Bolivia's La Paz Sees Escalating Tensions Amidst Protests and Economic Crisis

Highways have been blocked for weeks, and now the situation is growing ever more tense in the city of La Paz, where Bolivia's government is based. Local journalists reported that demonstrators have begun detonating small charges of dynamite to express their discontent.

Protesters have stormed public buildings and set up dozens of blockades, leading to fuel and food shortages and causing hospitals to run out of oxygen cylinders.

Banks have closed as a precaution. Economists warn that the protests are plunging Bolivia ever deeper into crisis. The US State Department has even called the ongoing protests an "attempted coup."

How did Bolivia get to this point?

Bolivia's economy has been struggling for some time. As a result of a weak export sector, the Bolivian state lacks foreign currency, which it urgently needs for fuel imports, among other things.

After almost 20 years of socialist governance with strong state control over economic affairs under Presidents Evo Morales and Luis Arce, Bolivians voted for change in 2025.

Ahead of the runoff election in October, the two right-leaning candidates promised economic reforms and greater market freedoms.

Jorge Quiroga, who enjoyed considerable public support, wanted to put Bolivia back on track with a cash injection from the International Monetary Fund. Yet in the end, center-right lawmaker Rodrigo Paz, who had campaigned on a platform of state reform without outside help, won the presidential election.

While his Christian Democratic PDC party won the necessary parliamentary majority to implement his reforms, experts predicted a challenging presidency before he even took office.

In October, Christina Stolte of the Konrad Adenauer Foundation in La Paz warned that the PDC lacked ideological unity and allegiance to the new president.

"The PDC does not guarantee the newly elected president any coherent party support in parliament, let alone disciplined voting along the lines he has set," she said.

Mounting economic problems

Years of foreign currency shortages and a pronounced import dependency have driven up Bolivia's debt ratio to 95% of gross domestic product.

In late 2025, President Paz abolished petrol subsidies, causing fuel prices to almost double. While this first measure to consolidate the state budget was considered reasonable by observers, it proved painful for ordinary Bolivians. The president's subsidy cut caused a price spike which, in combination with other domestic factors, accelerated inflation.

Prices were driven up further by outside factors like the war in Iran. In April, Bolivian purchasing power had dropped 14% lower than what it was one year earlier, according to government statistics. The country's poor have been especially hard hit.

Who is protesting?

Trade unions have responded to the rising inflation by calling for wage increases and the reinstatement of petrol subsidies. A heterogeneous alliance — comprising farmers, miners, teachers, workers from other sectors and Indigenous groups — soon coalesced around these demands.

The Paz government also repealed a law it had passed just a month earlier that allowed landowners to pledge small plots of land as collateral for bank loans. Protesters had complained that this law could lead to small farmers losing their land to agricultural companies.

While the government was able to defuse this issue by repealing the law, tension increased once demonstrators began calling for Paz to resign. Bolivia's largest trade union, the Central Workers Union (COB), then started organizing mass protests. In response, the public prosecutor's office issued an arrest warrant for COB boss Mario Argollo, accusing him of terrorism and inciting unrest.

Calls to protest, incidentally, were also made by associates of the former President Morales. The incumbent government, meanwhile, has said it believes subversive forces are at play. Without providing any evidence, Economy Minister Jose Gabriel Espinoza called demonstrators "political agents" claiming they had been sent to help "coca farmer" Morales return to power.

What could happen next?

Paz announced a cabinet reshuffle on Wednesday, and said the government would listen more to peoples' demands. In addition, the president said groups involved in the protest would be allowed to have their say in decision-making via an economic and social council.

Yet Paz also made it clear that he would not negotiate with what he called "vandals."

The US, meanwhile, has said it backs the Paz government, condemning all attempts to destabilize it. Neighboring countries Peru, Chile, Argentina and Paraguay as well as four Central American countries have also expressed support.

In a joint statement, the European Union and five European embassies called on all relevant actors in Bolivia to engage in dialogue. One crucial question is whether Paz can hold on to power and to what extent domestic or foreign mediators can create space for compromise. Morales is also seen as having a major influence on whether the situation escalates further.

In the long term, Bolivia will need to resolve its fundamental economic problems to stabilize the overall situation. For the time being, however, Paz is considering taking on new debt. Even before the protests began, his government had negotiated a fresh $200 million (€172.5 million) World Bank loan to offset some of the harshest societal consequences caused by inflation.

A $4.5 billion (€4.1 billion) loan pledged by the Inter-American Development Bank should provide the government even more scope to maneuver. Talks regarding a $3.3 billion International Monetary Fund loans have also been ongoing.

Bolivia's future trajectory will depend on how the government decides to uses these funds and whether protesters will cut it any slack.

This article was originally written in German.