The Royal College of Defence Studies

RCDS 2009 CONTEMPORARY STRATEGIC ISSUES

Should Chile Reverse History And Provide Bolivia Sovereign Access To The Sea? Assess The Risks And Benefits To Bolivia, Chile And Peru

Eric Fraser Sylvester Minja Tony Arber

October 2009

The opinions expressed in this paper are the personal views of the author(s) and do not represent those of their employing authorities Royal College of Defence Studies, 2009

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RCDS 2009 CONTEMPORARY STRATEGIC ISSUES

Should Chile Reverse History And Provide Bolivia Sovereign Access To The Sea? Assess The Risks And Benefits To Bolivia, Chile And Peru

KEY JUDGEMENTS Chile should not provide Bolivia with sovereign access to the sea but must seek a diplomatic/political solution based on the need for improved trade and economic opportunities for the sub-region. However, Bolivia will continue to seek access to the sea in order to reinforce its legacy as a maritime nation and as a means to develop its economy unilaterally. Chile will not give up sovereign territory to Bolivia as part of any solution. Peru is a major player with the ability to veto bilateral agreements between Chile and Bolivia over access to the Pacific where land occupied by Peru prior to the War of the Pacific is also involved. None of the countries is likely to resort to armed conflict as a means of resolving this disagreement.

DISCUSSION 1. The relationship between Chile and Bolivia is strained by Bolivias loss of maritime provinces following defeat (with Peru) by Chile in the War of the Pacific in 1879-1883. The territorial dispute over access to the sea has long been a source of nationalist fervour, particularly in the Bolivian armed forces, where reclaiming their maritime heritage is seen as a patriotic duty. From Chiles perspective, there is no dispute. A 1904 Treaty, ratified by both countries, legalised the annexation of the nitrate-rich coastal territory of Atacama as far south as Antofagasta (Fig 1). 2. Full diplomatic relations between the two countries have been suspended since 1978 and are now only at a consular level. However, relations at Presidential level appear to be friendlier of late. President Morales of Bolivia has repeatedly announced his intention of improving relations and re-establishing diplomatic relations with Chile (and President Bachelet) but without renouncing his countrys claim to access to the Pacific. Clearly, in Bolivia, the loss of territory still rankles and is a serious political, economic and social issue. 3. This project started with an examination of bilateral relationships between each of the main actors in the immediate area, followed by a brief review of the regional implications. From this it was possible to conduct a more detailed

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SWOT analysis that identified the benefits and risks to Peru, Chile and Bolivia. The emerging findings were discussed, tested and refined during a number of sessions during the recent RCDS Study Tour to South America, in particular in discussion with various Chilean officials and non-government experts, Peruvian diplomats and a Bolivian academic.

Fig 1 - Borders of Chile, Bolivia and Peru before and after the war. 4. Internal Politics. This is a hugely emotive issue for all three countries with historical legacy and national pride being major factors. No government in Chile can consider relinquishing sovereign territory to Bolivia without risk of serious electoral defeat and internal dissension. Chileans believe they have the legal and moral high ground and will not accede to Bolivias more strident demands. In Bolivia this issue has become a cause celebre for the populist President Morales. His most recent election promise was to find a solution and satisfy the nationalists demand to re-establish the countrys maritime heritage and trade links. Some see this policy as a key element in support of the Bolivar ideology of freedom from international dependency and anti-imperialism. Others believe it to be a unifying issue against internal demands for secession. Peru, on the other hand, is caught between the need to support its old ally, Bolivia, and its interdependency with Chile for trade and the movement of labour. President Garcia leans towards the latter but the radical-left opposition, supported by Morales and Venezuelan president, Hugo Chavez, have significant electoral support, particularly amongst the poor. Under a separate 1929 Treaty, Peru has the right to veto any agreement made between Bolivia and Chile where it concerns land previously part of Peru and will not be slow to exercise it according to its diplomats. It will also insist on resolution of their own maritime border dispute with Chile.

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5. International Politics. This issue, albeit certainly one of a sub-regional nature, spans the ideological divide between the Moderate and Radical Left in Latin America. Chile and Peru have accepted a greater degree of neo-liberalism while Bolivia, firmly within the Venezuelan and Cuban Bolivarian movement with their emphasis on state ownership and social development, resent the influence of the US (Monroe Doctrine) and the Washington Consensus. Fortunately, as currently aligned, there is unlikely to be any escalation that involves military force. Chile is, by far, the strongest country of the three but will only react if provoked. Bolivia is unlikely to do this given its inherent military weakness. 6. Trade. Chile has an economy built on foreign trade and has most to lose if it is seen to be flouting international norms and legal judgements. It will accept the International Courts ruling on its maritime dispute with Peru and will negotiate with Bolivia in good faith. Moreover, it needs hydrocarbons to fuel an expanding economy and sees many advantages from establishing a ready source of gas from across the border in Bolivia. However, popular opinion in Bolivia makes any trade highly unlikely with a 2004 referendum confirming that 90% of the population were still against supplying gas to Chile. It was evident that President Morales will be very hesitant to go against this populist view it serves him well and will forego any economic benefit as long as it reinforces his electoral position. 7. More broadly, Bolivia is a relatively poor, under-developed and landlocked country but it is rich in natural resources. According to its government it would see a 1% per annum increase in GDP if it had direct access to the Pacific Ocean, statistics that must be questioned given the countrys current inability to exploit existing export trade routes through Peru and its chronic lack of Foreign Direct Investment. Peru, on the other hand, is making good economic progress based on trade with more distant partners. It will be quick to veto any bilateral agreement between Bolivia and Chile, as they did in the 1970s, if it finds itself at a disadvantage and will be particularly sensitive to possible loss of Bolivian trade. 8. All three nations would benefit from increased trade and since each is an associate member of MERCOSUR 1 - with its stated purpose of promoting free trade and the fluid movement of goods, people, and currency this would seem a promising vehicle for progress. Unfortunately, MERCOSUR is not a priority for Chile and bilateral trade negotiations are more likely to achieve success. 9. Resources. Bolivia, by gaining access to the sea, contend that they will be able to export their abundant resources of oil, gas, tin, lithium and agricultural products more easily and efficiently. President Morales efforts to reduce inequality, and his subsequent chances of re-election, will increasingly depend on realising benefits from these nationalised industries such that he can fund
1

