GOVERNMENT CONCESSIONS MAY END BOLIVIAN UNREST

LA PAZ, Bolivia -- The Bolivian government agreed Monday to back off water
price increases that sparked a weeklong spiral of violent protests by
thousands of farmers and workers, fueled by the economic crisis in South
America's poorest country.

The protests -- which have virtually shut down Cochabamba, Bolivia's
third-largest city, and have left six dead -- prompted a security crackdown
and an official "state of siege" decree giving police and the military a
freer rein.

An end to the unrest was in sight late Monday, after the government reached
an agreement with protest organizers, the Roman Catholic Church and local
officials over an expensive water project in Cochabamba and a controversial
new water law.

"We hope that this will end this conflict that has so divided our people,"
Interior Vice Minister Guido Orias said.

Thousands of protesters who had gathered on the main square of Cochabamba
began disbanding Monday night.

The Cochabamba protests were prompted by a 20 percent increase in city water
rates to finance the badly needed expansion of water and sewage systems in
the central city, high in the Andes. Demonstrations quickly spread to rural
areas, with thousands protesting a new water law, unemployment, rising fuel
prices and other economic difficulties.

On Monday, Information Minister Ronald MacLean accused drug traffickers of
backing the demonstrations in an attempt to stop a government program to
eradicate production of coca leaf, used to make cocaine.

"These protests are a conspiracy financed by cocaine trafficking looking for
pretexts to carry out subversive activities," MacLean said. "It is
impossible for so many peasants to spontaneously move on their own."

The destruction of coca leaf production has deprived thousands of peasants
of their sole means of income, particularly around Cochabamba.

Since protests began April 3, Cochabamba, a city of 500,000 located 350
miles east of the capital, La Paz, has been paralyzed and isolated by
roadblocks, marches and clashes.

The state of siege decree passed Saturday suspended many constitutional
guarantees, allowing police to detain protest leaders without a warrant,
restricting travel and political activity and establishing a curfew.

Six people were killed and scores wounded in clashes around the country as
the government sent thousands of soldiers into the streets to try to put
down the protests.

At one point during the week of protests, police went on strike in La Paz
and in Santa Cruz, the country's second-largest city, demanding a pay
increase and clashing with soldiers. They were quickly given higher pay.