Why the coup attempt made bad things worse in Bolivia

The recently failed military coup in Bolivia has worsened an already fragile political and economic situation in the Andean country, according to Fitch Ratings.

The government’s capacity to mount an effective policy response is further hampered by the deepening divide within the ruling MAS party ahead of next year’s general elections, Todd Martinez, Fitch's Americas sovereigns co-head, told BNamericas.

“Bolivia was already facing an economic crisis before the attempted coup due to unsustainable policies that have depleted the central bank’s international reserves, resulting in dollar scarcity that is asphyxiating the economy,” said Martinez.

Following the failed June 26 coup, which saw a military assault on the presidential palace, supporters of former president Evo Morales began to accuse President Luis Arce of planning a false-flag operation to boost his popularity, a conspiracy theory that has also been echoed by Argentine President Javier Milei. 

The high tensions between the Morales and Arce camps within the MAS have this year seen road blockades, physical altercations between legislators and a bitter battle over the party leadership.

This has also affected the government’s capacity to obtain financing for infrastructure works, as clashes in congress have slowed congressional approval of multilateral loans.

The coup’s aftermath is “aggravating a climate of political uncertainty that is weighing on sentiment and hindering an effective policy response,” said Martinez.

LULA VISIT 

The visit of Brazilian President Luis Inácio Lula da Silva to Bolivia was much anticipated by the local authorities. 

The short visit, with Lula arriving on Monday evening and set to leave Tuesday evening, included a meeting with Arce that featured talks on gas imports, energy, mining, trade and other issues, local news outlets reported. The Lula delegation also included a large number of Brazilian businesspeople. 

Lula reaffirmed his support of Arce amid the coup attempt and said Bolivia has shown interest in joining the BRICS group.

“The region’s physical and energy integration necessarily involves both our countries. Bolivia’s commitment is key to complete the group of routes that Brazil has named the Rondón quadrant,” Lula said at a press conference after his meeting with Arce, referring to routes connecting the Brazilian states of Acre, Rondônia and Mato Grosso, and extending west to Bolivia and Peru.

Lula also highlighted Bolivia’s efforts to reactivate the project to build a binational bridge over the Mamoré river, as well as his own administration’s plan to improve navigability of the Tamengó canal in the Paraguay river, which runs through Brazil, Bolivia, Paraguay and Argentina.