st dramatic change undertaken by the Sánchez de Lozada government was the "capitalization" program, under which investors, typically foreign, acquired 50% ownership and management control of public enterprises, such as the state oil corporation, telecommunications system, airlines, railroads, and electric utilities in return for agreed upon capital investments. The reforms and economic restructuring were strongly opposed by certain segments of society, which instigated frequent and sometimes violent protests, particularly in La Paz and the Chapare coca-growing region, from 1994 through 1996. The Sánchez de Lozada government pursued a policy of offering monetary compensation for voluntary eradication of illegal coca by its growers in the Chapare region. The policy produced little net reduction in coca, and in the mid-1990s Bolivia accounted for about one-third of the world's coca that was being processed into cocaine. During this time, the umbrella labor-organization of Bolivia, the Central Obrera Boliviana (COB), became increasingly unable to effectively challenge government policy. A teachers' strike in 1995 was defeated because the COB could not marshal the support of many of its members, including construction- and factory-workers. The state also used selective martial law to keep the disruptions caused by the teachers to a minimum. The teachers were led by Trotskyites, and were considered to be the most militant union in the COB. Their downfall was a major blow to the COB, which also became mired in internal corruption and infighting in 1996. In the 1997 elections, General Hugo Banzer, leader of the ADN party and former dictator (1971-1978), won 22% of the vote, while the MNR candidate won 18%. General Banzer formed a coalition of the ADN, MIR, UCS, and CONDEPA parties, which held a majority of seats in the Bolivian Congress. The Congress elected him as president, and he was inaugurated on August 6, 1997. During the election-campaign, General Banzer had promised to suspend the privatization of the state-owned oil-company, YPFB. Considering the weak position that Bolivia was in vis-à-vis international corporations, however, this seemed unlikely. The Banzer government basically continued the free-market and privatization-policies of its predecessor, and the relatively robust economic growth of the mid-1990s continued until about the third year of its term in office. After that, regional, global and domestic factors contributed to a decline in economic growth. Financial crises in Argentina and Brazil, lower world prices for export-commodities, and reduced employment in the coca-sector depressed the Bolivian economy. The public also perceived a significant amount of public-sector corruption. These factors contributed to increasing social protests during the second half of Banzer's term.[citation needed] At the outset of his government, President Banzer launched a policy of using special police-units to physically eradicate the illegal coca of the Chapare region. The policy produced a sudden and dramatic four-year decline in Bolivia's illegal coca-crop, to the point that Bolivia became a relatively small supplier of coca for cocaine. Those left unemployed by coca-eradication streamed into the cities, especially El Alto, the slum-neighborhood of La Paz. The MIR of Jaime Paz Zamora remained a coalition-partner throughout the Banzer government, supporting this policy (called the Dignity Plan).[citation needed] On August 6, 2001, Banzer resigned from office after being diagnosed with cancer. He died less than a year later. Banzer's Vice President, Jorge Fernando Quiroga Ramírez, completed the final year of his term. 2002 elections Quiroga was constitutionally prohibited from running for national office in 2002. In the June 2002 national elections, former President Gonzalo Sánchez de Lozada (MNR) placed first with 29.5% of the vote, followed by coca-advocate and native peasant-leader Evo Morales (Movement Toward Socialism, MAS) with 20.9%. Morales edged out populist candidate Manfred Reyes Villa of the New Republican Force (NFR) by just 700 votes nationwide, earning a spot in the congressional run-off against Sánchez de Lozada on August 4, 2002. A July agreement between the MNR and the fourth-place MIR, which had again been led in the election by former president Jaime Paz Zamora, virtually ensured the election of Sánchez de Lozada in the congressional run-off, and on August 6 he was sworn in for the second time. The MNR platform featured three overarching objectives: economic reactivation (and job creation), anti-corruption, and social inclusion. Contemporary social crisis and the nationalization of hydrocarbon resources (2000-2005) Main article: Bolivian Gas War 2005 elections The following text needs to be harmonized with text in the article History of Bolivia. (See e.g. Wikipedia:Summary style.) This section does not cite any references or sources. (April 2008) Please help improve