After this defeat, Santa Cruz fled to Ecuador, and the Peruvian-Bolivian Confederation was dissolved. Following the independence of Peru, Peruvian president General Agustín Gamarra invaded Bolivia. The Peruvian army was decisively defeated at the Battle of Ingaví on November 20, 1841, where Gamarra was killed. The Bolivian army under General José Ballivián then mounted a counter-offensive managing to capture the Peruvian port of Arica. Later, both sides signed a peace treaty in 1842 putting a final end to the war. Economic instability and continued wars A period of political and economic instability in the early to mid-19th century weakened Bolivia. Then in the War of the Pacific (1879–83) against Chile, it lost its access to the sea and the adjoining rich Salitre ("Chile Saltpeter") fields, together with the port of Antofagasta. Since its independence, Bolivia has lost over half of its territory to neighboring countries in wars. It also lost the state of Acre (known for its production of rubber) when Brazil persuaded the state of Acre to secede from Bolivia in 1903. In the late 19th century, an increase in the world price of silver brought Bolivia relative prosperity and political stability. During the early 20th century, tin replaced silver as the country's most important source of wealth. A succession of governments controlled by the economic and social elite followed laissez-faire capitalist policies through the first thirty years of the 20th century.[citation needed] Living conditions of the native people, who constitute most of the population, remained deplorable. With work opportunities limited to primitive conditions in the mines and in large estates having nearly feudal status, they had no access to education, economic opportunity, and political participation. Bolivia's defeat by Paraguay in the Chaco War (1932–35) marked a turning-point.[15][16][17] Nationalist Revolutionary Movement The llama is one of the icons of the Bolivian altiplano. The Nationalist Revolutionary Movement (MNR) emerged as a broadly based party. Denied its victory in the 1951 presidential elections, the MNR led a successful revolution in 1952. Under President Víctor Paz Estenssoro, the MNR, having strong popular pressure, introduced universal suffrage into his political platform and carried out a sweeping land-reform promoting rural education and nationalization of the country's largest tin mines. Twelve years of tumultuous rule left the MNR divided. In 1964, a military junta overthrew President Estenssoro at the outset of his third term. The 1969 death of President René Barrientos Ortuño, a former member of the junta elected president in 1966, led to a succession of weak governments. Alarmed by public disorder and the rising Popular Assembly, the military, the MNR, and others installed Colonel (later General) Hugo Banzer Suárez as president in 1971. Banzer ruled with MNR support from 1971 to 1974. Then, impatient with schisms in the coalition, he replaced civilians with members of the armed forces and suspended political activities. The economy grew impressively during most of Banzer's presidency, but human rights violations and eventual fiscal crises undercut his support. He was forced to call elections in 1978, and Bolivia again entered a period of political turmoil. Military governments: García Meza and Siles Zuazo Elections in 1979 and 1981 were inconclusive and marked by fraud. There were coups d'état, counter-coups, and caretaker governments. In 1980, General Luis García Meza Tejada carried out a ruthless and violent coup d'état that did not have popular support. He pacified the people by promising to remain in power only for one year. (At the end of the year, he staged a televised rally to claim popular support and announced, "Bueno, me quedo," or, "All right; I'll stay [in office]."[18] He was deposed shortly thereafter.) His government was notorious for human-rights-abuses, narcotics-trafficking, and economic mismanagement; during his presidency, the inflation that later crippled the Bolivian economy could already be felt. Later convicted in absentia for various crimes, including murder, García Meza was extradited from Brazil and began serving a 30-year sentence in 1995. After a military rebellion forced out Meza in 1981, three other military governments in 14 months struggled with Bolivia's growing problems. Unrest forced the military to convoke the Congress elected in 1980 and allow it to choose a new chief executive. In October 1982, Hernán Siles Zuazo again became president, 22 years after the end of his first term of office (1956-60). Sánchez de Lozada and Banzer: Liberalizing the economy Sánchez de Lozada pursued an aggressive economic and social reform agenda. The most dramatic reform 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 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 Nationalist Democratic Action party (ADN) 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, Banzer had promised to suspend the privatization of the state-owned oil-company, YPFB. But this seemed unlikely to happen, considering Bolivia's weak position globally. The Banzer government basically continued the free-market and privatization-policies of its predecessor. 