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Bolivia tax riot shows Latin American discontent with free-market policies

By KEVIN GRAY
The Associated Press
2/17/03 1:22 AM

LA PAZ, Bolivia (AP) -- Word of the new tax spread quickly. Enraged police officers passed the word from precinct to precinct. Laborers and peasants expressed outrage. Shop owners simmered with anger.

Soon, students in school uniforms and taxi drivers took to the streets of South America's poorest nation. The furious policemen then walked off their jobs to join hundreds of demonstrators shouting down a government austerity plan in the central Plaza Murillo.

"We had to send a message we would not stand for this," said protester Elena Balderrama, who fled a barrage of rubber bullets and tear gas after Wednesday's demonstration turned into a riot. "The government should seek out other ways to save -- but don't do it on our backs."

Across Latin America, millions of people have balked at belt-tightening programs prescribed by the International Monetary Fund to aid the region's troubled economies. The sentiment has only added to a growing discontent over the region's decade-old experiment with free-market policies.

Striking police officers clashed with soldiers on Wednesday, as the groundswell of anger in Bolivia's capital, La Paz, sparked demonstrations, roadblocks and widespread looting. It was the latest outpouring of frustration by many in a region plagued by stagnating economies and rising unemployment.

By the time the protests had subsided, at least 22 people were dead and nearly a dozen Bolivian government buildings were in flames.

After escaping from the besieged presidential palace in an ambulance, President Gonzalo Sanchez de Lozada gave a nationally televised speech appealing for calm and announcing he would suspend the tax increases.

"I plead with all Bolivians to put an end to the violence and to begin honest negotiations," Sanchez de Lozada said. "I ask one more thing from our father above -- God save Bolivia."

The predicament of the Bolivian president mirrors that of many of his regional colleagues: how to reduce his country's rapidly expanding deficit and win new badly-needed loans from the international financial community.

Bolivia was the first in the region to fully embrace the U.S. backed-economic reforms.

But while many admit the results have curbed inflation and reduced poverty, more than 80 percent of the country still lives below the poverty line.

"These programs are not lifting the bulk of society," said Balderrama.

Michael Shifter, a Latin American analyst at the Inter-American Dialogue in Washington, said politicians need to do a better job of preparing their people for such plans.

"If you plan to apply this tough medicine you need to prepare the groundwork and work with the communities," he said.

It was not the first time an economic plan put forth by the Bolivian government provoked condemnation and ended in violence.

In April 2000, an effort to privatize the water supply in the central city of Cochabamba triggered violent protests that ended with the plan being rolled back.

Two years later, Peruvian President Alejandro Toledo suspended the sale of two state-owned electric companies after huge street protests in his country -- a move some analysts said significantly cooled support for the free-market reforms there.

In Paraguay, protests erupted last year over tax reforms proposed by the IMF, and a plan to sell the state telephone company met stiff resistance on the street and in Congress.

The backlash has also prompted anti-IMF protests similar to those seen during the turbulent 80s, when hyperinflation enveloped many South American countries.

At least one Latin American leader seized on the Bolivian unrest to highlight a growing feeling in the region that the IMF is failing to grasp the economic reality for those in the region.

Argentine President Eduardo Duhalde, who took office last January after bloody street riots and looting ousted then president Fernando De la Rua, has emerged as an ardent IMF critic. He charged that the Washington-based lender is partly to blame for his country's crisis-- a sentiment shared by many Argentines.

"What happened in Bolivia? The International Monetary Fund arrived and did what they did in Argentina," he told reporters in Buenos Aires. "What was the result? The people went to the streets."

Copyright 2003 Associated Press. All rights reserved.
This material may not be published, broadcast, rewritten, or redistributed.
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