Bolivia Fights Poverty by Launching Pension Benefit

(digitalwarriormedia) On Friday, the Bolivian government kicked off the Renta Dignidad - a national program that will help lift thousands of Bolivians out of poverty by taking government revenue and putting it back into the hands of elderly citizens.

Speaking in the Cochabamba department, President Morales and his administrators initiated Renta Dignidad (Dignity Income) payments at a public event attended by elderly Bolivians and representatives from the social sectors.

Similar events were carried out in cities and towns throughout the country by ministers, deputy ministers, parliament members, and other governmental representatives.

Vice President, Alvaro Garcia Linera, launched the program at an air base in Santa Cruz, while Foreign Minister, David Choquehuanca, handed out money to the elderly in El Alto.

Morales declared the pension part of the “revolution and democratic social change” taking place in Bolivia. The measure is described by various social sectors as historic – demonstrating solidarity for members of society that had previously been excluded.

The Dignity pension will provide more than 676,000 elderly Bolivians with a monthly payment of 200 bolivianos or about $26. The benefit is divided into two different groups of elderly Bolivians who are no longer working.

Elderly citizens with no income will receive 2400 bolivianos ($325) annually, while those retirees who have some other form of pension will receive 1800 bolivianos ($242) per year. Those over 60 years of age who are working and receive a salary are ineligible.

The expanded pension program replaces the Bonosol (Solidarity Bonus) that provided a monthly income to Bolivians over the age of 65. The new program will benefit 226,000 more men and women than the previously administered Bonosol pension.

More than 530 institutions throughout the country will distribute the monthly sums. In remote locations, the government plans to use the Armed Forces to administer the pension program from their barracks or use mobile units to travel to the remotest communities.

According to government data, the program’s cost will be approximately 1.68 billion bolivianos ($219 million), with the majority of the Dignity Income being funded collectively through departmental revenue of about 890 million bolivianos ($116 million) - made possible by the Direct Hydrocarbon Tax (IDH).

The Treasurer’s Office and the Indigenous Fund will provide the remainder of the program’s funding.

As promised, the government began payments on February 1st despite protests by political opponents. President Morales received criticism for moving forward with the Dignity Income even with ongoing negotiations between departmental governors; in particular the five governors from Santa Cruz, Cochabamba, Tarija, Beni and Pando that vehemently protest the amount of their contributions.

Regional governmental prefects have demanded a return of the 30 percent IDH revenue taken from their departmental budgets in order to help sustain the social program.

On January 7, negotiations about financing the program began and continued throughout last month, but the efforts failed to reach any resolution between the central government in La Paz and the regional departments.

On January 25, in an effort to reach an agreement, the Bolivian government put forth a proposal to increase the central government’s funding of the Renta Dignidad, but the proposal still remains unanswered by the opposition.

While speaking during a televised speech on Friday, Morales dismissed his critics saying, "These economic resources, whether from our natural resources or the direct tax on hydrocarbons, don't belong to the president or the mayors or the governors. This money belongs to the Bolivian people and must return to the Bolivian people."

Supporters of the program view the Dignity Income as a means to redress the historical injustices that many sectors of workers (such as maids, taxi drivers, housewives, miners, artisans, farmers, and even professionals) had been subjected.

It represents a way of paying society’s debt to elderly Bolivians who laid the foundation for the economic and social changes taking place in the country.

In addition, the Dignity Income attempts to meet governmental objectives of confronting and reducing the incidence of poverty in the poorest nation in South America.

Since nationalizing the nation’s oil and gas sectors in May 2006, the nation has been flush with new cash flows, as government coffers benefit from record high energy prices. The Morales administration has directed some of the increased revenue towards social programs in health, education and now the pension initiative.

Inflation of 12% and the falling U.S. dollar have both put pressure on Bolivia’s economy by increasing consumer prices. More than 60 percent of Bolivia’s entire population lives in poverty, with many unable to afford basic needs, let alone higher inflation rates.

As the funfolding mortgage crisis, historical deficits and the costs of an unending war take a toll on the American economy, as well as economies around the world, the U.S. government is contemplating a national stimulus package.

Some economists and policy experts support a federal tax credit proposal that would put money into the hands of taxpayers, thereby infusing the economy through consumer spending. One of the largest and most effective anti-poverty tools in the U.S. is the Earned Income Tax Credit - a tax rebate program that serves as a wage subsidy to low-income taxpayers.

In many ways Bolivia is merely using public policy to implement an economic stimulus model by redistributing government funds to members of society that will spend the newfound subsidies on basic consumer goods.

Unlike subsidies to the wealthy, who can horde their income or divert funds to international financial institutions, the money designated for the pension will be spent within the country on goods and services that will not only help keep elderly Bolivians out of poverty, but may potentially play a healthy role in the entire Bolivian economy.

Photos: ABI

It’s All about the Gas Revenues

by Franz Chávez for Inter Press Service

LA PAZ, Jul 24 (IPS) - Revenues from Bolivia’s sales of natural gas, which have ballooned in the last few years, are now at the center of the tense political polarization threatening to tear the country apart and are a main motivation in the opposition’s attempt to undermine the left-wing government of Evo Morales.

