ALL ABOUT EVO

Sunday's election of Evo Morales as president of Bolivia is more bad
news for liberty in Latin America. Winning on an anti-market,
anti-trade and anti-investment platform, Mr. Morales' victory does
not bode well for a nation already impoverished, backward, isolated
and desperately in need of economic growth. The role of Fidel Castro
and his apprentice, Venezuelan President Hugo Chavez, in Bolivian
politics is no less discouraging. There is some concern that Mr.
Morales may be coached to attempt a Chavez redux in Bolivia,
consolidating power in a constitutional assembly set for July and
destroying his political competition under the guise of legality.

Whether what is left of Bolivia's fragile democracy can survive a
Morales presidency with Chavez as the president's patron remains to
be seen. Yet Mr. Morales won a strong, legitimate victory, and to
focus on the Castro influence as the driver behind his win is to
ignore the pillars of fear, anger and resentment on which his
popularity is built.

The fear was registered by a working class tired of the violence
waged by Bolivia's left. Anecdotal evidence suggests that some
Bolivians felt Mr. Morales had the best chance of bringing radicals
- -- many of whom are far more extreme than he is -- under control and
ending repeated roadblocks that have paralyzed the economy in the
last two years.

The anger and resentment were reserved for the traditional political
class and the war on drugs, both of which played crucial roles in
enhancing Mr. Morales' popularity. To trace the Morales ascendance,
travel back in time to the 1997 presidential elections, when the late
Gen. Hugo Banzer placed first, but with only 22% of the vote. Needing
a coalition partner to seal his victory in a congressional vote, he
turned to the left-of-center MIR party led by Jaime Paz Zamora. That
alliance set off alarm bells in Washington because the MIR party
allegedly had drug trafficking ties and the U.S. had already pulled
Mr. Paz Zamora's visa. The party's secretary general, Oscar Eid, was
even jailed in Bolivia in 1996 on charges of links to drug
trafficking. To alleviate gringo concerns and ensure the flow of
foreign aid, Banzer pledged a scorched earth policy toward coca
growers in Bolivia's Chapare region, promising to "wipe out" the
cultivation of the ancient leaf during his tenure. Banzer and his
vice president Jorge Quiroga -- who was the center-right candidate in
the Sunday election -- waged war on coca in the Chapare in 1998 and
1999. Meeting their goal did nothing to alter America's cocaine
habits but it did produce a sharp recession and a migration of poor,
unemployed Bolivians to urban centers.

One place they showed up was Bolivia's third-largest city,
Cochabamba, where in 2000, according to the then-Minister of
Information Ronald MacLean-Abraoa, they were easily mobilized in
rioting against the privatization of water service. The Cochabamba
water privatization was the perfect storm for Bolivia's hard left.
But the center-right handed the Trotskyites the weapons they needed
to kill modernity.

In fact, the "water war," as the tragedy became known, exemplified
many of the misdeeds committed throughout the region during a period
of supposed reform.

The "market" got a black eye, but facts show that experiments in
reform often fell far short of economic liberalism. Instead, special
interests and politicians tried to use "reform" to get rich and carve
out privileges. They endorsed half-measures and ignored the
importance of competition. According to Fredrik Segerfeldt, in "Water
for Sale" (Cato Institute, 2005), Cochabamba water prices, having
been heavily subsidized, went up after the 1999 privatization, but
not by the astronomical amount that enemies of the sale claimed.

One reason bills were higher was that previous shortages were
alleviated so consumption quickly climbed. However, there were other
issues. "The blame to be pinned on the local authorities has been
disregarded," Mr. Segerfeldt writes.

Cochabamba Mayor "Manfred Reyes Villa, known as Bonbon, had
connections with companies that would profit from the construction of
a dam and he insisted against the advice of the World Bank that the
dam be included in the [water] project, which incurred an extra cost
of millions of dollars." Another plan, not requiring a new dam, had
been tried in 1997, but "Bonbon stopped it cold," notes Mr.
Segerfeldt. "The local political situation was a mess of patronage,
populism and vanity projects." Bonbon's dam gave the real "losers" in
the privatization -- Cochabamba's vested interests, including
subsidized upper-income households and commercial actors -- what they
needed to excite the masses. "These groups cynically exploited poor
urban dwellers as an excuse for safeguarding their own interests."
The street violence grew so intense that Banzer had to declare a
state of siege. The government reversed the water privatization but
the damage was done. The "p" word became a bogeyman, despite the
fact, as Mr. Segerfeldt points out, "the poor of Cochabamba are still
paying 10 times as much for their water as the rich, connected
households and continue to indirectly subsidize water consumption of
more well-to-do sector of the community.

Water nowadays is available only four hours a day and no new
households have been connected to the supply network." Lingering
resentment transformed the displaced "cocaleros" into a radicalized
political force, which broadened its agenda against all things
American. Mr. Morales, who built his political career as a leader of
the "cocaleros," is riding that tiger to the presidential palace. Yet
he will not have an easy job of it. The hard left will press him to
nationalize gas reserves and has already promised violence if its
wishes are not granted.

Brazil will try to make him moderate his approach since its Petrobras
is already a big player in the Bolivian gas market.

It cannot be lost on Mr. Morales that most of the country's reserves
are untapped and without foreign investment will remain so. The
Morales economic platform doesn't promise a future to Bolivians, only
revenge. That can't take him far and the opposition will have ample
opportunity to challenge him. Whether it can compete will depend a
lot on whether it has learned from its mistakes of warring against
coca growers to satisfy Uncle Sam and abusing its power to deny
Bolivians equality under the law.