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Associated Press
5 hours ago
- Politics
- Associated Press
What to know about Bolivia's election that elevated a centrist shaking up the political landscape
LA PAZ, Bolivia (AP) — One candidate is Rodrigo Paz , a conservative centrist senator and son of a neoliberal ex-president who is pitching himself as a moderate reformer. The other is former right-wing president Jorge 'Tuto' Quiroga galvanizing voters largely through promises of harsh austerity and a scorched-earth approach to transforming Bolivia's state-directed economic model after 20 years of leftist dominance. At stake in the outcome of Bolivia's consequential presidential election is the fate of one of South America's most resource-rich nations, where inflation has soared to heights unseen in decades and polls show growing distrust in major institutions. 'There has been a paradigm shift,' said Bolivian sociologist Renzo Abruzzese. 'What is truly historic is that the old cycle is over. It has carried away the classical leftist thought that dominated much of the 20th century.' The shadow of unrest among the fervent supporters of charismatic ex-President Evo Morales , the founder of Bolivia's long-dominant Movement Toward Socialism, or MAS, hangs over the next weeks of campaigning until the men face off in an unprecedented runoff on Oct. 19. Front-runner Rodrigo Paz surprises Screenshots of the Wikipedia entry for Paz's past political allegiances elicited waggish mockery on Bolivian social media Monday about the fluid ideology of this former mayor and governor. Paz began his political career in the Revolutionary Left Movement of his father, former President Jaime Paz Zamora. His movement emerged as a radical Marxist-inspired party and suffered brutal repression under Bolivia's 1964-1982 military dictatorship. Paz was born in exile in Spain. His father pivoted right as a pact with former dictator Hugo Bánzer vaulted him to the presidency in 1989. The younger Paz rose through the political rinks over the past two decades in opposition to Morales' platform of generous subsidies and hefty public investment. He joined Quiroga's right-wing party before drifting toward Bolivia's technocratic center. Analysts say that his enigmatic pragmatism — a focus on specific policies rather than ideological crusades — served Paz in Sunday's election, as it did his father before him. 'Voters don't want hard right or hard left. They want things to function,' said Veronica Rocha, a Bolivian political analyst. 'Ambivalence is a political asset right now.' Even his supporters aren't sure how to describe him politically. 'I don't care about politics, I'm sick of it, I just support the candidate who I think will steal the least,' Emma Gesea Mamani, 57, said from her kiosk, selling snacks to hungry truckers wasting their days in lines for diesel as a result of Bolivia's crippling fuel shortages. Jorge 'Tuto' Quiroga promises spending cuts A former vice president, Quiroga briefly held the presidency after then-President and ex-dictator Bánzer retired for health reasons in 2001. Fluent in English and educated at Texas A&M University, Quiroga has fashioned himself into a pro-business modernizer vowing to save Bolivia from what he calls '20 lost years' under the MAS party. He pledges drastic spending cuts, a bailout from the International Monetary Fund and fire sales of Bolivia's inefficient state-run firms. After years of Bolivia's foreign policy alignment with China and Russia, Quiroga vows to restore relations with the United States and claims to be close with U.S. Secretary of State Marco Rubio. 'For years we lived in a time of darkness and lack of opportunities like Cuba, Venezuela, Nicaragua,' said 60-year-old engineer Jimmy Copa Vargas. 'With Tuto's government, we'll open ourselves to the world.' Quiroga has run for president three times before, losing twice to Morales. Now 65, he hopes the fourth time's the charm. To attract young voters, Quiroga threw flashy concerts and named a wealthy young entrepreneur as his vice president. He appears in campaign posters wearing a stern expression, tailored suit and Apple Watch and often peppers his speeches with wonky macroeconomic data, fueling the perception among some Bolivians that he's out of touch with the rural poor in this majority-Indigenous nation. 