Mercado Comn del Sur or Southern Common Market

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social programmes amongst the poor. Chiles ambition is to secure gas supplies that can underpin economic development and supply its critical extractive industries such as copper and iron ore. Alternative energy sources such as using imported diesel, developing nuclear and hydro power, are proving either difficult and/or expensive, making Bolivian gas a logical and economically attractive option. The maritime dispute between Chile and Peru also involves the exploitation of natural resources and is closely linked with Bolivias claim for sea access. The case has been referred to the International Court in The Hague by Peru who stand to gain significant fishing grounds and potential oil resources if found in their favour. Chile has agreed to abide by any ruling. 10. Culture and Ethnicity. Although both Chile and Bolivia are predominantly Spanish-speaking Catholic countries there are considerable differences. Indigenous peoples make up a large constituency in the latter where the President is an Aymaran Indian whereas Chile is more European in outlook, custom and attitudes. Nationalism plays a major part in both but has a more immediate and potentially destabilising impact in Bolivia where politicians traditionally harness and rely upon populist support. Peru, like Bolivia, is more multiethnic with a vocal opposition who are aligned with indigenous minorities and the poor. Despite the cultural similarities between Peru and Bolivia these are secondary to the political and economic ties between Peru and Chile that currently exist. If the government under Garcia loses power and moves to the left or closer to Chavez, this relationship could well change. POSSIBLE OUTCOMES 11. Do Nothing. This offers little benefit to anyone and blocks political, diplomatic and economic progress. In Bolivia, failure to deliver a solution will put Morales in a difficult position with his electorate and could have serious political repercussions. On the other hand, Bachelet will not regard this as such an immediate problem. Doubtless Chile can benefit from the sale of Bolivian gas but there are alternatives - albeit more expensive and difficult to develop and she may be content to play a longer game. Chile has the upper hand and this may well be the most likely outcome in the short- to medium-term. 12. Corridor to the Sea. Granting Bolivia exclusive sovereignty to land that might provide access to the sea is entirely unacceptable to Chile but would completely satisfy Bolivias ambition to be a maritime nation. Any land identified in such a deal would have originally belonged to Peru and therefore, in accordance with the 1929 Treaty, Peru will exercise a veto over the settlement. This option is highly unlikely. 13. Joint Sovereignty. A tripartite deal between Chile, Bolivia and Peru offers a practical solution over joint sovereignty and was attempted (and nearly succeeded) in 1978. This foundered on Perus long-standing objections (see

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above) but still may offer a way out of the impasse. This is only likely if combined with a negotiated trade settlement and significant compromise on all sides. 14. Negotiated Settlement. A settlement that allows Bolivian access to the sea for trading purposes through a free-port - perhaps Arica - is a possible basis for agreement. This falls short of Bolivian ambitions for a Pacific fleet and sovereign access to the sea but has potential if a deal could be agreed similar to that negotiated by the Russians for their Black Sea fleet. This is likely to be more acceptable to Chile if linked to a trade deal over natural gas/oil and less of a problem for Peru than options 2 or 3. CONCLUSION 15. This issue between Chile and Bolivia needs to find a solution that is acceptable to all parties, including Peru. Our assessment is that none of the countries is likely to resort to violence and all three can benefit economically from a negotiated outcome. However, any hope of resolution is hamstrung by the posturing of politicians at all levels, the historical legacy and long-held nationalist views in each country and an unwillingness to enter serious discussions on a trilateral basis. Other countries in the region appear disinterested and consider it a local issue. RECOMMENDATIONS 16. It is recommended that a. All three countries must be included in any negotiations.

b. Bolivia should be encouraged to look at the wider economic benefits of export trade routes through Chile and Peru rather than the dubious military and nationalistic benefits of having a maritime presence in the Pacific. c. Chile can gain significant economic benefit from a more stable relationship with its neighbours and a guaranteed supply of gas from Bolivia. It should be encouraged to allow Bolivian access to the Pacific without granting sovereignty. d. Peru has to be part of the solution and discouraged from playing a spoiling role. Economic benefits should be highlighted.

E FRASER Commodore, UK Royal Navy

S MINJA Colonel, Tanzanian Army

A ARBER UK Civil Service

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