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During Gonzalo Sánchez de Lozada’s first term (1993–97), his Revolutionary Nationalist Movement (mnr) government undertook a series of legal, political, and economic measures that continued to roll back the reforms introduced by the mnr during the National Revolution of 1952. While his political and cultural policies were ambitious, Sánchez de Lozada was most intent on ending state ownership of key sectors of the economy. International financial institutions were already pushing this agenda, yet Sánchez de Lozada pursued it through a novel scheme known as “capitalization.” Rather than simply selling off state-owned industries to the highest bidder, the Bolivian privatization process required foreign companies to invest in them. In exchange, they received up to a 50 percent ownership stake and full control of management. The remaining 50 percent was meant to be transferred to the Bolivian people, who supposedly would gain financially through pensions and other economic and social benefits.

The admiring Wall Street Journal article included here, which appeared on 22 September 1995, was typical of the flattering response to Sánchez de Lozada’s creative neoliberal project among the international business, banking, development, and political interests that comprised the Washington Consensus. Nevertheless, the resulting influx of foreign capital did not generate economic growth or employment, and “capitalization” became a symbol of the failed promises of neoliberalism that would come to haunt Sánchez de Lozada during his much more turbulent and abbreviated second term in offce (2002–3).

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