Gas revenues soared from $188 million in late 2001 to $1.57 billion in 2007, after the Morales administration forced foreign oil companies to renegotiate the terms of their contracts, thus increasing the royalties and taxes paid by the companies.

The revenues now represent one-seventh of Bolivia’s gross domestic product (GDP) of $11 billion, and have become the main source of income for the governments of the country’s nine provinces.

In 2007, the government distributed $737 million in natural gas taxes to the nine provinces, according to figures provided to IPS by the Energy Ministry. That figure was $446 million dollars higher than the first distribution of the new Direct Hydrocarbons Tax (IDH), in 2005, when the then government of interim president Eduardo Rodríguez created the tax aimed at transferring money to the provincial governments.

Today the pie to be carved up is enormous. Senator Fernando Rodríguez of the right-wing opposition PODEMOS coalition told IPS that the total gas revenues taken in by the state will easily reach $4 billion this year, based on natural gas exports to Brazil and Argentina and domestic fuel sales.

The seemingly unstoppable rise in the international price of oil has also boosted the country’s gas income, despite the fact that gas sales to Brazil and Argentina have declined due to growing domestic demand for gas in Bolivia. This country has the largest natural gas reserves in South America -- 47 trillion cubic feet -- after Venezuela’s.

Rodríguez said that under the current law on the distribution of natural gas revenues, $440 million should go to the gas-producing regions of Santa Cruz, Tarija, Chuquisaca and Tarija, and $160 million to the remaining five provinces.

But the huge windfall profits prompted Morales to divert a substantial portion of the transfers to the provinces into a universal pension fund for people over 60, which expanded the number of eligible elderly people from 489,000 to 676,000, providing them with the equivalent of $27 a month.

A source with the provincial government of Tarija, the country’s most natural gas-rich province, told IPS that this year, the transfers to the provincial governments will be $260 million less than in 2007, as a result of the pension program.

José Antonio Aruquipa of PODEMOS, a member of the Constituent Assembly that is rewriting Bolivia’s constitution, told IPS that the movement for autonomy in the provinces of Santa Cruz, Beni, Pando and Tarija is fuelled by the aim of gaining greater provincial control over gas revenues.

"Without the IDH, autonomy is a vehicle without gasoline," he said.

Bolivia, South America’s poorest country, is basically divided between the western highlands, home to the impoverished indigenous majority, and the much wealthier eastern provinces, which account for most of the country's natural gas production, industry, agribusiness and GDP.

The population of eastern Bolivia tends to be of more European (mainly Spanish) and mixed-race descent.

The right-wing opposition argues that the national government only needs $200 million, rather than the $260 million that it currently retains from the natural gas revenues for the pension for the elderly.

When the new pension, known as the Renta Dignidad, went into effect in January this year, Morales argued that the country’s natural gas income should benefit the entire population.

For most of the recipients, the Renta Dignidad is the only pension income that they receive, as they worked in the informal sector of the economy and are not eligible for social security. Nearly 60 percent of elderly people in Bolivia live on less than one dollar a day.

The provinces that have passed autonomy statutes that run counter to the constitution have designed a political strategy, backed by PODEMOS, aimed at recuperating the natural gas income that they accuse Morales of "confiscating" -- even though many of the elderly benefited by the universal pension live in those provinces.

In the eastern city of Santa Cruz, the radical right-wing president of the Santa Cruz Civic Committee, Branko Marinkovic, announced street marches and hunger strikes in the pro-autonomy provinces to demand the return of the funds collected by means of the IDH.

The new political battle is being waged just ahead of an August 10 recall referendum for Morales, Vice President Álvaro García Linera and the country’s provincial governors. The polls indicate that both the president and vice president stand a good chance of being confirmed in office.

However, a top judge, Constitutional Court magistrate Silvia Salame, recently ordered the suspension of the recall referendum.

In the tussle over natural gas revenues, Morales announced that the pension scheme would be put to a public referendum, so that voters could decide whether a portion of the IDH transfers to the provinces should go towards the universal monthly pension for the elderly.

In the coca-growing region of Chapare in the central province of Cochabamba, rural union leader Julio Salazar questioned the credentials of the right-wing opposition governors in their defense of keeping the IDH gas revenues entirely for the provinces.

He pointed out to IPS that most of them were allies of president Gonzalo Sánchez de Lozada (1993-1997 and 2002-2003), who was overthrown in his second term by a popular uprising against a plan for foreign oil companies to export natural gas at low prices to the United States and Mexico.

Salazar accused the governors of promoting the 1990's privatization of natural gas, overturned since May 2006 by Morales’ renationalization process, which has generated much greater resources for the state.

"The social movements are seeking dignity for the country, so we can stop being beggars," said the rural leader.

Tarija Senator Roberto Ruiz of Podemos is demanding compliance with the hydrocarbons law that was amended in 2005, and which earmarks 14 percent of natural gas revenues for the provinces.

