The United States and Bolivia: The Taming of a Revolution, 1952-1957

Author(s): Stephen Zunes

Source: Latin American Perspectives, Vol. 28, No. 5, Free Trade and Resistance (Sep., 2001), pp.
33-49
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 The United States and Bolivia
The Tamingof a
Revolution, 1952-1957
by
Stephen Zunes

In January 1954, while U.S. officials in Washingtonwere developing

plans to overthrowa left-wing nationalistgovernmentin Guatemala,a very
differentpolicy was developing towardthe similarly inclined Movimiento
Nacionalista Revolucionario (National RevolutionaryMovement-MNR)
thenrulingBolivia. The U.S. governmentseemed open to the possibilitythat
thatcountryrequiredsome radicalreformthatmightchallengeelite interests
with which it had been on good terms. The U.S. counselor EdwardRowell
wrote to the State Departmentfrom the embassy in La Paz (U.S. National
Archives;GeneralRecordsof the Departmentof State,CentralDecimal File,
724.00/1-1354) thatthe MNR leadershipwas

attempting toaccomplish a realandprofound revolution whichhasasitsstated

objectivea materialimprovement inthestandard of livingof thecountry's
pro-
letariangroupsandtheincorporation intothe social,economic,andpolitical
lifeof thecountryof theIndianmasseswhichconstitute 90%of thetotalpopu-
lation.Sucha revolutioncannotbe accomplished withoutinjuring,perhaps
fatally,thoseeconomicandpoliticalsectorswhichpreviouslycontrolledthe
destiniesof thecountry.Suchtransformations alsoexacta pricewhosejustifi-
cationfrequently canonlybe determined by history.

Such a balancedapproachto a left-wing nationalistmovementhad rarely

been expressed by an U.S. official, particularly during the era of
McCarthyism.It was all the more strikingin that,while the MNR leadership
never envisioned a dramaticbreak with the West, the reforms it instigated
were far more radicalthan those of such other populist nationalistgovern-
ments as Mexico underLazaroCardenas,PeruunderJuanVelasco,or Brazil
underGetulio Vargas.

StephenZunesis an associateprofessorof politics andchairof the Peace andJusticeStudiesPro-

gramat the Universityof San Francisco.He teachescourseson LatinAmericanpolitics andrev-
olutionarymovementsin the university'snew LatinAmericanStudiesmajor.His books include
Nonviolent Social Movements: A Geographical Perspective (1999) and Western Sahara:
Nationalismand Conflict in NorthwestAfrica (forthcoming).
LATINAMERICAN PERSPECTIVES, Issue120,Vol.28 No. 5, September 2001 33-49
? 2001LatinAmerican Perspectives

33
34 LATINAMERICANPERSPECTIVES

At firstglance it might appearthatthe approachof the TrumanandEisen-

hower administrationsto Bolivia's revolutionarygovernmentrepresentedan
unusuallyenlightenedepisode in a historyof unwarrantedU.S. intervention
against nationalist movements in the hemisphere. It has been cited as an
impressivemanifestationof the Good NeighborPolicy, which respectedthe
nationalintegrityof the LatinAmericannations and pledged to resolve dif-
ferenceswithoutthe use of militaryforce. On closer examination,however,it
seems to have been interventionismby othermeans,profoundlyinfluencing
the policies of the rulingpartyin Bolivia, manipulatingthe republic'sbalance
of forces, andtakingadvantageof the economic relationshipbetweenthe two
countriesto achieve U.S. foreign-policygoals shortof a directoverthrowof
the government.To understandthe ultimatefailureof Bolivia's revolution,it
is crucial to understandthe role of the country'sdependencyon the United
States.
While the Bolivian revolutionhas been a topic of greatinterestfor Latin
American scholars, one of its most interestingand frequentlyoverlooked
aspectsis the role of the United Statesin shapingthe courseof the revolution.
U.S. influenceon this poor,landlockedcountry,ratherthandomesticinstitu-
tional rules or the rationalchoices of individualdecision makers,may have
been decisive in Bolivia's internal struggles for leadership and policy
direction.
The United States's relative tolerance of the Bolivian revolution was
linked to the realization that it might be able to moderatethe revolution
becauseof Bolivia's extremeeconomic dependencyandtakethe opportunity
to manipulatethe balanceof forces within the factionalizedMNR to its own
advantage.U.S. policy towardBolivia duringthe 1950s servedas an impor-
tantprecedentfor futureeffortsby the United States, otherWesternpowers,
andtheirallied internationalfinancialinstitutionsto ensurethatLatinAmeri-
can and other Third World nations pursuedforeign policies and domestic
economic prioritiesin line with Westerninterests.
When the MNR came to powerin a bloody uprisingin April 1952, Wash-
ington was concernedabout the ideological orientationof the party,which
was explicitly revolutionaryand nationalist,especially within its influential
left wing. In addition, U.S. policy makers were afraid that heavily armed
peasantandworkermilitiasunderstrongMarxistinfluencecould end up con-
trollingthe countryby force. The popularityof the government,the system-
atic dismantlingof the armedforces, andthe erosionof the politicalpowerof
the oligarchsgave the UnitedStateslittle leveragewith which to buildan alli-
ance with traditionallyconservative political forces in order to force a
change-which was the way the U.S. had frequentlydealt with otherLatin
America countries undergoing nationalist and leftist challenges. Despite
 Zunes/ THEUNITEDSTATES
ANDBOLIVIA 35