this section by adding citations to reliable sources. Unverifiable material may be challenged and removed. Central La Paz The 2005 Bolivian presidential election was held on December 18, 2005. The two main candidates were Juan Evo Morales Ayma of the Movement Toward Socialism (MAS) Party, and Jorge Quiroga, leader of the Democratic and Social Power (PODEMOS) Party and former head of the Acción Democrática Nacionalista (ADN) Party. Morales won the election with 53.740% of the votes, an absolute majority unusual in Bolivian elections. He was sworn in on January 22, 2006 for a five-year term. Prior to his official inauguration in La Paz, he was inaugurated in an Aymara ritual at the archeological site of Tiwanaku before a crowd of thousands of Aymara people and representatives of leftist movements from across Latin America. Though highly symbolic, this ritual was not historically based and primarily represented native Aymaras — not the main Quechua-speaking population. Since the Spanish conquest in the early 1500s, this region of South America, with a majority native population, has been ruled mostly by descendants of European immigrants, with only a few mestizo (mixed European and indigenous) rulers. Morales, an Aymara, has stated that the five hundred years of colonialism are now over and that the era of autonomy has begun. His recent presidential election victory has also brought new attention to the U.S. drug-war in South America and its heavy emphasis on coca-crop-eradication. The US-supported "Plan Dignidad" (dignity-plan), which seeks to reduce cocaine-production to zero, is seen by many Bolivians as an attack on their livelihoods and way of life. Morales, a leader among coca-growers, has said his government will try to interdict drugs, but he wants to preserve the legal market for coca-leaves and promote export of legal coca-products. Current president Evo Morales On May 1, 2006, Morales announced his intent to re-nationalize Bolivian hydrocarbon assets. While stating that the nationalization-initiative would not be an expropriation, Morales sent Bolivian troops to occupy fifty-six gas-installations simultaneously. Troops were also sent to the two Petrobras-owned refineries in Bolivia, which provide over 90% of Bolivia's refining-capacity. A deadline of 180 days was announced, by which all foreign energy-firms were required to sign new contracts giving Bolivia majority ownership and as much as 82% of revenues (the latter for the largest natural-gas-fields). That deadline has since passed, and all such firms have signed contracts. Reports from the Bolivian government and the companies involved are contradictory as to plans for future investment. By far the biggest customer for Bolivian hydrocarbons has been Brazil, which imports two-thirds of Bolivia's natural gas via pipelines operated by the huge semi-private Petrobras (PBR). Since gas can only be exported from landlocked Bolivia via PBR's large (and expensive) pipelines, the supplier and customer are strongly linked. How the nationalization will unfold is quite uncertain, as PBR has announced plans to produce sufficient natural gas by 2011 to replace that now supplied by Bolivia. Bolivia's position is strengthened both by the knowledge that hydrocarbon-reserves are more highly valued now than at the times of previous nationalizations, and by the pledged support of President Hugo Chávez of Venezuela. Fulfilling a campaign promise, Morales opened on August 6, 2006 the Bolivian Constituent Assembly to begin writing a new constitution aimed at giving more power to the indigenous majority[7]. Problems immediately arose when, unable to garner the two-thirds votes needed to include controversial provisions in the constitutional draft, Morales' party announced that only a simple majority (50%+) would be needed to draft individual articles while two-thirds needed to pass the document in full. Violent protests arose in December 2006 in parts of the country for both two-thirds and departmental autonomy; mostly in the eastern third of the country, where much of the hydrocarbon wealth is located. Conservative sectors in this region threaten to secede from the nation if their demands are not met. MAS and its supports believed two-thirds voting rules would give an effective veto for all constitutional changes to the conservative minority. Later in August 2007, more conflicts arose in Sucre, as the city demanded the discussion of the seat of government inside the assembly, hoping the executive and legislative branch could return to the city, but the city faced denial from the assembly and the government who pointed out that the demand was overwhelmingly impractical and politically undesirable. With the conflict turning into violence, the assembly was moved to a military area in Oruro. Although the main opposition party boycotted the session, a constitutional draft was approved on November 24. Subsequent riots, whipped up by opposition