In Bolivia, in order to protest against an 83 per cent hike in the price of petrol and a 73 per cent hike in the price of diesel, bus drivers have started an indefinite strike.
On Sunday the price increases were decreed by Bolivian vice-president Alvaro Garcia, who removed subsidies that kept the cost of fuel artificially low for more than a decade, making it the sharpest price increase since 1991.
In 1991, prices went up 35 per cent, but the increase was followed by six years of stable prices.
The measure was defended by the country’s president, Evo Morales, who said previous subsidies were a “drain on the economy”.
“That money should stay here and the resources we will obtain from this move will be spent on productive local irrigation projects,” Morales said on Monday at a ceremony at the presidential palace.
Facing more and more criticism, Morales vowed the step would “not hurt anyone.”
Socialist president told mayors of towns near La Paz : “The government and the president will never ignore the workers, but we cannot allow the money to continue trickling out through smuggling and corruption.”
But the government was urged to “go back on this measure” by Franklin Duran, the head of the Confederation of Drivers, which represents some 175,000 workers.
“We reject the measure taken by the government, and so we declare an indefinite strike” across Bolivia starting on Monday, Duran said.
Natural gas conversion
Buses and mini-buses that provide public transportation in Bolivia are operated by private companies.
For now only the drivers and a union representing city teachers have voiced opposition to the sudden price hikes.
Early on Monday, some taxis and city buses operated with unregulated higher prices. But to shuttle between the working class neighborhood of El Alto and downtown La Paz, army trucks were drafted into service (photo, from bbcimg.co.uk).
Natural gas for household use and for vehicles is exempted from the price increase.
According to the government, the aim of the measure is to encourage city buses to modify their vehicles to run on natural gas.
Fewer than three per cent of public transportation vehicles have converted so far.
At midday Sunday, residents rushed to fuel stations before the price increase went into effect.
The price increase was necessary because subsidized fuel was being smuggled across Bolivia’s borders to neighboring countries, said vice-president Garcia.
Prices should stabilise by mid-January, said Luis Arce, the finance minister.
But according to economic analyst Gonzalo Chavez, a teacher at Catholic University, gasoline prices are the benchmark for the entire transport sector, and transportation is a benchmark for dozens of other products.
“We already were finishing the year with inflation rising to six per cent and this is going to drive up inflation even further for the next three to four months,” he said.
To Alberto Bonadona, a Catholic University economist, the measure is hitting ordinary Bolivians the hardest : “Not just transport but food prices are going to be going up. Then there will be pressure for wage hikes.”.