Bolivia’s Enatex, or how state sovereignty intersects with workers’ interests

LA PAZ − My recent post “Bolivian government authorizes workers to take over closed or abandoned firms” was widely reproduced on other web sites. Its publication in the Socialist Project’s Bullet elicited some valuable comments from a number of readers. One such comment, by Sam Gindin, former assistant to the president of the Canadian Auto Workers, I republished with his agreement as a comment to the article on my blog. I replied to Sam in the Bullet piece (see Comment 4).

In another comment “Adam” corrected my reference, in my reply to Sam, to the textile firm Enatex as “a worker-owned ‘social enterprise’.” As he points out, Enatex is state-owned. My confusion stemmed from the statement of the Minister of Labour, at the press conference announcing the new legislation, that more firms like Enatex could be established under the new decree, which purportedly implements a constitutional provision, Article 54, that recognizes the right of workers to “reactivate” companies that are bankrupt or “closed or abandoned without justification.” In fact, Article 54 arguably allows both forms of ownership, state or worker-owned “communitarian or social enterprises,” although the new government decree specifies that the “social enterprises” it envisages will be “private” but provided with state support. In the case of Enatex, the state appoints the top management.

Federico Fuentes, moderator of the blog “Bolivia Rising,” tells me that to his knowledge “at no time have the workers [at Enatex] demanded it be put under workers control.” This does not mean, however, that the Enatex workers are passive. As “Adam” noted, in July they struck the plant for higher wages and for removal of the firm’s general manager. Management was delaying payment of a promised 20% wage increase. The Minister of Productive Development Teresa Morales Olivera met with the workers, granted the increase, and the workers called off their strike after one day.

Neither “Adam” nor I mentioned this, but it turns out that on October 8, the general secretary of Enatex awarded the company’s workers a 100% wage increase, attributing it to increased production and productivity. (It was not an adjustment for inflation, which is currently running in Bolivia at just over 5% annually.)

This additional information suggests that relations between Bolivia’s government and the labour movement are not always as conflicted as “Adam” argues. But there is actually much more to the Enatex story, as it illustrates some of the basic features of the Morales government’s approach as it attempts to negotiate the demands of the various social movements against an overriding commitment to defend and strengthen the country’s sovereignty — which it considers the necessary foundation for further social and economic advance.

The Enatex story, in brief

The company’s roots go back to the mid-1960s, when Ametex, its forerunner, was established first in Oruro, then in La Paz. It soon became a producer of high-quality clothing, and by the 1990s boasted a production capacity of eight million garments per year. According to a recent study by the economic think-tank Fundación Milenio,

“Ametex was a modern industrial complex, possibly the most modern private business in the country, built with the national pride of producing products for export and with responsibility for more than 3,000 highly skilled workers. It was perhaps one of the few examples of an industrial activity that generated both backward and forward linkages. The big US purchasers — Tommy Hilfiger, Polo, Nautica, Lee and others — were very demanding customers for its quality products….”

Much of the company’s US sales in recent years, however, were achieved under the Andean Trade Promotion and Drug Eradication Act (ATPDEA), US legislation that provided duty-free access to the US market for some 6,000 products from Bolivia, Peru, Ecuador and Colombia. The ATPDEA originated in the early 1990s as part of the US “war on drugs,” and was intended to provide these countries with alternative outlets to the production and export of coca and narcotics.

In 2002, the US government suspended Bolivia’s eligibility under the Act and Ametex lost its competitive advantage, the US tariff increasing its costs for export to that market by about 20%. Government subsidies failed to compensate for the loss of markets in the North. And later increased sales to Venezuela, paid in the ALBA currency, the Sucre, produced complex accounting difficulties.

Although the US Congress periodically renewed Bolivia’s eligibility under the ATPDEA, in 2008 — while Bolivia was battling US-supported separatist efforts by its eastern economic elites — Washington decertified Bolivia from continued participation in the Act, alleging that it had failed to cooperate in counter-narcotics efforts. The Morales government predicted that anywhere from 20,000 to 150,000 jobs of Bolivian workers were potentially in danger, most of them in La Paz and its neighbouring city El Alto.