'I can't trust that he's not going to be the first one out on a lifeboat when Bolivia starts sinking,' said Luis Quispe, a 38-year-old taxi driver. Paz's unusual campaign — and running mate Paz and his popular running mate, former police captain Edman Lara, crisscrossed Bolivian cities holding modest rallies filled with cheap beer and grilled meat, often recording videos to post on TikTok. Despite undergoing emergency knee surgery earlier in the year, Paz hit dozens of campaign stops in the traditional bastions of Morales' party, engaging with disillusioned voters at once desperate for change but wary of a dramatic lurch to the right after 20 years of the MAS economic model. He has rejected an IMF bailout and proposed 'capitalism for all,' touting accessible loans to boost young entrepreneurs and tax breaks to stimulate the formal economy. Many see his running mate, ex-police captain Lara, known here as El Capitán, as the driving force behind his win. After 15 years in the police force, Lara in 2023 gained national prominence by posting tales of police corruption to his followers on TikTok and Instagram. His videos went viral, becoming must-see dispatches for disgruntled Bolivians and social media-savvy youth who tuned in regularly to watch him talk to the camera. He faced disciplinary measures over the exposés and was fired from the force, solidifying his status as something of a folk hero. After his dismissal, he struggled to scrape by selling secondhand clothing. His wife drove for a ride-hailing app. That has resonated with many workers in Bolivia's vast informal economy who have watched politicians enrich themselves while their own finances collapse and the country's economy spirals. The election may not mark the end of politics for Evo Morales Sunday's presidential election marked the first since 2002 without Morales or a stand-in on the ballot. Still, the outcome confirmed the maverick ex-union leader's enduring influence after serving three straight terms marked by relative prosperity and political stability until his 2019 disputed reelection and subsequent ouster. Disqualified from the race by a court ruling on term limits, Morales called on his followers to spoil their ballots against what he deemed an illegitimate election. He campaigned hard for null votes, at times condemning his leftist rivals — Eduardo Del Castillo, nominated by the unpopular President Luis Arce, and Senate leader Andrónico Rodríguez , a former protégé and coca farming union activist — more than the right-wing opposition. While the election results swept aside those splintered MAS party factions, the null-and-void vote captured third place in Sunday's elections. Spoiled ballots appealed to nostalgic Morales supporters who fault Arce for Bolivia's economic collapse and to voters disillusioned by politicians across the spectrum who they say are more focused more on their own power games than on the people they are supposed to serve. 'Those who say Evo Morales is finished are mistaken,' Abruzzese said. 'Morales and MAS won't disappear.' ___ Associated Press writer Carlos Valdez in La Paz, Bolivia, contributed to this report.
Bloomberg
6 hours ago
- Business
- Bloomberg
Bolivia's Electoral Surprise Shows Limits of Billionaire's Sway
Bolivia's richest man went all out in this election cycle to publicly back a candidate that he thought could win the vote, unseat the ruling socialists and lift the nation out of acute economic crisis. Bolivian billionaire Marcelo Claure endorsed pro-business candidate Samuel Doria Medina in July, citing opinion polls that showed him as the most likely winner out of four potential picks. But on Sunday, Claure's pick came in third, missing out by a significant margin the possibility to dispute a run-off vote in October. The top candidate wasn't even on Claure's original slate of four potential hopefuls to back.
