The Credibility of Campaign Promises

By Franz Chávez, www.ipsnews.net

November 23, 2009

Bolivia

President Evo Morales of the leftist Movement to Socialism (MAS) is expected to handily win a second term, for the 2010-2015 period, without the need for a runoff election. 

Morales, the first-ever indigenous president in a country where native peoples form a downtrodden majority, won the December 2005 elections with 53.7 percent of the vote - an unprecedented majority in a country where leaders are sometimes elected with less than half that level of support. 

And in an August 2008 recall referendum, he took a record 67 percent of the vote. 

Since he took office in January 2006, Morales has broken the mould of traditional Bolivian presidents, putting a priority on social justice and the rights of indigenous people. Among the tools he has used are cash transfers to the poorest segments of society. 

"One of my advisers warned me that giving money to people would drive up inflation, which would bring the risk of economic instability," the president said recently. 

The Ministry of Economy and Public Finance reports that 2.5 million children, pregnant women and elderly persons, equivalent to 25 percent of the population, are beneficiaries of the cash transfer programmes created by the government to bolster human development in this land-locked country, South America's poorest. 

Some 744,000 people over 60 have received a monthly pension of around 28 dollars since February 2008, under the 'Renta Dignidad' programme, which expanded a previous pension system to around 200,000 additional people. Nearly 60 percent of elderly people in Bolivia live on less than one dollar a day. 

In addition, tens of thousands of families receive the 'Juancito Pinto' cash grant of roughly 28 dollars a month per schoolchild between the 1st and 8th grades, conditional on school attendance. 

More recently, pregnant women and mothers of small children began to receive special payments in May under the ‘Juana Azurduy’ mother-child subsidy programme aimed at cutting the country’s maternal and infant mortality rates. 

Some 550,000 women and children who have no health insurance will receive the payments in the first year of the programme. The cash transfers, which will total 258 dollars over the space of a woman’s pregnancy and her baby’s first two years of life, are conditional on regular pre- and post-natal care visits by the mother and checkups for her baby. 

The minimum monthly wage in Bolivia is 90 dollars. 

The campaign for the elections - in which voters will choose a president, vice president, and 166 members of Congress - has been void of innovative proposals, and Morales' main opponents have fallen into the temptation of offering money, although in different formats and under different arguments. 

In the latest poll by the Bolivian office of the Uruguayan polling firm Equipos Mori, whose results were released on Nov. 16, 52 percent of respondents said they would vote for Morales, while 18 percent said they would cast their ballot for his nearest rival, former Cochabamba governor Manfred Reyes Villa of the Plan Progreso Bolivia-Convergencia Nacional (PPB-CN). 

In third place is Samuel Doria Medina of the National Unity Front (UN), with 8.8 percent. 

Reyes Villa's main proposal consists of distributing 1,000 dollars to every poor, unemployed family, while Doria Medina also said he would provide 1,000 dollars to every small farmer, producer or craftsperson, as seed capital for them to start up a family business. 

Doria Medina argues against the Morales administration's plan to give a one billion dollar loan to the state-run oil company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), saying the money would be better spent on small self-employed producers. 

With regard to the cash transfers provided by the government, the UN leader points out that former president Gonzalo Sánchez de Lozada (1993-1997 and 2002-2003) had already created a pension system for the elderly, and that Morales merely changed its name and the way it is paid out and funded. 

Both Doria Medina and Reyes Villa also note that the cash grants are based on law, which means they cannot be eliminated - thus side-stepping any speculation that the leading right-wing candidates might want to remove the cash transfer programmes, which would hurt their popularity and lead to a loss of votes. 

But while the three leading candidates have all promised funds for the poor, the question of credibility of campaign pledges would appear to be a key aspect in the upcoming elections. 

Just a few months into his term, Morales re-nationalised the country's vast natural gas reserves, renegotiated the terms of the contracts under which foreign oil firms are operating in the country, and raised royalties and taxes on natural gas, which stood at just 18 percent from 1996 to 2005. That significantly boosted state revenues from energy exports. 

And although natural gas revenues have now shrunk due to the drop in international oil prices, the Morales administration has managed to break down several barriers created since the 1980s by governments that followed the structural adjustment policies dictated by the International Monetary Fund (IMF) and the World Bank, in what is known as the Washington Consensus model. 

The idea behind the structural adjustment programmes was to drastically cut public spending - mainly in social areas - in order to bolster fiscal revenues and later redistribute them to the population. 

After a far-reaching structural adjustment programme was implemented in Bolivia in August 1985, the state budgets in the second half of the decade put a priority on building roads, schools and health care centres, but the public works projects were plagued by cost overruns and the payment of dodgy commissions. 

In practice, the redistribution of income never reached the poor, which eroded the credibility of right-wing governments in the eyes of workers and peasants and gave rise to the MAS. 

Morales, by contrast with his predecessors, has distributed the money generated by the renegotiation of natural gas contracts to the population, by means of direct cash transfers. 

"Today I ask you to continue supporting the nationalisation of companies, because the money that is generated is turned into cash grants for the people," the president said in a recent campaign speech, referring to his plan to renationalise former public utilities and other companies. 

Morales thus put into practice the oft-repeated phrase "redistribution of income," which has had an immediate effect on generating economic activity, providing a degree of income security to the elderly, keeping children in school, and ensuring health coverage for pregnant women. 

But despite the economic stability achieved by the government, as reflected by the recent decision by Fitch Ratings, an international rating agency, to raise the country's grade by one notch, the Morales administration has been criticised for its spending by the fragmented right-wing opposition, which argues in favour of a rigid economy and reduced spending, in line with a laissez-faire economic model that would encourage production of export commodities. 

Under the Morales government, the state has played a slightly more interventionist role in some areas of production and food supplies, to prevent price speculation by means of temporary export bans on a few products.

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