The fracture between Luis Arce and Evo Morales shadows the future of Bolivia

The head of the Bolivian Army, Juan José Zúñiga, ran over the entrance door to the Quemado Palace with a tank on June 26. Two hours later, he was imprisoned along with twenty soldiers and civilians. The president, Luis Arce, remained in his place and celebrated the failure of the attempt before a crowd gathered in Plaza Murillo. But with the veil of democratic euphoria removed, Bolivia faced its old demons. The military coup was a symptom that something is not right in the Andean country. The fracture between Arce and his political mentor, Evo Morales, weighs down Bolivian democracy, blocks any strategy against the economic crisis, keeps Congress paralyzed and opens the door to adventures like those of General Zúñiga.

In 2025, Bolivians will elect a new president. The only party with a serious chance of winning is the Movement Towards Socialism, the MAS, the conglomerate of social, union and indigenous organizations that brought Evo Morales to power in 2006. The assumption of power by the first president of Aymara origin in the country’s history was a milestone for South America. Bolivia entered into an accelerated process of reforms, with the nationalization of gas as an emblem of the new times. The economy grew, a new indigenous middle class was born and, above all, the country entered a long period of political stability after decades of recurring coups d’état. Evo Morales’ vice president, Álvaro García Linera, defines this period of the MAS as “the progressive moment” of change.

It all ended abruptly in November 2019, when a civil-military revolt ousted Morales from power amid allegations of electoral fraud and in repudiation of his re-election attempts. From his exile in Buenos Aires, Morales chose his former Minister of Economy, Luis Arce, as his presidential candidate. A year later, the MAS returned to the Palacio Quemado. The country then began, explains García Linera, the transition towards “the institutional administrative moment,” as he calls the period in which the revolutionary party becomes one more on the political board and is dedicated to administering what is established. The problem in Bolivia, says the former vice president, is that “this transition is taking place without glory, in a very petty way.” And this is where the fracture between Luis Arce and Evo Morales comes into play.

The dispute between the two began on the day of Arce’s inauguration, on November 8, 2020. In his inaugural speech, the new president neglected to name Morales, who had just returned from political exile in Argentina. “He made a textbook mistake, which was not giving Evo a place,” says political scientist Susana Bejarano. “Evo, having no place, puts pressure on with his administration and Arce cannot let that pressure increase. Within the framework of this tension, the renewing force, ‘arcismo’, was born, which wanted to change cadres and was opposed to everything that was around Evo,” she explains. The party cannot find mechanisms to resolve the internal conflict and the blood flows into the river. Urged on by Arce, the Constitutional Court disqualifies Evo Morales as a presidential candidate with the argument that he can no longer aspire to a new reelection. The war between the two leaders is total.

The Minister of Government, Eduardo del Castillo, a figure in the renovation sector archistspeaks of “obvious differences” with Morales. “He sees and conceives the MAS from the person and we conceive it from the social organizations,” he says. From Morales’ sector, they accuse the arcism of playing into the hands of the political right, wanting to appropriate with benefits a social base that does not belong to them and forgetting the revolutionary principles of the movement.

The dispute in the Government party has consequences on the management. Social researcher Armando Ortuño warns of “a situation of imbalance and disorder that the country cannot resolve.” “The military coup was a symptom of that disorder. Today we have a weak Government that is immersed in a brutal political crisis and without the capacity to manage social conflict and the economic crisis,” he says. The fracture of the MAS has today paralyzed Parliament, without it even meeting to approve the international credits that Bolivia needs to reverse an alarming lack of foreign currency. “In any other country you look for a modus vivendibut here the solution has been to paralyze Congress,” laments Ortuño.

The economic crisis is getting worse silently, hidden behind the noise of politics. Since 2015, Bolivia has faced a growing shortage of dollars, a product of the fall in gas prices, its main export, and the depletion of existing wells due to lack of investment in exploration. Inflation, which was around 2%, has climbed to 3.5% and private projections expect 5% in December. Due to the lack of foreign currency, a black market for foreign exchange has emerged. The markets have also turned off the tap on external credit, fearing that the persistence of a fiscal deficit of 11% will not leave enough money to meet obligations. The country risk, the differential that a State must pay for its debt over the United States rate, in Bolivia is now close to 2,000 points, despite the fact that its external debt does not represent more than 30% of its gross domestic product. Distrust in the Bolivian economy is growing.

