The evolution of resource nationalism: The case of Bolivian lithium

Highlights

• Lithium resources were considered as a platform to foster structural change.

• The lithium policy in Bolivia shifted from a radical to a moderate nationalist strategy.

• The resources underpinning the original radical position of the government eroded over the years.

• The role of sub-national actors related to the resource is crucial for understanding resource nationalism dynamics.

Abstract

This paper analyses the dynamics of the relationship between the state and foreign firms in the context of resource nationalism, focusing specifically on lithium industrialisation policy in Bolivia. The paper examines three particular developments in the context of the country's lithium industrialisation strategy: the pursuit of a radical resource nationalism by the state; the subsequent transition towards a moderate nationalistic approach, more open to collaboration with foreign firms; and the repeal of a joint venture created with a German firm to produce lithium compounds. The analysis underscores the importance of reflecting critically on political processes at the sub-national level, and drawing on this knowledge to inform and guide resource policy. It is concluded from this case study of lithium policy in Bolivia that the evolution of resource nationalism should not only be examined by taking into account financial and technological factors alone. Rather, a multi-scalar frame of analysis which considers the social relations in local territories is needed to appreciate fully the impact of resource nationalism.

Introduction

In January 2006, Evo Morales assumed the presidency of Bolivia. In his opening speech, he shared his strategic view on natural resources:

[…] Natural resources must be transferred back to the Bolivian people, to the Bolivian State. […] it is not about nationalising for the sake of nationalisation, be it natural gas, oil, or mineral or forest resources, we must industrialise them [excerpt from Svampa and Stefanoni (2007), pp. 239-240, own translation].

The words of President Morales laid down the foundations for a resource-based development strategy in Bolivia. Moreover, they reflected the political climate at the time, a period characterised by the return of resource nationalism around the globe (Arbatli, 2018, Vikström, 2020). In the 2000s, largely (though not solely) motivated by the commodity boom, many resource-rich countries changed the ownership structures and regulations of resource-related activities (Singh and Bourgouin, 2013b).

Resource nationalism entails the application of a variety of tools aimed at increasing state control over natural resource wealth at the expense of foreign firms (Pryke, 2017). Its main objectives are to improve the state capacity to capture resource rent and to foster economic development by creating domestic capabilities and production linkages (Morris et al., 2012, Dietsche, 2014). It is not the first time that the world has witnessed a movement in this direction. The history of industrial capitalism could be told from the perspective of the tensions between the state and the market, which in the case of natural resources, has crystallised as cycles of nationalisation and privatisation (Chua, 1995).

This paper aims to broaden understanding of the relations between the state and foreign firms in the context of lithium policy in Bolivia. In 2008, Evo Morales officially launched his ambitious strategy of radical resource nationalism. His government would establish and control a domestic industry to extract and process the brine from the Uyuni salt flat and manufacture lithium compounds and battery cells (Echazú Alvarado, 2015). Private companies were generally excluded from the initiative; they were only permitted to have a minority stake in the production of cathodic materials and batteries.

In 2017 the government relaxed these restrictions. It established a joint venture between the state-owned lithium company, Yacimientos de Litio Bolivianos (YLB), and a German firm to produce lithium hydroxide. The project remained within the boundaries of resource nationalism, aligned with the original goals and the normative tools. But it was clear that the government had somewhat abandoned its radical position and adopted a more moderate strategy toward resource nationalism, open to collaboration with foreign partners. However, in 2019, the government yet again changed its position and repealed the decree that had established the joint-venture.

The timeline of lithium extraction in Bolivia raises a number of questions for research, foremost why did the government initially decide to monopolise the exploitation of resources, despite not having the capabilities and the infrastructure to do so? Moreover, why did it then seek foreign partners that assumed a role that went beyond what it had been originally planned? Finally, and more broadly, how can these developments be explained? The aim of this article, therefore, is to chronicle the evolution of lithium nationalistic strategy in Bolivia.

The article is structured as follows. The next two sections review the literature on resource nationalism and outline the research design, respectively. Section 4 outlines how lithium policy has change in Bolivia over the years, and Section 5 examines the drivers behind the shift from a radical to a more pragmatic approach to resource nationalism. Section 6 reflects critically on the analysis and weighs in on what impacts these developments may have on resource nationalism in Bolivia moving forward.