these initial concerns, however,U.S. policy towardBolivia's revolutionary

governmentwas ultimatelyjudged a success.
Traditionally,the UnitedStateshadtendedto be moresympatheticto gov-
ernmentsthat had come to power througha democraticprocess, adheredto
liberal democraticprinciples,maintaineda stable society, and opened their
economies to U.S. economic interests. None of these criteria applied to
Bolivia's MNR government.While the MNR hadwon a pluralityof the popu-
lar vote in the 1951 election, its accession to power,initially blocked by the
military,hadbeen by force. Manycivil libertieswere suspended,andthe pro-
gram of the new governmentwas militantlynationalist,particularlytoward
the "Big Three"tin-mining interests (Aramayo, Hochschild, and Patino),
which includedU.S. investors.Yet, these concerns graduallydiminishedas
the level of U.S. influence over the governmentincreasedand the regime's
prioritiesshifted dramatically.

THE U.S. RESPONSE TO THE REVOLUTION

FormerBolivian Ambassadorto the United States VictorAndrade,in his

memoirs, describedhis country'ssituationimmediatelyfollowing the 1952
MNR revolutionas follows (1976: 181):

Becauseof its landlockedposition,ourcountryis dependenton others.Our

voraciousneighborsnotonlyisolatedus fromtherestof theworldbut,when
importantsourcesof wealthappeared, keptlargeportionsof ourterritory
for
themselves....
We had dissipatedour gold reserves,the nationalizationof the mines
provedexpensive,and the costs of productionand importshad increased
sharply.Thedeficitwas tremendous andthe nationalbudgetreflectedall of
thesemisfortunes.

Underthese circumstances,a revolutionaryregime found itself confront-

ing the economic power of the United States. The MNR leadershipnever
really had a choice. From almost the beginning,the MNR's pragmaticwing
recognized that no Bolivian revolutioncould afford to alienate the United
States,notjust becauseof the threatof directinterventionbutalso becauseof
the possibility of economic retaliation, not unimportantgiven Bolivia's
dependenceon the UnitedStatesto absorbits tin andprovideneededimports.
Therewas considerablepressurefromwithinthe MNR to moderateits policy
and pursuereassuringthe United States throughdiplomaticchannels. As a
result,PresidentVictorPaz Estenssoroemphasizedthe limited natureof the
36 LATINAMERICANPERSPECTIVES

revolution'sgoals and the need for continuity with previous governments

(Malloy, 1970: 217).
Even priorto the revolution,the embassypredicted-despite its historyof
antagonismtowardthe MNR-that "while aggressively nationalistic, self
interestwould... counsel going along with the United States"(NA 724.00/
2-652).
Bolivia had traditionallybeen the poorest country in South America.
Thoughpotentiallywealthybecauseof its mineralresources,it hadremained
poorlargelybecause "theextractiveindustryhadtied itself into a worldmar-
ket, and its supplierposition in that system, along with elite control,essen-
tially determined Bolivia's failure to utilize the enormous surplus from
resource extractionfor capital formation"(Scott, 1972: 50). As the chief
sourceof foreignaid for the hemispheresouthof its border,the United States
hadon manyoccasions held the economy of Bolivia in the balance.This was
particularlytrue in the years immediatelyfollowing the MNR revolution.
The firstquestionwas recognitionof the MNR by the U.S. government,a
decision that had made the difference to the survivalof a numberof Latin
Americanregimes. The first governmentto recognize the MNR junta-and
for the first month the only government-was Guatemala,whose govern-
ment consistently supporteddemocraticrevolutionsagainstthe old military
oligarchs. The rest of the hemisphereappearedto be waiting for a decision
fromthe United States,which was expectedto have "adeterminingeffect on
the immediatepoliticalfutureof SouthAmerica"because"theBoliviancoup
d'etat is partof a political intriguewith ramificationsin variousotherLatin
Americancountries"(summaryof telegrams,TrumanPresidentialLibrary,
1952).
The United States decided to delay both recognitionand tin negotiations
until it was clear that there would be no immediate nationalizationof the
mines or othermeasuresharmfulto U.S. interestsin the region(NA 724.02/4-
2152). In addition,Secretaryof StateDean Acheson orderedthe suspension
of bilateraltechnicalassistanceandmilitarymissions, althoughhe decidedto
continue Point IV assistance (NA 724.00/4-1252). Within a week, in the
wake of assurancesby the MNR on majorareas of concern, the outlines of
U.S. policy beganto take shape.The StateDepartmentrealizedthatthe con-
tinueddelay in recognitionwould not help the moremoderateelementsin the
governmentand the continueddelay "mightaugment[the] disadvantagesof
nonrecognitionand start[to] operateagainstour own interest"(NA 724.00/
4-2752). The embassy concurred,reportingthat many believed that delay
could hurtthe moderates(NA 724.00/2-652), and,by the thirdweek of May,
after numerousconsultations,Acheson acknowledgedthat continuedwith-
holding of recognition might have the effect "of strengtheningthe radical
 Zunes / THE UNITED STATESAND BOLIVIA 37