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. Vice President Jorge Fernando Quiroga Ramírez completed the final year of his term. In the June 2002 national elections, former President Gonzalo Sánchez de Lozada (MNR) placed first with 22.5% 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. In 2003 the Bolivian gas conflict broke out. On October 12, 2003 the government imposed martial law in El Alto after sixteen people were shot by the police and several dozen wounded in violent clashes which erupted when a caravan of oil trucks escorted by police and soldiers deploying tanks and heavy-caliber machine guns tried to breach a barricade. On 17 October, 2003 Evo Morales' supporters from Cochabamba tried to march into Santa Cruz, the largest city of the eastern lowlands where support was strong for the president. They were turned back. Faced with the option of resigning or more bloodshed, Sanchez de Lozada offered his resignation in a letter to an emergency session of Congress. After his resignation was accepted and his vice president, Carlos Mesa, invested, he left on a commercially scheduled flight for the United States. In March 2004, the new president Carlos Mesa he announced that his government would hold a series of rallies around the country, and at its embassies abroad, demanding that Chile return to Bolivia a stretch of seacoast that the country lost in 1884 after the end of the War of the Pacific. Chile has traditionally refused to negotiate on the issue, but Mesa nonetheless made this policy a central point of his administration. However, the country's internal situation became unfavorable for such political action on the international stage. After a resurgence of gas protests in 2005, Carlos Mesa attempted to resign in January 2005, but his offer was refused by Congress. On March 22, 2005, after weeks of new street protests from organizations accusing Mesa of bowing to U.S. corporate interests, Mesa again offered his resignation to Congress, which was accepted on June 10. The chief justice of the Supreme Court, Eduardo Rodríguez, was sworn as interim president to succeed the outgoing Carlos Mesa. The Morales Era 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 MASParty 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 53.7% 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 16th century, 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 500 years of colonialism are now over and that the era of autonomy has begun. Current President Evo Morales On May 1, 2006, Morales announced his intent to re-nationalize Bolivian hydrocarbon assets. While stating that the initiative would not be an expropriation, Morales sent Bolivian troops to occupy 56 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). All such firms 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 semi-private Petrobras. Since gas can only be exported from landlocked Bolivia via Petrobras' large (and expensive) pipelines, the supplier and customer are strongly linked. Petrobras has announced plans to produce enough natural gas by 2011 to replace that now supplied by Bolivia. Bolivia's position is strengthened 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.[19] 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 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. 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 assembly and the government said this demand was overwhelmingly impractical and politically undesirable. The conflict turned into violence, and 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, started by opposition mercenary groups, left three dead. Geography Main article: Geography of Bolivia Map of Bolivia from the CIA World Factbook At 1,098,580 square kilometres (424,160 sq mi), Bolivia is the world's 28th-largest country.[20] 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. Many 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 (21,460 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. Departments and provinces Main articles: Departments of Bolivia, Provinces of Bolivia, Municipalities of Bolivia, and Cantons of Bolivia Map of the departments of Bolivia 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. Economy Main article: Economy of Bolivia Bolivia has the lowest GDP per capita in South America. However, the country is rich in natural resources. Cochabamba Bolivia's 2002 gross domestic product (GDP) totaled USD $7.9 billion. Economic growth is about 2.5% per 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.[21] 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. 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 Bolivia has the second largest natural gas reserves in South America.[22] The government has a long-term sales-agreement to sell natural gas to Brazil through 2019. The government held a binding referendum in 2005 on the Hydrocarbon Law. 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.[23][24] 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. Each mound is about a meter high. 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