‘Complementarity rather than competitiveness’

Fast-forward to November 2011. After three years of frozen relations (Bolivia had expelled the US ambassador and the Drug Enforcement Agency in 2008) the two countries signed a “framework agreement” to restore diplomatic ties. As Bolivia-based writer Emily Achtenberg reported, the agreement reaffirmed Bolivia’s commitment to voluntarily eradicate excess coca production through social control mechanisms enforced by the cocalero (coca farmers) union federations. But the document said nothing about restoration of tariff protection under any ATPDEA-like legislation, and the Bolivian government insisted that restoration of trade preferences was not a major goal. Achtenberg reported on November 19, 2011:

“Last week, hundreds of textile workers employed by Ametex, Bolivia’s largest textile company, paralyzed downtown La Paz for several days, demanding that the government work to restore tariff protections within the framework of the new bilateral agreement. The company said it would be forced to slash its 2,800 person workforce by 50% due to losses suffered from the decline in exports. The government arranged a $2 million line of credit from the Bank of ALBA—a practical solution unlikely to be replicable by the majority of Bolivian textile firms, which are small and/or family-based.

“While a return to ATPDEA, with its requirement for annual certification of compliance with coca eradication targets, does not seem feasible or desirable, [Foreign Minister David] Choquehuanca insists that Bolivia won’t sign a free trade agreement with the United States to protect manufacturing at the expense of other sectors. Instead, the government will seek to negotiate a new agreement that recognizes the developmental asymmetries between the two countries, based on principles of complementarity rather than competitiveness.

“Whether these aspirations can be realized remains to be seen. In the meantime, the framework agreement provides a powerful symbol of enforced equality between a weak and a powerful nation. Even Morales’s critics agree that his administration has achieved a more dignified and autonomous position relative to the U.S. than have any prior Bolivian governments.”

As these incidents illustrate, the Bolivian government resisted the Ametex workers’ demands for a renewal of preferential trading agreements with the United States because such arrangements would simply replicate a vulnerable market situation at the risk of renewed US interference in Bolivia’s internal development strategies as well as its own particular excess coca eradication policies. The union’s demands reflected only the immediate concerns of increasing market share for their company’s product and protecting jobs without reference to the broader interests of all Bolivian workers and campesinos in lessening the country’s dependency on US markets and US diplomacy.

This is not an unusual pattern in contemporary Bolivia, where many social movements including trade unions tend to focus on defense of their immediate corporate interests while failing to develop a broader anti-imperialist political perspective that alone, in the longer term, can help lead the country beyond capitalism.

In June 2012 the financially troubled Ametex granted the Bolivian government the industrial installations that now function under the name Enatex, to be administered as a public enterprise. As the recent tangled history of industrial relations within the company illustrates, the Enatex employees have not suffered unduly from the government’s control. And the new decree that I reported in my earlier post, offering another possible course of action for workers, reflects the same thinking on the part of the government. In effect, that workers’ jobs cannot come at the expense of national sovereignty, and pointing to an alternative: take over the factory and run it yourselves, with state assistance if necessary.

My thanks to Federico Fuentes, who knows far more about Bolivia than I do, for his valued comments to me on the exchange in The Bullet.

Bolivia’s Enatex, or how state sovereignty intersects with workers’ interests

LA PAZ − My recent post “Bolivian government authorizes workers to take over closed or abandoned firms” was widely reproduced on other web sites. Its publication in the Socialist Project’s Bullet elicited some valuable comments from a number of readers. One such comment, by Sam Gindin, former assistant to the president of the Canadian Auto Workers, I republished with his agreement as a comment to the article on my blog. I replied to Sam in the Bullet piece (see Comment 4).