elements in the government"(U.S. Departmentof State, 1983: 492). The

United States recognized the MNR governmentthat month.
For the Bolivians, the most urgentneed was food. Andrade(1976: 161)
admittedthat "only the assistanceof the United States could avoid a repeti-
tion of the famine which had occurredin our countryduringthe Warof the
Pacific."The United States offered US$9 million in famine relief and other
essential commodities, the startof a process that would make Bolivia the
largestrecipientof food aid percapitain the world(Dunkerley,1984: 81-82).
Trumanadministrationofficials recognized, however,that emergency food
assistance alone would not solve the problem of potential instability (NA
724.00(W)/4-1053). Rollin Atwood, director of the State Department's
Office of South AmericanAffairs, noted that "thepolitically articulatepor-
tion of the population"was highly dependenton the mining industry,which
was in turndependenton Britainand the United States (NA 724.00/1-1453).
Unlike the importof coffee fromGuatemala,which was controlledby private
companies,purchasesof Bolivian tin for the strategicstockpilecame directly
fromthe U.S. government,which madethe linkageof tradepolicies to imme-
diate political considerationsall the easier.
Sir JohnLomax, the Britishambassadorto Bolivia, interpretedthese ini-
tial diplomaticattitudestowardthe MNR governmentas evidence of the need
to show Bolivia's rulersthatthey needed Americanhelp (Whitehead,1969:
8). Up to this point, the United States was making spot purchasesof tin but
refusingto sign a long-termcontract.Its aid was enoughto preventthe coun-
try from falling into chaos but not to get the economy on its feet (NA 724.0
MSP/10-2353). More substantialaid would be forthcoming,but at a price.

COMPENSATION AND DEPENDENCE ON EXPORTS

Acheson informedthe embassy in September1952 of the State Depart-

ment's concernthatsigning a long-termcontractmightbe interpretedby the
Bolivian governmentas "green light to confiscatory nationalization,"and
that "this would have [a] bad effect in other countrieswhere U.S. property
rightsareat stake."Furthermore,he called on the embassyto reiterateto Pres-
ident Paz Estenssoro what the consequences of nationalizationwould be
were the contract not signed (U.S. Departmentof State, 1983: 502-503).
Assistant Secretaryof State for Inter-AmericanAffairs E. G. Miller wrote
Acheson in October 1952 (NA 724.12/10-752):

Our principalbargainingpoints with the Bolivians are their hope of further

financialassistancefromusandourabilityto abstainfromsigninga long-term
38 LATINAMERICANPERSPECTIVES

contractforBoliviantinandfromaccedingto thesubrogation
to theBolivian
Government's MiningBankof certaincontractsforthepurchaseof tungsten
betweentheGSAandthethreecompanieswhichhavebeennationalized.

Meanwhile, Andrade pleaded with U.S. officials to consider Bolivia's

"desperateneed"for a long-termtin contractat a price comparablewith that
receivedby othernationsin orderto combatbothrealfood shortagesandarti-
ficial shortages resulting from hoardingin anticipationof U.S. economic
sanctions(U.S. Departmentof State, 1983:511). The UnitedStatesincreased
the pressurefurtherin a meetingwith AndradeandNationalEconomyMinis-
ter CuadrosSanchez in which Assistant Secretaryof State for Inter-Ameri-
can Affairs John Cabot "expressedthe personalconjecturethat the Export-
Import Bank would not wish to consider further loan applications from
Bolivia while the compensationissue remainedunsettled"(NA 724.5-MSP/
9-1453).
The MNR's final decision to expropriaterather than confiscate the
mines-despite immense pressurefrom the miners and other Bolivians for
the latteroption-was directly relatedto its recognitionthat some form of
compensationwas necessary to avoid being labeled communistand denied
both aid (Whitehead,1969: 8) and capitaland techniciansfrom abroad(NA
724.00/10-2353). The impactof the U.S. boycottthathad crippledthe previ-
ous junta was also on the minds of the MNR leadership(Dunkerley,1984:
54). Tin exportsaccountedfor 70 percentof Bolivia's foreignexchangeearn-
ings and 90 percentof the government'srevenue;the United States was the
recipientof overhalf of Bolivia's tin exports(Rabe, 1988: 79). As Millerand
Assistant Secretary of State for Economic Affairs Willard Thorp told
Acheson, no matterwhat the price or arrangementfor tin, the United States
would "almostcertainlyget the Bolivian tin eventually.They have no other
place to sell it."Furthermore(U.S. Departmentof State, 1983: 486),

By buildingtheTexasCitysmelterandbuyingBoliviantinformanyyears,we
havediscouraged the Boliviansor anyothercountryfromconstructing a tin
smeltertousetheBolivianconcentrates. By preventing privatepurchasein the
UnitedStatesandremaining outof themarketforso long,we haveprevented
competitionfromdetermining the priceof tin. We have,in effect,usedour
stockpiletoforcethepricedown,sinceintheabsenceof thestockpilewe could
neverhaveheldoutas longas we did.

