Internationa News Internationa Siles Zuazo : caught between the bankers and the unions

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Miners and other workers rejected a union call for strike action against the government. But OVER three months after taking office, Bolivia's first elected government in over 18 years is still fighting to achieve the stability which is the objective of President Siles Zuazo's war economy"

Despite the tough economic package announced by the President at the beginning of November, the Bolivian economy remains on the verge of collapse, lurching from crisis to crisis under the burden of a massive external debt and with little sign of the recovery hoped for by the leftist government.

In October Dr Siles Zuazo's ~ administration was sworn in after a wave of strikes and demonstrations had forced the two month-old military junta of General Guido Vildoso to stand down, bringing to an end 26 months of a succession of some of the most corrupt and incompetent military regimes in • the country's history.

Debt

Since July 1980 - when General Luis Garcia Meza seized power, preventing the civilian government elected the previous month from taking office -Bolivia's foreign debt, according to latest figures, has grown to close on four billion dollars while GNP and the performance of the public sector have falien alarmingly.

Inflation, virtually zero in 1979, is now up to 40 per cent, while the balance of payments deficit has reached near two million dollars. This year's budget deficit is expected to be around 15% of GNP and bankruptcies and unemployment have risen dramatically.

Yet, despite inheriting virtually empty state coffers, the new government must find 135 million dollars to satisty a consortium of some 128 international commercial banks who are threatening to request that western governments slap a trade embargo on all, Bolivian goods unless the debt is met in full by April.

Priority

Since taking power, Silez Zuazo has made it clear that his first priority is to tackle the external debt - despite pressure from the left wing of his union federation, the COB, Siles UDRAM INP for how long? to default.

The President argues that such a course would prove disastrous since Bolivia's long term future depends on the outside world as a market for its primary goods (especially tin exports) and for loans to finance badly needed expansion programmes for its decaying export earning HILLINNA SANI indústries and to invest in new industry.

Siles Zuazo recently told supporters that some 80% of the country's export earnings in 1983 have been earmarked to service and repay outstanding debts. Moreover, until the present crisis has been overcome, he says, Bolivia's 4.5 million inhabitants will have to put up with at least three years of austerity and belt tightening.

This tough line, extended to cover incomes, was the source of a major boost for the government when, at the start of December, it refused to budge from its offer of a 30% increase in the minimum wage despite threats from the COB to call a nationwide stoppage in support of a 150% rise.

In the end the country's two million strong workforce rejected their union leaders' recommendations to strike, accepting the President's argument that, with foreign debt repayments, a large public sector wage bill and balance of payments deficit to be met, such an increase was untenable unless it was to result in the same kind of inflation that has been responsible for an increase of up to 1,000% in the price of many everyday commodities over the past nine months.

Lack

Indeed, the UDP:s lack of an overall parlamentary majority appears to have been more than made up for by the widespread personal popularity of Siles Zuazo not to mention fears that, if the present government falls it will be replaced by, at best, a right wing coalition and, at worst, another military regime.

By far the biggest disappointment so far for the government has be n the lack of badly eeded foreign loans and ai from friendly countries credit agencies.

Hard Despite an encouraging initial response firm offers of hard cash have been conspicuous by their absence. Only Argentina has so far come up with an offer of ready money available for debt repayments. All other offers to date have been tied to specific areas or goods or development projects - such as 50 million dollars from Brazil for oil exploration and 10 million from the US in the form of wheat.

Without the necessary foreign aid the government's prospects are indeed gloomy. Many believe that the foreign bankers, encouraged by certain western governments, are ready to let Bolivia go under as an example to discourage other far larger debtors such as Argentina or Mexico from deciding to default.

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own party and from the country's powerful trade