News.com.au
a day ago
- Business
- News.com.au
Bolivian voters hope for change after 20 years of socialism
Bolivians expressed hopes of radical change on Sunday as they voted in elections shaped by a generational economic crisis, which has given the right its first shot at power in 20 years. The Andean nation's ailing economy has seen annual inflation hit almost 25 percent with critical shortages of fuel and dollars, the currency in which most Bolivians keep their savings. Polls show voters poised to punish the ruling Movement Towards Socialism (known by its Spanish acronym MAS), in power since Evo Morales was elected the nation's first Indigenous president in 2005. "The left has done us a lot of harm. I want change for the country," said Miriam Escobar, a 60-year-old pensioner, who was the first to vote at a school in southern La Paz. More than 7.9 million Bolivians are obliged by law to cast a vote for one of eight presidential candidates as well as 166 members of the country's bicameral legislature. Center-right business tycoon Samuel Doria Medina and right-wing ex-president Jorge "Tuto" Quiroga are the favorites to succeed Morales's successor, Luis Arce, who is not seeking re-election. - 'Day that will mark history' - Polls showed Doria Medina, 66, and Quiroga, 65, neck-and-neck on around 20 percent, with the main left-wing candidate, Senate leader Andronico Rodriguez, trailing far behind. A run-off will take place on October 19 if no candidate wins an outright majority. The two frontrunners have vowed to shake up Bolivia's big-state economic model and international alliances if elected. "This is a day that will mark the history of Bolivia," Quiroga said after voting in La Paz in a white shirt and black jacket. Doria Medina, who also voted in La Paz, expressed confidence that the country of 11.3 million could "emerge from this economic crisis peacefully, democratically." Both men want to slash public spending, open the country to foreign investment and boost ties with the United States, which were downgraded under the combative Morales, a self-described anti-capitalist who resigned from office in 2019 following mass protests over alleged election rigging. Agustin Quispe, a 51-year-old miner, branded the pair "dinosaurs" and said he would back center-right candidate Rodrigo Paz, who has campaigned on fighting corruption. - Shock therapy - Several voters compared Bolivia's predicament to that of Argentina, where voters dumped the long-ruling leftist Peronists and elected libertarian candidate Javier Milei in 2023, in a bid to end a deep crisis. Emanuel Arratia, a 31-year-old graphic designer, said he believed the Bolivian economy needed Milei-style "shock" therapy. "What people are looking for now, beyond a shift from left to right, is a return to stability," Daniela Osorio Michel, a Bolivian political scientist at the German Institute for Global and Area Studies, told AFP. Doria Medina and Quiroga, both on their fourth run for president, have touted their experience in business and politics as qualifying them for the tall task of saving Bolivia from bankruptcy. Doria Medina, a millionaire, built Bolivia's biggest skyscraper and owns the local Burger King fast food franchise. Quiroga served as vice-president under ex-dictator Hugo Banzer and then briefly as president when Banzer stepped down to fight cancer in 2001. - Morales looms large - Morales, who was barred from standing for a fourth term, has cast a long shadow over the campaign. The 65-year-old has called on his rural Indigenous supporters to spoil their ballots in protest at his exclusion. Voting in his central Cochambamba stronghold, he slammed "an election without the people," of whom he claims to be the sole representative. Several working-class voters told AFP they would spoil their ballots because they did not feel represented by the candidates. Bolivia enjoyed more than a decade of strong growth and Indigenous upliftment under Morales, who nationalized the gas sector and ploughed the proceeds into social programs that halved extreme poverty. But underinvestment in exploration has caused gas revenues to implode, falling from a peak of $6.1 billion in 2013 to $1.6 billion last year. With the country's other major resource, lithium, still underground, the government has nearly run out of the foreign exchange needed to import fuel, wheat and other key commodities.
Khaleej Times
a day ago
- Politics
- Khaleej Times
Bolivian right eyes return in elections marked by economic crisis
