Morales, incidentally, shows no signs of giving way. Far from retreating from its stance, Bolivia obtained an exemption from its obligations under the U.N. Single Convention on Narcotic Drugs in January 2013 that requires signatories to bar domestic coca consumption. This exemption represents a significant alteration of the convention, one that was long and rigorously opposed by the United States.
The loss of the right to export tariff-free to U.S. markets matters little with natural resources, where markets are truly global or (in the case of natural gas) the only logical customers are Brazil and Argentina. But it does limit Bolivia's ability to reduce the economy's dependence on hydrocarbons, tin and zinc -- in particular, efforts to diversify into labor-intensive textile manufacturing. It may also put the kibosh on plans to produce batteries from Bolivia's vast deposits of lithium.
What's more, the empowerment of the powerless has not always worked in Morales' favor: His policies are also being tested by the very indigenous groups they were designed to benefit. Since late 2010, a number of native groups have been protesting the failure of his government to consult sufficiently on infrastructure projects. The government suffered a major embarrassment in August 2011, when over 1,000 people of marched 500 kilometers across the Andes to La Paz to oppose construction of a highway that the government claimed was critical for the development of sparsely populated eastern lowlands.
By the same token, indigenous groups have staged numerous protests to block gas development, despite the fact that most social programs are financed out of gas export revenues. They have also blocked attempts to bring the country's vast lithium deposits into production. One recent academic study estimated that protests, strikes and other social conflict reduced Bolivian GDP growth by an average of one percentage point annually between 1970 and 2004 -- a figure that is likely to have risen since in light of the ongoing high-profile protests.
This is not your usual "perils of defying the capitalist gods" tale, though. Given low levels of foreign investment, lack of favorable access to U.S. markets and the destructive effects of the ongoing protests (not to mention significant drop in foreign aid), Bolivia's overall economic performance has been surprisingly good. According to the U.N.'s Economic Commission for Latin America and the Caribbean (ECLAC), about 62 percent of the population lived in poverty in 2002; by 2010, that figure had been reduced to 42 percent.
While Morale's critics claim this decline was simply a byproduct of Bolivia's participation in the global commodities boom, ECLAC found otherwise. Resource-fueled growth, they concluded, explained only one-third of the reduction in poverty; Bolivia also experienced a fairly sharp drop in income inequality that was almost certainly a product of government policy.
It's worth noting, moreover, that despite the Morales Administration's reputation for radicalism, the government's macroeconomic management--including debt reduction and the build-up of foreign exchange reserves -- has been extremely effective. A January 2013 IMF report cited Bolivia as one of only a handful of Latin American countries (including Chile, Paraguay, Peru and perhaps Colombia) in "a relatively solid position to withstand sizeable shocks -- even responding with expansionary policies - without putting fiscal solvency at risk."
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