A meltdown in Latin America

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Bolivia appears to be on the verge of a constitutional crisis after four of its richest states declared their autonomy over the weekend. At issue is a new draft constitution—approved by supporters of President Evo Morales—that leaders in the energy-producing lowland states of Santa Cruz, Tarija, Beni, and Pando fear will put the country on the path to Hugo Chávez-style socialism. The new constitution would greatly increase the power of the presidency and give the central government greater control over the economy. There is a racial aspect to the split as well. The mostly European population in the lowlands object to new policies that would redistribute wealth to Bolivia’s indigenous population, of which Morales is a member.

The state governments are now seeking support for a referendum that would place elections, public works, roads, and telecommunications under state control and protect private property rights to prevent redistribution of land. Morales meanwhile has declared their actions unconstitutional and placed the military on high alert. It should be stressed that this is a bid for greater local autonomy, rather than a declaration of independence like the one Kosovo will likely make in the next few weeks. However, Stratfor outlines how the situation could easily spiral out of control:

Morales cannot allow the country’s sources of income to flout the authority of the center, and the lowlands cannot allow Morales to usurp both political and economic power from them. The questions now are: can Morales muster enough force to impose his will on the lowlands? Or can the lowlands resist?

Neither side has openly discussed the issue of secession or civil war, but once one security force starts firing on another, that is the next logical step.

That seems bit overly dramatic, but with Morales signing a $750 million deal with Brazil this week to exploit Bolivia’s oil and gas reserves (most of which are in the lowlands), he certainly can’t afford to lose control over his energy supplies. Could we be witnessing the birth of Latin America’s Kurdistan? As Tyler Cowen complained on Sunday, this story should really be getting more attention.