Bolivia’s economic turmoil fuels mistrust of the government and its claim of a failed coup

LA PAZ, Bolivia (AP) — Signs reading “I’m buying dollars” line the doors of Víctor Vargas’ shoe store in the heart of Bolivia’s largest city, a desperate attempt to keep his family business alive.

Just a few years ago, the 45-year-old Vargas would open the doors at 8 a.m. to a crowd of customers already waiting to buy tennis shoes imported from China. Now, his shop is hopelessly empty.

“Right now, we’re in a terrible crisis,” he said. “No one buys anything anymore. … We don’t know what’s going to happen.”

Bolivians like Vargas have been hit hard by economic turmoil in the small South American nation, fueled by a long-term hyper-dependence on US dollars and now a lack of them.

The economic downturn has been exacerbated by an ongoing feud between President Luis Arce and his ally-turned-rival, former President Evo Morales, ahead of next year’s presidential election. Many Bolivians affected by the crisis have lost faith in Arce, who denies that the country is even in an economic crisis.

READ MORE: Bolivian president faces more ‘self-coup’ accusations, including from rival Evo Morales

“Bolivia has a growing economy. An economy in crisis does not grow,” Arce told The Associated Press in an interview. This was opposed by economists and dozens of Bolivians.

That deep mistrust came to a head on Wednesday after a spectacle that the government called a “failed coup” and opponents, including Morales, called a staged “self-coup” intended to score political points for the leader unpopular before the election.

Whether the coup attempt was real or not, most Bolivians who spoke to the AP said they no longer believe what their leader says and say Arce would be better served by addressing Bolivia’s struggling economy and more little time to perform political stunts.

“He needs to think about Bolivia’s economy, make a plan to move forward, find a way to get dollars and work to move Bolivia forward,” Vargas said. No more of these childish ‘self-coups’.

That simmering anger has paved the way for more strife in a country that is no stranger to political turmoil.

Bolivia’s economic crisis is rooted in a complex combination of dependence on the dollar, drying up of international reserves, mounting debt and a failure to produce products like gas, once the Andean nation’s economic boon.

That means Bolivia has become largely an import economy “totally dependent on dollars,” said Gonzalo Chávez, an economist at the Catholic University of Bolivia. This once worked in Bolivia’s favor, fueling the country’s “economic miracle” as it became one of the region’s fastest growing economies.

Vargas’ family opened the shoe business nearly 30 years ago because they saw it as a sure way to ensure stability for future generations. The family imports shoes from China, which they pay in dollars and sell in Bolivia’s currency, bolivianos. Without dollars, they have no jobs.

The lack of dollars has led to the emergence of a black market, with many sellers bringing in money from neighboring Peru and Chile and selling it at a high price.

Pascuala Quispe, 46, spent her Saturday walking around downtown La Paz, going to various foreign exchange shops, desperately looking for dollars to buy car parts. While the official exchange rate is 6.97 bolivianos to the dollar, she was told the real price was 9.30 bolivianos, too high a price for her. So she kept walking, hoping to find luck elsewhere.

High prices have fallen on everything. People have stopped buying shoes, meat and clothing, and this has pushed working class people deeper into poverty. Bolivians joke about having “mattress banks,” storing money at home because they don’t trust banks.

“There’s no job. …and the money we earn is not enough for anything,” said Quispe. “Everyone suffers”.

Some vendors like Vargas post signs on their business doors, hoping vendors will trade dollars for a more reasonable price.

It’s a complicated economic liability that has few short-term solutions, said Chavez, the economist.

But Arce insists that Bolivia’s economy is “one of the most stable” and says he is taking steps to address the problems Bolivians are suffering, including shortages of dollars and gasoline. He said the government is also industrializing, investing in new economies such as tourism and lithium.

READ MORE: As supporters rally, Bolivian president calls coup accusations ‘lies’

While Bolivia has the world’s largest stores of lithium, a high-value metal key to the transition to a green economy, the investment is only viable in the long term, largely because of government failures, Chavez said. Meanwhile, inflation has outstripped economic growth, and most Bolivians face precarious working conditions with low wages.

This is only compounded by the ongoing fighting between Arce and Morales, who returned from exile after resigning during the 2019 unrest, which Morales says was a coup against him. Now the former allies have sparred and fought over who will represent their Movement for Socialism party, known by its Spanish acronym MAS, ahead of the 2025 election.

“Arce and Evo Morales, they fight over who is more powerful,” Vargas said. “But no one governs for Bolivia. … There is a lot of uncertainty.”

Widespread discontent has fueled waves of protests and strikes in recent months. The protests and roadblocks have dealt another economic blow to Vargas, the shoe seller, as customers from across the country no longer travel to buy products due to the chaos of the ubiquitous protests.

Morales, who still holds much of Bolivia’s power, blocked Arce’s government from passing measures in Congress to ease the economic turmoil, which Arce told the AP was a “political attack.”

Morales has fueled speculation that the military attack on the government palace last week, led by former military commander José Zúñiga, was a political stunt orchestrated by Arce to gain sympathy from Bolivians. The claim was first made by Zúñiga himself after his arrest.

“He deceived and lied, not only to the Bolivian people, but to the whole world,” Morales said on a Sunday radio program.

The political wrangling has left many, like Edwin Cruz, 35, a truck driver, shaking their heads as they wait hours, sometimes days, in long lines for diesel and gasoline due to chronic shortages caused by from the lack of foreign currency.

Oil is like gold now. “People are not idiots. And with all this ‘self-coup’ thing this government has to go.”

Cruz is among those who do not want to vote for either Morales or Arce. While Bolivians have few other options, Chavez said the discontent opened a “small window” for a foreigner to gain traction, as has happened to a number of Latin American foreigners in recent years.

Most recently, self-described “anarcho-capitalist” Javier Milei has taken over neighboring Argentina with promises to pull the country out of its economic spiral, which shares a number of similarities with Bolivia’s.

Meanwhile, Vargas doesn’t know what to do with his family’s shoe store. Once a point of pride, the store has turned into a financial drain. He was going to pass it on to one of his four children, but they all want to leave Bolivia. One of his children has already immigrated to China.

“They don’t want to live here anymore,” Vargas said in his empty shop. “Here in Bolivia, there is no future.”