Morales with Lula in January 2006

The 2006 inauguration of Evo Morales as president greatly increased international interest in Bolivia, both in Latin America and further afield. Morales has sought to build on this to establish ties with Europe and Asia. In so doing, he is trying to reduce the country's traditional dependence on the United States. One of his first acts as president-elect was to embark on a lengthy trip abroad, on which he attracted more media attention than any previous Bolivian president. As well as Cuba and Venezuela (now close allies), he visited Madrid, Paris, Brussels, Beijing and Pretoria, before returning to Bolivia via Brasilia. Concerns have nonetheless been raised as to the overall quality and consistency of the administration's early foreign policy initiatives.

United States

Bolivia's relationship with Washington has historically oscillated between mutual hostility /suspicion and accommodation. In the years after the 1952 Revolution, Bolivia was seen as a potential Communist threat in the Americas. Under the right wing military governments of the 1960s and 1970s, that threat was assuaged somewhat. By the 1980s and 1990s the coca trade was the main issue in bilateral relations. Bolivia came closest to fulfilling Washington's wishes over coca under the Banzer government of 1997-2001, when La Paz sought to implement a 'zero-coca' policy. The US embassy in La Paz, one of its largest in the Americas, has enjoyed a close relation with successive governments, despite their failure to eradicate coca cultivation. In 2002 Manuel Rocha, then US ambassador in La Paz, made no secret of his concerns about Evo Morales' presidential candidature. On the eve of polling day he openly advised Bolivians not to vote for Morales. His intervention was however counterproductive, apparently helping to swell support for Morales, who only narrowly missed topping the poll.

Relations have accordingly become tense since the election of Evo Morales and the MAS government in 2005. The United States sees Morales as 'soft' on coca. It also dislikes the links that he has developed between Bolivia, Cuba and Venezuela. The US State Department has nonetheless pursued a cautious policy, apparently not wishing to be perceived as overly interventionist. The Morales administration, meanwhile, distrusts US intentions in the region. The MAS victory reflected a resurgence in the spirit of Bolivian nationalism, which tends, today as in the past, to rail against perceived US interventionism. The administration has argued against greater trade liberalisation with the United States. It has also asked Washington to extradite former president Gonzalo Sánchez de Lozada (who fled to the United States after being ousted in 2003), on human rights grounds.

Chile

Bolivia's relations with Chile are strained, as they have been for much of the last 130 years, by Bolivia's loss of its maritime provinces as a result of its defeat in the War of the Pacific (1879-83). Bolivia's territorial dispute with Chile has also long been a source of nationalist fervour, not least within the armed forces, who continue to see recovery of the lost coastal territories as a patriotic duty. Full diplomatic relations between the two countries have been severed since 1978.

There have been various attempts to enter into negotiations to give Bolivia a sea corridor, 'salida al mar', in return for Bolivian concessions towards Chile. These efforts have however tended not to find favour in either Bolivia or Peru. (As the disputed northernmost areas of Chile actually belonged to Peru prior to 1879, a 1929 treaty gives Peru an effective right of veto over any further territorial changes). Attempts by Bolivia to court international support for its claims have been rejected by Chile, which argues that the issue is entirely bilateral.

The election of the Morales government in Bolivia, as well as the Bachelet government in Chile from 2006, has led to an improvement in relations. Ricardo Lagos, the outgoing Chilean president, attended Morales' inauguration in January 2006 , becoming the first Chilean president in over 50 years to visit La Paz. A few weeks later, Morales returned the compliment by attending Michelle Bachelet's inauguration. He was met with a warm reception from Chilean leftist and trades union groups, who chanted slogans and unfurled banners in support of Bolivia's ambitions for coastal access. Bolivia's gas wealth and Chile's chronic energy shortage provides an incentive for both sides to work out a lasting solution. Using gas as a weapon to force Chile to give up territory is however poorly received in Chile, while selling gas to Chile without some sort of territorial incentive is a sensitive issue in Bolivia. A good deal of mutual distrust remains, and a certain rapprochement between Chile and Peru after the election of Alan García to the Peruvian presidency in February 2006 meant Bolivia risked being left out in the cold.

