Rodrigo Paz’s Overhaul of Bolivia

This is the America's Quarterly Podcast. I'm Brian Winter. After 20 years of socialist rule in Bolivia, new President Rodrigo Paz is trying to lead a dramatic change. On today's podcast, we'll look at the opportunities for investors and for foreign partners including the United States as well as the obstacles standing in President Paz's way. Everything that he was saying during the campaign about being centrist or even being completely non-committal about where he finds himself on the spectrum of ideology is gone. You know, this is a very pro-market government. It is seeking investment, it is seeking trade, it is seeking to bring Bolivia back on the map of anything that has to do with commerce. In a Latin America that is shifting to the right, there may be no more fascinating case than Bolivia. When Rodrigo Paz was inaugurated in early November 2025, he vowed to implement capitalism for all. After inheriting an economy in rough shape, after 20 years of rule by the socialist Moss Party, with inflation running above 20%, foreign currency reserves nearly exhausted, public services fraying, and fuel lines stretching for blocks. Bolivia was also in many ways isolated in its relationships abroad, aligned more with Russia and Venezuela than its South American neighbors or the United States. Now almost 100 days into his new government, President Paz has had mixed success in pushing through some of these early changes. Today on the podcast, we're going to ask some questions about what's next in Bolivia. What are the most urgent economic challenges facing Rodrigo Paz? What is necessary to unlock the country's vast potential in lithium and other kinds of mining? How has President Paz been attempting to reinsert Bolivia into the community of South American nations and the West more broadly? And finally, in a country with a long history of instability and toppled governments, what are President Paz's odds of being able to successfully maintain power and get his agenda passed? Our very knowledgeable guest is Gabriela Kiesberg-Davaloves, a Bolivian strategic policy advisor. Gabriela has previously served as Senior Foreign Policy Advisor to the Vice President of the European Parliament for Human Rights and Democracy, and as Director of Global Public Affairs for a network of think tanks. Gabriela, welcome to the AQ podcast. Thank you so much for having me on the podcast Brian. Gabriela, as I said in the introduction, Bolivia is in the midst right now of a truly massive change. We are 100 days into this new government, which follows 20 years of socialist rule by the Moss Party. Does it feel there in La Paz like things have changed to such a dramatic degree? Can you take us a little bit inside what it feels like to actually be there? Well, the answer is yes and no. So on the one hand, change is in the air. There's a lot of hope, but of course there's also been already some conflict with this new government and we're reaching now this first milestone of the 100 days with mixed results, I would say. So we are on the way to economic stabilization more than recovery. So that is the first good sign, especially for investors, but there is of course conflict because there are old structures that have been there now for decades that are struggling with these new changes and with this new way of politics. So the first big thing that came was the decree 5503, which was there to mainly lift the subsidies for fuel, increasing the prices overnight for gas at over 90% and diesel even 160%. So you can imagine the shock that was for the Bolivian households, but then there was immediate conflict as well, which is very typical in Bolivia, with roadblochades, the workers unions and the social movements who have been accustomed at co-governing with the former mass governments are now very much against this government and are showing their strength and it's a tug of war between the two, right? And finally, after three weeks of conflict and of negotiations, the new government had actually to backtrack most of this decree, keeping only the lifting of the fuel subsidies. So let's talk about that decision because it was really kind of emblematic and perhaps tells us what to expect for the rest of this government. Would it be accurate to say that the past government capitulated or did they actually maintain the essence or the most important measure, which was the reversal of the subsidies? Yeah, it's exactly as you say. So they kept the most important measure and the one that everyone knew would come, except that most people thought it would come gradually or in a more focalized way. And instead we had this shock therapy. And it was maybe a bit sneaky of the government to try to bring in all these other articles. We're talking about a decree of 20 pages more than 100 articles, heavily focused in opening the market to investors, circumventing and incite lighting Congress. So you want to stabilize the markets, but at the same time you have to avoid delegitimizing the democratic process, which has to involve Congress. So would Regal Pass did campaign as something of a moderate or centrist or center-ish figure? Truth be told, none of us really knew quite how to describe him when he unexpectedly became the other candidate, so to speak, in the second round. Would you say that he has governed more as a right-wing figure in terms of especially of his economic policy? There's no doubt already in the first week we saw that this was a right-wing government. What's your sense of the explanation for that gap between how he campaigned and how he governed? Is it that he discovered as he took office that, you know, that the economic emergency was severe enough that he would have to take action right away? Or, you know, is it possible that maybe he was always more of a conservative figure who in order to get elected tacked more towards the center? Well, it definitely shows pragmatism on the side of pass. He came in, as you