U.S. CENSURE OF BOLIVIA RAISES HEAT ON MORALES

SANTA CRUZ, Bolivia -- Days after President Evo Morales expelled the
U.S. ambassador to Bolivia, Washington has added the country to its
list of nations failing to fight illegal narcotics, a decision that
could have economic consequences for the natural-gas-rich nation.

The move could embolden U.S. lawmakers who oppose the renewal of
Bolivia's trade preferences, which are due to expire in the coming
months. Such an economic blow would add to Mr. Morales's problems. Mr.
Morales is battling provincial governors who have declared autonomy in
the nation's gas-rich farmlands. They accuse Mr. Morales of trying to
impose a Cuba-styled regime by nationalizing industries and pushing a
new constitution that redefines property, centralizes power and grants
rights based on ethnicity.

Late Tuesday, Mr. Morales and the governors agreed on a road map to
end a weeklong crisis in the country, Reuters reported. The governors
pledged to end occupations of government buildings, after a wave of
violent protests left 17 dead last week, and Mr. Morales said he would
discuss their demands for more autonomy and a greater share of state
energy revenue.

The agreement came even though Bolivian troops arrested one of the
governors, Leopoldo Fernandez, the leader of Pando province, as part
of a crackdown earlier Tuesday.

Mr. Morales and his chief ally, Venezuelan President Hugo Chavez,
blame the U.S. for Bolivia's troubles. Last week, Venezuela and
Bolivia expelled their U.S. ambassadors, accusing Washington of
orchestrating Bolivia's political opposition, a charge the U.S. denies.

The U.S. and Bolivia, a major cocaine producer, have clashed over
drugs. The U.S. ambassador was expelled as he was questioning the
Morales government about threats made to U.S. Drug Enforcement
Administration officials in Bolivia, the U.S. State Department said.
The populist Bolivian president leads a union of growers of coca
leaves, the raw material in cocaine. Bolivia joins Venezuela and
Myanmar on the U.S. list of countries not fulfilling obligations to
stem drug trafficking.

Bolivia's neighbors, which depend on its natural-gas reserves, met in
a grouping of South American leaders Monday in Chile and vowed to help
Mr. Morales find a peaceful resolution. Sabotage curtailed gas flows
to Brazil and Argentina last week.

Mr. Morales had ordered Mr. Fernandez arrested after a clash in Pando
last week that left at least 14 people dead, many of them Morales
supporters. Mr. Morales, without providing evidence, says Mr.
Fernandez organized an ambush. Mr. Fernandez denies it.

In response to the clash, Mr. Morales deployed troops to the province
and ordered them to enforce martial law and arrest opposition leaders.
Upon arrival in Pando, soldiers killed an unarmed evangelical
minister. Since then, several opposition leaders have been arrested by
soldiers.