mercenary groups, left three dead. In January 2007 a clash between middle class city dwellers and poorer rural campesinos left two dead and over 130 injured in the central city of Cochabamba. The campesinos had paralyzed the city by blockading the highways, bridges, and main roads, and days earlier had set fire to the departmental seat of government, trying to force the resignation of the elected Prefect of Cochabamba, Manfred Reyes Villa after he demanded a re-vote on departmental autonomy having been previously defeated by popular vote. The city dwellers clashed with the campesinos, breaking the blockade and routing the protesters, while the police did little to interfere on either side. Further attempts by the campesinos to reinstate the blockade and threaten the government were unsuccessful, but the underlying tensions have not been resolved. Politics Santa Cruz de la Sierra Main article: Politics of Bolivia The 1967 constitution, amended in 1994, provides for balanced executive, legislative, and judicial powers. The traditionally strong executive, however, tends to overshadow the Congress, whose role is generally limited to debating and approving legislation initiated by the executive. The judiciary, consisting of the Supreme Court and departmental and lower courts, has long been riddled with corruption and inefficiency. Through revisions to the constitution in 1994, and subsequent laws, the government has initiated potentially far-reaching reforms in the judicial system and processes. Bolivia's nine departments received greater autonomy under the Administrative Decentralization law of 1995. Departmental autonomy further increased with the first popular elections for departmental governors (prefectos) on 18 December 2005, after long protests by pro-autonomy-leader department of Santa Cruz. Bolivian cities and towns are governed by directly elected mayors and councils. Municipal elections were held on 5 December 2004, with councils elected to five-year terms. The Popular Participation Law of April 1994, which distributes a significant portion of national revenues to municipalities for discretionary use, has enabled previously neglected communities to make striking improvements in their facilities and services. The president is elected to a five-year term by popular vote. Elected president Gonzalo Sanchez de Lozada resigned in October 2003, and was substituted by Vice-president Carlos Mesa. Mesa was in turn replaced by chief justice of the Supreme Court Eduardo Rodríguez in June 2005. Six months later, on December 18, 2005, the Socialist native leader, Evo Morales, was elected president. Legislative branch The government building of the National Congress of Bolivia at the Plaza Murillo in central La Paz Bolivia's government is a republic. The Congreso Nacional (National Congress) has two chambers. The Cámara de Diputados (Chamber of Deputies) has 130 members elected to five-year terms, seventy from single-member districts (circunscripciones) and sixty by proportional representation. The Cámara de Senadores (Chamber of Senators) has twenty-seven members (three per department), elected to five-year terms. Bolivia has had a total of 193 coups d'etat from independence until 1981, thereby averaging a change of government once every ten months. Credit for the past quarter century of relative political stability is largely attributed to President Víctor Paz Estenssoro, who ceded power peacefully after cutting hyperinflation which reached as high as 14,000 percent.[8] Military The Bolivian military comprises three branches: an Army, Navy and Air Force. The legal age for voluntary admissions is 18; however, when the numbers are small the government recruits anyone as young as 14[9]. It is estimated that 20% of the Bolivian army is between the ages 14 and 16 while another 20% is from 16 to 18. The tour of duty is generally 12 months. The Bolivian government annually spends $130 million on defense.[10] Departments and provinces Map of the departments of Bolivia Main articles: Departments of Bolivia, Provinces of Bolivia, Municipalities of Bolivia, and Cantons of Bolivia Scenery in the Noel Kempff Mercado National Park in the Santa Cruz Department Bolivia is divided into nine departments (departamentos); capitals in parentheses: Beni (Trinidad) Chuquisaca (Sucre) Cochabamba (Cochabamba) La Paz (La Paz) Oruro (Oruro) Pando (Cobija) Potosí (Potosí) Santa Cruz (Santa Cruz de la Sierra) Tarija (Tarija) Additionally, the departments are further divided into 100 provinces (provincias), and the provinces are each divided into municipalities (municipios) and cantons (cantones), which handle local affairs. Geography Map of Bolivia from the CIA World Factbook. Main article: Geography of Bolivia At 1,098,580 km² (424,135 mi²), Bolivia is the world's 28th-largest country (after Ethiopia). It is comparable in size to Mauritania, and it has about 1.5 times the area of the US state of Texas. [11] Colours