In another comment “Adam” corrected my reference, in my reply to Sam, to the textile firm Enatex as “a worker-owned ‘social enterprise’.” As he points out, Enatex is state-owned. My confusion stemmed from the statement of the Minister of Labour, at the press conference announcing the new legislation, that more firms like Enatex could be established under the new decree, which purportedly implements a constitutional provision, Article 54, that recognizes the right of workers to “reactivate” companies that are bankrupt or “closed or abandoned without justification.” In fact, Article 54 arguably allows both forms of ownership, state or worker-owned “communitarian or social enterprises,” although the new government decree specifies that the “social enterprises” it envisages will be “private” but provided with state support. In the case of Enatex, the state appoints the top management.

Federico Fuentes, moderator of the blog “Bolivia Rising,” tells me that to his knowledge “at no time have the workers [at Enatex] demanded it be put under workers control.” This does not mean, however, that the Enatex workers are passive. As “Adam” noted, in July they struck the plant for higher wages and for removal of the firm’s general manager. Management was delaying payment of a promised 20% wage increase. The Minister of Productive Development Teresa Morales Olivera met with the workers, granted the increase, and the workers called off their strike after one day.

Neither “Adam” nor I mentioned this, but it turns out that on October 8, the general secretary of Enatex awarded the company’s workers a 100% wage increase, attributing it to increased production and productivity. (It was not an adjustment for inflation, which is currently running in Bolivia at just over 5% annually.)

This additional information suggests that relations between Bolivia’s government and the labour movement are not always as conflicted as “Adam” argues. But there is actually much more to the Enatex story, as it illustrates some of the basic features of the Morales government’s approach as it attempts to negotiate the demands of the various social movements against an overriding commitment to defend and strengthen the country’s sovereignty — which it considers the necessary foundation for further social and economic advance.

The Enatex story, in brief

The company’s roots go back to the mid-1960s, when Ametex, its forerunner, was established first in Oruro, then in La Paz. It soon became a producer of high-quality clothing, and by the 1990s boasted a production capacity of eight million garments per year. According to a recent study by the economic think-tank Fundación Milenio,

“Ametex was a modern industrial complex, possibly the most modern private business in the country, built with the national pride of producing products for export and with responsibility for more than 3,000 highly skilled workers. It was perhaps one of the few examples of an industrial activity that generated both backward and forward linkages. The big US purchasers — Tommy Hilfiger, Polo, Nautica, Lee and others — were very demanding customers for its quality products….”

Much of the company’s US sales in recent years, however, were achieved under the Andean Trade Promotion and Drug Eradication Act (ATPDEA), US legislation that provided duty-free access to the US market for some 6,000 products from Bolivia, Peru, Ecuador and Colombia. The ATPDEA originated in the early 1990s as part of the US “war on drugs,” and was intended to provide these countries with alternative outlets to the production and export of coca and narcotics.

In 2002, the US government suspended Bolivia’s eligibility under the Act and Ametex lost its competitive advantage, the US tariff increasing its costs for export to that market by about 20%. Government subsidies failed to compensate for the loss of markets in the North. And later increased sales to Venezuela, paid in the ALBA currency, the Sucre, produced complex accounting difficulties.

Although the US Congress periodically renewed Bolivia’s eligibility under the ATPDEA, in 2008 — while Bolivia was battling US-supported separatist efforts by its eastern economic elites — Washington decertified Bolivia from continued participation in the Act, alleging that it had failed to cooperate in counter-narcotics efforts. The Morales government predicted that anywhere from 20,000 to 150,000 jobs of Bolivian workers were potentially in danger, most of them in La Paz and its neighbouring city El Alto.

‘Complementarity rather than competitiveness’

Fast-forward to November 2011. After three years of frozen relations (Bolivia had expelled the US ambassador and the Drug Enforcement Agency in 2008) the two countries signed a “framework agreement” to restore diplomatic ties. As Bolivia-based writer Emily Achtenberg reported, the agreement reaffirmed Bolivia’s commitment to voluntarily eradicate excess coca production through social control mechanisms enforced by the cocalero (coca farmers) union federations. But the document said nothing about restoration of tariff protection under any ATPDEA-like legislation, and the Bolivian government insisted that restoration of trade preferences was not a major goal. Achtenberg reported on November 19, 2011:

“Last week, hundreds of textile workers employed by Ametex, Bolivia’s largest textile company, paralyzed downtown La Paz for several days, demanding that the government work to restore tariff protections within the framework of the new bilateral agreement. The company said it would be forced to slash its 2,800 person workforce by 50% due to losses suffered from the decline in exports. The government arranged a $2 million line of credit from the Bank of ALBA—a practical solution unlikely to be replicable by the majority of Bolivian textile firms, which are small and/or family-based.