Bolivians expressed hopes of change on Sunday as they voted in elections shaped by an economic crisis, which has given the right its first shot at power in 20 years. The Andean country is struggling through its worst crisis in a generation, marked by annual inflation of almost 25 per cent and critical shortages of fuel and foreign exchange. Polls show voters poised to punish the ruling Movement Towards Socialism (known by its Spanish acronym MAS), in power since Evo Morales was elected Bolivia's first Indigenous president in 2005. "We're experiencing a tremendous crisis so we need a change," Alicia Vacaflor, a 62-year-old importer of industrial machines, told AFP after voting in the biting cold at a school in central La Paz. Karla Coronel, a 46-year-old market analyst, agreed on the need for a new direction. "Socialism has brought us nothing good," she declared. More than 7.9 million Bolivians are eligible to vote Sunday, choosing between eight presidential candidates as well as electing 166 members of Bolivia's bicameral legislature. Center-right business tycoon Samuel Doria Medina and right-wing ex-president Jorge "Tuto" Quiroga are the favorites to succeed Morales's unpopular successor, Luis Arce, who is not seeking re-election. Polls showed Doria Medina, 66, and Quiroga, 65, neck-and-neck on around 20 percent, with six other candidates, including left-wing Senate leader Andronico Rodriguez, trailing far behind. A run-off will take place on October 19 if no candidate wins an outright majority. The two frontrunners have vowed radical reforms to Bolivia's big-state economic model if elected. They want to slash public spending, open the country to foreign investment and boost ties with the United States, which were downgraded under the combative Morales, a self-described anti-capitalist and anti-imperialist. "Today is a very important day for Bolivians because through voting we can emerge from this economic crisis peacefully, democratically," Doria Medina told the press after voting at a polling station in La Paz. Agustin Quispe, a 51-year-old miner, accused both the left and right of failing to advance "new ideas." Branding Doria Medina and Quiroga, both of whom are on their fourth run for president, "dinosaurs," he said he supported centre-right candidate Rodrigo Paz. - Shades of Argentina - Analysts say the election resembles that of Argentina in 2023, when voters dumped the long-ruling leftist Peronists and elected libertarian candidate Javier Milei in a bid to end a deep economic crisis. "What people are looking for now, beyond a shift from left to right, is a return to stability," Daniela Osorio Michel, a Bolivian political scientist at the German Institute for Global and Area Studies, told AFP. Unlike Milei, who was a political newcomer, Doria Medina and Quiroga are experienced candidates. Doria Medina, a millionaire former planning minister, made a fortune in cement before going on to build Bolivia's biggest skyscraper and acquire the local Burger King fast food franchise. Seen as a moderate, he has vowed to halt inflation and bring back fuel and dollars within 100 days, without cutting anti-poverty programs. The tough-talking Quiroga, who trained as an engineer in the United States, served as vice-president under ex-dictator Hugo Banzer and then briefly as president when Banzer stepped down to fight cancer in 2001. "We will change everything, absolutely everything after 20 lost years," he trumpeted during his closing rally in La Paz on Wednesday. - Morales looms large - Bolivia enjoyed more than a decade of strong growth and Indigenous upliftment under Morales, who nationalized the gas sector and ploughed the proceeds into social programs that halved extreme poverty. But underinvestment in exploration has caused gas revenues to implode, falling from a peak of $6.1 billion in 2013 to $1.6 billion last year. With the country's other major resource, lithium, still underground, the government has nearly run out of the foreign exchange needed to import fuel, wheat and other key commodities. Bolivians have repeatedly taken to the streets to protest against rocketing prices and hours-long waits for fuel, bread and other basics. Morales, who was barred from standing for a fourth term, has cast a long shadow over the campaign. The 65-year-old has called on his mostly rural Indigenous supporters to spoil their ballots over the refusal by electoral authorities to allow him to run again.
Bloomberg
4 days ago
- Business
- Bloomberg
A Chaotic Gold Rush Is Helping Bolivia Prop Up Its Finances
The Big Take The central bank has raked in more than $3 billion by buying murky bullion and swapping it for much-needed dollars. Photography and video by Marcelo Pérez del Carpio It's been a puzzling phenomenon for a while now: Bolivia is facing a crippling dollar shortage, a local currency crisis and surging inflation — and yet it's still honoring its debts. A visit to Cangalli, one of hundreds of mines carving gold out of the lush Amazon basin north of La Paz, helps explain it. Here, under the world's largest rainforest, the central bank has found a way to raise billions of dollars to help pay back international bondholders with the nation's debt trading at distressed levels ahead of hotly contested general elections this coming weekend. The tripling of international gold prices in the past decade has accelerated a shift from centuries-old panning practices — in which artisans used shovels, picks and even their bare hands to sift through river sediment — to industrial operations that are reshaping the riverbank and flooding homes, schools and businesses. Some of the excavators, front