Peru

Peru and Bolivia have historically been drawn together in hostility towards Chile, since both came out losers in the three-way War of the Pacific. Peru's unwillingness to concede Pacific coast access to Bolivia along Peru's southern frontier with Chile has nonetheless been an obstacle. In 2002, Peru offered to provide an alternative route for the export of Bolivian gas, allowing Bolivia to bypass the problematic Chilean territories, but the project - involving the building of a pipeline to link the Bolivian department of Tarija with Peru's Pacific coast - has been shelved.

Bolivia and Peru are moreover potential rivals so far as gas sales are concerned: plans by Peru to use gas from the Camisea reserves in the Peruvian department of Cuzco to supply Chile and Argentina were seen in La Paz as an unfriendly move. Were Peru to try to build a pipeline directly to Chile across Bolivia's potential salida al mar , this would also further complicate territorial claims. The open sympathy expressed by Morales for losing candidate Ollanta Humala in the 2006 Peruvian presidential elections did little to improve relations with eventual winner Alan García. During his first months in office, García made clear that he attached great importance to improving relations between Peru and Chile. Any such rapprochement could lead to Bolivia's further isolation.

Brazil

Brazil has traditionally vied with Argentina for influence over Bolivian politics. It is a key trading partner of Bolivia, representing its most important source of imports as well as its most important export market (mainly natural gas). Following the privatisation of the hydrocarbons industry in the mid-1990s, Brazil also became by far the most important source of foreign investment in Bolivia, with Brazilian state hydrocarbons company Petrobras becoming the major player in the Bolivian gas industry.

Bolivia's decision to renationalise its hydrocarbons industry in May 2006, and to charge Brazil substantially more for the gas it buys, led to a deterioration in bilateral relations. Although Brazil is seeking to reduce its dependency on imported gas, Bolivia remains the main provider of gas to Sao Paulo and other states in southern Brazil. This effectively gives Bolivia some leverage, although Bolivia needs Brazil just as much as vice-versa. Brazil's President Lula sought to defuse tensions between his government and that of Morales in the aftermath of the May nationalisations, but having appeared to cave in to Bolivian pressure did nothing to help boost Lula's own re-election campaign in the latter part of 2006.

Argentina

Argentina has traditionally exerted considerable influence over Bolivian politics, with Argentina's own right-wing military dictatorship of 1976-1983 having been behind various coup attempts in Bolivia in the 1970s. Until Argentina discovered its own natural gas sources in the 1980s, Argentina was the only market for Bolivian gas. Argentina remains an important trading partner, and more than a million Bolivians reside, legally or otherwise, in Buenos Aires and other Argentine cities. Argentina's rapid recovery after the economic collapse of 2002 has led to renewed interest in Bolivian gas, because the country is facing a serious energy shortfall.

Agreements were signed in 2006 to build a new pipeline between the two countries to facilitate gas supplies. Argentina has agreed in principle to raise both the volumes of its purchases and the price it is prepared to pay. For Bolivia, the Argentine market provides a welcome alternative to dependence on Brazil. Personal relations between Morales and Argentine President Nestor Kirchner have been cordial so-far. Politically, both men favour greater state involvement in the economy and both are suspicious of Washington.

Venezuela

Relations between Venezuela and Bolivia have not tended to be particularly close, even though both countries are founder members of the Andean Community. Since the election of Evo Morales, however, the importance of Caracas for La Paz has grown dramatically. Morales, along with Cuba's Fidel Castro, has emerged as one of Venezuelan President Hugo Chávez's closest confidants. Venezuela is actively using its diplomatic and financial muscle to cultivate the friendship of Bolivia. Venezuelan aid to Bolivia has increased substantially, with Caracas offering important technical support to the renationalised Bolivian oil company, Yacimientos Petroliferos Fiscales Bolivianos (YPFB). Venezuela has also offered Bolivia military aid to bolster its defences, a controversial move which has been viewed as an attempt by Venezuela to stake out a military presence beyond its own borders. Chávez has made frequent visits to Bolivia since the MAS were elected, as has Morales to Caracas.