Bolivia traditionally has maintained normal diplomatic relations with all hemispheric states except Chile. Relations with Chile, strained since Bolivia's defeat in the War of the Pacific (1879-83) and its loss of the coastal province of Atacama, were severed from 1962 to 1975 in a dispute over the use of the waters of the Lauca River. Relations were resumed in 1975, but broken again in 1978, over the inability of the two countries to reach an agreement that might have granted Bolivia sovereign access to the sea. They are maintained today below the ambassadorial level.
In the 1960s, relations with Cuba were broken following Castro's rise to power, but resumed under the Paz Estenssoro administration in 1985. Under President Morales, relations between Bolivia and Cuba have improved considerably, and Cuba has sent doctors and teachers to Bolivia. Relations have also improved with Venezuela, which has provided financial assistance to Bolivian municipalities, armed forces, and police since Morales took office. The Bolivian and Venezuelan Governments are also working closely together in the petrochemical industry, with plans to expand cooperation into the mining sector and advance the Venezuelan-sponsored [[Bolivarian Alternative for the Americas ]] (ALBA) trading bloc. The Bolivian Government announced it would pursue formal relations with Iran and Libya in September 2007, with plans to cooperate in the petrochemical industry and increase Bolivian exports to both countries.
Bolivia has pursued a foreign policy with a heavy economic component and the Morales government seems to be following in this same tradition. Bolivia has become more active in the Organization of American States (OAS), the Rio Group, and in Mercosur, with which it signed an association agreement in 1996. Bolivia promotes its policies on sustainable development and the empowerment of indigenous people.