Paz Estenssoroannouncedthat"theUnited States told us thatthey could

not buy tin from us on a long-termbasis unless we made an agreementwith
the NorthAmericanstockholders"(Mitchell, 1977: 55). Unlike the copperof
Chile or the oil of Venezuela,the country'sleading naturalresourcewas not
 Zunes/ THEUNITEDSTATES
ANDBOLIVIA 39

directlycontrolledby foreign corporations.However,given thattin ores are

worthlesswithouttin smeltersandall suchrefinerieswere abroad,the degree
of dependencywas at least as serious. The embassy reportedthat duringa
nationalisticspeech in April 1953 Paz Estenssoro,while declaringhis coun-
try's sovereigntyandcomparingits nationalizationof the tin mines to the Ira-
nian nationalizationof oil, admittedthat until his country had its own tin
smelterit wouldbe dependenton othercountriesfor the sale of its tin concen-
trates (NA 724.00 [W]/4-1053). Deputy Assistant Secretary of State for
Inter-AmericanAffairs Thomas Mann arguedthat while the United States
was willing to make spot purchasesof tin to keep the economy afloatenough
to preventa politicalcollapse, it would insist onjust compensationandrefuse
to sign a long-termtin contractuntil a settlementwas reached(NA 724.00/
4-2253).
As earlyas the weeks immediatelyfollowing the revolution,Acheson told
his ambassadorin Bolivia (NA 724.00/6-1552):

While obviouslyimpossible[to] obtainany specificcommitmentagainst

nationalization
as [a]conditionprecedentto recognition,
it WLD[would]be
desirablein our opinionthatthe FONMIN[ForeignMinistry][would] be
emphaticallyput on notice of problemsthat WLD arise for us in connection
withourtinpurchasing policyin suchevent.TheySHLD[should]alsounder-
standclearlythat[the]effects[of]nationalization
mightextendnotonlyto our
tin purchasingpolicybutalso to futurepossibilities[of] ECON[economic]
development of country.

The importanceof this pressurewas confirmedby William P. Hudsonof

the StateDepartment'sOffice of South AmericanAffairs (OSA), who noted
(NA 724.00/1-1453) that"itwas due entirelyto United Stateseffortsthatthe
inevitable nationalizationof most of the country's mining industrytook a
formwhichrecognizedthe principleof compensation,despitestrongpopular
and official feeling thatthe mine owners were not entitledto any payment."
Indeed, the expropriationincluded provisions that made it possible for the
nationalizedmine industryto invite foreign mining intereststo exploit and
develop new deposits (Whitehead,1969: 8).
Rebecca Scott argues that such a condition was inevitable given that
Bolivia had no smelting capabilityand one of the formermine owners had
substantial interests in a British smelting operation, the only non-U.S.
smeltercapableof acceptingthe low-gradeBolivian ore. When the Russians
offered to build a smelterfor the Bolivians, the United States threatenedto
withdrawaid (Scott, 1972: 53-54). The Bolivians could not affordto build
one themselvesbecause the nationalizationof the tin mines committedthem
to sendingore to the Patinosmelterin Englandandbecausethe United States
40 LATINAMERICANPERSPECTIVES

denied them any kind of aid thatwould raise the cost of importedcommodi-
ties (Wilkie, 1969: 92).
Jose Nufiez Rosales, as vice presidentof a government-runmining com-
pany, stated that Bolivia agreed to compensate U.S. stockholders "only
because Bolivia hadto eat."The leadingBolivian left-wing partydenounced
the agreementas "Yankeeimperialism,"an attemptto "starveBolivia into
submission" (NA 724.00 [W]/4-3053). The MNR ideologue Carlos
Montenegroaccusedthe United Statesof attemptingto "fosterthe oligarchy
and the enslavementof the popularclasses for the benefit of Wall Street"
(Weston, 1968: 97). The revolutionaryleadershipwas forced to rely on aid
thatrequireddepletingits resources(Eckstein, 1976: 45). The U.S. govern-
ment forced Bolivia to use its scarcecapitalnot for its own developmentbut
to compensatethe formermine owners and repay its foreign debts.

THE IMPACT OF U.S. AID

In July 1953, Milton Eisenhower,the president'sbrother,visited Bolivia,

where the government spelled out its desperate economic situation. This
came to be seen as a turningpoint in U.S.-Bolivian relations. Eisenhower
(1963) noted that Bolivia had to import about 50 percent of its food and
arguedthatthereshouldbe a dramaticincreasein aid. Suchgeneroussupport,
particularlyfrom a Republicanadministration,could be justified by Wash-
ington policy makersonly if it had clear political advantages.
During the early phase of U.S. assistance, the United States certainly
could not yet controlthe MNR government.However,accordingto the Brit-
ish economist Lawrence Whitehead,within six months of the revolution,
"worriedby theirweakness in the face of popularpressures,and alarmedby
the economic and administrativedislocation of the revolution, few MNR
leaderswere inclinedto rejecthelpfuladvice out of hand"(Whitehead,1969:
11). By January,the Britishembassy could reportto the ForeignOffice that
Paz Estenssorowas "gettinga lot of help andadvice fromthe Americansand
knew when to bendhis knee"(BritishForeignOffice Archives#AX 1051/1).
Thus, from early on, Bolivia's economic weakness and its own economic
power allowed the United States to establish clear guidelines for the
revolution.
The influence of the United States over Bolivia was enhanced greatly
when, between Marchand July 1953, the price of tin droppedby one-third
(NA 724.5-MSP/7-1453). The Bolivians were desperate for large-scale
financialassistance. In a memo to PresidentDwight Eisenhower,Secretary
of StateJohnFosterDulles arguedthatadditionalloans for Bolivia shouldbe
 Zunes / THE UNITED STATESAND BOLIVIA 41

