Economic turmoil in Bolivia fuels distrust in government and its claim of a ‘failed coup’

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LA PAZ, Bolivia (AP) — “I buy dollars” signs line the doors of Victor Vargas’ shoe store in the heart of Bolivia’s largest city, desperate to keep his family business alive.

Just a few years ago, the 45-year-old Vargas would open the doors at 8 a.m. to a crowd of customers who were already waiting to buy tennis shoes imported from China. Now, his shop remains hopelessly empty.

“We are in a terrible crisis now,” he added. “Nobody is buying anything anymore. … We don’t know what will happen.

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Bolivians like Vargas have been hit hard by the small South American nation’s economic turmoil, fueled by a long-standing overreliance on the U.S. dollar, which is now in short supply.

The economic downturn has been exacerbated by an ongoing dispute between President Luis Arce and his ally-turned-rival former President Evo Morales in the run-up to next year’s presidential elections. Many Bolivians affected by the crisis have lost confidence in Arce, who denies that the country is in an economic crisis.

“Bolivia’s economy is growing,” Arce told The Associated Press in an interview, contradicting statements by economists and dozens of Bolivians.

This deep mistrust came to a head on Wednesday in the wake of a spectacle that the government described as a “failed coup” and that opponents, including Morales, described as an orchestrated “self-coup” aimed at gaining political points for the unpopular leader ahead of elections.

Whether the coup attempt was real or not, most Bolivians who spoke to the AP said they no longer believe what their leader says, and say Arce would be better off dealing with Bolivia’s faltering economy and spending less time pulling political stunts.

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“He should think about Bolivia’s economy, make a plan to move forward, find a way to get the dollars, and work to move Bolivia forward. No more of these childish coups,” Vargas said.

This mounting anger has paved the way for more conflict in a country that is no stranger to political turmoil.

Bolivia’s economic crisis is rooted in a complex mix of dollar dependence, draining international reserves, mounting debt, and a failure to produce products such as gas, which was once an economic boon for the Andean nation.

This means Bolivia has largely become an import-dependent economy “completely on the dollar,” says Gonzalo Chavez, an economist at the Catholic University of Bolivia. This had previously worked to Bolivia’s advantage, as he led the country’s “economic miracle” as it became one of the fastest growing economies in the region.

The Vargas family opened a shoe business nearly 30 years ago because they saw it as a sure way to ensure stability for future generations. The family imports shoes from China, pays for them in dollars and sells them for the Bolivian currency, the boliviano. Without dollars, they have no business.

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The shortage of dollars has led to the emergence of a black market, where many sellers bring dollars from neighboring Peru and Chile and sell them at exorbitant prices.

Pascuala Quispe, 46, spent Saturday walking around downtown La Paz, going to different money exchange shops, looking for dollars to buy car parts. While the official exchange rate is 6.97 bolivianos to the dollar, she was told the real rate was 9.30 bolivianos, which was too high for her. So she kept going, hoping to find luck elsewhere.

The high prices have seeped into everything. People stopped buying shoes, meat, and clothes, which pushed working-class people deeper into poverty. Bolivians make jokes about having “mattress banks,” where they store money at home because they don’t trust banks.

“There are no jobs… and the money we earn is not enough for anything,” Kispe said. “Everyone is suffering.”

Some vendors, like Vargas, paste signs on the doors of their businesses, where vendors hope to trade dollars at a more reasonable rate.

Economist Chavez said it is a complex economic dilemma that has few solutions in the short term.

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But Arce insists that Bolivia’s economy is “one of the most stable” and says he is taking measures to address problems plaguing Bolivians, including dollar and gasoline shortages. He said the government was also industrialising, investing in new economies such as tourism and lithium.

While Bolivia has the world’s largest deposits of lithium, a valuable mineral essential to the transition to a green economy, the investment will only be viable in the long term, largely due to government failures, Chavez said. Meanwhile, inflation has outpaced economic growth, and most Bolivians face precarious working conditions with low wages.

This situation is exacerbated by ongoing battles between Arce and Morales, who returned from exile after resigning during the unrest in 2019, which Morales claims was a coup against him. Now the former allies have traded insults and fought over who will represent their Movement for Socialism party, known by its Spanish acronym MAS, ahead of the 2025 elections.

“Arce and Evo Morales are fighting over who is stronger, but neither of them is ruling Bolivia… there is a lot of uncertainty,” Vargas said.

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Widespread discontent has fueled waves of protests and strikes in recent months. The protests and roadblocks dealt another economic blow to Vargas, the shoe seller, because customers from all over the country no longer traveled to buy products due to the chaos of protests everywhere.

Morales, who still holds a significant amount of power in Bolivia, has blocked Arce’s government from passing measures in Congress to ease the economic turmoil, which Arce described to The Associated Press as a “political attack.”

Morales has fueled speculation that last week’s military assault on the government palace, allegedly led by former military commander José Zúñiga, was a political stunt orchestrated by Arce to win Bolivian sympathy. That claim was first made by Zúñiga himself upon his arrest.

“He deceived and lied, not only to the Bolivian people, but to the whole world,” Morales said on a radio program on Sunday.

The political bickering has left many, like Edwin Cruz, a 35-year-old truck driver, shaking their heads as they wait hours, sometimes days, in long lines for diesel and gasoline due to intermittent shortages caused by a lack of foreign currency.

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“Diesel is like gold now,” he said. “People are not stupid. With this whole ‘self-coup’ thing, this government has to go.”

Cruz is among those who do not want to vote for Morales or Arce. While Bolivians have few other options, Chavez said the discontent opens a “small window” for an outsider to gain more attention, just as a number of outsiders have in Latin America in recent years.

More recently, Javier Milei, a self-described “anarcho-capitalist,” took the reins in neighboring Argentina, promising to lift the country out of its economic maelstrom, which shares a number of similarities with Bolivia.

Meanwhile, Vargas doesn’t know what to do with his family’s shoe store. The store, which was once a source of pride, has become a financial drain. He would like to pass it on to one of his four children, but they all want to leave Bolivia. One of his sons has already immigrated to China.

“They don’t want to live here anymore,” Vargas said in his empty store. “Here in Bolivia, there is no future.”

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Follow AP’s Latin America coverage at: https://apnews.com/hub/latin-america

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