loaders and dump trucks that rumble through Cangalli's eroded landscape are owned by a Chinese company that's set up camp in the area. One of the biggest buyers in this gold rush is Bolivia's central bank, which received congressional approval to exchange the gold for hard currency at a time of record prices. Even Finance Minister Marcelo Montenegro has acknowledged the economic benefits, telling reporters in February that the bullion is helping the country meet foreign debt obligations and finance fuel imports. It's a critical lifeline for Bolivia, where financial challenges persist. The unpopular leftist government is grappling with the deepest economic crisis in decades as its natural gas bonanza peters out, fuel subsidies drain coffers and the currency tumbles on the black market. Sporadic protests have blocked highways this year, aggravating shortages of gasoline and cooking oil. Of all the Latin American nations tracked by S&P Global Ratings and Fitch Ratings, Bolivia has the worst-rated dollar debt. Moody's Ratings has Bolivia at Ca, the second-lowest rating in its scale, which it defines as 'likely in, or very near, default.' In June, S&P attributed its rating to Bolivia's 'reduced reserve levels' and its 'weak capacity to fully meet its debt commitments over the next six to 12 months.' Bolivia's surprising ability to continue paying its debt, along with election optimism, has helped lift its most liquid international bonds to 78 cents on the dollar from 61 cents at the start of 2025. Bolivia's strategy is one employed by countries including Mongolia and Ecuador — and something a group of lawmakers in neighboring Peru are pushing for. In the World Gold Council's latest central bank survey, 17% of respondents indicated they buy gold directly from artisanal and small-scale gold miners in their countries. In economically struggling Bolivia, the country isn't just using the gold rush as a means to bolster its international reserves but more as a way to keep honoring its international debt, according to ratings agencies. 'The central bank has relied on purchases of local gold,' Fitch said in a report this year, 'which it has then refined abroad and liquidated, to meet external debt service' payments. But there's little transparency on where and how the metal is actually mined and processed, and where it ends up, according to to dozens of miners, traders, researchers and residents in a supply chain that stretches from Bolivia's Amazonian rivers, to refineries in Turkey, and finally to vaults in London. Bolivian authorities say the gold the central bank buys is legal, and produced and marketed responsibly — and the central bank has the documentation to show it. But according to those interviewed the industry is fraught with lax regulation and oversight, dirty practices like using mercury, flimsy paperwork and a growing black market, including the illegal presence of foreign financiers. 'The central bank is interested in buying gold and it doesn't care where it comes from,' said Danilo Bocángel, who heads Foundation Medmin, a local non-governmental organization that fosters sustainable mining practices. The central bank has bought almost 24 metric tons of locally produced metal and monetized 44 tons since May 2023, according to its latest data from April, in transactions worth more than $3 billion. It's gone on to deposit and invest 19 tons abroad — mostly with UBS AG and Standard Chartered Plc, but also with China's ICBC and JPMorgan Chase & Co., among others. Another ton was in central bank vaults, while 3 tons were being refined. Standard Chartered and JPMorgan declined to comment. UBS and ICBC didn't respond. It's unclear for how long the program will remain sustainable, as a widening gap between the official and parallel currency exchange rates undermines its appeal for sellers. Authorities release few details on commercial terms and funding of the state's purchases, although it does have to offer a premium over the official exchange rate in order to compete with private buyers. Several economists and former central bankers allege the bank prints money to help plug that gap, thereby putting further pressure on inflation already at its highest in decades. The former central bankers asked not to be identified due to internal regulations. Bolivia's central bank said in a statement that it buys the gold exclusively in local currency and mostly from cooperatives grouping small-scale miners. It said it relies on other state agencies to certify the legality of the gold. It declined to identify who refines the bullion. And it didn't answer questions on whether it had printed money in order to fund its gold purchases. President Luis Arce told Bloomberg in a June interview that he was unable to provide details of central bank gold operations, saying only that 'we have been using the gold reserves according to current regulations to leverage resources that come to the country.' Either way, Bolivia is strapped for cash, with a soaring budget deficit that exceeded 10% of gross domestic product in the past