Editorial, El Diario:

The privatization of state-owned enterprises has emerged as a key issue in discussions about reviving the country’s economy. During last year’s election campaign, privatization topped the national agenda, and most candidates pledged to sell off public companies in response to growing public demand. That position helped propel one political party to victory in the general elections.

Since taking office, however, the new government has reversed course. It now argues that state-owned enterprises should be revived rather than privatized, a stance that also satisfies labor groups opposed to privatization.

State-owned enterprises have existed around the world since the early twentieth century. In many cases, they have delivered disappointing results, leading governments to shut them down or transfer them to private ownership. The model flourished particularly in socialist countries such as Cuba, where substantial support from the Soviet Union—including subsidies and raw materials—helped sustain state-run industries.

In Bolivia, state-owned companies expanded significantly after the 1952 Revolution. Although some achieved positive results, many were criticized for poor performance. International pressure eventually led Bolivia to adopt a program of “capitalization,” effectively a form of privatization, which produced relatively favorable outcomes.

The MAS governments that took power in 2006 made the creation of state enterprises a priority. According to critics, however, the process was plagued by serious mistakes. Some companies were acquired without competitive bidding, reportedly at the personal initiative of President Evo Morales, a practice later continued under President Luis Arce. Other enterprises were established without securing adequate supplies of raw materials, while some were built far from both production zones and consumer markets.

According to published reports, MAS governments invested more than $30 billion in over seventy large and small state-owned companies. Many of those enterprises soon began operating at a loss. As a result, the country has allegedly lost billions of dollars through questionable transactions. Faced with the current economic crisis, proposals were put forward to take urgent measures regarding these companies as part of a broader effort to stabilize the economy.

Just as those plans were beginning to move forward—albeit in limited form—social unrest erupted. Protest marches and road blockades between May and June dealt a severe blow to the national economy.

In an effort to contain the economic and social crisis, the government signed an eight-point agreement with the Bolivian Workers’ Central (COB), effectively ruling out any privatization measures. Critics view the agreement as a step backward, noting that the government now insists privatization is no longer under consideration.

This leaves an unresolved contradiction: whether to privatize or continue supporting dozens of state-owned enterprises that cost billions of dollars to establish but, in many cases, continue to generate losses.

The challenge now is to stop the drain on public resources caused by maintaining state enterprises that, according to their critics, have largely served as a source of employment for MAS supporters over the past two decades.