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01/12/2005:

"As Protests Swell, Bolivia Cancels Foreign Contract"

LA PAZ, Bolivia (Reuters) - Anti-government protests in Bolivia on Tuesday paralyzed two cities and pushed authorities to meet a key demand -- the cancellation of a water concession run by a foreign company.

A two-day civic strike called by business, labor and neighborhood groups to protest a rise in gas prices brought to a halt the normally bustling Santa Cruz, Bolivia's richest and largest city with 1.2 million people. Streets were blocked and public transport was grounded.

The government said it will not reverse the gas price hikes decreed two weeks ago because it cannot afford the $30 million in fuel subsidies needed to keep prices down.

In El Alto, the poor combative city of 800,000 that overlooks the capital La Paz, protests continued for a second day against the gas price hikes and also the city's water utility, owned by France's Suez Lyonnaise des Eaux .

Protesters cut off roads leading into the capital and to the international airport outside El Alto.

Late Tuesday, Bolivian President Carlos Mesa's government agreed to cancel the French company's concession in both El Alto and La Paz for failure to fulfill its contract.

About 200,000 people in El Alto still don't have running water, although the contract stipulates 100 percent coverage, and the government said connection costs were too high. The company has denied any wrongdoing.

Even with the government's gesture, El Alto's leaders said they would not end their strike.

The government of South America's poorest nation is on alert after uprisings in 2003, centered in El Alto, turned into a bloody revolt against the former president, who fled Bolivia for the United States.
Full Article:nytimes/reuters