two years, according to the International Monetary Fund. Fitch said in its report that the central bank was responsible for financing Bolivia's 2024 deficit, because the country didn't have the ability to tap international markets to raise the necessary funds. Sellers, meanwhile, are increasingly turning to less formal private gold buyers or the black market, where terms are better. Plus Bolivia's debt obligations are about to get a lot heavier — with payments coming due of $300 million-plus a year in 2026 and 2027 from $54 million this year, according to data compiled by Bloomberg. The extra yield investors demand to hold Bolivia's dollar bonds is already the highest among performing sovereign credits in emerging markets, reflecting low confidence in its ability to pay. 'Many investors have been puzzled over the government's ability to keep paying the bond coupons on time,' said BancTrust strategist Mariano Ortiz. 'By now, the mechanics of the domestic gold purchases by the central bank have become clearer, although doubts remain' regarding its sustainability. It was mid-2023 when, in the face of diminishing dollar flows from gas exports, lawmakers allowed the central bank to buy local gold and sell it without congressional approval. All it had to do was keep a minimum of at least 22 metric tons of bullion in its reserves. Later that year, exporters were required to sell to the central bank first before shipping gold overseas. With the bank becoming a major buyer, official gold exports tumbled 72% last year and continue to decline. Other factors behind the drop include diesel shortages that can disrupt production and a dollar shortage that halted inflows of smuggled Peruvian gold. At first, the central bank simply bought gold from private traders and cooperatives. Then last year, the government set up state firm Epcoro to buy from different players — including traders, cooperatives, intermediaries and private citizens — in local currency and sell it to the central bank. The intermediaries, dubbed rescuers, buy from different sources in small quantities until they have enough to sell. The central bank then ships much of the semi-pure gold it buys in Bolivia to Istanbul Gold Refinery, which is on the London Bullion Market Association's list of ethical suppliers. The Turkish company, one of the world's largest precious metals refineries, confirmed to Bloomberg that it began processing Bolivian gold last year, which it then sends to the central bank's JPMorgan accounts in London for its reserves. The central bank is mandated to use gold for investing, in hedging instruments, as collateral and for conversion into cash. The rules specify that the bank must acquire 'responsible gold,' sourced from legal operations for strengthening reserves rather than commercial use. The problem is that having all the necessary legal documentation doesn't always tell the true story of how the gold has been mined, processed and sold, according to the more than a dozen miners, traders and people who work directly in this supply chain. Almost all gold produced in Bolivia comes from cooperatives, which are legal entities. But an estimated 85% of them either lack permitting or fail to properly document their output, according to mining consultant Hector Cordova, who served as deputy minister under former President Evo Morales. Today, an estimated 200,000 people work in gold cooperatives, according to local development institute Cedla, making the sector an economic and political force. Some output from cooperatives goes through official channels, where royalties and other fees are paid. But much is kept off the books to maximize profit. Some of it feeds into the black market and ends up in Peru, where buyers pay in dollars, according to people with knowledge of the matter. Rescuers collect from different sources and require little or no documentation. Private traders say they often register gold as coming from one location when it may actually come from another. Or they assign gold to individuals who may have had nothing to do with its production. 'No one asks for any paperwork,' says Alex Guaman, as he makes adjustments to a small floating rig on the riverbank near the town of Chima. The 21-year-old left his job with a cooperative to strike out on his own about a year ago when prices started surging. Now he gets down into the water to suck up material from the riverbed with a motorized pump, selling the flakes he finds to buyers in town, all informally. Declarations made about the origin and legality of gold are basically 'statements made in good faith,' said Alfredo Zaconeta, a researcher at Cedla. 