say, with very adverse conditions, so he knew this and the first thing he had to do was stabilize, but he also came in with a weak strength in Congress. He doesn't know one has a total majority. He has to seek alliances and the first alliance was, although this was never said openly, it was with the fraction of Samuel Doria Medina who came in third in the elections. So, you can see that very strongly in the cabinet, right? So, two of the most important ministers, the minister of presidency, who is becoming also a sort of the factor of Vice President is José Luis Lupe, and he was the running mate of Samuel Doria Medina. And then the other person is the finance minister José Gabriela Espinosa. He was also in the team of Samuel Doria Medina. So, you can see that he is trying to balance also these strengths within his cabinet and in Congress. Otherwise, he wouldn't have the numbers to do it alone. You watch a government do what he's doing, essentially trying to remove subsidies and reduce the size of the state. And of course, inevitably, you think of what's been happening the last two years next door in Argentina with Javier Miele, and the success that he has had there. But it occurs to me that a significant difference between the two is that Miele campaigned saying exactly what he was going to do. I mean, he had the change saw and that gave him legitimacy in a way when he came in and followed through on what he campaigned on. Do you think ultimately the gap between how past campaign and how he's governing is that likely to be a problem? Well, you're right that there are some similarities with Miele even to the point of the tension with his vice president, which is something that Miele has as well. Of course, it's funny that you mentioned this because the person who was really honest about what he was going to do was the one who came in second, the Jorge Tutu Quiroga, and he was he probably didn't win because he was so honest about the changes that he was going to make. And now we have Rodrigo doing practically everything that Tutu said was going to happen. You know, which is why he has such high approval ratings in the whole region of the country that voted predominantly for Tutu Quiroga. So that is really interesting. It's going to be interesting to see where this goes because with this tension that he has with the vice president, it is showing also detention with the whole part of the country that voted for him thinking that he would go soft on these changes. So as long as there's tension with his VP, there's also going to be tension with this part of the popular vote. And that is the danger that exists there. The vote that brought him into office was mostly in favor of his vice president at Manlada and in favor of changes, but soft and gradual changes, which is not what is happening right now. So let's get into that a bit more. This whole story about the relationship between the president and his vice president, Edmund Lara, can maybe seem from the outside like a little bit of a talent oil, but it is actually very politically important because of this dynamic that you described where it really did seem during the campaign like many voters were more excited about Lara than they were about pass for our listeners who might not be fully aware of that dynamic. Can you tell us a little bit about the latest and the conflict between these two men? Yeah. So first of all, this is very emblematic of the problems that we have with the political party system in Bolivia. These two people came together very close to the election without really knowing each other, without having a joint project, and just sort of complementing each other to get enough votes to win the election. But now as soon as they started their mandate, already two days into it, the first quarrel started. And it started with a vice president saying that he was being sidelined and not being allowed into the cabinet meetings and being told, you know, it's not necessary that you come and so on. And then from there on, it just escalated. And it's pretty clear that they're basically not even talking to each other. I mean the political marriage that these two represent, as I understand it, is essentially the past comes from the establishment. I mean, his father was a former president. And then Lada represents this almost populous strain that attracted a lot of people who previously voted for the socialist party for mass. Is that basically correct or is there more to it? Yeah, that is a correct reading. So with us, we have someone precisely from the establishment with political pedigree because of his father and his grand uncle, who was also a president and also someone who has held different public positions, right? He has been a mayor. He has been a senator. Now he's a president. On the other side, we have at Manlada, who is a former police captain and became famous because he's a sort of avenger in terms of anti corruption and especially when it comes to the police, which is unfortunately one of the most corrupt institutions in the country. So, and you can also tell now that he's in office, that he has no experience and that he's having problems, you know, with this new role where he should be presiding the legislative and finding compromises and so on. And I don't think he likes that role very much. He likes this role of avenger. He was kicked out of the police force because he was denouncing corruption. He was unemployed for quite some time, so he knows the struggle of the people and many, many people identify with him. So, why does it matter now that these two are fighting? I mean, in a way, I would say that on a micro level, they show the macro situation and polarization of the country. And that is why I also think that if they were really to reconcile and try to work together, you know, and find compromises, they would send this incredibly strong message of reconciliation within the country, you know, of different regions, different social classes, and