What’s Behind Bolivia’s Cooperative Mining Wars?
Bolivia’s brutal cooperative mining conflict reveals the growing contradictions and perils of extractivism at the end of the commodities bonanza, as the government and popular sectors struggle to control a dwindling mining surplus.
by Emily Achtenberg
On August 25, Bolivia’s Deputy Interior Minister Rodolfo Illanes was detained, tortured, and beaten to death, allegedly by a group of cooperative miners. The horrific incident, which shocked the nation and the world, followed several weeks of road blockades and violent conflicts with police that ultimately claimed the lives of five miners. The protests were led by Fencomin (the National Federation of Mining Cooperatives), a long-time political ally and bastion of support for President Evo Morales and Bolivia’s MAS (Movement Towards Socialism) government.
In the wake of these tragic events, Morales issued a series of far-reaching decrees to reign in the cooperative mining sector, reversing their 10-year history of privileges and benefits under his administration. A dozen cooperative mining leaders, including Fencomin’s former president, have been jailed and are awaiting charges in conjunction with Illanes’s murder.
The apparent rift with Fencomin marks a watershed moment in Bolivia’s “process of change.” Even in a country where the dynamic of road blockades, confrontation, police repression, and escalating violence is a familiar aspect of popular struggles—especially in relation to mining—the brutality of this conflict is unprecedented. As political analyst Pablo Stefanoni notes, not even during the 2003 Gas Wars was there such a display of aggression against a ranking government official.
What explains this savage conflict, its origins, and its dramatic political aftermath? As is often the case in Bolivia, events and actors are not exactly as they seem. The western media’s initial characterization of the mobilizations as a strike for workers’ rights fell wide of the mark—since the protesters were actually resisting perceived efforts by the Morales government to unionize cooperative workers. Equally unenlightening was Morales’s labeling of the conflict as a “right-wing conspiracy” to destabilize the MAS government.
The conflict and its consequences can best be understood in relation to the contradictions of Bolivia’s cooperative mining sector, especially as it has evolved over the past 10 years under Morales, and in the context of recent economic and political changes that have unleashed new tensions between the government and its popular bases.
Cooperative Miners and the MAS
Bolivia’s powerful cooperative mining sector is a legacy of the 1980s, when pressure from international financial institutions and a catastrophic fall in mineral prices led to a shutdown of the government mines, displacing 25,000 salaried miners. Privatization of the mines in the 1990s further weakened COMIBOL, the state mining company, and destroyed Bolivia’s miner-led revolutionary trade union movement, once the most combative in Latin America—and perhaps the world.
Encouraged by successive neoliberal governments to buffer the consequences of massive mining dislocations, the cooperative mining sector flourished. Through these informal, self-managed associations, ex-miners could eke out a modest subsistence by excavating the mineral-rich surface dumps left over from centuries of exploitation, and selling their unrefined product—predominantly tin, silver, zinc, and gold—to private operators.
In recent years, thanks to sky-rocketing mineral prices, cooperative mining has expanded dramatically. Today, there are more than 1,600 mining cooperatives in Bolivia, as compared to 500 in 2005. The country’s 120,000 cooperative miners vastly outnumber their counterparts in the state and private sectors, representing 90% of the mining workforce, although they generate only 30% of total mining exports.
Still, more than a few cooperatives have strayed far from their artisanal and egalitarian roots to become hierarchical business enterprises, fueling the wealth of a small class of member-owners who have joined the ranks of Bolivia’s burgeoning indigenous bourgeoisie. Most of the mining work is carried out by a temporary, low-wage labor force under extremely precarious conditions, without benefits. Some cooperatives have also subcontracted or leased their concessions to domestic and transnational mining companies, who provide capital, technology, and guaranteed markets in exchange for utilizing the sector’s privileges and benefits to increase their profits.
Politically, Fencomin was an important protagonist of the 2003 Gas Wars and other anti-neoliberal struggles of the era. Its relationship with Morales was cemented during the 2005 constitutional crisis after the resignation of then-president Carlos Mesa, when cooperative miners mobilized to guarantee a succession process that would include popular elections, paving the way for Morales’s presidency.