“While a return to ATPDEA, with its requirement for annual certification of compliance with coca eradication targets, does not seem feasible or desirable, [Foreign Minister David] Choquehuanca insists that Bolivia won’t sign a free trade agreement with the United States to protect manufacturing at the expense of other sectors. Instead, the government will seek to negotiate a new agreement that recognizes the developmental asymmetries between the two countries, based on principles of complementarity rather than competitiveness.

“Whether these aspirations can be realized remains to be seen. In the meantime, the framework agreement provides a powerful symbol of enforced equality between a weak and a powerful nation. Even Morales’s critics agree that his administration has achieved a more dignified and autonomous position relative to the U.S. than have any prior Bolivian governments.”

As these incidents illustrate, the Bolivian government resisted the Ametex workers’ demands for a renewal of preferential trading agreements with the United States because such arrangements would simply replicate a vulnerable market situation at the risk of renewed US interference in Bolivia’s internal development strategies as well as its own particular excess coca eradication policies. The union’s demands reflected only the immediate concerns of increasing market share for their company’s product and protecting jobs without reference to the broader interests of all Bolivian workers and campesinos in lessening the country’s dependency on US markets and US diplomacy.

This is not an unusual pattern in contemporary Bolivia, where many social movements including trade unions tend to focus on defense of their immediate corporate interests while failing to develop a broader anti-imperialist political perspective that alone, in the longer term, can help lead the country beyond capitalism.

In June 2012 the financially troubled Ametex granted the Bolivian government the industrial installations that now function under the name Enatex, to be administered as a public enterprise. As the recent tangled history of industrial relations within the company illustrates, the Enatex employees have not suffered unduly from the government’s control. And the new decree that I reported in my earlier post, offering another possible course of action for workers, reflects the same thinking on the part of the government. In effect, that workers’ jobs cannot come at the expense of national sovereignty, and pointing to an alternative: take over the factory and run it yourselves, with state assistance if necessary.

My thanks to Federico Fuentes, who knows far more about Bolivia than I do, for his valued comments to me on the exchange in The Bullet.

Bolivian government authorizes workers to take over closed or abandoned firms

LA PAZ − On October 7, President Evo Morales issued a government decree that allows workers to establish “social enterprises” in businesses that are bankrupt, winding up, or unjustifiably closed or abandoned. These enterprises, while private, will be operated by the workers and qualify for government assistance.

Morales issued Supreme Decree 1754 at a ceremony in the presidential palace marking the 62^nd anniversary of the founding of the Confederación General de Trabajadores Fabriles de Bolivia (CGTFB – the General Confederation of Industrial Workers of Bolivia). The Minister of Labour, Daniel Santalla, said the decree was issued pursuant to article 54 of Bolivia’s new Constitution, which states that workers

“in defense of their workplaces and protection of the social interest may, in accordance with the law, reactivate and reorganize firms that are undergoing bankrupty, creditor proceedings or liquidation, or closed or abandoned without justification, and may form communitarian or social enterprises. The state will contribute to the action of the workers.”

In his remarks to the audience of several hundred union members and leaders, President Morales noted that employers often attempt to blackmail workers with threats to shut down when faced with demands for higher wages. “Now, if they threaten you in that way, the firm may as well go bankrupt or close, because you will become the owners. They will be new social enterprises,” he said.

Labour Minister Santalla noted that the constitutional article had already been used to establish some firms, such as Enatex, Instrabol, and Traboltex, and that more such firms could now be set up under the new decree.