'The state lacks the capacity to oversee what is supposedly being mined in a given area.' But Montenegro, the finance minister, says Bolivia's central bank meets all traceability requirements and defends its gold transactions against accusations by opposition lawmakers that they constitute laundering. In its last report, the bank said it 'only acquires gold in the domestic market from legally established participants, registered and authorized by the competent entities.' It describes its sources as clean, safe and socially inclusive, in accordance with international standards, and works with refineries accredited by the LBMA. Turkey's IGR, one of Bolivia's biggest gold buyers, conducted a thorough risk assessment, due diligence and compliance checks, as well as delivering responsible sourcing lectures to the central bank before beginning its refinery agreement, Chief Executive Officer Aysen Esen said in response to written questions. The LBMA backed up IGR's account, adding that no sourcing concerns were raised by an assurance firm as part of a review by the Turkish company. Still, the association said beyond the IGR-central bank arrangement, no other LBMA refiners source gold from Bolivia, where the artisanal sector faces significant challenges 'including widespread use of mercury by miners and the possibility of illegally mined material from other countries infiltrating local supply chains.' The participation of Epcoro also shields the central bank from any possible traceability issues because it's the state trader that certifies the ethical origin of the gold. But Epcoro boss Pablo Cesar Perez said his firm's job is to verify grades and ensure the paperwork is in order. 'It is not my responsibility to go and control how they are producing,' he said in an interview. Efforts to promote traceability are petering out. The Swiss Better Gold Association, a nonprofit that promotes responsible supply chains, is closing down in Bolivia this year as surging prices stoke the informal and illegal markets, according to program manager Thomas Hentschel. 'At the moment, there is no chance of creating a legal supply chain' in Bolivia, said Hentschel, who calls the Andean nation his second home. 'For me, it's clear that this is really not responsibly produced,' he said. 'This is not what a consumer expects of good delivery.' Initially, the creation of Epcoro gave cooperative miners the assurance of a legitimate, deep-pocketed purchaser. The state-owned firm also guaranteed miners increasingly scarce diesel supplies in exchange for doing business together. But those guarantees have faded and in late July, Epcoro said it had heavily restricted purchases, citing currency and price volatility and limited availability. A spike in the parallel exchange rate to more than double the official rate has also reduced incentives for selling gold to the central bank. While terms vary, two traders told Bloomberg that typically the bank pays 35% in dollars and the rest in bolivianos at the official rate, with a 12.5% premium. Even so, that translates to less than traders receive shipping to overseas buyers in all-dollar arrangements. When gold is sold to Epcoro, the state trader says it pays in bolivianos at the official rate plus a premium capped at 18% to offset the gap with the parallel rate. In the past year, Epcoro sold 5 tons of gold to the central bank, according to Perez. All of that has seen more gold diverted into informal markets that offer better returns amid weak enforcement of regulations and traceability standards. There's little data on illegal flows, although a 20% jump in Peruvian gold exports last year may indicate some Bolivian metal is finding its way across the border. The arrival of the central bank and Epcoro as major buyers of Bolivian gold could have benefited the industry if it was done as part of an organized and centralized approach, according to Manuel Barrientos of Primero de Mayo, one of the oldest and biggest gold cooperatives in Bolivia. While the cooperative is able to self-finance these days, that doesn't mean partners are getting rich, said Barrientos, who drives a 1999 Toyota station wagon without plates and lives in a humble abode at the camp. 'People think gold cooperative partners are all millionaires. That's just not true,' the 81-year-old said. Deposits have been depleted in the more than six decades since he started mining, meaning operators now rely on heavy machinery to move much bigger volumes in order to extract the same amount of metal. Even though record prices are making lower quality deposits profitable, costs are up, fuel is scarce and the local currency is fast losing value. Cooperatives also have to pay off corrupt officials, tap the black market for fuel and keep some of their output off the books to get better terms, Barrientos said. 'Here we work on the basis of the best offer.' Perhaps more frustrating than anything is that parts of an industry that's helping Bolivia meet debt obligations is quite literally underwater. In Cangalli, gold cooperative boss Cristobal Mamani has to clamber up an external staircase to access his second-story office since the first floor is covered in sludge. The school is being relocated and dozens have had to uproot. In front of the building, Carmen Callisaya is washing up in an improvised kitchen after serving breakfast to miners on plastic tables and chairs. She sleeps on the other side of a dividing wall, in an area flanked by a tarpaulin, with her daughter, who does homework in the plaza. 