Gasolinazo! ….or not

Happy New Year! It’s been a crazy week here in Bolivia. Here’s a quick news update for those who are interested and may be wondering about what’s happened with the so-called “gasolinazo.”

Last Sunday  vice president Álvaro García Linera announced a decree that ended a practice of government subsidy of gasoline and diesel prices, resulting in an immediate increase of 73% in the cost of gasoline. This came as quite a shock to the entire country and was almost universally unpopular. The official explanation pointed out that the subsidy on imported gasoline costs the government hundreds of millions of dollars annually, with the sum expected to increase for 2011–and a large portion of that is lost through smuggling operations that sell the cheaper gasoline across the border into neighboring countries. Costs of transportation and other basic goods were in limbo for a few days, often as much as doubled in spite of an official assessment that transportation costs should only rise 25-30%. On Wednesday evening president Evo Morales gave a speech announcing a 20% increase in the minimum wage and in salaries for all government employees. Clearly that was too little too late, as protests and transportation strikes were carried out as planned on Thursday and even made news in US media. Some of these got violent, and all made quite evident the anger, pent-up frustration, or sense of betrayal of the various demonstrators.

Then late last night, on New Year’s Eve, following long meetings with his cabinet and representatives of various sectors of society, Morales once again addressed the nation and announced that the decree and all related measures were repealed. In other words, gasoline goes back to its subsidized price, and the pay increase will not take effect. While affirming that ending the subsidy is necessary, Morales has evidently been persuaded that the timing is not right, and he announced his continued intention to govern in obedience to the people’s wishes. So… never mind! What many described as an unwelcome Christmas present has now been taken back, presumably in the hopes of offering a happy, peaceful New Year.

For those who have expressed concern, I have been just fine and my home, while walking distance from the center of La Paz and the palace of government, is in a quiet neighborhood away from the main roads. But stay tuned! It will be interesting to see both the immediate and long-term effects of this turbulent week on the political and social climate here.

About Sarah

I serve with Presbyterian World Mission as liaison to the Andean region. This blog is a place to share stories, experiences, and observations, both my own and those of friends and colleagues and the occasional item of news.
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3 Responses to Gasolinazo! ….or not

  1. Liz and Bill Branch says:

    We hadn’t heard about the unrest; glad you’re OK. Happy New Year!
    Peace,
    Liz

  2. Rashad says:

    Thanks for sharing! How governments deal with removing gas subsidies is a particular interest of mine, since it is such a burden on many governments, and so harmful for traffic, pollution, etc. I’m surprised they proposed doing away with the subsidies all at once. Usually when governments do it they move gradually, say in 2-3 steps. Iran just increased prices quite dramatically as well, but announced they were also going to directly give money to the poor to make up for it. Of course, having a repressive police state to fall back on to quash dissent makes things easier. Egypt has been talking about lowering their subsidies forever, but seems like it never will.

    • Sarah says:

      Hi, Rashad, that’s interesting perspective/comparison. It has been an odd series of events. It seems to me that one of the biggest problems with the move is that it took a few days after prices nearly doubled for negotiations with transportation unions to establish new bus and cab fares, and the announcement of intended benefits to the poor, raising the minimum wage, etc. came even after that. So there were several days of anxiety and confusion and speculation, and I don’t think the full package of changes, if it might have been accepted, had much chance of even being heard.

      Since the government still says the subsidies need to end, we’ll see how they handle it. Bolivia, along with lots of countries in South America, has been pushing using natural gas instead of petroleum sources to power vehicles. But there’s talk that Bolivia’s natural gas reserves may not be as large as once expected, and apparently the extreme elevation of most of Bolivia’s western cities, notably La Paz and El Alto, doesn’t lend itself to natural gas use anyway.

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