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ViewpointDecember 8 2010

The power behind Bolivia's new energy

Bolivia is barely recognisable from the state it was in 20 years ago - it now has a budget surplus and a store of foreign currency, and there are even plans to make the country an export hub for electric power and natural gas. Hugh O'Shaughnessy met Bolivia's vice-president to discuss the country's prospects.
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Álvaro García Linera, vice-president of Bolivia, is in a relaxed mood at the Bolivian Embassy in London's Eaton Square, having just delivered a hopeful and thoughtful lecture in exquisite Spanish at the London School of Economics. It attracted, among others, a throng of Bolivian students happy to hear a leader with some good news at last from their homeland, traditionally a fount of negative reporting.

No student of Latin America two decades ago could possibly have forecast the situation in Bolivia in 2010, so dire was the mismanagement in the country. Yet today, its government has received approving words from the International Monetary Fund. Not only does the country have a welcome budget surplus - 1.1% in the first half of 2010 - which gives the government of president Evo Morales cash for $2.2bn-worth of public sector projects this year, something that no former Bolivian leader could have dreamed of, but the trade surplus has given the country a store of foreign currency no one could have expected. With vast new energy and other exports it rose from a low point of $854m in 2002 to $8.9bn in September this year. Deposits by the public in the financial system have risen at a similar pace.

Power source

Now the government has the money and the will to make Bolivia a well-placed source to supply electric power and natural gas - not to mention lithium, urea and much else - to world markets and to its hungry neighbours. "We are on the way to becoming a semi-industrialised country," says Mr García Linera. "In 2009, we had the highest rate of growth in Latin America, 3.4% in what was a difficult year for many countries."

Coming from a middle-class family of Spanish stock, Mr García Linera is an important member of the new generation of leaders who are transforming South America. One president, Hugo Chávez of Venezuela, came to power through the ranks of the military; others, such as Luiz Inácio Lula da Silva from Brazil, trod the path of organised labour; still others such as President Morales himself have relied on the power of indigenous people of the countryside. For his part, Mr García Linera is similar to president José Mujica of Uruguay and president-elect Dilma Rousseff of Brazil, who have reached positions of leadership after a longer or shorter time in guerrilla ranks.

Born in 1952 in Cochabamba, he studied mathematics at the UNAM, Mexico's foremost university. Returning to Bolivia in 1985, Mr García Linera ended up in the political leadership of the EGTK, the Tupac Katarí Guerrilla Army. He was captured and tortured in 1992 before serving five years in Chonchocoro prison: as was the lawless practice at the time, he was never brought before any court or tribunal.

In the elegant surroundings of Eaton Square we joke about his appearance in suit and tie and this correspondent's ill-advised faux pas in arriving tieless. He sees no compulsion to follow his president's easy habit of appearing in the most prestigious meetings with fellow heads of state in Andean dress or woolly jumper.

Project backing

Mr García Linera makes no secret of the fact that he wants foreign investment in new projects, despite continuing disagreements over one or two sums of compensation for recent nationalisations. A series of renationalisations of state enterprises which had been privatised in recent years has not, as he sees it, shut the door to foreign entrepreneurs with big new plans for development. The 1600-megawatt El Bala hydroelectric scheme, costing $2.4bn, is probably the biggest of these and full finance has yet to be found. That it is not due to come into operation until 2022 illustrates the fact that serious long-term planning is in vogue.

At Mutún, in the extreme south-east corner of the country, the Indian firm Jindal has already started work on mining iron ore from one of the world's biggest - and also most remote - deposits. In accordance with the aim of processing raw materials as much as possible before they are exported, Bolivia wants to produce iron and later steel. Those sorts of strategies are something new in Bolivia, and would have been unimaginable in the not-too-distant past.

Álvaro García Linera is the vice-president of Bolivia

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