yeah, and between even the social movements and the establishment. Do we have any sense for how past his popularity is after these first hundred days? You mentioned that in sectors of the country that are more conservative, he's obviously doing quite well. But what's your feeling both based on any polls as well as just anecdotally being in a city like La Paz, which from personal experience, I know that when people in La Paz are upset, you tend to see it. I know there was some of that after that first decree, but how does it feel now? Yeah, so there was some first polling after the first month and their ratings were around 68% for BAS and I think 35% for Lara. And just this past week, there was new polling and it puts BAS still at 65% after three months and Lara at 20%. But I'm very cautious with these numbers because these are the same companies that did the polling for the elections the past two times and they were very much off with their numbers. I would say precisely from what you say, the feeling and anecdotal evidence that the truth lies somewhere in between. I think it's a bit lower from us than what these polls say and probably a bit higher for Lara. How is the economy doing? I mean, I know that we've seen again taking Argentina and X doors and example inevitably time will pass between when austerity measures go into place and when the economy itself starts to turn around and it takes usually longer than that for people to start feeling any fundamental improvement in their daily lives. It's only been a hundred days. But what's your sense of the evolution of the economy since President Paz came into office? The path right now is more towards stabilization than recovery and I predict that that will be the case for the rest of the year. So there's still a lot of hurdles, you know, but there's also a lot of positive signs. So first of all, all the meetings that were held with the multilateral banks and the credits and the loans that we're getting from them. Also, a very modest but still symbolic stabilization in terms of ratings, you know, from Fitch and JP Morgan that is already helping. Then last week we had a huge delegation from the European Union coming in bringing 30 to 40 companies that want to invest in the country and that we're really interested, especially in everything that has to do with lithium, of course, and critical minerals. But what we're still missing is legal certainty and that is something that has to be done with laws and that means working with Congress. And that is going to be I think the big hurdle from now on because Paz needs to start working with Congress. Just curious. I mean, is there any area besides critical minerals and specifically lithium that has generated much investor interest in these early days? Well, I'm not sure if necessary investor, but the other very positive development is that this government has recognized that tourism would be a huge interesting factor for the economy and of course, also a sustainable one. So there are a lot of efforts right now to attract investment and also interest in coming to Bolivia and doing business in terms of tourism, which has already been happening in terms of, you know, at the civil society level because we have a boom in gastronomy and modern culinary and coffee and wine and everything. And that is hopefully also something that will be attractive for the investors. Bolivia is such a beautiful country. I've spent time there over the years, but is tourism a sector that has underperformed in the past several years? Is that why some people are seeing opportunities there? Yes, it has definitely underperformed because we were not only isolated politically. We were also isolated in terms of any airlines or any companies coming here. And of course, because of all the conflict and the roadblochades and so on. And again, also the legal certainty for investment. It has been underperforming and it has probably the biggest potential because this is a very diverse country, not just in landscape, but also in gastronomy and in culture. And it is completely underrated in terms of tourism. We were chatting a little bit here before we started formally the podcast. And I was talking about this, you know, very subjective opinion of mine that Bolivia was almost like just absent from the map of Latin America over at least the last 10 years, maybe longer in a way that I struggle even to articulate because there were other countries in the region that had more adverse economic policy. Other countries that were smaller in terms of their economic size or population that we were still talking about that were still present. But you know, sometimes for whatever reason it seemed like Bolivia just wasn't getting attention whether positive or even negative. It's just people didn't talk about it. And I would recognize by the way that that's despite the fact that for the first say 10 years or so of the mass government, they had economic indicators and poverty levels that told a good story. But for whatever reason Bolivia just wasn't really part of the discussion. Do you have any sense for, I mean, do you agree? And second of all, if that was the case, what else needs to be done for Bolivia to start getting the attention it deserves again? Yeah, I mean, for those of us who work in foreign policy, it was a very frustrating time. This sort of isolation and it had to a lot to do of course with the alignment of the former mass governments with other governments that were already isolated themselves, you know, like Iran and Venezuela and Cuba, Nicaragua. And then sometimes they were aligned with Argentina or Brazil, depending on who was in power. But in Russia, of course. But other than that, the whole foreign service apparatus was weakened. You know, there are basically no more diplomats working in the foreign service. They were all fired or left. And the new government is having huge problems, you know, to reconstruct this. And also, of course, they don't