The Bolivian ambassador to the UK doesn’t get many requests for media interviews. When financial news outlets in the West write about Latin America, it’s inevitably an article lauding the ‘economic miracle’ of its Brazilian neighbour or a scaremongering editorial about the Red Menace of Hugo Chávez and Venezuela.
But a look at the media elsewhere – specifically emerging markets in East Asia – and the story isn’t so monochrome. In fact, China’s state news agency, Xinhua, covers pretty much every statement made by Bolivian President Evo Morales. Why? It’s quite simple, really: A soft, silver-white metal called Lithium.
The landlocked country of 9 million people, which is the poorest in South America, has the world’s largest reserves of a mineral that could become one of the most sought-after of the century. It’s needed to make the batteries that will power the electric car revolution that many are waiting for, particularly in China.
But in government since 2005 has been the Movimiento al Socialismo, or MAS, and they are pioneering a new development model, which, if successful, could become the norm across the developing world. What may worry multinational mining companies and their backers is that it takes no heed of the International Monetary Fund and World Bank orthodoxy, which has traditionally advocated minimal regulation on FDI.
“I know that they are in some discussions with France, Korea and Japan about working in Bolivia to develop lithium, but we don’t want to be only raw material exporters. We want to create added value in the country,” says Ambassador Maria Beatriz Souviron, as she sits in the Bolivian embassy in Eaton Square.
By value-added Souviron means building factories in Bolivia to manufacture the batteries within the country, rather than sending the metals abroad once they are out of the ground. It’s an idea that has an increasing number of proponents all over the world of emerging markets. In an interview earlier this year Nigeria’s State Commissioner for Agriculture and Natural Resources, Akin Akinnigbagbe, said of his country’s cocoa exports:
“We are equally embarking on what l will call value addition to the business of cocoa. This will take the form of processing it at home before selling into the international market. This will equally assist the farmers to get higher profit unlike in the past, when cocoa beans are exported directly to the international market; with the farmers having no control on the price.”
It could mean a harder time for Western companies. “The policy of my government is to retain sovereignty over the investments made in the country,” says Souviron. “So if the people that want to invest in my country and follow that rule of value-added, then it’s fine. If not we’ll do it ourselves.”
And the challenge to orthodox development models has so far been a success. The Bolivian government have managed to run a current account surplus of 12.1 per cent of GDP in 2007, 11.6 per cent in 2008, and 3.4 per cent in 2009 as the government spent to keep the country from recession. Along with Venezuela and Argentina, Bolivia is the only country in the whole of Latin America and the Caribbean to be forecast a current account surplus by the IMF in 2010.
So far the Morales administration has “inked” a MOU with the South Koreans to develop the lithium after the President was happy with Korea’s “efforts to use clean technology” and its willingness to abide by the new endogenous growth model Bolivia is seeking.