Bolivia has been a major producer of coca leaf, the main ingredient in the production of cocaine. Opposition to forced eradication policies led to the rise of coca growers' trade unions and an associated political party, the Movement Toward Socialism (MAS). Political and Economic Conditions

Since taking power in January 2006, Evo Morales and his leftist Movement Toward Socialism (MAS) party have presided over a period of relative political stability and economic expansion. President Morales has expanded state control over the economy by renegotiating contracts with some companies to increase the taxes and royalties they pay, and by expropriating other companies. These policies have angered foreign investors, but have brought the government substantial revenue. Buoyed by record prices for its gas and mineral exports, economic growth in Bolivia has averaged 4.5% per year during the Morales Administration, according to the World Bank. U.S. Relations

From the late 1980s through the mid-2000s, U.S. relations with Bolivia centered largely on controlling the production of coca leaf and coca paste, much of which was usually shipped to Colombia to be processed into cocaine. In support of Bolivia's counternarcotics efforts, the United States provided significant interdiction and alternative development assistance, and forgave all of Bolivia's debt for development assistance projects and most of the debt for food assistance. The U.S. government responded by expelling Bolivia's Ambassador to the United States. That decision was closely followed by the suspension of Bolivia's trade preferences under the Andean Trade Preferences Act (ATPA) for a lack of counternarcotics cooperation. The Peace Corps also suspended operations in Bolivia that fall due to "growing instability" in the country and has since closed the program. President Morales then said in February 2013 that he no longer had an interest in exchanging Ambassadors. In May 2013, President Morales asked the U.S. Agency for International Development (USAID) to end its operations in Bolivia after 52 years in the country. As the United States criticized Bolivia's handling of the Ostreicher case, Bolivia protested the U.S. government's 2012 denial of its request for former President Gonzalo Sánchez de Lozada, currently living in the United States, to be extradited to Bolivia to stand trial for civilian deaths that occurred when he ordered government security forces to respond to violent civilian protests in the fall of 2003. U.S. Foreign Aid

When Evo Morales took office, Bolivia was among the top recipients of U.S. aid in Latin America. Although other donors, such as the European Union (EU), support development assistance, health, and alternative development programs in Bolivia, they have not traditionally provided the same types of surveillance and interdiction programs that the U.S. government supported through the State Department and DEA. From 1991 through 2008, Bolivia received U.S. trade preferences under the Andean Trade Preference Act (ATPA; Title II of P.L. 102-182 ).
In the last decade, Bolivia has transformed from a country plagued by political volatility and economic instability that was closely aligned with the United States to a relatively stable country with a growing economy that now has strained relations with the U.S. government. Located in the Andean region of South America, Bolivia, like Peru and Colombia, has been a major producer of coca leaf, the main ingredient in the production of cocaine. Since 2006, Bolivia has enjoyed a period of relative political stability and steady economic growth during the two presidential terms of populist President Evo Morales, the country's first indigenous leader and head of the country's coca growers' union. Buoyed by a booming natural gas industry, Morales and his party, the leftist Movement Toward Socialism (MAS) party, have decriminalized coca cultivation, increased state control over the economy, expanded social programs, and enacted a new constitution favoring the rights of indigenous peoples.
U.S. interest in Bolivia has traditionally centered on counternarcotics, trade, and development matters. From the late 1980s through the mid-2000s, successive Bolivian governments, with financial and technical assistance from the United States, tried various strategies to combat illicit coca production, including forced eradication. In support of Bolivia's counternarcotics efforts, the United States has provided significant interdiction and alternative development assistance, and has forgiven all of Bolivia's debt for development assistance projects and most of the debt for food assistance. From 1991 through November 2008, Bolivia also received U.S. trade preferences in exchange for its counternarcotics cooperation under the Andean Trade Preference Act (ATPA; Title II of P.L. 102-182). Bolivia also received U.S. development, democracy, and health assistance provided by the U.S. Agency for International Development (USAID) from 1961 through 2013.
Although President Morales' policies have proven popular with his supporters, they have worried foreign investors and strained U.S. relations, particularly in the realm of drug control. With an antagonistic foreign policy closely aligned with that of Venezuela, Bolivian-U.S. relations have been more tense during the Morales Administrations than they have been in decades. Despite significant strains in the bilateral relationship, the two countries have not formally severed diplomatic or consular relations, even though they have not exchanged Ambassadors since President Morales expelled the U.S. Ambassador in the fall of 2008. Due to actions taken by the Morales government (including the 2013 expulsion of USAID from the country) and a lack of counterdrug cooperation with the United States, Bolivia has lost U.S. trade preferences and no longer receives U.S. foreign aid.
This report provides background information on Bolivia, an analysis of its current political and economic situation, and an assessment of some key issues in Bolivian-U.S. relations.