Bolivia’s Morales set for another showdown

LIMA, Peru — Bolivia president Evo Morales appears set to renew his showdown with the poor voters who swept him to power after heavy hinting that he will again attempt to abandon fuel subsidies.

Speaking at a conference of his Movement Towards Socialism party earlier this week, Morales warned that the subsidies were “bleeding the national economy."

He added: “If we don’t stop the subsidies, you cannot guarantee investment … gas and diesel could provide money to the state to continue improving the economy.”

The last time he attempted a similar move, in December 2010, the Andean nation was convulsed by violent protests and roadblocks — including by the president’s political base, the coca growers’ union.

Read more: Morales goes back to his roots

The incident threatened to topple the Morales government and he was quickly forced to back down. It has gone down in Bolivian history as the “gasolinazo," which might be translated as “fuel-gate."

The popular reaction was not surprising. In a country where most live on the breadline, removing the subsidies would have resulted in a 73 percent price rise for gas and diesel.

The irony of Morales’position — he is usually opposed to the “free market” — can be explained by the heavy cost of the subsidies to one of Latin America’s poorest governments.

It could also benefit Bolivia’s neighbors whose economies and tax revenues are also distorted by the subsidies.

Read more: The left vs. the indigenous of Latin America

In 2010, Bolivia imported $660 million of refined gas and diesel, of which roughly one quarter ended up on the black market. Much of that was imported as contraband to Peru, whose mountainous border region of Puno is notorious for the illegal convoys that regularly cross it.

A new gasolinazo would just be the latest clash between Morales, anxious to modernize and grow the Bolivian economy, and his supporters who are largely poor and indigenous.

Last year, demonstrators forced Morales into a humiliating retreat over his plans to put a road through a reserve for native communities in the Amazon which the president argued would help integrate remote rural communities into the national economy.