BOLIVIA PRESIDENT QUITS AFTER REVOLT

LA PAZ, Bolivia (Reuters) - President Gonzalo Sanchez de Lozada
resigned in a letter to Congress on Friday, a senior government source
said, after a month-long revolt by Bolivia's Indian majority in which
more than 70 people died.

"The letter of resignation has been sent to Congress," the source, who
asked not to be named, told Reuters.

The decision, which the government has not immediately confirmed, came
after tens of thousands of people had marched and blockaded the
world's highest capital for weeks to reject Sanchez de Lozada's
pro-U.S., free-market economic policies.

Sanchez de Lozada, 73, had been due to inform Congress of his decision
later in the evening. But some protesters took his departure for
granted, dancing and clapping in the streets. Miners exploded dynamite
before singing the nation anthem.

Local TV reported that he may have left the presidential residence in
a helicopter for the international airport.

Constitutionally, the president's resignation would be followed by the
appointment of Vice President Carlos Mesa, a respected journalist who
is not a member of a major party. He would then serve out Lozada's
term, due to end in 2007.

"Finally, the criminal has fallen!" said Roberto de la Cruz, a union
leader. Like many protesters he blames the president for the deaths of
demonstrators, nearly all of whom died from bullet wounds after being
shot by police or troops.

His resignation would come as La Paz lay in ruins. Streets are
barricaded and little food entered in the last week. Basic necessities
from bread to aspirin are in short supply. Streets are littered with
garbage, broken glass and tires. The peppery sting of tear gas hangs
in the air.

"GRINGO" GOES

Lozada, who spoke Spanish with a U.S. accent and was nicknamed the
"gringo," was widely seen as out of touch with a poverty stricken
Indian population. Many live on less than $5 a week. The life
expectancy in some areas is under 45 years.

His fall from a free-market star of Washington in his first 1993-1997
government has coincided with a Latin American trend of increasingly
sophisticated indigenous movements, who organize themselves with cell
phones and the Internet.

Washington may be worried. His U.S.-backed effort to eradicate coca,
the raw material for cocaine, made him a key ally in the anti-drug war
but angered farmers. A plan to export natural gas sparked unrest in
this nation of 8 million.

Some Indian leaders want new elections with Mesa as interim leader.
But Bolivia's constitution, legal experts say, makes it difficult for
him to call elections and analysts warn of a period of chaos if he
does not deal with Indian demands to alleviate poverty and halt
foreign investments in the energy sector.

Earlier in the day, a main partner in Sanchez de Lozada's ruling
coalition Manfred Reyes Villa withdrew his support for the government
because of the bloodshed as hordes of miners, farmers and Indian women
marched to the center of the capital.

The protesters shouted "quit, quit" and exploded dynamite sticks two
blocks from a government palace guarded by troops and assault
vehicles. Live television showed congressmen being bussed into the
center of La Paz, escorted down otherwise deserted streets by heavily
armed police.

The growing political muscle of socialist movements in Bolivia extends
a shift toward the left across South America where new leaders in
Brazil, Venezuela and Argentina have questioned who benefits from free
trade and investment flows.

A Brazilian Air Force plane evacuated 108 people from La Paz, while
Israel was also making arrangements for stranded tourists to be
airlifted out. U.S and British governments have advised their citizens
not to travel to Bolivia.

The U.S. military said it was sending a small team of security
specialists to the American Embassy in La Paz to examine contingency
plans to evacuate diplomats if necessary.