Revolt of the Rich

Relations between Bolivia's President, Evo Morales, and the country's wealthy easterners were tense from the start. Since Morales's election in 2005, the eastern provinces, known as the  "Media Luna," or half moon, which have grown rich on natural gas, have fought bitterly over a new constitution that would redistribute some of that wealth to the western provinces. The opposition has recently waged disruptive strikes. Protests began to take a more violent turn after Morales trounced the opposition in last month's recall election. This week at least eight Bolivians were killed in clashes. Opposition groups blew up part of a natural gas pipeline  and vandalized government offices, causing millions of dollars worth of damage.  They have also succeeded in disrupting trade with Brazil and Argentina, which rely on Bolivia's natural gas.

Relations between Bolivia  and the United States have quickly deteriorated  as well. Bolivia expelled U.S. ambassador Philip Goldberg for  "conspiring against democracy" and in response the Bush   administration sent the Bolivian ambassador in Washington packing.  In a show of support, Hugo Chavez, Venezuela's president and staunch Evo ally,  ejected the American envoy from Caracas. On Friday,  Morales sent troops into the eastern provinces to restore order. To  find out where it's all headed, Newsweek's Michael Miller talked with economist and Bolivia expert Mark Weisbrot, co-director of the  Center for Economic and Policy Research in Washington, D.C. Excerpts:

Newsweek: How serious is the fallout between the United States and Bolivia?
Weisbrot: I think it's serious. I think that this thing was coming  for a long time. There had been a number of incidents. There was the incident with the Peace Corps and the Fulbright scholar [asked to  spy by the U.S. Embassy]. And then there are the meetings between   the ambassador and the opposition. Obviously he's the ambassador: he  should meet with everybody. But the way he did and the timing of it   was considered unfriendly. I think you have a bigger structural  problem, which is that you have USAID funding groups in Bolivia but  they won't disclose who they are. They are doing this now in  Venezuela too. These are polarized countries. So on that basis both  of these governments [Bolivia and Venezuela] just assume that  Washington is doing what it has always done, which is to fund the  people that they are sympathetic to.

How much influence do eastern Bolivia's large estate  owners have?  What kind of pressure do opposition groups exert in Bolivia?
Quite a bit. That's what this conflict is really about. You have the most concentrated land ownership in almost the entire world in  Bolivia, with around two thirds of the land owned by six tenths of  one percent―not even one percent―of the landowners. Obviously Evo Morales ran on a platform of land reform. He is not talking about confiscating huge amounts of land, but there is going to be some redistribution. There is the hydrocarbon revenue, which goes disproportionately to the Media Luna states with the opposition governors. So those are the two big economic reasons for this conflict.

Which one, land or hydrocarbons, is really the central issue?
That is a tough question. The hydrocarbons are more immediate  because [the government has] already begun some redistribution  there. Morales has not touched the landowners. So I guess you could  say that [hydrocarbons] are the bigger issue.

I was in Bolivia a couple months ago and I met with the Central Bank  and the ministries. The government has $ 7 billion in reserves right now in the Central Bank, which is an awful lot [considering] their   whole GDP is only $13.2 billion. Most of it is owned by the  prefectures, the provinces, so they have a lot of money. So it is  hard to explain why they would raise such a fuss over the government wanting to take a small part of that and use it for some pensions 
 for people over 60, which also goes to their own residents.