of Altiplano Boliviano Bolivia has been a landlocked nation since 1879, when it lost its coastal department of Litoral to Chile in the War of the Pacific. However, it does have access to the Atlantic via the Paraguay River. An enormous diversity of ecological zones are represented within Bolivia's territory. The western highlands of the country are situated in the Andes Mountains and include the Bolivian Altiplano. The eastern lowlands include large sections of Amazonian rainforests and Chaco. The highest peak is Nevado Sajama at 6,542 metres (21,463 ft) located in the department of Oruro. Lake Titicaca is located on the border between Bolivia and Peru. The Salar de Uyuni, the world's largest salt flat, lies in the southwest corner of the country, in the department of Potosí. Major cities are La Paz, El Alto, Santa Cruz de la Sierra, and Cochabamba. Economy Main article: Economy of Bolivia Bolivia is the poorest country in South America. The country is rich in natural resources, and has been called a "donkey sitting on a gold-mine" because of this. Cochabamba Bolivia's 2002 gross domestic product (GDP) totaled USD $7.9 billion. Economic growth is about 2.5% a year, and inflation was expected to be between 3% and 4% in 2002 (it was under 2% in 2001). Bolivia’s current lackluster economic situation can be linked to several factors from the past three decades. The first major blow to the Bolivian economy came with a dramatic fall in the price of tin during the early 1980s, which impacted one of Bolivia’s main sources of income and one of its major mining-industries.[12] The second major economic blow came at the end of the Cold War in the late 1980s and early 1990s as economic aid was withdrawn by western countries who had previously tried to keep a market-liberal regime in power through financial support. Since 1985, the government of Bolivia has implemented a far-reaching program of macroeconomic stabilization and structural reform aimed at maintaining price-stability, creating conditions for sustained growth, and alleviating scarcity. A major reform of the customs-service in recent years has significantly improved transparency in this area. The most important structural changes in the Bolivian economy have involved the capitalization of numerous public-sector enterprises. Parallel legislative reforms have locked into place market-liberal policies, especially in the hydrocarbon- and telecommunication-sectors, that have encouraged private investment. Foreign investors are accorded national treatment, and foreign ownership of companies enjoys virtually no restrictions in Bolivia. The Central Bank of Bolivia The government has a long-term sales-agreement to sell natural gas to Brazil through 2019. The government expects to hold a binding referendum in 2004 on plans to export natural gas. In April 2000, Bechtel signed a contract with Hugo Banzer, the former president of Bolivia, to privatize the water-supply in Bolivia's third-largest city, Cochabamba. Shortly thereafter, the company tripled the water-rates in that city, an action which resulted in protests and rioting among those who could no longer afford clean water. Drawing water from community wells or gathering rainwater was made illegal. [13][14] Amidst Bolivia's nationwide economic collapse and growing national unrest over the state of the economy, the Bolivian government was forced to withdraw the water contract. Bolivian exports were $1.3 billion in 2002, from a low of $652 million in 1991. imports were $1.7 billion in 2002. Bolivian tariffs are a uniformly low 10%, with capital equipment charged only 5%. Bolivia's trade-deficit was $460 million in 2002. Salt mounds in Salar de Uyuni Bolivia's trade with neighboring countries is growing, in part because of several regional preferential trade-agreements it has negotiated. Bolivia is a member of the Andean Community and enjoys nominally free trade with other member countries. The United States remains Bolivia's largest trading-partner. In 2002, the United States exported $283 million of merchandise to Bolivia and imported $162 million. Agriculture accounts for roughly 15% of Bolivia's GDP. Soybeans are the major cash crop, sold into the Andean Community market. Bolivia's government remains heavily dependent on foreign assistance to finance development-projects. At the end of 2002, the government owed $4.5 billion to its foreign creditors, with $1.6 billion of this amount owed to other governments and most of the balance owed to multilateral development-banks. Most payments to other governments have been rescheduled on several occasions since 1987 through the Paris Club mechanism. External creditors have been willing to do this because the Bolivian government has generally achieved the monetary and fiscal targets set by IMF programs since 1987, though economic crises in recent years have undercut Bolivia's normally good record. The rescheduling of agreements granted