Bolivia lies landlocked high in central South America, and is one of the continent's poorest nations. Over half of the population lives on the altiplano, the windswept plateau between two ranges of the Andes, 3500 m (11,500 ft.) above sea level. La Paz, the highest capital in the world, has spawned a neighboring large twin, El Alto. Bolivia has the world's highest golf course, ski run, and soccer stadium. The eastern lowland regions are tropical and underdeveloped but are rapidly being colonized.

Two-thirds of Bolivians are Quechua and Aymara Amerindians who historically have been marginalized. In recent years, however, they have played a more active role in politics by supporting new populist parties. Wealthy city elites, dating back to Spanish colonial rule, retain great influence, but new entrepreneurs with political ambitions have appeared. Most Bolivians are subsistence farmers, miners, small traders, or artisans earning low incomes. Government schemes, spontaneous colonization, and the collapse of tin mining have led to large-scale migration from the Andes to lowland eastern regions in the last few decades.

Family life tends to be close-knit; Amerindians practice Roman Catholicism mixed with their own traditions and culture. Women have low status. There are some 130,000 lowland Amerindians in western regions.

Strengths

Mineral riches: gold, silver, zinc, lead, tin. Newly discovered oil and natural gas deposits attracting foreign investment.

Weaknesses

Raw materials vulnerable to fluctuating world prices. Lack of processed or manufactured exports with higher added value. Lack of integration between economic sectors and regions. Poor infrastructure.

Profile

Traditionally, the state used earnings from the publicly owned state mining sector to control the economy. Years of deep recession in the 1980s, accompanied by accelerating inflation and a collapsing currency, saw the introduction of severe, IMF-approved, austerity policies. These, along with the introduction of a new currency and tax reform, succeeded in curbing inflation, reducing public spending, and restoring international loans, but at the price of great social unrest. Growth was restored in the 1990s and a controversial "capitalization" program was launched which allowed for the 50/50 sell-off of shares in all six state companies on attractive terms to investors and employees. Narcotics revenues remain important for the economy.

Bolivia is a multiparty democracy.

Profile

From 1825 to the early 1980s, Bolivia experienced, on average, more than one armed coup a year, punctuated by a national revolution in 1952 which delivered important reforms. The fragmented and drug-tainted military finally stepped down in 1982, but full elections were delayed until 1985.

New populist parties have emerged to challenge traditional politics, although not the drift to free-market economic development. Coalitions are unstable, nepotism remains rife, and the narcotics trade, the profits of which underpin the economy, are frequently implicated in political corruption scandals. The main trade union federation COB was the traditional focus of opposition, but coca growers and other popular groups have now assumed this role. Peasant leader Evo Morales even gathered enough support to come a close second in presidential elections in 2002.

The austerity policies of the MNR were continued after its defeat in 1997 by former dictator Hugo Banzer. Ill health forced his resignation in 2001, and the MNR was returned to power in 2002 with Gonzalo Sanchez resuming the presidency.

Main Political Issues

Disillusionment with political system

Public opinion in the run-up to the 2002 presidential elections pointed to a lack of faith in promised electoral reform. The country's veteran politicians are widely viewed as a self-serving, self-perpetuating class tainted by corruption.

Coca growers

Poor farmers oppose the government's forced eradication of coca crops – an anticocaine drive to ensure more US aid. Serious clashes continued in 2001–2002 as troops operating in eastern coca-growing areas removed farmers' road blocks. The cocaleros complain that modest government subsidies to switch crops take no account of low prices for bananas, pineapples, and palm hearts.

Bolivia's historic foreign policy concern is gaining improved access to the Pacific via Peru and Chile. The prospect of a Bolivia–Peru gas pipeline is a long-term project. Current gas export projects, coupled with the opening of the telecoms sector, and the extension of the Apta preferential trade act with the USA should strengthen economic growth. Current US aid is conditional on the Bolivian government taking measures to destroy the cocaine-producing and -trafficking industry, involving military and police attacks on impoverished coca growers.

A pointer to the future is that Bolivia is an associate member, along with Chile, of Mercosur. This southern grouping, under the leadership of Brazil, will act as a strong negotiating bloc in upcoming talks for a Free Trade Area of the Americas (FTAA) due in 2005.

The military has not actively interfered in politics for over two decades. However, it is frequently used to quell internal dissent. The army is the main focus of defense spending, with weaponry bought almost entirely from the USA. The Bolivian navy consists mainly of gunboats on Lake Titicaca, which borders Peru, and on the Pilcomayo River. The army has worked with US forces against the cocaine business, although its integrity is questioned due to its past associations with narcotics trafficking. The main ambition of the military, apart from protecting its own interests and privileges, is the unrealizable aim of recapturing territory that would allow Bolivia access to the Pacific. Military service lasts for one year.

Bolivia is the world's fifth-largest tin producer. The government is allowing foreign companies to prospect for more oil, and to increase sales of natural gas to Brazil and Argentina.

