THE CREATION and SUSTAINABILITY of AUTONOMOUS OVERSIGHT AGENCIES in a POLITICIZED BUREAUCRACY the Case of Bolivia
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TESI DOCTORAL FRAGILE MIRACLES: THE CREATION AND SUSTAINABILITY OF AUTONOMOUS OVERSIGHT AGENCIES IN A POLITICIZED BUREAUCRACY The case of Bolivia Suzanne Dove Director: Dr. Ricard Gomà Universitat Autònoma de Barcelona Facultat de Ciències Polítiques i de l’Administració 2002 ACKNOWLEDGEMENTS While writing this dissertation, I started doing a lot of bicycling as a way to get out of the house and refresh my brain and my body. A lot of people describe writing a dissertation as an endurance test; I think of it as similar to a long-distance bike ride. There is the long process of finding a topic, which in my case was a difficult uphill battle. The excitement of doing original research in the field is incomparable, but it reminds me a little bit of how much I enjoy exploring new routes on my bike, never sure what I will find ahead. The writing process has its ups and downs, like the rolling hills of the countryside where I enjoy biking. Sometimes I wondered when, or indeed if, I would ever complete this project. The will to finish came from within, but it would not have survived without nourishment from several groups of people in different parts of the world. In Barcelona, where I began this long ride, I received the initial push from my dissertation adviser, Ricard Gomà. Ricard agreed to direct my thesis even though I was not able to tell him exactly what I wanted to study. When I moved to Washington, DC in the early stages of my work, Ricard continued to provide guidance via e-mail, reading the chapters I sent him and providing rapid and supportive responses. To Ricard go my first thanks. My friends and colleagues of the former “Barcelona Governance Project” also provided crucial support in those early days: Fabrizio Zarcone, María Elena Corrales, Laura Lamolla and Carla Zumbado offered advice and encouragement that I will always remember. When I moved to Washington, DC I was still struggling to define my dissertation topic. I consider myself extremely lucky to have received help from two World Bank officials, Geoffrey Shepherd and Yasuhiko Matsuda, who became valued colleagues and cherished friends during the two years I worked in their department. Special thanks to Geoffrey for believing in my ideas, helping me articulate my questions, sharing my curiosity about the limited number of success stories of administrative reform in Latin America, and for giving me the chance to work at the Bank. I am especially grateful to Yasuhiko for giving me the opportunity to travel to Bolivia by inviting me to join the Bolivia Institutional and Governance Review team, and for his unfailing willingness to take the time to read, comment on, and ask tough questions about so many versions of my dissertation proposal. The time I spent doing fieldwork in Bolivia was unforgettable; the terribly beautiful mountains that outline La Paz are forever etched in my memory. I feel privileged to have had the chance to visit such a fascinating country. In Bolivia, I met many dedicated public officials who took the time to meet with me and transmit their knowledge of, love for, and pride in their country. Rudy Araujo, Renán Arce, Ramiro Cabezas, Efraín Camacho, Wilma Crespo, Luis del Río, Antonio Sánchez de Lozada and Jacques Trigo were especially helpful. Special thanks to Rene and Paola Rivera for sharing not only their knowledge but also their home and their family with me while I was away from mine. i Finally, I want to extend my gratitude to family and friends who were there for me unconditionally throughout this project and never failed to ask me about my progress and provide encouragement. Thanks to my Spanish family (Marcos García and María Rosa Gosálvez, Marcos García Gosálvez and Ana Martínez); to Laura Peimer, Maddy and Jim Ellis, and Jeff Mjaanes and Mercedes López; and to my brothers and sisters-in- law (Patrick Dove and Deborah Myerson, William Dove and Kiki Jamieson). Many thanks to my parents, William and Alexandra Dove, for giving me one of the greatest gifts: their love of knowledge, and the awareness that getting there is more than half the fun. Most of all, I am grateful to my husband, Miguel García Gosálvez, my best friend and favorite cycling partner, for his love, patience, and support during this long journey. To him I dedicate this thesis. ii TABLE OF CONTENTS PAGE Chapter One. Introduction: organizations for export 1 The research questions 4 The variables 5 Dependent variable 5 Independent variables 7 The case selection 12 The CGR and SBEF 12 Summary 14 Chapter Two. Patronage and political decay in Bolivia 16 Introduction 16 The collapse of the oligarchy (1900-1946) 20 The liberals (1900-1920) 20 Republican rule: Saavedra (1920-1925) 23 Siles and the rise of the Nationalist Party 27 (1925-1930) The Chaco War and the defeat of the 30 Bolivian oligarchy The MNR Revolution 32 The coming of the insurrection 32 Revolution Phase One (1952-1956): 35 authority vs. power Revolution Phase Two (1956-1960): 38 winners and losers Revolution Phase Three (1960-1964) 41 Reforming the revolution: the rise of the 46 neo-patrimonialist state (1964-1978) Barrientos: the alliance of campesinos 46 and military (1964-1969) Military populism (1969-1971) 50 The Banzerato (1969-1978). 