“Oil sales were reduced by half, this is the structural reason for the lack of dollars. The phenomenon is aggravated by the speculative attack that the Bolivian peso suffered in February 2023, when thousands of savers lined up at banks to withdraw their currency deposits, explains Omar Velasco, an economist at the Universidad Mayor de San Andrés. For Juan Antonio Morales, former president of the Central Bank of Bolivia between 1995 and 2006, the situation “is very serious.” “To sustain exchange rate parity you need reserves. Today they are around 1.8 billion dollars, but most of it in gold, which is very difficult to convert into liquid currencies. If we only count dollars, euros and yen, we do not add up to more than 108 million dollars. That does not cover even two weeks of imports,” says the economist. The lack of dollars takes away the Government’s firepower to maintain the value of the national currency and resist speculative attacks. “Bolivia has maintained the fixed exchange rate since November 2011. If it is not reversed, it will end with a devaluation in the worst possible scenario. A devaluation is a very delicate surgical operation, if one makes a mistake the consequences can be very serious,” warns Juan Antonio Morales.

President Arce has a very different view. In an interview with this newspaper, he said that Bolivia’s inflation is still one of the lowest in the region and that the trade imbalance will be rapidly reduced thanks to official investment in oil exploration and industrialization. The lack of dollars, therefore, will no longer be a problem. “I already know the ideas that right-wing economists put into our heads,” he complained. Omar Velasco agrees that “the outlook is not very serious,” but it could become so if Arce and Morales do not resolve their differences and delay solutions. “The Achilles heel of the economy is the political issue. The MAS has devoted a lot of time to presidential nominations and has neglected the economic part. As long as the governing party does not resolve the fracture, it will not be able to resolve the crisis.” The key word is “adjustment,” which scares any government that considers it
self progressive. The current imbalances make it inevitable. This is said by the former vice president of Evo Morales, Álvaro García Linera, who has stayed away from the quarrels within the MAS. “Whoever takes office in 2024 will have to adjust the economy. But it remains to be seen whether it will be an adjustment with a human face or not. Whether Evo Morales is willing to make an adjustment is an unknown, because today he seems more concerned with weakening Arce than with saying how he plans to solve Bolivia’s problems.”

From the Palacio Quemado they say that Morales plays hard in this strategy of weakening. “He wants to be a presidential candidate in 2024 no matter what he wants. He said it: ‘I’m going to be a candidate by hook or by crook.’ And he is going to use everything, including calling into question the failed coup, for his personal political aspirations,” President Arce complains. García Linera sees a great danger in this strategy of crossed attacks applied by both MAS leaders. “Arce acts as if Evo were not a candidate and now he even fights to take away the party’s acronym. And Evo believes that if the economic crisis worsens, Luis will be so weak that he will be forced to qualify him as a candidate. And if the military appears in the middle, everything is welcome, because the important thing is to weaken the other,” he says.

Morales initially repudiated Zúñiga’s coup attempt, but quickly changed his mind and considered it a self-coup by Arce to undermine his presidential aspirations. “I don’t know what kind of coup it will be,” he said on Friday at a press conference from Chapare, the coca-growing region where he was born into politics more than 20 years ago. “The coup begins with happy ministers, strolling in Plaza Murillo, playing tanks.” [en referencia al ministro de Gobierno, Eduardo del Castillo]. A coup d’état with zero injuries, zero shots, zero deaths.” He even said that he had received phone calls from military leaders who recommended that he hide because the plan was to arrest him. Del Castillo remembers that Arce called Morales at the time of the coup to warn him that if Zúñiga triumphed he would go after him later. Instead of thanking the gesture, Del Castillo complains, “all the people from that sector of the Movement towards Socialism came out to attack the Government.”

García Linera fears that this game of thrones will spur the appearance of “a monster that in the end devours both.” He refers, of course, to the Armed Forces “The problem with all this is that within the MAS they rely on the military, one to contain Evo, the other to weaken Luis. And the military structure always has its own agenda, they are all very dangerous. There is a sign of Luis’s weakness, because a progressive government cannot be supported by the military. And at the same time, Evo cannot rely on weakening his opponent with military actions,” says García Linera.

Is there a political solution to the MAS crisis? It doesn’t seem simple. “In the short term, the government has to stabilise its political support and that requires some kind of agreement between Arce and Evo Morales,” says Armando Ortuño. If the fight between the two leaders deepens, he adds, “the issue has no way out.” And the opposition? “It has no resources, today it is looking at disaster looking for an opportunity. It has many problems building power because it has not understood the changes in the country,” adds Ortuño. With nothing to gain from the opposition parties, the key to governability is still in the hands of the MAS. “Division will lead us to an electoral defeat in 2024,” warns Álvaro García Linera. “Hopefully, unity will allow us to go to a second round stronger, because neither Evo nor Luis separately can achieve a majority,” he says. At the end of the day, everything will depend on the survival instinct of the party that has dominated Bolivian political life for the last 18 years.

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