OCI No.
CENTRAL INTELLIGENCE AGENCY Office of Current Intelligence5
INTELLIGENCE MEMORANDUM
Situation in Bolivia
Sutonary
Onay the Barrientos government movedits authority over the tin Mines byforce. This actiontruggleits roots in nationalization of the ninesthe revolution The revolutionminers armed, and enabled their leftisttoeto over any government movesthe efficiency of mine operations. Attime, Bolivian tin became loss competitiveworld market, with the result that tinprovide Bolivia's main source of foreigndeclined and the minesrain on : 1domestic
In recognition of ttil3, the government 1
the US ,i
the Inter-American Development Ba nl^toiioaernlze the mines. The three partners would supply funds In return for government action to reform mineand bring the miners under discipline. This plan was suspended4 because the government was unable to overcome the miners. The junta which caae to power in that year has now recognised that reform in the mines is essential to Bolivia'sand has thrown down the glove to the miners. If It falls, the miners and other leftist-ledare likely to try to seize national political power.
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Nationalization of the Kings:
1. 2 the revolutionary government of Bolivia nationalized the three largest tin-producing enterprisesPatlno, Araaayo.and Hochschlld--and placed them under the control of the Bolivian Mining Corporation nder the first nix years of COHIBOL'9 management, tin production declined by one half. utputgradually to rise, but3 was still only two thirds of prerevolutlonary levels. Since tin exports have traditionally contributed betweenercent andercent of Bolivia's total export earnings,erious blow to the economy. Tin earnings dropped byercent during the. COHIBOL was operating at a loss, thus makingrain on the government's budget. Despite the sharp decline In production, COMIBOL's labor force hasconstant at
2. The major factors In COMIBOL's reducedand rising costs are labor union practices In the mines, and poor and corrupt COHIBOL management. Other factors include: fluctuation of world tin prices, which declined sharply2of ore deposits; difficult access to ore deposits; failure to make use of new metallurgical processes; failure to replace or maintain mining equipment; and
maintenance of food commissaries selling below cost to miners.
The Role of the Miners
he minors' unions nre organized under the Mine Workers Federation (FSTMB) which is headed byJuan Lechtn Oq'iendo. Host of the mine leaders are extreme leftists and Communists whose purposes are not to assist In the nationalization of the Industry but to obstruct it. Mine union activities are closely tied to political maneuvering on the national level, usually in support of Lecbln's National LeftistParty.
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Labor pressure is exerted on the COHIBOL management by labor representatives known as Con-troles Obreros. ontrol Obrero is maintained by Ihm union at each mine to "advise" management on labor aatters. Under Bolivian lav, he has veto potter over all decisions involving union affairs and labor rights. In practice, this power has been so broadly interpreted as to allow the Controles Obrorua to pass on technical and management mattersutside thuir legitimate sphores of esult of union encroachment, COHIBOL management has been seriously circumscribed in any attempts to maintain labor discipline and to reduce personnel even when the need for such reductions is clearly indicated.
Bolivia's tin miners spearheaded2 revolution by defeating the armed forces, traditional bulwark of former oligarchy-controlled regimes. At*
a legacy of their victory, tbe miners' militia and groups of peasants established themselves, often with official sanction, as armed bands to serveas "defenders'* of the revolution. During Paz' first term ine used the miners and peasant militia unitsounterweight against the drastically reduced national military By the time he reversed this policy during his second administration, the armed miners hadtheir military position.
The Triangular Plan:
tbe US Agency forthe Inter-American Development Bank,
and Vest Germany entered into an agreement to finance the rehabilitation of COHIBOL. This undertaking, known as the Triangular Plan, was designed to coordinate the contribution of substantial capital Inflows into COHIBOL while aiding in the institution of sound management and financial practices. Under thePlanillion was pumped into COHIBOL in two phases during. Tbe scheduled third phase of the plan was suspended inesult of the participants' dissatisfaction with progress attained during the first two phases.
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7. Prom the beginning of the Triangular Plan it was recognized that the most seriousto the rehabilitation program was theof COMIBOL to make management decisions stick in the face of labor obstruction. Inof tbls, the Paz Bstenssoro governmentecree in1 clearly limiting labor prerogativesls management. The decree was never effectively Implemented despite pressures from the Triangular partners. The miners reacted to any government intervention by striking and, In some cases, by takingCOMI BOL administrators and foreign politics! pressure would then force President Paz to back down.
8. During the summer4 theprogram ground to a halt when Triangular consultants were unable to visit the minesthe danger of Incurring physical violence. The Paz government was informed, oneptember, that no further financial assistance would be forthcoming until civil authority was established in the mines. Paz remained extremely reluctant to move against the miners and twice canceled plans for military action. Mo further progress was made on the matter and4 the Paz government was overthrown.
Actions by the Barrientos Government:
he military Junta which was established in the wake of the November revolution announced thatould undertake sweeping economic Colonel Juan Lechln Suarez, half-brother of labor leader Lechln, took office as COMIBOL president. Heompetent administrator who is determined to reform the mining industry. Colonel Lechln's political views differ from those of his half-borther and the twoare not on good terms.
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February an extensive study ofthe Triangular review group resulted in aagainst any further loans to COMIBOLabsence of profound changes. Thethe gravity of COHIBOL's financialand expressed the beliefXB0Lservice its existing indebtedness. and the junta at first believed thegroup exaggerated COHIBOL's problems. negotiations with the miners, makingin return for assurances of greatlytin production during the month ofagreement the miners failed to keep. This,pressure by Triangularconvinced Junta president BarrlentosLechln of the gravity of theirgovernment was encouraged by Triangularto begin workoordinated planmine reforms.
were indications during theof May that the government wasintervention in the mines to clearfor implementation of reforms. ecreedrafted which provided for salaryright to fire for cause, punishment forore or materials by firing and criminalnoninterference by labor in free movement of material andbetween mines, and surrender of all arms The plan was to Issue the decree andit up, if necessary, by armed action, was not the comprehensive plan envisioned
by Triangular partners butreliminary In expectation of an extended strike by the miners in reaction to the decree, the Junta asked US officials for financial assistance to cover COMIBOL's cash needswo-month period. The cash deficit figure was estimatednay. the government arrested Juan Lechln and exiled him toeasure which produced reactions which merged onay with already planned widespread strikes.
12. The Barrlentos government opened military operations against the miners onay. The quick action, begun before formulated contingency plans could be fully implemented, probably was taken as
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a result of attacks by the miners againstauthority. Onay, Kami miners attempted to assassinate Barrientos, while those in the Oruro area clashed with army troops guarding the mining .town. The government's goal is to establish order in the mines and thus allow implementation of reforms and further financial and technicalunder the Triangular Plan.
in the mine operation probablyon continued calm and civil order throughout
the rest of the country. If, in addition to thein the mining areas, major urban disorders break out, the armed forces will be bard put to maintain control.
event that the armed forcesto occupy the mines or prevent chaos,probably wouldid for power.
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Original document.
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