Bolivia and Its "Capitalism for All:'' A New Frontier for Foreign Investment

Bolivia has historically posed significant challenges for foreign investors. The nearly two-decade reign of the country’s Movement for Socialism party, and nationalist opposition to entreguista policies in Bolivia (including a notable revolution in 1952 that overthrew the oligarchy) has made the nation an unattractive target for investment. However, the 2025 election brought a change in the governing party. The new president, Rodrigo Paz Pereira, claims to be taking the nation away from its socialist past – in favor of ‘Capitalism for All’.  But is there a catch?

In a bid to modernize the regulatory framework and attract foreign investment, Paz began his presidency by issuing a Supreme Decree identifying six priority sectors for strategic investment: mining and metallurgy; hydrocarbons and energy; electricity generation and renewable energy; agriculture and food production; logistics and transportation infrastructure; and export-oriented manufacturing.[1] At the same time, Bolivia’s Minister of Hydrocarbons and Energy, Mauricio Medinaceli, announced plans to introduce four new laws aimed at revitalizing the hydrocarbon, electricity, lithium, and green energy sectors.[2] 

Undoubtedly, the country is rich in natural resources – signaling a promising environment for foreign investment. In 2024, Bolivia announced a major natural gas discovery in the Madre de Dios basin, the largest since 2005. Furthermore, Bolivia holds approximately 20% of the world’s known lithium reserves. If Bolivia’s neighbor, Peru, is an indicator of the investment potential, we need look no further than the $847 million investment from American Lithium Corp. for its Falchani project, valued at $5.11 billion.[3] 

Furthermore, in a significant shift, Paz reestablished full diplomatic relations with the US, bringing the US Drug Enforcement Administration back into the country and restoring ambassador-level relations which had been severed since 2008.[4]

Despite positive steps, however, investing in Bolivia still poses challenges. In January 2026, the Paz government stated that there were transparency and sovereignty concerns relating to contracts that could lead to their cancellation or modification. A court-ordered suspension of Russian and Chinese lithium exploration contracts worth roughly $2 billion suffered this fate.[5] 

There are also compliance risks to consider. Bolivia remains “grey listed” by the Financial Action Task Force due to strategic deficiencies in its anti-money laundering and counter-terrorist financing (AML/CFT) regime. Due to its grey status, the Financial Crimes Enforcement Network (FinCEN) advises that financial institutions apply risk-based, enhanced due diligence on transactions involving Bolivia to mitigate risks of money laundering and terrorist financing.

The practical steps for any savvy foreign investor considering investment in Bolivia include:

• Identify reliable local partners and agents that have been thoroughly vetted.
• Conduct pre-contractual due diligence and discreet source inquiries with local experts and government authorities to help prevent companies from entering contracts that will end up in a similar situation.
• Hedge the risks of investment arbitration with contractual measures, since most arbitration in Bolivia is designed to be resolved within the country rather than in inter-arbitration courts. 

Applying enhanced due diligence measures will significantly mitigate risks for investors, shielding companies from losses and potential lawsuits for breach of fiduciary duties.