The Economist weighs in on Bolivia’s new constitution whose referendum is being voted on today.

Bolivia’s economic outlook is dark.  [President Evo] Morales scared off investment by nationalizing the natural-gas industry, telecoms and parts of mining. That boosted government revenues in the short term, but is now jeopardizing them.  Miners are being laid off because of plunging mineral prices.  The price of gas exports has fallen too, while Brazil (the main market) has cut imports by a third because of a slowing economy and plentiful rainfall for hydroelectricity.  To make matters worse, Bolivian migrants are returning from recession-hit Spain, cutting remittances.  The public finances are set to go into deficit this year.

At heart, the constitutional referendum involves a choice as to whether or not Bolivia should graft on to an imperfect Western liberal democracy a socialist model that owes rather more to the corporatism of Spanish colonial rule (but with Amerindians, rather than conquistadors, in charge) than to Marx.  A less confrontational president than Mr. Morales might find a more harmonious way to blend the two.  As it is, his probable victory risks setting his country on a path of chaotic conflict, government paralysis and continuing economic backwardness.

Advertisements