Bolivia is riven by hostility between the leftist government of Morales and its right-wing opponents in the so-called 'media luna', the eastern departments of Santa Cruz, Beni, Pando and Tarija. As 2007 ended, these departments, along with Chuquisaca, proclaimed their de facto 'autonomy' from the administration in La Paz, vowing not to recognise the constitutional text agreed upon by the outgoing Constitutional Assembly. The main opposition party, the right-of-centre, pro-business Podemos, had boycotted the final sessions of the Assembly.

Morales, Bolivia's first fully indigenous head of state since the Spanish Conquest over 470 years ago, pushed for a new constitution to "re-found Bolivia" by empowering indigenous communities and allowing the state to take over unproductive land holdings. This was an unwelcome development for the political elite of eastern Bolivia, which is right wing in terms of its ideology, and favours a less interventionist state.

This polarisation is reflected in the Bolivian president's approval ratings.  According to a poll by Ipsos Apoyo, Opinión y Mercado, 56% of respondents approve of the performance of Morales, but 40% disapprove.

Yet there are some signs that the two sides will look for some sort of modus vivendi, taking advantage of the Christmas period and summer holidays to reduce tensions:

• The government is reluctant further to inflame the situation in the eastern departments by sending in the army. Such a move might also provoke tensions within the military between those loyal to the constitutional government and those whose sympathies are with the Santa Cruz department, whose demand for greater autonomy is longstanding.
• Morales is likely to come under informal pressure from external forces not to provoke the situation further. Brazilian President Luiz Inacio Lula da Silva and Chilean President Michelle Bachelet both paid visits to La Paz in December. The Organisation of American States has also been involved, and there have been offers of mediation from the EU.

Yet the situation remains highly volatile. If more radical elements in Santa Cruz and Tarija seize oil and gas installations, the government would be forced to respond militarily. Gas revenues are crucial to the state's ability to finance itself, and any cut-off of gas supplies to Brazil and Argentina would have devastating economic effects. Such moves would also send the most negative signal to potential investors -- particularly Brazilian Petrobras and Russian Gazprom -- which have recently indicated interest in investing to increase Bolivia's productive capacity.