have a lot of money. So that is a, unfortunately, that is absolutely correct. Bolivia was isolated. And Bolivia didn't really do marketing for itself, you know, and we didn't have many airlines coming. The few times that Bolivia would do something outside, it was usually related to the Koka leaf. So there you could see once more this conflict of interest between a president who is leading the Koka growing unions in Bolivia and being the president of the country and basically representing only this fraction of the country and not the rest, there was also a lot of animosity with the business sector, which is why there wasn't a lot of investment. And yeah, basically we were isolated and we're hopefully now getting into a new era where Bolivia is back on the international scene. So let's talk a little bit about some of the efforts to end that isolation. There was a significant delegation from the United States from the Trump administration that came for president passes inauguration. They've organized some talks with foreign investors as well. How would you describe what president pass has done so far with regard to, you know, trying to open back up specifically to the United States? Well, that is the most significant pivot that we have seen in terms of foreign policy because as you know, but I don't know if your audience knows this Bolivia had basically cut ties almost with the United States. We haven't had representation at the ambassadorial level since 2008 when the US ambassador in Bolivia was actually kicked out by Evo Morales and then of course vice versa. And there's always been tension, you know, and accusations, you know, of interference and so on. So I trust that this new government is now trying to mend fences with the US government while still rebalancing with the other important regions and powers in the world, given that the geopolitics has obviously changed a lot in the last 20 years. So it's not as easy anymore. And as you know, the entire region is right now trying to balance between the US and China, for example. And I think that is exactly what is going to happen also with the past government. Well, tell us a little bit about what if any contacts the past government has had with Beijing so far. Well, during the campaign foreign policy didn't play a massive role. So it was all, you know, a guessing game. Now we know a little bit more definitely in terms of their relationship with the US. During the campaign, BUS had also said that he would need to review the contracts on lithium and other things that we have with China and Russia. And just recently the minister in charge of that said that most probably they would respect those contracts because of the legal repercussions it could have if they don't do it. So we're seeing pragmatism in that sense. Let's talk a little bit more about the economy and specifically about policy. This first move that that President Post made was important to begin to close this fiscal gap that is in some ways at the heart of Bolivia's troubles. But it's not the only thing that needs to be done. What are the other remaining important pieces on this government's economic agenda? And you know, how much chance do they have of getting those things through given how many challenges they had with this first wave? Yeah. I mean, the other big challenges inflation right now. And given the changes with the fuel subsidies and the prices hiking up even more than before, that has been quite straining for the average citizen. So there have been some measures and bonuses, for example, or an increase of the basic income and things like that. But they are all a little bit the changes. So I don't really know what the plans are, but I think the next thing will be to stabilize the exchange rate with the US dollar because that has been fluctuating too much in the last year. So the official exchange rate is around seven Bolivianos, but last year it went up even to 20 Bolivianos. So that was of course really hard for the economy. Right now is around nine or ten. So it has been steadily declining. And the finance minister has announced that that is the next thing they want to tackle. So with that and the subsidies lifting, they've already they would already have done the two major tasks that they had to do for the stabilization. And then hopefully they can really start with their recovery, which will probably work mostly with the loans that we're going to get from the multilateral banks. So that's all necessary for macroeconomic stability. But what's your sense of what investors in the extractive sector in particular are waiting for beyond just a sign that this is a government that might be here to stay at least for a while. What investors need is legal certainty and political stability. So those are the two things that the past government will only reach if it works with Congress again. And of course with civil society and the social movements. And that is going to be probably the biggest task of the year ahead to start to understand that there's no way of circumventing this kind of process. You have to work with them. And so it's important in that sense also the upcoming subnational elections. That's in around six weeks. It's the fourth election in less than 18 months. So you can imagine how tired everyone is of going to the polls again. And probably not everyone's going to be very informed about the candidates. It's also showing a huge fragmentation in terms of political parties. Now that the mass who was really dominant in the political scene is gone. We have so many new political parties that no one has ever heard about. They're coming up like mushrooms. Just for La Paz we have like 20 candidates for mayor. So we are also in a transition period of our whole political system and the political parties. And that is going to make it also difficult for us to rule this country or co-govern with the regions and the municipalities. It seems it almost beggars believe that so soon after a