He complained to IPS that as a result of decrees, which have less authority than national laws, the share of revenues taken in by the provinces has decreased. Ruiz also criticised the government’s failure to live up to the terms of the agreement for exporting natural gas to Argentina.

According to government figures, the growth in domestic demand for natural gas has brought exports to Argentina down to one million cubic metres a day, instead of the 7.7 million agreed in a deal between the two countries. Brazil, meanwhile, purchases 32 million cubic metres a day of gas from Bolivia.

Ongoing Opposition & A New Decree

Sept 2 - (digitalwarriormedia) As President Morales travels to Libya and Iran to shore up foreign relations, the scene in Bolivia is increasingly polarized following a presidential decree on Friday that Bolivians will vote on a new constitution this December.

Regional leaders, civic and political opposition rejected the measure that calls for a multiple referendum on December 7 and announced tough resistance, civil disobedience and a commitment to step up road blockades already being carried out.

Within 24 hours of Morales issuing Decree 29691, violent conflicts occurred in several cities throughout the country.

The measure calls for votes on the nation’s constitution as well as the prefects (governors) of Cochabamba and La Paz, sub-prefects and departmental councilors.

Violence Escalates

Incidents against government supporters - initiated by ultra right wing opposition groups - have left several injured. These incidents are just the latest in a series of skirmishes between opposition groups and pro-Morales supporters in August.

One clash, occurred a block from the main square in the city of Santa Cruz, when a group of MAS members marching in celebration of the government decree, tried to enter the city square.

More than 500 MAS members were overtaken by approximately 100 autonomy supporters, some armed with sticks and other weapons.

According to Cochabamba paper, Los Tiempos, several women were beaten, even many who were not involved with the march, but were attacked because they were identified as peasants by their skirts.

In retaliation, a group of MASistas attacked the vehicle of Carlos Dabdoub, Secretary of Autonomy and Decentralization of the Santa Cruz Prefecture, breaking the car’s windows and beating the official.

And in Villamontes, a group of citizens affiliated with MAS, participated in a march demanding an end to the blockades in that city and were assaulted by blockers armed with stones, sticks and other blunt objects. The assault resulted in a clash between both sides that left five people injured.

Blockades called by the National Democratic Council (CONALDE) went into effect on August 19, with the aim of forcing the central government to return local hydrocarbon revenues to the regional departments.

Return of $166 million in revenues from the Direct Hydrocarbon Tax (IDH) remains one of the opposition’s strongest demands. Meanwhile the central government is using the funds to finance social programs such as the Renta Dignidad - a pension for all Bolivians over the age of 60.

Hundreds of trucks were left stranded on the Argentine side of the border, many of them with diesel destined for southern and eastern Bolivia.

According to Enrique Martinez, Chairman of the Bolivian Transportation Chamber, blockades in the regions of Villamontes, Yacuiba and Camiri have halted more than 1,200 trucks, causing shortages of diesel in the Santa Cruz department and as well as disrupted trade between Bolivia and neighboring Argentina and Paraguay.

Last weekend, President Morales ordered troops to secure oil and gas facilities in the eastern regions of Bolivia.

Regional Rejection

Ruben Costas, prefect of Santa Cruz, said that the five autonomous regions (Santa Cruz, Tarija, Pando, Beni and Chuquisaca) will launch civil resistance to the government decree and will not hold the referendum and will continue to take action that will deepen their autonomy.

The opposition calls the government’s latest actions unconstitutional, illegal and undemocratic.

And in Cochabamba, the civic committee also rejected the decree and the appointment of the new interim prefect, Rafael Puente. A departmental mobilization is planned for September 4 to demonstrate opposition to the central government.

For & Against the Decree

Faced with the violent events that occurred yesterday, there are some voices other than the opposition governors that are calling for a repeal of the decree.

The Central Obrera Boliviana (COB) warned that the national referendum decree and approval of draft the new Constitution of the State, was premature and created more clashes in the country.

And on Sunday, Waldo Albarracin, Public Ombudsman, condemned the attacks by both opposition and government supporters.

The human rights activist urged the Morales administration to rescind the decree to stop the violence and called for establishing a dialogue and consensus on both sides in order to avert deaths in the country.

Meanwhile social organizations in support of the decree designated September 13 for commencing a campaign to familiarize the draft constitution and win support for its passage in the December 7 referendum.

According to Fidel Furrow, Executive Secretary of the Confederation of Trade Unions of Bolivia (CSCB), the campaign will begin in Cochabamba with union leaders educating their members throughout the country.

Report: Distribution of Bolivia's Resources & Autonomy Conflicts

Bolivia's opposition leads a charge against the agrarian reform of the Morales administration and redistribution of the country's wealth through the taxing of regional oil and gas revenues for national social initiatives such as the Renta Dignidad - a social security program for the elderly and the Bono “Juancito Pinto” - a payment program that helps young students.

In the following report, the Center for Economic Policy Research looks at the wide distribution of Bolivia's hydrocarbon revenue and the rate of inequality in land ownership within the Eastern lowland states.

The Distribution of Bolivia’s Most Important Natural Resources and the Autonomy Conflicts - by Mark Weisbrot and Luis Sandoval