BOLIVIAN LEADER CONFIDENT TALKS WILL END PROTESTS

LA PAZ, Bolivia (Reuters) - Bolivian President Hugo Banzer said Tuesday the
government was close to negotiating a deal to end a protest by teachers,
peasants and coca growers that has paralyzed Bolivia's major cities with
roadblocks for 16 days.

"We're close to solving this," Banzer said in a national radio address. "As
long as dialogue exists, there's hope for a peaceful solution without the
use of force to take down the roadblocks."

The government had threatened to deploy soldiers to remove the roadblocks,
but its noon (EDT) deadline came and went without action despite a
stalemate with coca growers as Cabinet ministers huddled with peasants and
teachers in La Paz.

Government Minister Guillermo Fortun said as long as talks continued with
at least one of the three protest groups, no troops would be sent to clear
the highways.

Ten protesters died in clashes with security forces last week. The
demonstrators are demanding that the government increase teachers' pay and
drop a water tax. They also oppose a government effort to eradicate the
cultivation of coca -- the raw material of cocaine.

"As long as the government is unwilling to discuss the coca issue, we won't
have an agreement," said Congressman Evo Morales, head of the coca growers
union.

Tensions Rise Over Skyrocketing Food Prices

The situation in the poor Andean nation of 8 million people has become
increasingly tense as food prices have skyrocketed because of the
roadblocks preventing traffic from reaching the capital, La Paz, and the
agricultural hubs of Santa Cruz and Cochabamba.

"Many of us sell our fruit and vegetables on monthly contracts and I doubt
(coca growers union leader) Evo Morales is going to compensate us for our
losses," said Felipe Gonzalez of the Santa Cruz Peasants' Association.

The Bolivian air force said it had flown hundreds of thousands of pounds
(kg) of food to La Paz, Cochabamba, Santa Cruz, San Borja and Cobija to
restock supermarket shelves.

"We are firmly behind the democratic and constitutional government of
President Banzer," U.S. Ambassador Manuel Rocha told reporters, calling the
crisis a threat to Bolivia's socioeconomic reforms.

Coca growers did not return to the negotiating table on Tuesday. While they
welcomed a government offer not to build three army barracks in the key
coca-growing Chapare region, they refused to lift the roadblocks until the
region's 40,000 families are allowed to grow 2.5 acres (1 hectare) of coca
for traditional use.

U.S. Reassured By Alternative Coca-Monitoring Plan

U.S. diplomats said as long as troop numbers were increased at the barracks
along the highway at either end of the Chapare region, they would be
reassured that surveillance would be sufficient to prevent the return of
coca cultivation there.

Coca crops in the Chapare have been reduced to 5,000 acres (2,000 hectares)
from 92,500 acres (37,000 hectares) only three years ago. Only
insignificant amounts were forecast to remain by January.

Andean Indians use the bitter leaf for religious and medicinal purposes
such as easing the pangs of hunger and thirst and to cope with altitude
sickness. Some coca production is legal.

At the height of coca production about five years ago, one in every eight
Bolivians made a living off coca. Bolivia is the world's third-largest
producer of coca after Peru and Colombia.

Bolivian government ministers presented the peasants with a $63 million
rural development plan that includes crop diversification as well as the
extension of electrical and telephone services to remote areas. Closed-door
talks continued Tuesday.