Morales’s first mining minister, a Fencomin leader, was replaced after a brutal confrontation between cooperative and state miners at Huanuni in 2006 left 16 dead, underscoring a bitter conflict between Bolivia’s popular mining sectors that persists to this day. In 2008, Fencomin played an important role in drafting Bolivia’s new constitution, gaining recognition for a plural mining economy (state, private, and cooperative) while Bolivia’s mining wealth was declared to be a patrimony of the state.
Historically, the Morales government has nourished, strengthened, and privileged the cooperative mining sector. Over the past 10 years, concession areas granted to mining cooperatives have increased more than 500%. Cooperative miners have enjoyed favorable tax treatment, paying only 2.5-5% in royalties and no taxes to the state—compared to 8% in royalties plus 37.5% in taxes paid by the state and private sectors. Mining cooperatives have also been effectively exempt from labor and environmental regulations.
Until recently, Morales turned a blind eye to the cooperatives’ pre-existing private contractual arrangements, allowing domestic and foreign mining companies continued back-door access to the sector’s benefits and privileges. The Morales government also approved some new contracts, which were legal under the mining law inherited from past neoliberal regimes, but arguably inconsistent with the 2009 Constitution. Morales has also respected the cooperative sector’s continued resistance to nationalization.
In exchange, Fencomin has delivered consistent electoral support for Morales and the MAS, backed by its powerful capacity for mobilization—an arrangement dubbed “votes for veins” by critics like the investigative research NGO, CEDIB. The cooperative sector has been fully integrated into the MAS party and government, with its leaders occupying several ranking ministry positions as well as seven seats in the national Congress, as elected MAS delegates.
A new mining law passed during the run-up to the 2014 presidential election, after considerable controversy, appeared to consolidate the cooperative sector’s “regimen of exception,” even criminalizing any activity that would impede mining operations. Still, the seeds of the current crisis were sown when the Bolivian Congress failed to include in the law provisions promised by Morales to Fencomin, to protect and expand the cooperatives’ rights to associate with private firms. The sector’s steadfast support for Morales in 2014, and again in the 2016 referendum, was predicated on the expectation that these deficiencies would be remedied at the earliest possible opportunity.
The Current Crisis
In early 2016, two events radically altered Bolivia’s economic and political landscape: the drastic decline in minerals prices, and the defeat of Morales’s referendum bid for a fourth presidential term. Perceiving the cooperative sector’s economic situation as increasingly desperate, and Morales as politically vulnerable, Fencomin mobilized its constituency to regain what they had been promised in 2014.
While the protests were initially sparked by Morales’s initiative to unionize telecommunications and other service sector cooperative workers—a measure viewed by Fencomin as a provocation, although it specifically exempted the mining sector—the sector’s demands soon broadened into a 10-point agenda. In addition to resisting unionization, Fencomin called for extending cooperative mining concessions into protected indigenous territories and national parks, redirecting mining royalties for the exclusive benefit of cooperatives, further relaxing environmental restrictions, and recognizing existing and future contracts negotiated by the cooperatives with domestic and foreign firms.
As anti-extractivist critic Eduardo Gudynas notes, the promotion of such an audacious, anti-popular agenda by a sector that views itself as part of Bolivia’s progressive, revolutionary left is a testimony to the sector’s contradictions, and to the power it has accumulated under the Morales government. For its part, the government, faced with a cooling economy and a worrisome decline in revenues, was determined to resist any further concessions.
Widespread popular revulsion to the assassination of Illanes—notwithstanding the brutal repression of protesters by police—provided Morales with an opportunity and a mandate to strengthen government control over the cooperative mining sector. Within days of the tragedy, Morales issued a series of decrees reverting both idle cooperative concessions and those subject to private subcontract and leasing arrangements to the state, subjecting mining cooperatives to detailed annual audits, and extending labor protections (including unionization and benefits) to all cooperative mineworkers other than member-owners.
