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<H1>Bolivia leader restores fuel subsidies in the face of protests </H1>
<H2>President Evo Morales backs down after an unsuccessful appeal to his power
base to support gasoline, diesel and jet fuel subsidy cuts. The nation had been
bracing for more strikes and protests. </H2>
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<P>By Chris Kraul, Los Angeles Times</P>
<P>January 1, 2011</P>
<P>Reporting from Bogota, Colombia</P>
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<P>Faced with mounting political opposition and the specter of crippling
strikes, Bolivian President Evo Morales late Friday night reversed his recent
decision to slash gasoline and diesel subsidies, a move that led to a
near-doubling of fuel costs.</P>
<P>Morales called a New Year's Eve news conference to say he wanted to spare the
nation further upheaval after a week of protests that turned violent Thursday.
The nation had been bracing for a strike and demonstration Monday by powerful
miners unions.</P>
<P>Morales' backtracking followed an unsuccessful appeal to his power base to
support his Dec. 26 decree sharply reducing subsidies for gasoline, diesel and
jet fuel. On Friday, he sent Vice President Alvaro Garcia Linera to talk to coca
growers, a group Morales once led, after they blocked a main highway from
Cochabamba to Santa Cruz.</P>
<P>Morales had said Sunday that he was cutting fuel subsidies to save $380
million and to choke off the sale of low-cost Bolivian fuels at a big profit on
the black market in Chile, Peru and Brazil. The decree, which caused prices of
gasoline and diesel to rise 73% and 83%, respectively, sparked the widest
protests since he was inaugurated in 2006.</P>
<P>For reasons he did not explain, Morales did not reduce heavy subsidies on
liquid propane gas, used for heating and cooking. He may have been mindful of
protests that erupted in 2003 after President Gonzalo Sanchez de Lozada raised
propane<B> </B>gas prices. Those protests subsequently helped drive Sanchez de
Lozada from office and opened the path for Morales' election in 2005.</P>
<P>On Thursday, thousands of demonstrators marched in several cities and threw
rocks at government buildings in La Paz, the capital, where police used tear gas
to disperse crowds. Taxi drivers called a strike that brought commerce to a
standstill in the capital. The government reported that 15 police officers
nationwide were injured.</P>
<P>He had been facing a real test of public sentiment in the new year, when
schools and universities return to session and workers are back on the job after
the holidays, said Lupe Andrade, a La Paz-based political consultant and former
mayor of the capital. The decree ended a six-year freeze on gasoline, diesel and
jet fuel prices.</P>
<P>Andrade said of the earlier decree: "The announcement came as a complete
surprise, especially given that the president has touted the economy as among
the most vibrant in the region with energy reserves among the highest of any
country in South America. Everyone is perplexed."</P>
<P>After Morales announced Friday night that he was canceling the subsidy cuts,
Andrade said the leader's problems may not be over: Many business groups were
eager to use the rise in fuel costs as an excuse to raise prices.</P>
<P>"The measure was badly planned and implemented, but this hasty retreat is
even worse," she said.</P>
<P>She said that energy industry sources believe Morales had ended the subsidies
in response to a sharp decline in private investment in YPFB, the
state-controlled oil and gas company.</P>
<P>Although Andrade and other analysts expect Morales to weather the storm, the
president's approval rating, which according to one pollster had already fallen
from 70% in January to 52% in November, had slipped further. His image took a
hit after he kicked an opponent in a soccer match in October, images of which
aired on YouTube.</P>
<P>Fuel prices have proved to be a sensitive political issue in some of Latin
America's oil- and gas-producing countries, where residents feel entitled to
subsidies. In 1989, an attempt by Venezuela's then-president, Carlos Andres
Perez, to raise gasoline prices set off violent protests that left hundreds
dead.</P>
<P>To defuse the protests, Morales had promised to use the savings from
reducing<B> </B>subsidies to support grain farmers in a program that he said
could lead to lower consumer prices. He also announced 20% wage increases for
teachers, health workers, police and the armed forces.</P>
<P>But some workers weren't mollified, with the bus drivers union calling for a
nationwide strike Thursday. Miners and other large unions are planning protest
marches Monday in La Paz.</P>
<P>Morales on Friday ordered the army to sell bread in parts of La Paz and in El
Alto, a poor suburb, after a bakers union declared a two-day strike to protest
higher fuel costs. The bread will be produced in government ovens and sold at 10
sites staffed by troops.</P></DIV></DIV></DIV></BODY></HTML>