La Paz is in crisis mode. President Luis Arce has declared a state of emergency, citing social unrest and economic instability. The move is a direct response to protests that have paralysed the country's mining sector. And here's the rub: British firms have billions tied up in those lithium and silver mines.
The emergency decree gives the government sweeping powers. Troops are already deployed to protect key infrastructure. But the real question is whether they can protect the supply chains on which UK firms depend. Word from Whitehall is that the Foreign Office is 'monitoring the situation closely' – diplomatic code for 'we're bricking it'.
Sources in the City tell me that shares in British mining companies with Bolivian exposure have taken a hit. One fund manager put it bluntly: 'This is a nightmare. We've been screaming about political risk for years. Nobody listened.'
The backdrop is a power struggle between Arce and his former mentor, Evo Morales. The country is split. The economy is tanking. And the world's largest lithium reserves are sitting there, tantalisingly out of reach.
A No.10 insider whispered to me: 'We're looking at options. Diplomatic pressure. Perhaps a contingency plan for evacuating British nationals. But the real concern is the long-term viability of our investments.'
Opposition MPs are already sharpening their knives. Expect urgent questions in the Commons tomorrow. The Business and Trade Secretary will face a grilling. Labour's shadow minister is calling for a 'full review of the government's approach to political risk in emerging markets.' Ouch.
The Bolivian government insists the emergency is temporary. But in La Paz, the streets are tense. And in London, the mood is grim. This story has legs. Bad legs.
