Bolivia’s President Gonzalo Sánchez de Lozada, in an increasingly desperate effort to quell the massive strikes, demonstrations and peasant roadblocks that have virtually paralyzed Bolivia for over a month, announced on Oct. 13 that he was temporarily suspending his plan to export natural gas through Chile to the United States.

“The government has decided it will not export natural gas to new markets … until consultations have been conducted [with the Bolivian people],” he told reporters. The “consultation period” will run until Dec. 31.

Union, peasant, student, and indigenous Indian groups have opposed the proposed gas export plan, arguing that Bolivia’s vast natural gas reserves should be used in Bolivia for the people’s benefit. They have denounced Sánchez de Lozada’s “free trade” policies and many have called for the nationalization of the oil and gas industries.

But the president’s retreat has done nothing to stem a rising tide of rebellion and a deepening crisis of his regime. Despite his announcement, thousands marched in La Paz, the capital, demanding Sánchez de Lozada’s resignation, and a public transit strike – combined with continuing highway and road blockages by militant peasants and miners – brought the city to a standstill. Food and gasoline are in increasingly short supply in the capital.

Tensions were brought to a boiling point last week after the government called out thousands of troops backed by tanks to suppress the rebellion, particularly in the city of El Alto, a poor, industrial suburb of La Paz. El Alto, which has a population of 750,000, has been a major center of the general strike. Most of its residents are of Indian origin. The city was put under martial law and the population was brutally suppressed.

Over 55 people have been killed in the violent military crackdown in recent weeks, many of them in El Alto. Clashes have been intense in other towns, too, notably Cochabamba, Oruro and Potosi.

While the natural gas export plan was the immediate cause of the crisis, its roots go much deeper. Bolivia, a Texas-sized country with a population of 8 million, is one of the poorest nations of Latin America, with over 70 percent of its population mired in extreme poverty.

Bolivia has long been under the economic and political domination of the United States. Its workers have been subject to extreme exploitation. Many thousands of its peasants have been driven to bankruptcy and ruin. Its mineral resources, including its vast natural gas reserves, crude oil, zinc, tungsten and gold, have been subject to systemic plunder by U.S. mining and petrochemical companies for decades.

The current president, Sánchez de Lozada, 73, was born and grew up in the U.S. He is a millionaire businessman and a close ally of George W. Bush. He took office in August 2002 after winning only 22 percent of the vote. In February of this year, he tried to push through an IMF-inspired austerity program that would have drastically cut the living standards of the workers and peasants. That plan, too, sparked a major rebellion and claimed at least 32 lives before the government was forced to make concessions.

This time around it appears that Sánchez de Lozada is in even deeper trouble. His vice president, Carlos Mesa, has openly criticized his superior’s policies, and four of the 15 cabinet members have resigned in protest.

Evo Morales, an indigenous union leader and member of the Bolivian Congress, said “the only political solution to this crisis is the resignation of the president,” according to the Associated Press. Roberto de la Cruz, a union leader in El Alto, said “We will not stop until he (the president) goes away.” The unrelenting pressure of the strikers and peasant demonstrators suggests that Sánchez de Lozada may in fact be forced out soon.

Ominously, the U.S. warned this week that it will “not tolerate” any move to topple the current regime. “The American people and their government support Bolivia’s democratically-elected president … in his bid to build a more prosperous and just future for all Bolivians,” a State Department statement said.

The Bush administration is increasingly nervous about the mounting turmoil in Latin America – particularly in Bolivia, Venezuela, Colombia, Ecuador, Argentina, and Brazil – and the growing opposition to the U.S.-backed Free Trade Area of the Americas. It remains to be seen how much longer this turmoil can be contained.

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