postponed until furtherpolitical and economic stability provided a clearer

view of the country's developmentand paymentprospects (Dulles Papers,
EisenhowerPresidentialLibrary,October 13, 1953). After a pairof particu-
larly radical speeches by Paz Estenssoroand the leftist leader JuanLechin
duringthe 1953 May Day celebration(NA 724.00(W)/5-853), Acting Secre-
tary of State WalterBedell Smith encouragedU.S. AmbassadorEdwardJ.
Sparksto "warnsuch a campaignmight so antagonizeAmericanpeople and
Congress as to endangersubstantialUnited States assistance alreadybeing
given Bolivia and future assistance such as long-term tin contract which
Bolivian Governmentdesires"(NA 724.11/5-753). In a memo to Cabotfrom
Deputy Directorof the Office of South AmericanAffairs W. TapleyBennet
Jr.in preparationfor the assistantsecretary'smeeting with Bolivian Ambas-
sador Andradeand National Economy Minister CuadrosSanchez, Bennet
noted that in formulatingthe details of a food grantto Bolivia "we may ...
wantto exact some quidpro quo fromthe Bolivians-such as disassociation
from Communistinfluences and progresstowardagreementon the value of
expropriated American mining properties" (NA 724.5-MSP/9-1453).
Dulles, in preparationfor a meeting with Bolivian ForeignMinisterWalter
Guevera,was advised by Cabot(NA 724.5-MSP/11-1953) to let the foreign
ministerknow thatBolivia's chancesof receivingaid would be enhancedif it
were able:

(a) Todispelstrongsuspicions,stillheldby somesectorsof Americanopinion,

thattheBolivianGovernment is dominated by communistinfluence;
(b)Toreacha promptandjustfinalsettlement of claimsarisingfromthenational-
izationof miningproperties
in whichthereis anAmericaninterest.

Withregardto the questionof communistinfluences, Dulles telegraphed

the embassy in September1953 thathe would not recommendfurtherassis-
tanceto the Bolivian governmentuntilthe moderateelements were clearlyin
control(NA 724.5-MSP/9-2953). A joint telegramfrom Dulles and the For-
eign OperationsAdministrationencouragedthe ambassadorto advise the
Bolivian governmentto makea formalrequestfor aid, with a note includinga
"reiteration[of] Bolivia's adherenceto [the] Free Worldand [a] desire [to]
cooperate toward mutual security" (NA 724.5-MSP/9-2853). Cabot told
Dulles, "Wehave repeatedlystressedboth here and in La Paz the importance
of continuingactionby the Governmentto makeits non-communistposition
perfectly clear"(NA 724.5-MSP/11-1953).
The strategyworked.After Paz Estenssoroannouncedcabinetchanges in
late October1953 thatshiftedthe governmentto the right,CounsellorRowell
observed (NA 724.13/11-453):
42 LATINAMERICAN
PERSPECTIVES

It is not known,of course,whetheror not the compositionof the cabinetwould

have been different if United States aid had not been forthcoming,but the
Embassyis underthe definite impressionthatthe action of the United States
Governmentin furnishingfood grantsto Bolivia hasbegunto pay dividends.

UndersecretarySmithwas moreexplicit:"Webelieve thatour aid is help-

ing to rid the Bolivian Governmentof the pro-Communistinfluences now
present"(NA 724.001/1-1454).
AssistantSecretaryof Statefor Inter-AmericanAffairsHenryF. Holland,
addressingthe Senate Subcommitteeon ForeignAffairsduringhearingson
the mutualsecuritybill in April 1954 (U.S. Departmentof State, 1983: 370),
spoke in glowing termsof the success of U.S. strategyin Bolivia, in thatthe
foreign aid program

has sustaineda governmentin Bolivia which has now become strongly anti-
Communist.... The existing governmentin Bolivia originallyacceptedCom-
munistcollaborationwhen it took office in 1952. Since thattime it has aban-
donedthatCommunistsupport,andit demonstrated,in myjudgementbeyond
all shadowof a doubt ... thatit is now stronglyanti-Communist.

ForeignMinisterGueveratold U.S. officials in WashingtonthatU.S. aid

was responsiblefor placingpro-U.S. elements "ina position of dominance."
Similarly,a nationalintelligence estimate observed that the MNR govern-
menthad become increasinglyfriendlyto the United Statesbecause of U.S.
supportof the regime. It warnedthatthe governmentwould revertto a more
hostile orientationshould it lose confidence in such support,but suggested
thatthe MNR would "probablycontinueits presentmoderatecourse without
any serious threatto its continuancein power"(U.S. Departmentof State,
1983: 542). It continued(1983: 547-548, 556):

Bolivia's policy towardthe US is primarilydeterminedby its desire for U.S.

economic support.... As a resultof subsequentU.S. aid andthe tolerantU.S.
attitudetowardthe regime... the MNR has become increasinglypro-U.S.in its
outlookandhas takenthe positionthatBolivia's interestwill be best servedby
cooperatingwith the U.S.