Business spokesmen predictably warned that the new provisions would be a disincentive to private investment and risk the viability of companies.

Santalla also said that firms that do not comply with their workforce obligations under the law will lose preferential mechanisms to export their products to state-managed markets. And he cited some recent cases in which the government had intervened in defense of workers victimized for their attempts to form unions. In one such case last month, Burger King, the company was fined 30,000 Bolivianos ($4,300 US), ordered to reinstate the fired workers and to recognize the union.

In the following article Alfredo Rada, Bolivia’s Deputy Minister of Coordination with the Social Movements, draws attention to some important developments within the country’s labour movement and suggests some means by which the unions can be more effectively incorporated within the “process of change” being championed by the government of the MAS-IPSP, the Movement for Socialism – Political Instrument for the Sovereignty of the Peoples. My translation from the Spanish.

-- Richard Fidler

* * *

The working class and the political process in Bolivia

By Alfredo Rada, Rebelión, October 8, 2013

Five months ago, I was in Tarija participating in a forum debating the political process in Bolivia, a process we call the Democratic and Cultural Revolution. One of those attending asked me whether it was possible to deepen this revolution, to make it an economic and social revolution, without the participation of the working class. My immediate response was no, that to consolidate a period of transition to the construction of a new form of communitarian socialism it was absolutely necessary that the workers participate within the revolutionary social bloc that has managed this process of transformations starting in 2000 in the so-called water war, when the overthrow of neoliberalism began.

It was a very relevant question since at that moment, in May of 2013, the mobilizations over the Pensions Act called by the leadership of the Central Obrera Boliviana (COB – Bolivian Workers Central) in opposition to the government of Evo Morales were at their height.[1] Strongly influenced by ultraleft political tendencies organized around the self-described “Partido de los Trabajadores” [PT -- Workers Party], the COB committed a monumental error in mobilizing their ranks with fevered speeches calling for replacing Evo with “another government,” as a leader of the urban teachers in Santa Cruz put it.

This maximalist orientation led the COB inexorably to defeat, since the strike and the mobilizations never met with popular support and in the end the union leadership had to retreat in virtual disarray. The diversion that led to the defeat originated in the characterization that the ultraleft makes of the present government as “bourgeois and pro-imperialist,” a simplistic deceit peculiar to the political currents of an excessively classist and workerist ideological mould that blocks them from understanding the varied nature of the Bolivian social formation, which can only be analyzed in terms that combine nation and class.

The present process of change is made up of a dynamic deployment of social class struggles within capitalism that are combined, sometimes in a contradictory way, with the historic struggle of the indigenous nations against the internal capitalism. That is the dialectical nature of this process, in which the anticapitalist and anticolonialist structural tendencies expressed in the political action of exploited classes and oppressed nations make possible the revolutionary transformation of the economic relations of exploitation, the political relations of exclusion and the cultural relations of oppression. Yet there is always the risk that this course of transformations, as a result of external pressures, internal fragmentation or programmatic concessions, will become exhausted or reversed.

Turning to the conflict with the COB, following its dénouement the government set itself the task of rapidly mending its relationship with the working-class sectors while at the same time the rank and file workers began to settle scores with the ultraleft leaderships within the unions. That is what has just occurred in the Sindicato Mixto de Trabajadores Mineros de Huanuni [Combined Union of the Mining Workers in Huanuni], an emblematic organization because that district, located in the western department of Oruro, has the largest proletarian concentration in the entire country. Its 4,500 miners more than a year ago had elected a union leadership radically opposed to the government. This leadership led in the May strike, the blockade of roads in Caihuasi and the blowing up of a bridge located in that locality. Today, weakened and isolated, that ultraleft that was perched for some time in the Huanuni union has ended up being removed by a mass general meeting of the workers, who also decided to approve the construction of a new political pacto de unidad [unity agreement] with the government of Evo Morales.

No doubt such repositioning within the workers movement will have a major impact on the future of the PT since that political instrument has now lost its backbone; the effects will also be felt in the orientation of the Federación Sindical de Trabajadores Mineros de Bolivia [Federation of Mining Workers of Bolivia] and in the COB itself.

