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On August 1st, the Bolivian Ministry of Foreign Affairs confirmed the Andean country’s participation in the 15th BRICS Summit upon South African President Cyril Ramaphosa’s invitation. President Luis Arce’s presence at one of the major multilateral meetings was counted on to present Bolivia’s Economic, Social, Community, and Productive Model, according to a social media post by Bolivia’s Minister for Foreign Affairs, Rogelio Mayta. Mayta also reported that on June 12, President Arce manifested Bolivia’s desire to join BRICS, and his participation at the 15th Summit was seen as a crucial step for the country’s integration into the economic bloc.
Luis Arce took over the Bolivian presidency in 2020, as the country was facing an unprecedented health crisis in the form of COVID-19 and political unrest that had been brewing since former President Evo Morales had been ousted and replaced by Jeanine Áñez. The task that lay ahead of his first presidential term was daunting, yet on August 5th, 2023, as President Arce addressed Bolivians in the diaspora in commemoration of 198 years of independence, there seemed to be significant cause for optimism. In his speech, the President announced, “The various measures adopted by our Government have allowed our Plurinational State of Bolivia to achieve a cumulative inflation rate of just 0.8 percent as of June in this administration, the lowest in South America.” Additionally, in the same speech, President Arce highlighted programs such as Bono Contra el Hambre and SIBOLIVIA credit, all of which have been crucial to the aforementioned model.
Since Evo Morales’ ascension to the presidency in 2006, Bolivia has centered its industrialization objectives around the abundance of lithium deposits in the country’s expansive salt flats. Indeed, Morales sought to completely nationalize the lithium production process, allowing for limited input from foreign entities, if any at all. Upon his forced resignation after widespread protests in 2019, Morales described his ousting as a “lithium coup”, accusing the United States of orchestrating the events to maintain its stronghold on lithium production in the country and discourage Bolivia from seeking alternative partnerships. However, underwhelming production has seen the government turn to other countries to ramp up the numbers to compete with neighboring Chile and Argentina. President Arce stated that Bolivia would begin exporting electric batteries in 2025, and in order to bring this goal to fruition, partnerships with the two BRICS powerhouses would be crucial.
So why is Bolivia turning towards BRICS now?
Bolivia has been jostling for space in the global economic order for some time now, seeking to establish mutually beneficial partnerships with other countries. The country has been actively working to build regional partnerships and has a longstanding desire to become a full member of Mercosur. Currently, it holds the status of an associate state. However, Bolivia’s application for full membership faced obstacles in 2015 when Brazil’s right-leaning Congress posed a significant challenge to the process. It’s important to note that Argentina, Uruguay, and Paraguay had already approved Bolivia’s full accession at that time. However, the status quo changed, as President Lula da Silva now finds himself at the helm of Mercosur, albeit on a temporary basis. In an online article, he has been quoted as saying, “It is urgent that Bolivia becomes a full member of Mercosur,” which could signal positive developments for La Paz. Mercosur membership would allow Bolivia to fully participate in the decision-making processes of the bloc and enjoy reduced trade tariffs with other members, privileges it would not have otherwise enjoyed as an associate state.
Bolivia is also eyeing the lucrative BRICS membership due to recent developments in the previously mentioned lithium industry. In July 2023, President Arce stated that Bolivia had 23 million tons in lithium resources, a 2 million ton increase from the figures provided by the U.S Geological Survey. However, Bolivia’s production has failed to match these figures, an issue that the Bolivian government is keen to reverse. In the face of the transition to clean energy, lithium has seen an unprecedented surge in demand due to its use in electric car batteries, even being referred to as ‘white gold’, and President Arce has turned to the mineral to catalyze Bolivia’s industrialization process. The President announced a partnership between Bolivia’s lithium development parastatal, Yacimientos de Litio Bolivianos (YLB), and Russian firm Uranium One Group and China’s Citic Guoan Group, in a deal worth $1.4 billion. Given the crucial role that Chinese and Russian companies are expected to play in Bolivia’s lithium production, it is quite befitting that President Arce would turn to BRICS for further investment opportunities. Additionally, the fact that BRICS countries contribute 31.5% of the global GDP, which is a larger share than that of rival bloc G7 at 30%, has made BRICS membership all the more coveted in international economic circles, as more than 40 other countries have inquired about membership. Therefore, it should come as no surprise that Bolivia will be looking to partake in the resulting benefits from BRICS’ expanding economic purview.
Bolivia’s BRICS membership would also perfectly align with the Bolivianizacion process that has taken root in the country. Bolivianizacion refers to the process of bringing key industries, resources, or sectors under the control and ownership of the Bolivian government or state, with one of the key pillars being reducing the economy’s dependence on the American dollar, instead giving priority to the national currency, the Boliviano. China has been leading the de-dollarisation charge of the global economy, accusing the U.S. of weaponizing its currency in political affairs, while promoting the yuan as a medium of exchange for international transactions in its stead. In the same vein, Brazilian President Lula has also openly called for local currency settlements. Bolivia is one of the many countries that have grown weary of the U.S. dollar’s hegemony and will get behind the initiative of BRICS countries to topple the dollar as the benchmark currency.
Looking toward the future
As has been established, Bolivia envisages a future with a booming lithium production industry and rid of dependence on the American dollar. With the ascension to full Mercosur membership status looking even more certain, BRICS membership seems to be the next, logical step for the South American nation, as it seeks to strategically position itself in an emergent global political order. Bolivia’s political and economic ambitions would immensely benefit from joining this exclusive club that seems to be growing from strength to strength.
Bolivia has clearly charted a roadmap for its future and with an abundance of natural resources and positive macroeconomic indicators, the country’s potential cannot be underestimated.
- Will Bolivia’s BRICS membership bid be successful?
- How soon will Bolivia be able to transform itself into a major player in the growing lithium sector?
- What kind of impact will Russian and Chinese companies have on Bolivia’s lithium industry?
Suggested readings
“Chinese, Russian Firms to Build Lithium Plants in Bolivia”. VOA News 29 June 2023.
“Bolivia boosts lithium resources estimate, cementing spot as global leader” AP News. 20 July 2023.
