BOLIVIA MAKES KEY CONCESSIONS TO INDIANS

LA PAZ, Bolivia, Oct. 6 - The Bolivian government today agreed to a broad
range of demands by Indian peasant leaders, buckling under the pressure of
three weeks of road blockades that paralyzed the economy, caused food
shortages and threatened to force the resignation of President Hugo Banzer.

The government gave in to the most important demands of the Aymara-speaking
peasants after Indian leaders threatened to surround La Paz and starve the
capital in a replay of an Indian rebellion in 1781.

Sitting across a table from Indian leaders who chewed coca leaves
throughout the night, government ministers agreed to prop up corn prices,
reverse a land titling process that would have raised taxes, and return
water rights from the government to Indian peasants.

It was the second time in six months that President Banzer was forced to
retreat on government initiatives in the face of large-scale protests to
avert a collapse of his authority and the shaky Bolivian economy.

Political analysts including Peruvian journalists and academics said his
growing signs of weakness would probably invite more costly protests in the
coming months by the restive labor and peasant movements.

Shortly before reaching an agreement in the predawn hours today, Economic
Development Minister Jose Luis Lupo said this country of 8.1 million people
had suffered losses of at least $120 million in damaged roads, spoiled food
and interrupted exports during the last three weeks.

"This is the worst crisis Bolivia has faced since 1985, when we had a
24,000 percent inflation rate," Mr. Lupo said.

Despite its concessions to the Indians, the government has refused to
accept demands by coca growers in the Chapare region to stop short of its
goal of eradicating all coca plants by Feb. 1 and to allow peasant families
to grow small private plots.

The Chapare coca growers, who continue to block roads between the cities of
Cochabamba and Santa Cruz with stones and logs, agreed today to resume
separate talks with the government.

With money and technical help from the United States and the United
Nations, the Bolivian government has reduced coca plantings in Chapare, the
principal cultivation area for Bolivian cocaine exports, to 4,050 acres as
of Thursday from 70,400 acres in 1998, according to the American Embassy here.

In previous negotiations with the coca growers, the government agreed last
month to forgo plans to build three new army bases in Chapare. But
President Banzer has vowed that he will not back down on his pledge to
destroy the remaining coca crops in Chapare in the next three months and
then destroy 6,000 acres of illicit coca cultivation in the Yungas region
early next year.

"We say illegal coca cultivation will be zero in 2002, and we intend to
keep to that goal," said Mr. Lupo, the economic development minister, in an
interview.

Congressman Evo Morales, the leader of the coca growers, said today that
his movement would continue to march and block roads until the government
backed down.

But Mr. Morales appears to be in an increasingly isolated position now that
the larger peasant confederations have agreed to halt their protests. He is
widely expected to give up the road blockade in the next few days or face
military action.

Felipe Quispe, 58, a former guerrilla leader who was imprisoned for six
years on terrorism charges, emerged from the recent protests as the
dominant leader of the Indian peasant movement.

Mr. Quispe, who is better known as Mallku - the Great Condor in Aymara -
used fiery oratory, going so far as to say that "the whites should leave
the country."

In an interview on Thursday, Mr. Quispe said his ultimate goals were to
force Mr. Banzer to resign and reverse his pro-market economic policies.
"Banzer is incapable, inept and he can't govern," Mr. Quispe said. "He has
to go."

Mr. Quispe's road blockade was so effective that the air force was sent to
deliver food to cities. Meat became scarce, and vegetables and fruits more
than doubled in price in many markets. Ten people were killed in the
protests, and thousands were left stranded and destitute throughout the
country. An affiliated teachers' strike left more than half of the
country's public schools closed for weeks.

The situation became so desperate that housewives began threatening to loot
grocery stores and businessmen in Santa Cruz warned that they would mount a
tax boycott until the government used whatever force necessary to reopen
the roads.

President Banzer showed great restraint, in part because he is trying hard
to overcome his old reputation for brutality garnered when he ruled as a
military dictator in the 1970's. But the analysts also noted that when he
declared a state of siege in April to end protests over water prices in
Cochabamba, protests only grew and the national police went on strike for
higher wages.

With two years left in his five-year term, Mr. Banzer increasingly looks
like a lame duck. His governing coalition is fraying, and his credibility
continues to suffer from widespread reports of government corruption.

The husband of one Mr. Banzer's nieces faces charges of cloning cellular
phones and running an illegal gambling ring, and three trial judges who
acquitted him on drug charges last year are themselves now being
investigated on corruption charges. Under American pressure, the acquittal
has been overturned.