Latin America’s left-wingers are in a rut. Venezuela’s Nicolas Maduro presides over a collapsing economy behind bayonets. An Ecuadoran court has ordered the arrest of former President Rafael Correa, who is living in Belgium. Brazil’s Dilma Rousseff was impeached for cooking the books and her iconic predecessor and Workers’ Party mentor Luiz Inacio Lula da Silva is in jail for graft.

Sure, Mexicans swoon to old-school lefty Andres Manuel Lopez Obrador, but he’s the new caudillo on the block. So how to explain President Evo Morales of Bolivia? The three-time socialist leader is favored to win a fourth term in this October’s election. No matter that the constitution that Morales himself had rewritten banned presidents from serving more than two consecutive terms, and that a majority of Bolivians seconded that hard stop in a national referendum. Leave it to the Morales-friendly Plurinational Constitutional Court to finesse those obstacles.

Such imperial hubris, plus a host of other democracy-bending rules Morales forged on his watch, would leave less stolid supremos vulnerable. Look no further than Nicaragua, where besieged autocrat Daniel Ortega has relied on blunt force and jail cells to cling to power. Morales is no democrat -- just ask Bolivian journalists -- but the secret of his 13- year-plus tenure owes less to the jackboot than to checkbook populism, stacking the courts, gaming the constitution and plenty of luck.

Thanks to China’s appetite for minerals and regional demand for natural gas, Bolivia’s economy has surged. Average prices for its mineral and natural gas exports increased 120 percent in the boom years of 2006 to 2013 compared with the period from 2000 to 2005, according to the Bolivian think tank Fundacion Milenio.

Bolivia’s economy grew by an average 4.8 percent per year from 2004 to 2017. Even as it slowed last year, gross domestic product still expanded by around 4.5 percent, making Bolivia one of the region’s best performers, the International Monetary Fund reported.

Morales has been better than his peers in the spendthrift Bolivarian Revolution at marshalling the windfall. During the boom, he socked away international reserves, which rose eightfold from $1.7 billion in 2005 to nearly $14 billion in 2012. He also, admirably, decanted much of the largess into aggressive minimum wage increases and social programs, with heavy cash transfers to the elderly, women and children. Overall poverty fell sharply in the decade to 2017, while extreme poverty shrank from 38 percent to 17 percent, buying him good will and votes.

But booms also fizzle. Bolivia’s reliance on mining and natural gas -- in Latin America, only Venezuela’s economy is more beholden to raw materials -- left it prey to the commodities bust. Falling export revenues tipped external accounts into the red; the current account deficit widened by around $2 billion a year from 2015 through 2017. Bolivia’s external debt more than doubled in the post-bonanza, from $4.2 billion to $9.4 billion between 2012 and 2017. International reserves are plummeting.

Government spending kept growing, however, tripping off warnings by foreign lenders as the global economy slowed. “The model of past success was based on factors that are not sustainable,” the IMF concluded in an Article IV review last December. “Relying on natural resource windfall revenues to fund social programs should be reconsidered.” Continuing to hoist wages above overall economic productivity, the fund argued, “would further damage Bolivia’s international competitiveness.”

Inequities worsened the fiscal folly. A generous helping of the government’s social subsidies, equivalent to 3.7 percent of gross domestic product, found its way into the pockets of the nonpoor. Some 62 percent of Bolivians toil in irregular jobs -- the world’s largest informal economy -- dragging down productivity and human capital.

Bolivia’s slow-motion economic slide has yet to weigh heavily on Morales’s ratings. Polls show he outpaces a fractured opposition in the presidential race. And he recently received an unlikely, and unconscionable, bump from Organization of American States Secretary-General Luis Almagro. A fierce critic of perennial autocrats, Almagro -- who is seeking reelection himself at the Latin American compact -- all but endorsed Morales’s constitution-warping bid for a fourth mandate. (In a recent visit, he even tagged along with the Andean incumbent to his electoral stronghold in the Chapare, the heart of Bolivian coca country.) “It was probably a political move calculated to garner Bolivia’s vote at the OAS,” said Jaime Aparicio Otero, former Bolivian ambassador to Washington. “But Almagro may have underestimated the Bolivian reaction to his gesture.”

Morales, for his part, is likely to emerge unscathed. What’s helped contain the damage is Bolivia’s decentralized budget pact, written into law before Morales’s election, which sends 20 percent of federal revenues to cities and towns. “That automatic revenue-sharing helped protect the economy,” economist Roberto Laserna of the Fundacion Milenio told me. “Thanks to that provision, which Morales was unable to change, the Bolivian economy is diversified and heterogeneous.”

Yet the government’s unchecked spending habit suggests that no matter who wins in October, a fiscal reckoning is at hand. “It’s like the guy who jumps off a 12-story building,” said Laserna. “Ten floors down, everything still looks good.” Even the most charmed Bolivarian can’t game gravity.


Mac Margolis
Mac Margolis is a Bloomberg Opinion columnist covering Latin America. He was a reporter for Newsweek and is the author of “The Last New World: The Conquest of the Amazon Frontier.” -- Ed.

(Bloomberg)