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In Bolivia, Natural Gas Drives Renewed Engagement With U.S.

2 MINS READFeb 26, 2015 | 18:22 GMT
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In Bolivia, Natural Gas Drives Renewed Engagement With U.S.

Relations between the United States and Bolivia, strained since 2008, may soon improve. La Paz recently expressed an interest in sharing information with the DEA to combat the country's drug traffickers. Such cooperation could provide the impetus both countries need to improve bilateral relations on a much wider scale — improvements that would benefit Bolivia economically.

A better relationship with the United States could help boost Bolivia's economy at a troublesome time. The Morales administration has presided over the country during a natural gas boom, and the revenue generated from sales affords the president widespread political support. But natural gas now accounts for roughly 45 percent of Bolivian exports by value, the dangers of which are not lost on the government. Historically, Bolivia has relied heavily on one commodity at a time — once it was silver, then it was tin — and when the price of that commodity fell, the Bolivian economy suffered accordingly. Now, in light of the drop in oil prices, to which the value of Bolivian natural gas is tied, La Paz is eager to avoid repeating that historical scenario.

It is in this context that improved relations with the United States could help. When Morales broke ties with the DEA in 2008, Bolivia lost its preferential trade status with the United States under the Andean Trade Promotion and Drug Eradication Act, or ATPDEA, resulting in trade losses in 2009 — though natural gas production helped to offset those losses. By ingratiating itself with the United States once more, Bolivia could secure improved trade terms and improve its domestic business climate. A better rapport with Washington could also lead to uninterrupted flows of foreign direct investment, which the country will sorely need amid unfavorable energy prices.

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