MercoPress. South Atlantic News Agency

Bolivia faced with a dead alley

Bolivia faces a renewed week of political instability as protesters take to the streets to demand more state control over the country's vast reserves of natural gas and President Carlos Mesa warned he would step down if violence erupts.

Marches on cities and the blocking of the country's road system recalls similar protests in October 2003 which ended ousting a democratically elected president from office and forcing him to flee the country.

Residents in the poor and traditionally militant city of El Alto, which overlooks the capital La Paz and is home to the country's main international airport, blocked streets to press their demands for nationalization of the country's natural gas as a protest march led by opposition chief Evo Morales drew closer to La Paz.

Last week Congress approved a controversial energy law which sharply raises taxes on foreign oil companies exploiting Bolivia's largely untapped natural gas reserves of 53 trillion cubic feet, the second largest in Latin America. But groups representing the poor indigenous majority now want nationalization of gas and Congress dissolved.

Bolivian president Carlos Mesa tried to defuse protests last week by taking a neutral stance on the law, neither vetoing nor signing the bill despite his desire for a less punitive law for companies. The bill was signed into law by the head of Congress.

Mr. Morales, head of the Movement Toward Socialism, or MAS, with a strong Congressional representation is not calling for the country's gas and oil to be nationalized but rather a further increase in royalties and taxes. However he agrees with the more radical El Alto groups on the need for a constitutional convention and in their opposition to the growing regional autonomy movement that has taken root in the gas rich eastern province of Santa Cruz.

Actually over the weekend civic leaders in the wealthy, tropical Santa Cruz decided to hold a referendum on autonomy on August 12 after Congress failed to agree last week on a referendum as promised.

Santa Cruz threw Bolivia into a constitutional crisis last January with threats to break away, but tempered its demands after President Mesa and Congress said they would work toward a process to give Bolivia's provinces more autonomy. But there are deep divisions between east and west on over how to do it.

Bolivia, a country of 8.3 million people, is divided between the poor west and home to the indigenous majority, and the wealthy east where a European descended elite thrives with advanced farming, oil and gas.

"In Bolivia, it is time to change. There is a need for a decentralized state and autonomic regions" said political analyst Carlos Toranzo, adding that "Bolivia has many simultaneous challenges."

But for left-wing opposition leader Evo Morales, the gas law and the autonomy issue are linked.

"Many oil companies are behind Santa Cruz's proposal because they think it will be easier to negotiate royalties with producing regions rather than with the Bolivian state" stressed Mr. Morales on Sunday.

Foreign companies have threatened to take Bolivia before international arbitration if contracts are not honoured. Under the previous 1996 energy bill companies such as Spain's Repsol-YPF, British Petroleum, British Gas, Brazil's state-owned Petrobras and French giant Total invested an estimated 3,7 billion US dollars in developing natural gas deposits.

With the ever present memories of the October 2003 events when former president Gonzalo Sanchez de Lozada was ousted after nearly 70 people died in protests against his gas policies, President Mesa has said he will step down if protests turn violent.