Legalization and amnesty have led to illicit trafficking and organized crime in Bolivia. We’re not talking about drugs or weapons or people. This is about cars.

The government’s decision to grant amnesty to the owners of unregistered vehicles has had a fascinating effect on crime across the region, showing how one country’s regulations can create sudden large movements in the black market of others.

President Morales pushed a law through the legislature that would allow the owners of unregistered vehicles, known as "chutos," to pay a fine and have them documented. The issue of chutos on Bolivia’s roads is significant and leads to related problems such as the inability to track cars used in crimes.

Bolivian officials expected about 10,000 cars to be legalized during this amnesty period, while Bolivia’s transportation unions said there were at least 100,000 unregistered cars on the road that would be registered. It turns out even the unions underestimated the problem, with people filing paperwork to register over 130,000 vehicles in June and July 2011. While the registration period is now over, the Bolivian government is still working its way through the sea of paperwork, inspections and fees that they did not expect.

Prior to the law’s passage, the domestic opposition to the amnesty law came primarily from those who believed that those owning an unregistered car had committed a crime. Some analysts inside Bolivia believed that cars were being used in exchange for cocaine, a method of laundering money. However, this appears to be a limited issue. Most of the owners of chutos were not criminals and had purchased them because they couldn’t afford a new car. Other domestic opposition came from taxi drivers, who thought that the increase in registered vehicles would harm their business and increase traffic.

Significant opposition to the amnesty also came from Bolivia’s neighbors, who believed that some of the chutos on Bolivia’s roads were vehicles stolen from their territory and trafficked to the Bolivian market. They were also concerned that stolen new cars would be trafficked to Bolivia in order to legalize them. In this case, Bolivia’s neighbors turned out to be correct.

On one street in Iquique, Chile, vendors lined up to sell unregistered or pre-2007 cars (Bolivia does not allow the importation of older cars). Bolivians purchased used cars by the dozen, some of them stolen, and planned to bring them back into the country. The vendors also sold advice as to how to “chutearlo,” or how to get the cars past Chilean and Bolivian authorities on the border and into Bolivia to be registered under the amnesty.

Chile has complained to the Bolivian authorities about cars being stolen in the North, with vehicle theft up over 30 percent in some regions. Additionally, car sales in Chile and some parts of Argentina have vastly increased, distorting the domestic markets. Authorities believe that certain criminal organizations see an opportunity to launder cash and make a profit during Bolivia’s amnesty period.

Brazil has placed the issue of stolen vehicles on par with drug trafficking. Brazil’s embassy recently handed over a list of stolen vehicles to the Bolivian authorities and are demanding the vehicles are found and seized from their newly registered owners. It’s likely that Argentina and Paraguay will soon do the same.

According to Bolivian officials and media outlets who have cross-referenced the lists of stolen vehicles with the list registered in Bolivia under the amnesty, at least 4,000 stolen Brazilian cars are on that list, along with 800 from Chile, 130 from Peru, and 90 so far from Argentina, where as of 22 July 2011, authorities are still not finished going through the data.

In response, the Bolivian government recently ordered 2,000 soldiers to various borders with the goal of preventing the entrance of any more illicit cars. The Chilean government has also deployed forces to guard the over 80 crossing points that they believe cars are passing through. The most embarrassing moment for Bolivia -- so far -- occurred when Chilean authorities arrested 14 Bolivian soldiers, who were patrolling the border to prevent illegal cars from entering. It turned out those Bolivian soldiers were driving unregistered vehicles, which Chile did not return to Bolivia.

The government now realizes that they are not just registering cars for poor families who couldn’t afford a legal market car. They have created an artificial demand for black market vehicles, causing cars to be trafficked to Bolivia the way guns enter Mexico or drugs enter the United States.

One additional unexpected consequence of the chutos law turned up last week in La Paz. Due to a completely separate issue, protesters in El Alto used roadblocks to shut down the highway to La Paz. This event cut off fuel supplies into the capital for two days. Gas stations in La Paz ran out of fuel more quickly during this protest compared to previous protests. They believe, in part, this was due to the number of newly registered cars on the road. One energy expert estimated that the country must use an additional 8,000 barrels of fuel per day to run the newly registered cars.

One person inside Bolivia’s custom’s agency called the recent events a “legislative disaster” and said the government should think through its policies more carefully next time. Even the vice president admitted the government made errors in underestimating the challenges this law would bring.

And according to neighboring governments, the cars keep coming. Though the amnesty period is over, illegal chutos continue to be trafficked across Bolivia’s borders, particularly from Brazil and Chile. Brazil has announced they will be implementing a new electronic tracking system that uses cameras to read license plates and cross reference with a list of stolen vehicles. Chile continues to crack down on its border security to prevent more cars from leaving. The amnesty period may be over, but the illegal car problems for Bolivia appear to have multiplied.

Reprinted with permission from Southern Pulse -- see original article here.

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