The embassy noted that both of Bolivia's communist parties were

extremely critical of the governmentfor accepting U.S. aid, quoting the
assertionthatthe MNR "hadnow demonstratedthe complete incapacityof
bourgeois elements to bring to successful fulfillment a truly revolutionary
movement."The embassyalso notedwith satisfactionthatthe MNR's tolera-
tion of its left opposition was waning: "With the assurance of tin sales
throughMarch 1954 and the substantialaid given by the United StatesGov-
 Zunes / THE UNITED STATESAND BOLIVIA 43

ernment,the Partyis now in a position to takea somewhatboldercourse and,

in fact, it has done so" (NA 724.00/1-1354).
Rowell reportedthat the Bolivian authoritieshad taken an even tougher
line against the communist parties after Milton Eisenhower's visit (NA
724.00/1-1354). Even Lechin, it was noted,recognizedthe situationandwas
sympatheticto his government'spredicament.The embassy reportedthat
(NA 724.00/4-1554) Lechin

chidedtheCommunists' pretensionsof establishing

relationswiththeUSSRor
thePopularDemocracieswhichconsumedonly5,000tonsof tinperyearas
compared withthe70,000consumedintheUnitedStatesandGreatBritain.He
asked,"Couldwe be so stupidasto renouncethis(latter)marketonlyto please
whoproclaimforeignsloganswithoutassimilating
theseinfantilists themnor
understanding them?"

By this point, the embassy could begin to influence some government

appointments.For example, by November 1953 the State Departmentcould
reportthat the appointmentof an alleged communistto teach at the newly
opened military academy was canceled when the U.S. embassy voiced its
objections (NA 724.00/12-753). By this time, AmbassadorSparks could
confidently predict that "the Embassy expects the MNR Governmentpro-
gressively to limit the opportunitiesfor the Communistparties"(NA 724.00/
10-2353).
The rightwarddrift of the MNR was becoming evident in almost every
aspectof the revolution.In surveyingthe situationinvolvingorganizedlabor,
Hudsonnoted that (NA 724.00/1-1453, 2)

domestic and foreign Communists . . . sought to gain control of the COB

[CongresoObreros deBoliviano,themajorBoliviantradeunion].Attheendof
officersof theInter-
theyear,however,thanksinpartto theeffortsof American
American RegionalLaborOrganization, theCOBstillmaintained apositionof
independence.

Similarly,the moderatedirectionof the land reformwas attributedto the

U.S. National Security Council's aim to "combat Communist agrarian
reformby encouragingland developmentof our type" (OperationsCoordi-
natingBoardCentralFile 091.4 LatinAmerica [File #1(5)]). In additionto a
strongeranti-communiststance andcompensationof the formerowners,the
United Statesalso insistedthataid be supervisedby U.S. officials at all levels
(Wood, 1969: 10).
This generousaid did not meanthatBolivia was readyto go it alone. That
same month, OSA official John L. Toppinginformedhis State Department
colleagues thatthe embassy in La Paz had pointedout thatBolivia's foreign
44 LATINAMERICANPERSPECTIVES

exchange earnings from its tin, on which, he emphasized, it was solely

dependent,were insufficientto meet the population'smost basic needs and
that only U.S. aid had preventedthe country'stotal collapse (NA 724.00/1-
2654). A reportof the Bolivian PlanningBoard noted that U.S. aid "repre-
sented a means only of preventingworse deteriorationin the situationas it
existed" (Wood, 1969: 24).
As a result,in subsequentyears,it was possible to extracteven greatereco-
nomic concessions. For example, the PetroleumCode of 1955, written by
Americansandenactedwithoutanypublicdebateor alterationsby the Boliv-
ian authorities,forced the Bolivian governmentto forgo its oil monopoly
(Whitehead,1969: 11). Offersby the Soviet Union to assist Bolivia with its
nationalizedoil industrywere met by a threatenedwithdrawalof U.S. aid
(Scott, 1972: 54). Similarly,the United States and Bolivia signed an agree-
mentin 1955 to encourageforeigninvestment(Blasier,1985:78). It was only
becauseof the desperateneed for additionalsourcesof foreignexchangeand
pressurefromthe U.S. governmentthatthe once stronglynationalisticMNR
agreedto these concessions (Alexander,1958: 168-169).
By this time, it appears,the United States had effective veto power over
even the compositionof the Bolivian cabinet.Lechinresignedas Ministerof
Mines when Congresswas consideringcontinuingaid to Bolivia, a move that
Bolivians laterclaimed had been an explicit condition.It is believed thathe
would have made a bid for the presidencyin 1956 had he not recognizedthe
need for continuedU.S. assistance;indeed, he may have preferredthat Paz
Estenssoro'svice-president,HernanSiles Zuazo,ratherthanhimself bearthe
disgrace of implementingAmericanorders(Whitehead,1969: 18).
The following year, the United States took more direct control over
Bolivia's economy with the appointmentof GeorgeJacksonEderto head an
economic stabilizationprogram-a decision, accordingto Eder(1968: 479),
that the MNR governmentmade "virtuallyunderduress, and with repeated
hintsof curtailmentof U.S. aid."Ederwas executivedirectorof the Stabiliza-
tion Commission, every memberof which had to be "personagratato the
U.S. embassy."The program,which bore a strikingresemblanceto the struc-
turaladjustmentprogramsthathave since been imposed on dozens of debt-
riddencountriesin LatinAmericaand elsewhere,consisted of the following
(Scott, 1972: 55):

