President Evo Morales announced last week that Bolivia will revoke its contract with Brazilian company OAS to build the controversial highway through the Isiboro-Sécure Indigenous Territory and National Park (TIPNIS), due to construction delays and other irregularities. A $332 million loan committed by Brazil’s national bank to finance 80% of the $415 million project is also in jeopardy.
The cancellation applies to all three segments of the Beni-Cochabamba road, which are covered by a single contract. According to Morales, only 5% of the work on the two sections leading to and from the TIPNIS park has been completed over the past 10 months, while the contract calls for 20% completion. Work on the TIPNIS section has been paralyzed, due to the law passed last October at the behest of anti-highway protesters that declared the reserve “untouchable.” Two other OAS roads under construction in Bolivia, Morales noted, have not been delivered on schedule.
The announcement comes just two weeks ahead of the national march in defense of the TIPNIS, scheduled to begin on April 25, and just a month before the government-sponsored “consulta previa” (prior consultation) on the road, which many TIPNIS communities regard as “ex-post facto” and have pledged to resist. But thus far, the surprising new development has done little to defuse tensions.
For one thing, the government has assured that while it is revoking the contract, it is not cancelling the Beni-Cochabamba highway project, which remains a “strategic necessity. ” Once consent of the affected communities is obtained through the consulta, which the government insists must go forward, alternative construction and financing options will be pursued—though significant delays are anticipated.
For their part, leaders of the TIPNIS and the lowland indigenous federation CIDOB have vowed to continue the march unless the consulta is cancelled, truly returning the road project to “ground zero.”
“Our problem is not with OAS or with any other contractor, but with the road itself, which must not pass through the TIPNIS,” says Fernando Vargas , president of the TIPNIS Subcentral.
“We respect their right to march, but it’s no longer about the highway,” says Vice-President Alvaro García Linera.  “Now they are marching against the consulta, for political ends. It will be the first march against democracy in Bolivian history.”
With respect to the OAS contract, the government insists that Bolivia will benefit economically from the rescission. The $20 million performance bond that Bolivia will claim will more than cover the $16.6 million  that the government says it has paid OAS to date from Bolivian funds. (For unexplained reasons, it appears that none of Brazil’s $332 million loan has yet been disbursed.) And according to Minister of Economy and Finance Luis Arce , in today’s market, alternative financing may be obtainable on terms even better than those committed by Brazil (3.87% interest for 15 years).
Critics claim that Bolivia has actually disbursed as much as $83 million to OAS, and that the outcome of any litigation or international arbitration of the case is far from predictable. Historically, according to former road agency head José Maria Bakovic , foreign construction companies in Bolivia—especially Brazilian ones—have profited more by abandoning roads than by completing them, by negotiating hefty indemnities.
Many believe there are larger political factors behind the decision to revoke the contract. TIPNIS protestors accuse the government of seeking to undermine the march by “legitimizing” the consulta as newly “previa,” while continuing to manipulate the process in order to obtain indigenous community support for the road.
Other sources indicate that the cancellation was actually initiated by Brazil . While Brazilian president Dilma Rousseff  has formally protested the decision as “not constructive,” Brazilian news reports suggest that Brazil demanded a new contract soon after the TIPNIS was designated “untouchable” under Bolivian law. But the parties could not agree on the value of the contract reduction to reflect the excised TIPNIS portion of the route. Concerned with its own potential exposure, the Bolivian government may have decided to take the high ground by asserting its own claims against OAS.
Still another theory is that the contract was cancelled by mutual agreement between Brazil and Bolivia in anticipation of the violent confrontations  that are likely to result if the TIPNIS road is built, which a foreign construction company’s presence would only exacerbate. Under the circumstances, Bolivia might prefer to have the road built by its own state construction company  operating under the aegis of the Armed Forces, created last March with financing from China.
Meanwhile, ahead of the march and the consulta, the pattern of shifting alliances, divisions, and contradictions between and within lowland indigenous communities continues. While the government claims to have signed programmatic agreements  with at least 10 CIDOB affiliates who have agreed to boycott the march, CIDOB leaders say the march will include representatives from at least 10 of its 13 regionals, in some cases taking a position at odds with their directors.
Last week inside the TIPNIS, President Morales personally delivered outboard motors and promised 30 houses and a sports stadium to the community of Gundonovia , where indigenous leaders from 41 TIPNIS commmunities recently convened to authorize the April 25 march. Gundonovian authorities later reaffirmed their community's continued commitment to the march.
Elsewhere in the TIPNIS, a pro-road faction is actively contesting the anti-road leadership of the Sécure Subcentral, representing 16 communities that have been divided on the issue. And, according to the draft protocol  just issued by the government for the consulta, the number of communities to be consulted has now increased from 63 to 67, including 19 in the southern portion of park that are affiliated with the pro-road CONISUR (up from 12-16, based on previous estimates).
For groups opposed to the TIPNIS road, these developments reflect the heavy hand of the government as it seeks to manipulate the outcome of the TIPNIS controversy. According to the on-line periodical Bolpress, government political operatives have drafted a 4-page “Strategy To Undermine Opposition to the Highway ” that offers a detailed tactical blueprint for coopting, dividing, and subverting local communities to gain support for the road. This confirms anti-road protesters' worst suspicions, reinforcing their resolve to fortify the march and resist the consulta.
Despite the intransigence on both sides, the revocation of the OAS contract—and the probable cancellation of its financing—could provide the framework for a paradigm shift in the TIPNIS conflict, if the parties were so inclined. With the highway project effectively suspended, most likely for a significant period of time, this could be a convenient opportunity to return to ground zero, cancel both the consulta and the march, and undertake the necessary feasibility and environmental studies to analyze the true costs and benefits of alternative routes, followed by a legitimate consulta previa. Whether or not the government anticipated this outcome in revoking the construction contract, it would be an extremely fortuitous result.
Read more on the TIPNIS conflict on Emily Achtenberg's blog, Rebel Currents . See also, the January/February 2011 NACLA Report, "Golpistas! Coups and Democracy in the 21st Century ;" the September/October 2010 NACLA Report, "After Recognition: Indigenous Peoples Confront Capitalism ;" or the September/October 2009 NACLA Report, "Political Environments: Development, Dissent, and the New Extraction ." Or subscribe to NACLA .