presidential election, like practically within the first 120 days, that there will be this election on March 22nd. And to be clear, electing new governors, mayors, departmental assembly members and municipal counselors throughout the country. I mean, a cynic would almost wonder if the system was designed to keep a certain amount of instability in the system because this is just in the period where most presidents are able to get things done without worrying about the immediate short-term consequences. Yeah, that electoral calendar needs to be revised. I want to go back though to something that you mentioned, which is, you know, maybe this is the question now facing Bolivia is, can president Paz keep a quote-unquote good relationship with civil society and some of these social movements and various actors in Bolivian politics while also delivering the tough medicine, so to speak, that is needed to stabilize the economy. Yeah, that will be a balancing act, but I see goodwill and good political will to do the precisely that to keep an open dialogue with society. He has had some town halls. He's practically out and about all the time at events. And of course, it's also a mix with campaign trail at the moment, so that goes for him and for Edman Lara. So we'll see if this will continue after the subnational elections. Again, the downside of that is that he isn't spending much time talking to members of Congress, but he is definitely trying to keep an open channel. He is posting every day, lots of videos, you know, and trying to connect with people. And he seems to be also an eternal optimist, you know, and at the same time, also pretty pragmatic. But again, you know, the one figure that is probably doing the day-to-day work on all these things is his minister of presidency. And who is that? Jose Luis Lupe, the one who was the running mate of Samuel Doria Medina. Where is Aval Morales? And what is the overall state of the mass after, you know, this crushing electoral defeat? I imagine that they are licking their wounds, but a government or a movement, really, that was in power for 20 years, does usually not just disappear. Yeah. So the party as such as mass is not, for example, on the on the ticket now for the subnational elections, but of course former mass leaders are everywhere. You can find them in absolutely every region, every municipality, people well known that were with mass for a long time. Aval Morales himself has disappeared this last month. Apparently he had some health problems and there were rumors that he had left the country, which might have been related to the return of the drug enforcement agency, the US drug enforcement agency. But we don't know if that is true or not. But in any case, before disappearing that month, he was quite active, you know, of course always commenting on the politics of the past government and sometimes siding with Ed Mandlada, which again brings conspiracy theories of if Ed Mandlada is working with Aval Morales and mass and so on. Rumors fly around here all the time. So that is more or less what we know about Aval Morales. But he's still there. He still has power, for sure. But if he is in Bolivia, then he's still in the Chaparra region and hasn't left. And I suppose it's the same old story. If the past government succeeds, then he may receive into history. But if some of these problems remain and people feel like their day-to-day lives are not getting better, either he or somebody with similar ideas will inevitably make a comeback. I have my doubts if Aval Morales can make a comeback. Then again, everything is possible in Bolivia, like even the most impossible. I mean, no one thought he would ever leave, so and he left. So a comeback is always possible, but at the moment, I think everyone is giving this new government the benefit of the doubt. There has been conflict, but it could have been much worse knowing Bolivian standards. They could have already toppled the government, for example. That is very, very much possible in Bolivia, and it hasn't happened. So even though this is a fragile government and it has pretty much all the odds against it, it is also surprising us on a daily basis. Well, and that segues perfectly into my final question for you as we try to think of some kind of takeaway from this chat. Bolivia for 20 years was mostly stable. It was mostly run by the mass, but prior to that Bolivia was well known as one of the most politically unstable countries in Latin America. I believe that there was a long period where it even averaged a coup or attempted coup of more than once per year over a quite a long period of time. And so my question for you, Gabriela is, you know, what are the odds sitting here today of this government being able to finish its term? You say that it, you know, it has, it looks fragile, but it seems to be defying the odds right now. If you were an investor trying to think in, you know, sort of 5-10 or even 20-year terms, what would you be looking for right now in terms of proof that this is a government with some staying power? So, Brian, you know, even before we knew who would be president, I gave this government a 50/50 chance of making it to the end. I still stand at that. Now, after three months, again, saying, okay, they are surprising us on a daily basis, but things are difficult and they have to be very careful about their political reading, you know, about what could happen on the street, mending fences with Lada, trying to get Lada also to work with Congress. There are a lot of positive signs, but the odds are really difficult for them. Gary, I really thank so much for joining us on the ACU podcast. It's been a pleasure, Brian. Thank you for listening to the America's Quarterly Podcast. If you enjoyed this episode, please leave us a review, give us a rating, and subscribe, wherever you get your podcasts. The America's Quarterly Podcast is produced and edited by Miranda Masariegos. Our sound engineer is Leah Shaw-Dameran.