Thebolivianowasdevalued,andexport/import controlswereremoved.Price
controlsandgovernment subsidieson consumergoodswereremoved,while
wagesandsalarieswerefrozen.Toreducegovernment spending,educational
outlayswereslashed,theprogram of colonizingthelowlandswasstopped,and
werehalted.Practicallyall socialwelfare
diversification
effortsat industrial
allocationswereterminated.
 Zunes/ THEUNITEDSTATES
ANDBOLIVIA 45

Forexample,AssistantSecretaryof StateRichardRubottomsaid in refer-

ence to one Bolivian developmentplan, "Wehadto tell the Bolivian Govern-
ment thatthey couldn't put their money into it and we weren't going to put
ours into it" (U.S. House of Representatives,1960: 847).
Though nominally a technical adviser,Eder,a strongadvocateof mone-
tarism,believed thatBolivia would havebeen betteroff leaving the economy
entirelyin the handsof privateenterprise.He was contractedandpaid by the
U.S. governmentat the behest of the InternationalMonetaryFundto acquire
direct administrativecontrol of the economy (Dunkerley, 1984: 86). This
gave the U.S. governmentunprecedentedpower to controlthe course of the
Bolivian revolution.
Eder has writtena detailed account of how he-as an agent of the U.S.
government-was able to implement a programwhich, in his own words,
"meantthe repudiation,at least tacitly,of virtuallyeverythingthatthe Revo-
lutionary Government had done over the previous four years." Eder
explainedthathis goal was to convincethe new MNR administrationthatsta-
bilization would be possible only througha total transitionto a free market
economy (1968: 87-88). He insistedthatgovernmentbusinessbe returnedto
privatehands, that compensationbe guaranteedin the event of any future
nationalizations,and that all price controls be repealed (Scott, 1972: 55).
Eder's prescriptionfor the favorableinvestmentclimate that he considered
necessary was a stable political environment,a strong currency,and labor
conditions that minimized the risk of interferencefrom labor or political
leaders (Eder, 1968: 695).
Furthermore,there was never any doubt about the fate of the revolution
shouldthe MNR refuse:"I suggestedthatthey hadbettermaketheirplans on
the basis of what Assistant SecretaryHolland had specifically told all of
them"or it wouldbe "extremelydifficult"for themto receivefurtherU.S. aid
(Eder, 1968: 159). Similarpressures,predictedEder (1968: 141, 143),

wouldprovidetheleveragethatwouldbe neededlaterto obtainenactment

of
certainratherdrasticmeasures,necessaryfor monetarystabilizationbuthardly
popularorpoliticallyeasy.... Therewouldbe no difficultyin gettingBolivia to
agree in advanceto conditions that would ensure a returnto a free enterprise
economy.

The effect was not only to redirectthe economic prioritiesof the revolu-
tion but to alterthe revolution'spolitical structureby effectively curbingthe
power of the trade unions and displacing socialist-leaning leaders of the
MNR. This was importantbecause it had become clearto Americanofficials
thattherehadto be some changesin the internalstructureof Bolivianpolitics.
46 LATINAMERICANPERSPECTIVES

Indeed, as Susan Eckstein (1976: 33) observed,"eversince the government

initiatedthe basically anti-laborstabilizationprogramin 1956, post-revolu-
tionaryheadsof stateadoptedan anti-laborstance."The MNR went so faras
to exclude labor representativesfrom governmentunless their unions sup-
portedthe stabilizationprogram(Mitchell, 1977: 15-19). Hostile unionmili-
tias couldby thenbe neutralizedby the U.S.-encouragedandU.S.-subsidized
military.Accordingto Cole Blasier(1985: 102), "theeffect of U.S. influence
was to make the United States an ally of the MNR center and right and the
enemy of the laborleft. Thus,the effortof U.S. policy was to bolsterthe posi-
tion of the Bolivian middle classes againstorganizedlabor."As Scott (1972:
56-57) describedthe situation,

Boliviansubmissionto Americanwishes increaseddivisionswithin the

splittheMNR... withtheresultthatthe
MNR.... Thebattleoverstabilization
leftwing-the minersandworkerswhohadfoughtintheRevolution-wascut
off from governmentpower .... After stabilization,U.S. aid shifted to direct
cashsupportfortheMNR,whichhadturneddecisivelyfromsocialistexperi-
mentation .... Acceptance of stabilizationdiverted the Revolution from a
socialist direction.... The split in the MNR broke up its mass base, making
andpoliticalsupport.
on U.S. budgetary
theirrulershighlydependent

It became virtuallyimpossible for the MNR to balanceits independence,

its belief in the redistributionof wealth,and its anti-imperialistrhetoricwith
the realitiesof dependencyexacerbatedby the economic crisis of 1956-1957
(Dunkerley,1984: 84). The increasinglyalienatedand apatheticpeasantry,
manipulatedby competingpolitical factions,was too weak to challenge this
dramaticshift to the right (Eckstein, 1976: 34-35). The party leadership
became badly split, resultingin governmentrepressionof its formerallies in
the miners'union and a buildupof the newly reconstitutedmilitary(Wood,
1969: 33). Indeed, this period in Bolivian history gives some credence to
Nicos Poulantzas's (1973) analysis of the state as a site for class conflict
ratherthanpurelyas an instrumentfor class dominationand the importance
of a dominantpolitical bloc ratherthan a well-defined ruling class as the
determinantof power.
In additionto the variousprogramsin agriculturaldevelopment,construc-
tion, technicalassistance,food aid, etc., therewas directfinancialsupportof
the generalbudget.In less thanten years,Bolivia hadgone froma threatening
revolutionaryregime to "the model for the Alliance for Progress"(Blasier,
1976: xv). U.S. economic aid during the eight years of the Eisenhower
administrationtotaled US$192.5 million, US$178.8 million of it in grants
(Rabe, 1988:77). By 1958, the UnitedStateswas providingBolivia with one-
third of the government'stotal budget (Dunkerley,1984: 82). As a result,
 Zunes/ THEUNITED
STATES
ANDBOLIVIA 47

