, natural gas production has failed to increase.  This delay, paired with flourishing contraband of subsidized gas canisters to neighboring Peru, has led to frequent internal shortages.  A lack of reinvestment in the industry has also dampened production potential.  Yet, Carlos Mesa’s statement cited in the article is inaccurate: “[T]he former Bolivian President, says that gas production has fallen to the point that the country is now importing it.”  In truth, Bolivia imports diesel and sometimes gasoline, but does not import natural gas.  Mesa continues, “’We produce less and less,’ he said, calling the situation a ‘disaster.’” Although restricted production provoked internal shortages, it did not cause significant economic problems.  In fact, according to Reuters in late 2009, “State revenue from the key natural gas sector boomed to $2.65 billion last year, from just over $1 billion in 2005, and revenue from the mining sector increased fourfold in the same period to $128.1 million.”

In spite of difficulties in the hydrocarbons sector, increased revenue and advantageous economic moves in other areas have put Bolivia on comparatively strong overall economic footing.  In January the IMF noted:

“Increased export volumes of gas and mining and the concurrent boom in commodities prices led to a 230 percent increase in export receipts between 2005 and 2008. […] The external and fiscal positions strengthened sharply during the boom years.

Larger export receipts, coupled with higher taxation of the hydrocarbon sector and moderate rates of increase in government spending, led to substantial external current account and fiscal surpluses. […] These surpluses contributed to the build-up of a comfortable reserves buffer, which—added to the debt relief obtained under Multilateral Debt Relief Initiative (MDRI)—turned Bolivia into a net external creditor in 2008.”

However, if we accept Mesa’s claims of “disaster,” it is important to factor in recurring multiple problems related to the Morales administration’s resource management and extraction efforts. These issues include widespread corruption allegations, as well as problems with output and technical capacity in the national hydrocarbons company and the Mutún iron foundry.  In light of these very real challenges, an extremely slow, measured approach by the Bolivian government – whether by design or default – and not the rapid “now or never” action recommended by Wright appears to be the most prudent course.

Mystifying Morales

The middle section of the article, based on conversations with several Bolivian ex-advisors, breaks with the analytical focus of the rest of the piece, and Wright largely bases his assessment on a few sources who are not experts on resource management.  For example, he frequently cites Fernando Molina, claiming the journalist is “one of Bolivia’s best-known intellectuals,” when in fact he does not enjoy that reputation.  Molina presents some questionable analysis, such as oversimplifying and minimized the Aymara world view: “The Aymara see the world as a fight between the forces of good and the forces of evil, like in ‘Star Wars.’”

Wright also attempts to shed light on President Morales’ moral character, describing the leader after accompanying him on an official presidential trip.  Although the author often quotes Morales directly, the rest of his portrayal seems to imply that Morales is alternately quirky and paranoid.  He writes, “Morales, who is fifty, is a creature of his biography.”  Characterizations of an indigenous president merit extra diplomacy, and the following description of Morales’ formation as a leader can be interpreted as objectifying the president as an exotic rarity.

Furthermore, Wright asserts that Morales possesses a “mystical attachment to coca.”  Despite the traditional and spiritual significance of coca, Morales’ primary connection, like that of tens of thousands of Bolivian families, is a pragmatic reliance on the leaf as a source of economic subsistence.  Wright later criticizes Morales’ statement that “social control” to limit coca farming is “vague.” Perhaps this term was unfamiliar to the author, but it is specifically defined and implemented in the Chapare region, where Morales still leads coca growers’ unions.[iv]

Wright seems to use an unfair yardstick to criticize Morales in his presidential persona.  He describes how Morales imposes exaggerated security measures such as sending his luggage on separate flights, and would rather call his own doctor during international travel or use a common Bolivian home remedy for an earache – implying Morales does not trust U.S. doctors.   Comparatively, Barack Obama’s security is a great deal more elaborate, and it is not at all rare for presidents to consult their own physicians while out of the country.

He also claims that Morales “fired” ex-Justice Minister and indigenous union leader Casimira Rodriguez because “She didn’t seem to be learning anything.”  Although Wright is quoting Morales’ former campaign advisor in this instance, he offers no further information to put this comment into perspective.  Rodriguez’s removal from the post did not reflect a lack of ability on her part; she left office at the same time that about a third of the cabinet turned over.  The author does not seem to understand that MAS views these ministerial posts as rotating appointments to be shared by different key constituencies.  Whether or not you agree with this political strategy, the reality fails to support Wright’s hypothesis that Morales’ “nontraditional appointments” demonstrate poor judgment.

Conclusions

If Wright had accurately assessed the numerous impediments Bolivia faces in its attempt to extract lithium and negotiate international contracts, his article could have made a significant impact.  There are no guarantees that lithium exploitation in Bolivia will be successful, but the author oversteps his bounds and overshadows his more salient points by dramatizing the issue and creating a false sense of economic crisis and urgency for lithium exploitation.

Wright’s historical segments on the demand for lithium seem even-toned and balanced. In contrast, the information about Bolivia is dramatic, incomplete and misleading.  Wright’s tone reflects a common problem with outside reporting on Bolivia: journalists often lack the information and input they need to contextualize their hypotheses and affirmations.  In the absence of a solid frame of reference, they tend to exaggerate existing ironies or trivialize the nation’s political dynamics.  Furthermore, Wright, like others before him, relies too heavily on a handful of interviews or “experts,” and as a result, perhaps unintentionally, reflects their biases.


[i] For examples of recent  foreign investment in the hydrocarbons industry: http://www.reuters.com/article/idUSN2638135520091126?feedType=RSS&feedName=everything&virtualBrandChannel=11563, http://www.eldiario.net/noticias/2010/2010_02/nt100210/3_01ecn.php

[ii] http://spanish.peopledaily.com.cn/31617/6800343.html

[iii] http://www.laprensa.com.bo/noticias/230210/noticias.php?nota=23_02_10_nego1.php

[iv] The latest UNODC Coca Cultivation Report points out that, although the social control method faces challenges in some areas of Bolivia, in the Chapare region the cato restriction for coca production is largely observed. For further information on social control in the Chapare, please refer to AIN’s report: “Obama’s Bolivia ATPDEA Decision: Blast from the Past or Wave of the Future?” at http://ain-bolivia.org/2009/08/obama%E2%80%99s-bolivia-atpdea-decision-blast-from-the-pa/#hide.