Faced with a strike that has idled two of the country's largest cities, the government on Tuesday canceled a contract with a French-run water company. President Carlos Mesa has warned he will resign if the spreading cost-of-living protests turn violent.
Protests launched Tuesday in Santa Cruz, a city of over one million people, drew hundreds of thousands of people outraged by a government-ordered hike in the price of gasoline. The strike in Santa Cruz, Bolivia's largest city, which is about 570km southeast of the capital, La Paz, is an expansion of demonstrations launched Monday in the neighboring city of El Alto.
Strike organizers in El Alto, led by neighborhood organizer Abel Mamani, have demanded the government drop a 10 to 23 percent increase in the price of gasoline, and have vowed to continue the protests until the government agrees to their demands, among which was canceling the contract with the water utility controlled by Lyonnaise des Eaux of France.
Protesters claim the utility charges residents excessive rates and has failed to extend service to poor neighborhoods since it began operating in Bolivia in 1997.
On Tuesday, the government agreed to that demand.
In a letter to the leaders of the strike made public by the government, Public Works Minister Jorge Urquidi said the decision to rescind the contract "through the legal available means" was made after the company refused to review it.
Protest leaders said a decision will be made in the next few hours on whether to end the strike.
But the government remained adamant on maintaining the price hike, arguing that inexpensive gasoline in Bolivia is encouraging smuggling to neighboring countries and threatens to produce a supply crunch at home. In Chile, for example, a liter of gasoline is about double the US$0.42 per liter charged in Bolivia before the increase.
In Santa Cruz, shops and offices were closed and the main access routes to the city were blocked by protesters. The strike in El Alto halted traffic between the city and La Paz, the capital.
Sporadic street protests have been reported in other Bolivian cities, including La Paz, but so far strikes have only taken place in Santa Cruz and El Alto, a city of 750,000.
So far, the protests have been peaceful.
But Mesa threatened to resign should the protests turn into a repeat of the violent, October 2003 demonstration that left dozens dead and prompted then President Gonzalo Sanchez de Lozada to resign.
Protest leader Mamani said the movement is not seeking to oust Mesa.