U.S. diplomats and technicians were "quite free to give them political
advice" (Alexander,1982: 93). Even the more conservativeelements of the
party had serious reservations about this level of dependency, but they
believed they had no alternative(Dunkerley,1984: 85). Accordingto Wood
(1969: 24-25),

anauraof dependence andineffectuality

hadenvelopedtheregimeandsapped
itslegitimacy.Unrealized
aspirationsandthemerepassageof timehadblunted
the fervourof popularcommitment.The governmenthad progressively
exhaustedits symbolic,regulative,
andextractivecapabilities....Theregime
wasnowdependent forits day-to-dayoperationandits veryexistenceon the
"externalderivative
power"providedby theaid.

As the revolutionturnedto the rightunderthe Siles Zuazo administration

(1956-1960) and Paz Estenssoro'ssecond term,beginningin 1960, the mas-
sive popularbase of supportthathad previouslyprotectedit fromright-wing
and traditionalelements evaporated.

CONCLUSION

Blasier (1985: 53) has arguedthat "the Bolivian Revolution is the only
genuine social revolutionto which the United Statesprovidedearly and sus-
tained support"and that "theUnited States was deeply involved for a dozen
yearsin makingthe Bolivian Revolution'work."'Whathe does not addressis
for whom it was made to work, other than to acknowledgethat the United
Stateshada goal "of moderatingorderadicalizingthe revolution."Thoughhe
persuasivelyarguesthatthe MNR governmentduringthis period did repre-
sent an authenticrevolution,he also acknowledgesthat "fromthe beginning
U.S. influence has tended to check the natureand extent of revolutionary
change"(1985: 101).
In the end, the United Stateswas able to overthrowthe revolutionwithout
having to overthrowthe government.The reality of a high level of depen-
dency made it possible for the United Statesto steerthe course of the revolu-
tion in a directionmore favorableto its interests-a move facilitatedby the
MNR's predominantmiddle-class orientationand the inability of its more
radicalfactionsto dominateit. While the revolutionsucceededin undermin-
ing muchof the old orderby breakingup the haciendasystem andnationaliz-
ing the tin mines, it never succeeded in developing a new orderto take its
place. This made it possible, in the words of AnthonyFreemanof the State
Department'sBolivia desk, for the UnitedStates"tochannelthe revolutionin
constructivedirections"(Scott, 1972: 53).
48 LATINAMERICANPERSPECTIVES

The United States chose to influence the directionof the MNR through
large-scale financial supportto the revolutionarygovernment.Indeed, its
influence over the Bolivian governmentwas greaterthanit had been priorto
the revolution,since the old rulingclass-tied to the tin barons-had been in
conflict with the United States over the price of tin (Whitehead,1969). The
NationalSecurityCouncil saw the successful handlingof the Bolivian situa-
tion as a model (OCB CentralFile 091.4 LatinAmerica [File #3] [3], Febru-
ary 3, 1955, 8), and it was one thatwould be exploited to the fullest in Latin
America and elsewhere.
Scott (1972: 53) andothershavearguedthatthe UnitedStatescould toler-
ate the Bolivian revolutionbecause of the lack of large-scale direct private
investment in the country.However, the lack of large-scale direct private
investmentin Iranduringthe same perioddid not preventit from intervening
to help overthrowthe government,nordid the relativelysmall amountof U.S.
investmentin Nicaraguaminimizethe hostilitytowardthe Sandinistaregime
duringthe 1980s. In part, there was great concern over the precedentthat
nationalizationand other radical initiatives might set elsewhere in Latin
Americaandbeyond.U.S. perceptionsof the willingnessof the Boliviangov-
ernmentto addressthe nationalizationissue in what was consideredto be a
responsible manner,one in large part dictatedby the United States, made
such economic nationalismtolerable.
In many respects,U.S. policy towardBolivia provedto be a harbingerof
contemporaryU.S. policy towardLatinAmericain this age of globalization,
in which the so-called Washingtonconsensus, backed by U.S.-supported
internationalfinancial institutions,has institutionalizedeconomic leverage
to the pointthatmoreovertformsof interventionto advancestrategicor eco-
nomic interestsare no longer necessary.Thoughthe outcome of this policy
was not as dramaticas whattranspiredin Guatemaladuringthe same period,
the impact on the people of Bolivia in terms of the human costs of living
within a system in which once-promised social, economic, and political
rightswere subsequentlydeniedto the majorityof the populationwas no less
severe. With the globalizationof the economy, most Latin Americancoun-
tries now have as few choices in choosing their economic policies as did
Bolivia in the 1950s.

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 Zunes / THE UNITED STATESAND BOLIVIA 49

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