Let’s look at another industrial sector, that of the construction workers. This is one of the fastest growing sources of employment owing to the expansion in public and private investment in new building construction. Everywhere in Bolivia’s cities you can see building and housing complexes under way, and with them the hiring of many workers as casual or piecework labour. But the unions in this sector are weak and dispersed, partly because their leadership tends to be controlled by the big construction companies but also because of the sparse regulation exercised by the state.

This submissiveness of the unions began to change at the most recent national congress of the Confederación Sindical de Trabajadores en Construcción de Bolivia [Bolivian Construction Workers Union Confederation], which met in the city of Santa Cruz. The construction workers elected a new union leadership and set their sights on the mandatory organizing of all the building workers, teachers and assistants, replacing oral agreements with the bosses with collective labour contracts in all construction projects. This will also be a means of overcoming the situation of “informal workers” that is one of the worst legacies of neoliberalism in a country in which less than 20% of the workers are unionized.

Manufacturing workers have been one of the hardest-hit sectors, decimated by the massive layoffs euphemistically labelled “relocations” by Supreme Decree 21060 of August 1985. The manufacturing sector was subsequently subjected for almost two decades to the labour flexibility policies of neoliberalism in order to reduce payloads and increase the profits of capital.

Today the manufacturing sector is undergoing a rapid reorganizing of the unions that has helped to strengthen the Confederación General de Trabajadores Fabriles de Bolivia [General Confederation of Manufacturing Workers of Bolivia]. Yet to be consolidated is the organization of new unions, particularly in the cities of El Alto and Santa Cruz, the two major concentrations of industrial factories in Bolivia.

The importance given to reincorporating workers in the process of transformations around a common programmatic agenda with the Morales government lies not only in the fact that it will help to bring together a strong labour base of support, but also that it will strengthen the anti-imperialist and revolutionary tendencies in the process. The programmatic agenda to which we refer could address the following aspects: (1) a new General Labour Law which, while preserving the advances already in the present law, will grant new rights to the workers; (2) a natonal campaign of massive union organization in all industries that are unorganized; and (3) the strengthening of the social and communitarian sector of the economy, in alliance with the nationalized state sector.

Alfredo Rada is Bolivia’s Deputy Minister of Coordination with the Social Movements.

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[1] The COB demanded an increase in state pensions to 8,000 bolivianos ($1140) annually for miners, and 5,000 bolivianos ($715) for other sectors. The government offered 4,000 and 3,200 bolivianos respectively ($600/$470), saying that any more would risk the financial sustainability of its pension scheme.

The conflict saw miners, teachers and health workers take to the streets of La Paz, while roadblocks and strikes took place across the country. Police were deployed to break up blockades in Cochabamba and La Paz, leading to several arrests and injuries, while workers at the state-run Huanuni mine joined the La Paz protests, paralysing tin production and costing several million dollars.

Other social sectors in Bolivia organised counter-marches in favour of the government. Representatives of the Confederación Sindical Única de Trabajadores Campesinos de Bolivia (CSUTCB), and the Confederación de Mujeres Campesinas y Originarias Bartolina Sisa marched in La Paz to reject the blockades and mobilisations organised by the COB, while coca workers also protested in favour of the government in Cochabamba. At a rally in La Paz, Morales strongly criticised the COB leaders, accusing them of being at the service of imperialism, capitalism and neoliberalism.

After 16 days of protest, COB leaders agreed to lift the strike for 30 days to allow time to analyse a government offer to reform the current pensions system. Union leaders negotiated for several days in La Paz with officials from the labour and finance ministries, during which the union lowered its demand on pensions to 4,900 bolivianos for miners and 3,700 bolivianos ($700 and $530 respectively) for other sectors. It remains to be seen whether permanent settlement can be reached. (Source: “Strikes and blockades organised by trade unions in pension protest,” Bolivia Information Forum, News Briefing May-June 2013)