The resignation of President Evo Morales and other key officials in the line of succession for the Bolivian presidency on Nov. 10 has created a power vacuum leaving Bolivia's political and economic future up in the air. Morales' announcement, which came amid persistent, widespread protests against disputed election results, capped a series of events that began with the president claiming a fourth term in office after the first round of presidential elections on Oct. 20 and ended with the leader of the Bolivian army asking him to step down. Accompanying Morales in resigning were the country's vice president, president of the Senate and president of the Chamber of Deputies, leaving opposition politician Jeanine Anez Chavez next in line. Other key Morales allies in the government, including the mining minister, also quit.
The extent of the political power of any caretaker administration will immediately face a tough test, as Morales has already told his supporters to resist any transitional government. The next steps in the electoral process must also be decided. Before Morales resigned, the Organization of American States recommended new elections, citing irregularities in the Oct. 20 vote count, but exactly what those will look like remains up in the air. Even if Bolivia can form a transitional government expeditiously, the likelihood of prolonged instability in the country remains high. While Morales' departure may calm opposition protests for now, it does little to bridge the divides splitting the country’s indigenous population and its business interests and middle class. Morales' supporters, who denounced his downfall as a coup, immediately took to the streets in the wake of his resignation portending a protest campaign of their own.
As the political drama unfolds in the near future, it will be important to watch which side wins support from the country's political and military power brokers. Bolivia’s powerful mining interests (which account for nearly a third of the country's export revenue) have largely lined up behind Morales, with workers going on strike last week to show their support for him, indicating a growing risk of further strikes ahead that could disrupt short-term mining production. S&P Global already reported that Bolivian export traffic through Chile had declined amid the unrest.
In the longer term, continued political uncertainty will make it more difficult for Bolivia to increase its production of strategic metals like lithium or develop a value-added sector in the battery market. The poor investment climate comes at a time of expanding global opportunities in lithium-ion battery production to meet rising demand from electric vehicle manufacturing.
Whoever takes charge in Bolivia will have to contend not only with lingering domestic divisions but also with instability in the region at large as neighboring Chile and Ecuador face their own protest movements. As a global economic slowdown continues, the economic pressure on countries in the region will increase, exacerbating their internal divides.
