Evo Morales heads for third term in Bolivia

On the shores of Lake Titicaca, the university chancellor stands before Bolivia's two official flags - the national tricolour and the chequered indigenous standard, or wiphala - and speaks with the words of his party.

"Capitalism is no longer viable here," Lucio Choquehuanca tells the students.

The Tupac Katari indigenous university, named after a local rebel leader, is a conspicuous achievement of the indigenous-cum-socialist revolution of Evo Morales, Bolivia's first president of Amer-Indian descent.

It is symbols such as this that are propelling Mr Morales towards his third presidential victory on Sunday on the back of popular redistributionist policies and a deep-rooted connection to impoverished Bolivians in one of Latin America's poorest countries.

Victory would make Mr Morales arguably the world's most successful socialist. Bolivia has grown an average 5 per cent a year since he took office. The World Bank forecasts the Andean nation will grow 5.5 per cent this year - South America's fastest clip.

Poverty rates almost halved during the same period, according to George Gray Molina, a Bolivian economist at UNDP. That is a similar rate to that of neighbouring Peru, feted as a star for its free-trade policies. Bolivia's foreign reserves have rocketed more than sevenfold to almost $15bn since Mr Morales took office in 2006, and the country has issued bonds in international markets.

"This is a very peculiar model," says Luis Arce, the country's UK-educated finance minister. "We use the national resources in order to produce development and growth for the Bolivian people, rather than profits for transnational corporations, like in the past."

Mr Morales is projected to win on Sunday with 59 per cent of the vote compared to 13 per cent for his nearest rival, the cement tycoon Samuel Doria Medina, according to Ipsos.

Despite fiery anti-capitalist rhetoric in the style of Hugo Chavez and an over-dependence on resource nationalism, his government has not been as radical as many may think.

The charismatic former coca union leader and llama herder rose to power on a promise to end centuries of oppression and inequality. He won a landslide second election in 2009, after changing the constitution to scrap the single presidential term limit.

Since then he has ridden on the back of the commodities boom, exporting natural gas to neighbouring Brazil and Argentina, and minerals to Asia. Yet unlike oil-rich Venezuela, which struggles with stagflation, Bolivia ran prudent macroeconomic policies.

"Even with the rhetoric, today's Bolivia is a country that is totally open, with a market economy that is thriving thanks to an almost Thatcherite handling of public finances," says Humberto Zogbi, until last week Coca-Cola's general manager for Bolivia.

The model is "state capitalism", says Carlos Toranzo, a political economist in La Paz. Mr Morales, he says, has used the nationalisation of hydrocarbons, coupled with high gas prices, to boost state revenues. This has fuelled a consumer boom, higher wages, cash transfer schemes, public works, and helped Bolivia launch its first satellite - all factors behind Mr Morales' apparently unassailable poll lead.

But critics accuse him of being autocratic, holding increasing sway over the judiciary, controlling a state-run media empire and persecuting members of previous conservative administrations.

Jorge Quiroga, a former conservative president running a distant third in the election, describes Mr Morales' administration as an "authoritarian, abusive regime" which has "squandered the best economic bonanza in Bolivia's history."

Such opposition has become marginalised, however, says Jim Shultz of the Democracy Centre, a Cochabamba-based think-tank, because Mr Morales has figured out a simple formula: "Yank wealth out of the ground and invest in things Bolivian governments have not invested in before, that benefit regular people."

This strategy has its limits though. As the commodities supercycle eases, Mr Morales needs funds and expertise to diversify away from natural resource extraction. He has vowed to modernise Bolivia by building batteries out of rich lithium deposits, petrochemical plants, and a nuclear energy programme.

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For Mr Morales' staunchest followers none of that matters. The peasant president, they say, has made this once divided country politically stable and produced tangible improvements in the day-to-day lives of poor Bolivians.

One such accomplishment is the new $234m mass-transit aerial cable-car system which connects El Alto, a sprawling city of impoverished rural immigrants on a high plateau, with the country's capital La Paz.

Wearing the quintessential Andean outfit of bowler hat and flouncy skirt, Virginia Contreras says the gondola is proof that Mr Morales's revolution is succeeding. "We have been in a state of submission until brother Evo arrived; now we have money and pride. Why would I ever vote for someone else?"

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