Other edicts cut off funding support for Fencomin, excluded cooperative mining representatives from the Comibol board, and prohibited the use of dynamite—long a staple of miner-led protests—in mobilizations and marches. The latter provision was quick to provoke the wrath of state and cooperative miners alike, in a rare show of unity. “It is thanks to dynamite,” said Guido Mitma, leader of the COB (Bolivian Workers Central, the national trade union federation), “that Evo became president.”
Economic and Political Consequences
What is the Morales government seeking to accomplish with these new policies, and what are their likely economic and political consequences? The government has presented the measures as an anti-imperialist, revolutionary program to wrest control of the mining sector from transnationals, similar to the 2006 “nationalization” of hydrocarbons. Additionally, according to Vice-Minister of Social Movements Alfredo Rada, the extension of labor protections to some 100,000 cooperative mineworkers is the most important advance in labor rights of the past 10 years.
On the other hand, Bolivian sociologist Henry Oporto warns that the “draconian” decrees constitute a form of “shock treatment” for which the cooperative sector is unprepared. The new policies, he contends, are an act of political reprisal against a wayward constituency that the government itself has nurtured, fueled by a “media lynching” that has sought to blame the sector for all of Bolivia’s mining problems.
If strictly enforced, Oporto warns, these measures could destroy the cooperative mining industry, causing massive dislocations and undermining communities like Potosí, where 40% of the economically active population is dependent on cooperative mining. Neither the state nor the private mining sector can absorb the vast cooperative mining workforce. In other words, the remedy could be worse than the problem.
Oporto argues that the necessary formalization of the sector should be accomplished gradually instead of punitively, with massive government assistance. To date, the government has supported 49 mining cooperatives with $28 million in loans, mostly for equipment and machinery, but this has met only a fraction of the need.
For Pablo Villegas of CEDIB, the cooperative sector has become the scapegoat in a political process whose real purpose is economic: to allow the government to increase its share of the mining surplus, in response to the economic crisis. While the reviled “false” cooperatives that have associated with private firms (with the government’s knowledge, if its not blessing) will lose their concessions, the government now hopes to contract directly with the same transnationals on more favorable terms, i.e. increased taxes and royalties. The goal is laudable, but whether it’s feasible in the current economic environment remains to be seen.
As to the revolutionary scope of the program, Villegas notes that so far, only 31 contracts have been slated for revocation by the government, including 6 executed under Morales. Some of these, apparently, are no longer operational. Still, the at-risk list includes some high profile targets like Manquiri, a subsidiary of the U.S.-based Coeur Mining Company, whose contracts with seven mining cooperatives in the Cerro Rico of Potosí encompass some 7,000 workers and members.
Politically, reconciliation between Morales and the cooperative sector is not out of the question, which could lead to a slowdown in enforcement, or even some mitigation, of the new decrees. The newly-elected Fencomin leadership has reopened dialogue with Morales, adopting a conciliatory tone and emphasizing the sector’s continued loyalty to Bolivia’s “process of change.” While the sector has voted to advance a new political party, it’s unclear whether it will contest the MAS candidate in the 2019 presidential election. Some prominent Fencomin affiliates have recently announced their endorsement of Morales for a fourth presidential term.
What Bolivia’s cooperative mining wars have revealed, in stark terms, are the growing contradictions and perils of an extractivist-dependent economy at the end of the commodities bonanza, as the government and popular sectors struggle to control a dwindling mining surplus. As Gudynas notes, the real debate should be over the mounting social costs of extractivism to local communities and to societies as a whole, including exploitation, environmental destruction, escalating violence, and now even kidnapping and assassination. Unfortunately, this is a reality and a challenge that will continue to shape Bolivia’s economic and political landscape for the foreseeable future.
This article summarizes the deception, the anarchy and incompetence of the government of the coca grower caudillo. He managed to waste over $150 billion dollars in the last eleven years.
There is no excuse on his part, nor his political party, 11 years with total control of state powers, the economic bonanza is over. We are left with a broken country as he managed to plow deception, racism, egocentrism among all Bolivian society.
The worst possible government ever!