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COUNTRY BRIEFS


INTRODUCTION

Bilateral relations between Australia and Bolivia are modest. Australia works with Bolivia in a number of multilateral forums, particularly in the World Trade Organization (WTO) through our common membership of the Cairns Group of agricultural exporting countries, which Bolivia joined in 1999.

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POLITICAL OVERVIEW

Political system

Bolivia is a democratic republic with a directly elected President who serves a five year term. Consecutive re-election is now permitted under Bolivia's new constitution. Bolivia has a bicameral system of government: the Senate has 27 members (nine departments elect three members each); the Chamber of Deputies has 130 members (half of whom are directly elected and half who are elected indirectly through party nominations).

Bolivia attained independence from Spain in 1825 but then suffered a period of economic decline and the loss of territory in disputes with neighbouring nations, most notably the loss of coastal areas to Chile. This occurred during the War of the Pacific, which Bolivia fought with Peru against Chile in 1879, and remains an ongoing source of resentment, with Bolivia strongly pushing the issue of its maritime aspirations in the form of a 'corridor' to the sea.

After a long period of instability marked by coups and military rule, democratic civilian rule was established in 1982. However, the proliferation of political parties since then has resulted in political fragmentation. Organised labour has historically been strong, and capable of coordinating large demonstrations in opposition to free-market reforms. The church has played a significant intermediary role between the government and social groups.

Recent political developments

Bolivia's most recent presidential elections were held on 6 December 2009. The incumbent, Evo Morales, representing the left wing Movimiento al Socialismo (MAS), won a convincing second term with 64 percent of the vote over his conservative opponents. Morales party also gained two-thirds majorities in both houses of parliament. Morales is the first candidate of indigenous origin to have become President in Bolivia.

During his time in office, President Morales has moved away from the free market policies espoused by his predecessors and sought to increase state involvement in the economy. He announced the nationalisation of Bolivia's hydrocarbon sector in May 2006 and required multinational companies to sign new contracts with the Government, which saw ownership of the underlying hydrocarbons resources revert to the Bolivian state.

Another key issue in Morales' agenda is the promotion of indigenous rights – a grouping that represents approximately 60 per cent of Bolivia's population. To this end, the Government set up a Constituent Assembly, whose delegates were elected in August 2006. The assembly was tasked with drawing up a new constitution in an attempt by the MAS to enshrine indigenous rights, and to allow the possibility of consecutive presidential election and the removal of a bicameral parliamentary system.

A draft Constitution was approved in November 2007 which excluded opposition parties from voting when protesters blocked their entry into the building where the vote was being held. This sparked violent protests which left four people dead and over 130 injured in clashes between opposition supporters on the one hand, and police and government sympathisers on the other.

The draft Constitution was approved by a relatively strong majority (59% to 41%) in a referendum held in January 2009. It formally promotes the official use of the country's 35 indigenous languages, sets aside a number of indigenous seats in the legislature, provides for increased 'autonomy' for indigenous communities and supports new restrictions on private agricultural land holdings to a maximum size of 5000 hectares. It also grants the national government greater involvement in the Bolivian economy (thus opening the way for further nationalisations).

The Constitutional reform process has highlighted a growing polarization in Bolivian society between the rural poor (concentrated in the highlands) and those on higher incomes (mostly located in the eastern low-land provinces and urban areas). The growing divide is not just geographical but increasingly ideological: opposition provinces favour a more neo-liberal, open market philosophy, whilst Morales' support base endorse a model of state-led economic development with greater focus on social programs to reduce poverty.

Bolivia is a member of the UN; the Organization of American States (OAS); the Non-Aligned Movement (NAM); the International Parliamentary Union; Latin American Integration Association (ALADI); World Trade Organization (WTO), Rio Treaty; Rio Group, the Amazon Pact, the Union of South American Nations (UNASUR), Bolivarian Alternative for the Americas (ALBA), the Andean Community (CAN), the Forum for East Asia-Latin America Cooperation (FEALAC) and is an associate member of Mercosur.

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ECONOMIC OVERVIEW

In 2010-2011 foreign direct investment grew by 41 percent to US$319 million with 74 percent of this directed to the hydrocarbon and manufacturing sectors. The dramatic increase in investment comes after a drop in foreign investment coinciding with the global financial crisis. The leading source countries include Spain, Sweden and Brazil. The state owned oil and gas company also intends to seek US$10.7 billion in investment by 2015, indicating government recognition of a role for foreign investment in the country. World Bank figures show the hydrocarbon sector grew by 15 percent in 2011. The oil and gas sectors also showed signs of growth in 2011.

Trade policy directions

As well as its membership of the WTO and the Cairns Group, Bolivia is also a member of a number of regional trade organisations including CAN with Colombia, Peru and Ecuador (Chile as an associate member); ALBA whose members include Venezuela, Cuba and Nicaragua; the newly created UNASUR and the G77 (Group of 77).

Bolivia has an Economic Complementation Agreement with Chile that was established in 2006 that allows some 6,600 Bolivian products duty-free access to Chile.

In April 2006, Bolivia signed a 'People's Trade Agreement' with Cuba and Venezuela as a "means toward development with social justice in the framework of genuine fraternal Latin American and Caribbean integration". The Agreement provides for the export of Venezuelan and Bolivian natural resources in exchange for Cuban medical services.

Bilateral economic and trade relationship

Two-way merchandise trade between Australia and Bolivia is small but growing, totalling approximately $13.8 million in 2011, up from a modest A$2.4 million in 2002. Australia's exports to Bolivia fell in 2011 to $660,000 from $1.8 million in 2010. Australian exports to Bolivia include tubes and pipes of iron or steel, manufactures of base metals, measuring and analysing instruments and civil engineering equipment and parts. Imports from Bolivia to Australia increased to $13.1 million in 2011 from A$10.5 million in 2010, made up principally of fruit and nuts, cereals and lead ore and concentrates.

A small number of students from Bolivia are enrolled in Australian education institutions, and Bolivia is ranked eleventh in source of students out of the 33,351 enrolments from Latin America. Australian travellers to Bolivia increased to 15,254 in 2010, up from 13,249 in 2009.

Australian investment in Bolivia is primarily concentrated in the mining sector, and opportunities exist in the supply of mining services and technology. There is also growing interest in Bolivia's agribusiness sector. Prospects for Australian investment and trade exist in the agricultural region of Santa Cruz, particularly in the beef and soya sub-sectors. A number of beef producers from Santa Cruz attended the World Beef Conference in Rockhampton, Queensland in 2006. Opportunities in tourism and related industries also exist.

The Australian Embassy in Peru has non-resident accreditation to Bolivia. An Honorary Consul heads the Australian Consulate in La Paz, Bolivia.

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Last Updated: April 2009

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