After the Ball

No Latin American nation has received more U.S. aid than Bolivia, and few have less to show for it. Since 1952, the U.S. has pumped $169,600,000 into Bolivia, either in technical assistance or outright grants. Yet Bolivia's economy is still near bankruptcy, and its 3,500,000 ill-housed, ill-fed people are never far from revolt. The U.S. is now taking a new look at its aid program in hopes of finding a way to straighten out this discouraging situation.

On President Kennedy's desk last week was a 50-page report written by a three-man team*sent to Bolivia with orders to "review the status and effectiveness of U.S. economic policies in Bolivia." The fact-finding team spent twelve days in the barren, mountainous Altiplano, getting a first-hand look at the problems of a nation that is rich in minerals but little else.

Subsidizing Deficits. Estimates are that since the Spanish conquest, some $200 billion worth of tin, silver and nitrates has been extracted from Bolivia, largely by absentee mine owners who took their wealth elsewhere. Bolivia's peasant revolution of 1952 led to the nationalization of the richest tin mines. But inefficient operation brought financial ruin. Mine machinery fell into disrepair. The demagogic leader of the tin miners' union, Juan Lechin, forced thousands of featherbedding new workers onto the government mine payrolls. Before nationalization, the mines produced 30,000 tons of tin each year; today they produce only 15,000 tons, at a loss of $10 million annually. The government-run railroads and the state oil company are also overstaffed and in bad shape.

In the past, U.S. policy has been to help Bolivia by doling out dollars to make up deficits. The cash gift ranges up to $9,000,000 a year, and Bolivians have become so used to the dole that they frankly budget it as 20%-30% of anticipated revenue. Kennedy's fact finders do not recommend cutting off aid to Bolivia, but conclude, in effect, that the U.S. has been acting too much like an indulgent uncle, should dole out less cash and grant more development loans. Says an Administration source: "The report doesn't say that we should dump $50 million in there, or $10 million, and say, 'Here you are, fellows, have a ball.' Our aid should be for businesslike development."

Short-Term & Long-Term. The first order of business is short-term loans to put Bolivia's nationalized industries on their feet. The tin mines should get $6,500,000 for new equipment and to prospect for new ore deposits. One condition for the loans: the government must fire 5,000 featherbedding miners, devise a plan to relocate them in other jobs. Another loan of perhaps $5,000,000 would buy modern pumping and refining machinery for the state oil company and at least make a start toward rehabilitating the railroads.

Once the state enterprises are running efficiently, the U.S. might then consider long-range help in the form of more grant aid for specific projects to improve health, education, housing and roads, and diversify industry and agriculture.

President Kennedy has read and endorsed the fact-finding team's blueprint. The immediate hurdle is Bolivian President Paz Estenssoro's willingness to risk the first politically unpopular step of making the mines more efficient. The miners are well armed and defiantly opposed to wholesale dismissals. However, President Paz Estenssoro, the man who led the 195 2 revolution, realizes that his movement will fail unless Bolivia solves its problems, and soon. Even the tin miners' Lechin, now the nation's Vice President, may understand that time is growing short. Visiting in Washington six weeks ago, Lechin wept publicly when the Inter-American Development Bank granted Bolivia a $10 million loan.

*Dr. Willard Thorp, Assistant Secretary of State for Economic Affairs in the Truman Administration; Jack Corbett, former State Department economist; and Seymour Rubin, Washington attorney and economist.

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