Deforestation is Bolivia's major ecological problem, as throughout the Amazon region. Land clearances are running at 164,000 hectares (398,000 acres) a year. Much of the cleared land is turned over to cattle ranching or the growing of coca. Pesticide and fertilizer overuse in the coca business is a concern. The industry is effectively uncontrolled and rivers in Amazonia have high pollution levels.

Pollution problems are compounded by waste chemicals used in minerals industries. Mercury, used in the extraction of silver, has been found in dangerous quantities in river systems.

Obtaining port access to the Pacific coast for landlocked Bolivia is important. Only 4% of roads are paved. The national railroad was privatized in 1996. Domestic airlines are generally reliable.

Bolivia has one of the highest child mortality rates in the western hemisphere. Nearly 40% of children up to three years of age suffer from chronic malnutrition, and fewer than half the children under one year are immunized; diseases preventable by vaccination are a major cause of death. Formal health services are costly, so that over half the population does not use them. Some 60% of births take place at home with no trained assistant present. High maternal mortality was targeted in a UNICEF-backed initiative in the 1990s. Official figures at the end of 1999 showed that 4100 people were living with HIV/AIDS.

IMF targets for increased school attendance are being met, but education, based on a combination of the French and US systems, is seriously underfunded.

Although the majority of people speak indigenous languages, most teaching is in Spanish. Bolivia has one of the lowest literacy rates in South America. Reform and multilateral aid have led to some improvements.

Violent crime is centered on narcotics-trafficking towns in the eastern lowlands, particularly Santa Cruz. Main cities are much safer for tourists, and have lower crime rates than cities in neighboring Peru. The police and army have a history of mistreating poor farmers and miners.

Havoc created by economic reforms has widened the already huge gap between rich and poor. Generally, the indigenous population who form the rural poor are the worst off. The Andean highlands suffer from grinding poverty that has hardly changed in generations. Migrants to more prosperous eastern regions have faired better, but skewed land ownership remains a big problem. Poor housing, and lack of utilities and regular income are common to urban poverty. Only some 5% of people have bank accounts.

Foreign tourists are drawn by the traditional festivals, especially carnivals in February or March, the variety of Bolivia's scenery, and its Spanish colonial architecture. Major attractions include the Silver Mountain at Potosí, and Lake Titicaca, the highest navigable lake in the world, covering an area of 8970 sq. km (3463 sq. miles). Recent political stability encouraged some growth in tourism in the 1990s, but potential is limited by Bolivia's isolation, the rugged, inaccessible terrain, and the limited infrastructure.

The Aymara civilization was conquered by the Incas in the late 1400s. Fifty years later, the Incas were defeated by the conquistadores and Upper Peru, as it became, was governed by Spain from Lima.

• 1545 Cerro Rico, the Silver Mountain, discovered at Potosí. Provides Spain with vast wealth.
• 1776 Upper Peru becomes part of Viceroyalty of Río de la Plata centered on Buenos Aires.
• 1809 Simón Bolívar inspires first revolutionary uprisings in Latin America at Chuquisaca (Sucre), La Paz, and Cochabamba, but they fail.
• 1824 Spaniards suffer final defeat by Bolívar's general, José de Sucre.
• 1825 Independence.
• 1836–1839 Union with Peru fails. Internal disorder.
• 1864–1871 Ruthless rule of Mariano Melgarejo. Three Amerindian revolts over seizure of ancestral lands.
• 1879–1883 War of the Pacific, won by Chile. Bolivia left landlocked.
• 1880–1930 Period of stable governments. Exports from revived mining industry bring prosperity.
• 1903 Acre province ceded to Brazil.
• 1914 Republican Party founded.
• 1920 Amerindian rebellion.
• 1923 Miners bloodily suppressed.
• 1932–1935 Chaco War with Paraguay. Bolivia loses three-quarters of Chaco. Rise of radicalism and labor movement.
• 1951 Víctor Paz Estenssoro of MNR elected president. Military coup.
• 1952 Revolution. Paz Estenssoro and MNR brought back. Land reforms improve Amerindians' status. Education reforms, universal suffrage, tin mines nationalized.
• 1964 Military takes over in coup.
• 1967 Che Guevara killed while trying to mobilize Bolivian workers.
• 1969–1979 Military regimes rule with increasing severity. 1979 coup fails. Interim civilian rule.
• 1980 Military takes over again.
• 1982 President-elect Siles Zuazo finally heads leftist civilian MIR government. Inflation 24,000%.
• 1985 Paz Estenssoro's MNR wins elections. Austerity measures. Annual inflation down to 20%.
• 1986 Tin market collapses. 21,000 miners sacked.
• 1989 MIR takes power after close-run elections. President Paz Zamora makes pact with 1970s dictator Gen. Hugo Banzer, leader of ADN.
• 1990 1.6 million hectares (4 million acres) of rainforest recognized as Amerindian territory.
• 1993 MNR voted back to power.
• 1997 Banzer wins largest proportion of vote in presidential elections.
• 1999 Opposition demands inquiry into Banzer's role in regional military repression in 1970s.
• 2001 Banzer resigns due to ill health.
• 2001–2002 Government program of coca eradication and bans on coca trading and marketing provoke clashes with peasant farmers.