'We're living here because there's no other option,' says Callisaya, pointing to her flooded house. But mining is what drives the local economy, she says. 'That's what they tell us. They say: 'If there's no mining, what are you going to live from?'' The reason for the inundation is plain to see through the back window of Mamani's office. Excavators, front loaders and dump trucks reshape the riverbank and floodplain in pursuit of flakes of gold. Mamani blames upstream mines that dump sediment and heavier-than-normal rains for the flooding, saying his cooperative does what it can to help the town. The boom itself is precarious, even for the miners. 'If gold prices fell now, we'd be sunk,' said Mamani, 45, who wants his three children to enter other professions. 'Mining can be great — if you're lucky, you can buy a car, a house. But you can also suffer.' Pollution is another huge problem. Imported mercury used to process the gold-rich ore enters fish eaten by Indigenous groups and belches into the air a hundred miles away in La Paz, where some gold traders burn amalgams with mercury in artisanal ovens without any type of filter. As a signatory to the Minamata Convention on Mercury, Bolivia is obliged to take steps to reduce its use in mining. But a surge in the number of cooperatives in recent years has made mercury more widespread, particularly among hard-rock miners in the highlands, according to Foundation Medmin's Bocángel. While larger plants in the country face sanctions if they smelt mercury-laced metal, dozens of artisanal furnaces in the capital appear to have few restrictions. 'We're not talking about grams or kilos, we're talking about tons that are released into the atmosphere and the environment,' Bocángel said. 'Tons that go into our rivers and our soils.' Ten minutes upriver from Cangalli is an even more dramatic example of gold's impact on residents. Tipuani began as a colonial-era mining settlement. In a plaque in the plaza, it's described as the 'gold capital' professing 'liberty in unity.' But for several months of the year, flooding requires many locals to vacate their homes and workplaces. Mining may still be the town's lifeblood, but it's also an existential threat. Alejandro Catarrion, a 67-year-old mechanic, sits in the shade of an elevated pathway, looking down over his flooded shop. A meter of muddy water has kept him from working for six months. He and others in the town who don't work directly in mining are frustrated with the lack of action to address a problem that began several years ago and is getting worse. Rents for buildings in dry areas have surged. Some sleep in the local school, others in the plaza. The fetid river water mixes with sewage in lower-lying streets, where pigs wallow. A resident wades through flooded streets in the mining town of Tipuani. Flooding requires many locals to vacate their homes and workplaces. High-pressure water is used to break up riverbed materials and access gold flakes. Homes submerged in floodwaters in Tipuani, where rents for buildings in dry areas have surged. Dumping of mining waste has raised river levels, contributing to severe flooding in towns such as Tipuani. Catarrion sees the municipality and the mining cooperatives as one in the same, with complaints from affected residents falling on deaf ears. Those with more direct ties to the mines don't dare speak out, he said. 'This town has become lawless,' he said. 'They seem to want to mine the town itself.' Mines in the area are being funded by Chinese groups that take a 70% cut of production, according to neighborhood association boss Rufino Chambi, 47. Though illegal, such arrangements are widespread, according to several miners and traders. The political counselor at China's embassy in Bolivia, Marcelo He, said as far as the diplomatic mission can assess, the companies provide equipment, machinery and other services to Bolivian cooperatives, none of which is illegal. Dozens of lawsuits have been filed against illegal gold operations and mining cooperatives. In September 2023, a judge ordered the suspension of unauthorized mining in five Amazonian rivers. More recently, the public prosecutor launched an investigation into flooding in Tipuani. 'There are laws to mine responsibly and replace earth,' said Chambi. 'But they don't do it, just to save a little fuel, a little diesel. They do whatever they want.' Court rulings and enforcement efforts have failed to halt environmental damage. On a section of the road between Tipuani and Chima, a precariously perched hydraulic excavator knocks down one of the remaining hilltops. 'If gold prices keep going up, they're going to go crazy,' Chambi said. 'They're going to try to mine everything.' Assist: Zijia Song and Patrick Sykes Editor Responsible: Crayton Harrison Editors: Danielle Balbi and Stephen Wicary Photo editor: Marie Monteleone More On Bloomberg Terms of Service Do Not Sell or Share My Personal Information Trademarks Privacy Policy Careers Made in NYC Advertise Ad Choices Help ©2025 Bloomberg L.P. All Rights Reserved.