52 Phase One: dividing the spoils Phase Two: an attempt at military authoritarianism 55 Decay and chaos (1978-1982) 62 Summary 67 i Chapter Three. Deciding to delegate 72 Introduction 72 Autonomous agencies: definitions and designs 74 State versus agency autonomy 75 Defining autonomy 80 A typology of autonomous agencies 84 Autonomous oversight agencies 87 Operationalizing autonomy: four dimensions 91 Autonomy and accountability: 93 the essential tension History of autonomous agency creation in Bolivia 96 The Progressive Era and the Money Doctor 98 Administrative efficiency: service delivery 100 and the productive state New Public Management: model or 104 marketing tool? The decision to delegate: creating autonomous agencies 107 Organizations for export: the influence of 111 external actors in autonomous agency creation Who drives autonomous agency creation? 117 The politics of autonomous oversight agency creation 119 Hypothesis 1 119 Hypothesis 2 120 Chapter Four. Agency creation in desperate times 122 Introduction 122 The Kemmerer mission: applying scientific 123 administration to political and economic turmoil The Siles administration 123 The economic situation 125 The Kemmerer Mission 128 Reactions to the Money Doctor 130 Summary 134 Two autonomous oversight agencies: the CGR and 136 the Banking Superintendency The influence of ideas: on the cutting edge 136 of administrative reform Dimensions of autonomy 138 Summary 145 Policy and politicization: a brief overview of 154 agency autonomy in Bolivia (1930-1980) The CGR: the President’s Comptroller 154 The weakening of the Banking Superintendency 156 Re-creating agency autonomy: insulating key tasks 157 ii From economic collapse to a New Economic Policy 158 Fighting for autonomy: CGR 166 Winning back public confidence: the re-creation 177 of the SBEF Summary 184 Chapter Five. Sustaining autonomy: organizations matter 200 Introduction 200 Sustaining autonomy: political and organizational 205 explanations Managerial autonomy 206 Technical independence 207 Agency strategy 219 The agencies today: a top-down view 224 The SBEF: safeguarding the financial sector 225 CGR: strengthening public administration 226 through audit Fighting for autonomy: two strategies 229 Critical tasks: dealing with a key environmental 231 problem Observing agency strategy 245 Clarity and consensus for agency mandate 246 Value of agency expertise 255 Clear performance indicators 262 Summary 268 Chapter Six. Final reflections 270 Introduction 270 Exploring the creation and sustainability of 272 autonomous oversight agencies Autonomous agencies: the secret to state reform? 281 Semi-autonomous agencies: from patronage 283 to professionalism? Final reflections 295 References 297 iii Chapter 1. Introduction: organizations for export Until the mid-1980s, Bolivia represented one of the most extreme cases of political instability, economic stagnation, and poverty in Latin America. Even when the country’s economy underwent a dramatic recovery in 1985, its government was still considered one of the most poorly managed in the region. Like many developing countries, the inefficiency, corruption, and incompetence of Bolivia’s public sector has hampered development efforts, both by domestic and foreign actors. Of all the countries in Latin America, Bolivia was one of the largest recipients of foreign assistance during the 20th century. In order to assure themselves that their money will be paid back (if a loan) or used for the intended purposes (if a development project, whether loan or donation), providers of foreign assistance -- whether private companies or public agencies -- have been particularly concerned with avoiding the high levels of inefficiency and politicization that characterize Bolivia’s public administration. To that end, money from foreign lenders has generally come with strings attached. One common condition imposed by external actors1 in light of their concerns about Bolivia’s politicized bureaucracy has been to require the government to create administrative “enclaves”: autonomous or semi-autonomous public agencies established through special legislation, which enjoy some degree of protection from interference by narrowly defined interests. These public agencies are created to carry out government functions that external actors view as essential