Bolivia is effectively hitting the "reset" button. If you haven't been following the chaos in La Paz lately, things just took a turn that basically nobody saw coming a year ago. After two decades of solid socialist rule, the country is currently under a "social and energy emergency" declared by a center-right president, Rodrigo Paz, who took office just two months ago. Honestly, it’s a mess.
Gasoline is more expensive than it’s ever been. People are furious. But in a wild twist of events this week, the government actually blinked.
The Gasolinazo that almost broke the country
The biggest news in Bolivia today isn't just that prices are high; it's that the government actually backed down on a massive austerity package. Last week, the country was paralyzed. We’re talking six days of total shutdown. Roadblocks everywhere. Miners, teachers, and farmers—the very people who used to be the backbone of the previous government—were out in the streets with dynamite and placards.
They were protesting what locals call the Gasolinazo.
For twenty years, Bolivia subsidized fuel. It was cheap. Like, ridiculously cheap. But that came at a cost that eventually drained the Central Bank of every dollar it had. President Paz tried to rip the Band-Aid off by decreeing an end to those subsidies in December. Prices for gasoline and diesel shot up by 86% to 162% overnight. You can imagine how that went over.
Why the government folded
On Tuesday, Paz sat down with the unions and basically said, "Okay, we hear you." He annulled the most controversial parts of his decree. The roadblocks are gone for now, but the "energy emergency" remains. Why? Because even though the protests stopped, the dollars are still missing.
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The state is still bleeding roughly $10 million a day to keep fuel prices manageable. It’s a classic "damned if you do, damned if you don't" situation. If they cut the subsidy, the economy explodes from inflation. If they keep it, the government goes bankrupt.
News in Bolivia today: The lithium dream (and the Russia-China problem)
While everyone is looking at the gas stations, the real long-term drama is happening in the salt flats. Bolivia sits on 23 million metric tons of lithium. That’s more than anywhere else on Earth. But here’s the kicker: they produce less than 1% of the world's supply.
Chile, right next door, is pumping out 300,000 tons. Bolivia? Barely 3,500.
Paz is trying to pivot. The previous administration under Luis Arce—who, by the way, was arrested on corruption charges in December—had signed massive deals with Russian and Chinese firms. But today, the news in Bolivia suggests those deals are on thin ice. Russia’s ambassador, Dmitry Verchenko, recently admitted that the new government is "revising" the terms.
Basically, the new administration wants to open the doors to Washington and private investors. They want to change the constitution to allow private companies to own the extraction process.
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The lithium bottleneck
- Infrastructure: The salt flats lack the roads and power grids needed for mass export.
- Technology: "Direct Lithium Extraction" (DLE) is the goal, but it’s water-intensive and unproven at this scale.
- Politics: Local communities in Potosí are terrified their water will vanish to feed the world's EV batteries.
What happened to Evo Morales and Luis Arce?
It’s weird to think that the two most powerful men in Bolivia for the last 20 years are currently in legal limbo.
Luis Arce, the former president who stepped down after choosing not to run for re-election, was arrested on December 11. He’s currently sitting in a cell facing a five-month pretrial detention. The charges? Corruption involving indigenous project funds from back when he was Finance Minister.
Then there’s Evo Morales. The guy who basically invented modern Bolivia is currently a fugitive in his own country. He’s been hiding out in the Chapare region, surrounded by "security rings" of loyal coca growers. There’s an arrest warrant out for him over some pretty dark allegations of statutory rape and human trafficking from 2016. He says it’s all a political hit job.
Regardless of whether you believe him, his influence is cratering. The MAS party, which once felt invincible, has basically eaten itself alive.
Practical insights for the week ahead
If you’re looking at Bolivia right now—whether for travel, business, or just to understand the region—keep these things in mind:
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1. Travel is still dicey. Even though the roadblocks were lifted this week, the Argentine Foreign Ministry and other embassies are still telling people to avoid overland travel to La Paz. Stick to flights if you can.
2. The dollar shortage is real. Don't expect to find USD in local ATMs. The "parallel market" rate for dollars is nearly double the official rate. If you're heading there, bring cash—specifically crisp, new $100 bills.
3. Watch the IDB loans. The Inter-American Development Bank just promised $4.5 billion in aid for 2026. If that money doesn't hit the streets soon, expect the protests to return by February.
The news in Bolivia today is a story of a country trying to transition from a state-run socialist model to a market-driven one without causing a total civil war. It’s a high-wire act. One week the government looks strong, the next they’re backing down to miners in the streets.
Keep an eye on the parliament this month. They are currently debating the new lithium legislation that could finally let Tesla, BYD, or Rio Tinto into the Uyuni salt flats. If that passes, the economic trajectory of the entire Andes region changes overnight.
Next steps for you: Monitor the official gazette for updates on Decree 5503's replacement. If the new wage increases don't offset the fuel costs by the end of the month, the unions have already threatened a "total strike" for February.