A CONVERSATION WITH BOLIVIA'S PRESIDENT

Two-time Bolivian president Gonzalo Sanchez de Lozada -- known by his
countrymen as 'Goni' -- is quite clear where he stands: in a fight to remain
in power.

Elected last year in a tight race against coca growers' leader Evo Morales
and former Cochabamba Mayor Manfred Reyes, Sanchez de Lozada faced crippling
riots earlier this year, which forced him to flee the presidential palace as
bullets flew through his office.

In January, the opposition blocked the nation's roads. In February, the
police rose up against him. He runs South America's poorest country. His
poll numbers are plummeting. His Nationalist Revolutionary Movement (MNR)
has been obliged to form an alliance with its former foe, the Revolutionary
Left Movement (MIR), creating an unwieldy coalition blamed for much of the
government's inability to move forward on programs.

At one time, Bolivia was considered the most politically shaky country in
South America, the all-time leader in the number of military coups that
toppled government after government. The recent events have put the future
of today's modern democracy into question.

But Sanchez de Lozada says he is moving forward with a program to bring jobs
to his nation, despite the threats to his government -- and his life. The
72-year-old mining millionaire, who studied philosophy and English
literature at the University of Chicago, grew up in the United States
because his father was a Bolivian diplomat posted here.

He recently spoke with Herald correspondent Frances Robles. Here are
excerpts from the interview in the presidential residence.

Q: In retrospect, where did your government go wrong? Why was there such an
institutional breakdown during the February crisis?

A: Our biggest mistake was not to recognize it. There were serious problems
in living conditions, salaries, working conditions of the police. I think we
made a big mistake in not recognizing it. We were sort of comforted by the
fact that we have always, as a party, had a close alliance with the police.

The second mistake is we just took longer than we should have to get going,
because it was a tough, tough coalition to make work. Even today we are
having difficulties. We are dissimilar. A 51-49 coalition is tough. We were
set back very seriously. January and February easily set us back about five
months.

I have my work cut out for me.

Q: How easy is it to get the pulse of the people?

A: In my career in politics, I have been in three elections and won them
all. One was stolen by fraud, but the other two were with majorities. And I
did it because I am basically a modern person. I do a lot of work with focus
groups and polling.

I have a virtue very few politicians have: I am willing to accept bad news.
And I know that if anyone brings the Bolivian president good news, he's
lying. So it's pretty hard to look at these tough polls. The people are
unforgiving, but at the same time underline that they really want me to
succeed, because they say, `What other option do we have?'

They are much more respectful than the opposition is of what it means to be
a democratically elected president. They may not like me, but I am the
president.

Q: How do you get them to like and trust you?

A: It's tough. You've got to go out and spend more time with them. That's
the big problem. It's like a family. They want to feel you really care and
worry about them. It's very hard to do that when you have an extremely
difficult coalition to run, and you need to do a lot of things, which demand
a great deal of time.

It's the same problem that happens with people in business. You can't
satisfy them just with results; they have to feel you care about them --
especially if you can't show immediate and dramatic results. It's a tough
challenge. I'm doing the best I can. But, you know, it's hard to do when you
are being shot at.

Q: Does having spent so much of your life out of the country -- being an
Americanized president -- hurt?

A: I think it does, there's no doubt. But in a way it hurts and it helps,
because over the years I've been seen as successful and able to solve
problems. That's what I was able to achieve as a politician: credibility,
stopping hyperinflation. It's a double thing. Now obviously, I'm extremely
committed to the country. In a way it's a defect. In a way it's positive.

Q: There has been a lot of press lately about Bolivia losing ground in its
quest against coca eradication.

A: It's horrible, I won't use another word. The big problem is, we've gotten
rid of almost 90 percent of the coca -- we have 5 or 10,000 hectares
[remaining] and started at 50 or 60 [thousand]. It's hard to get the last
bit.

That last five or 10,000, they are planting as fast as we can rip it out. We
are at a standoff. I made a big point, with very unhappy reactions in
Washington, of trying to have a discussion and arrive at a consensus with
the coca growers to see if we could arrive at a solution. We're at the end
of the war.

Evo would say there's a lot more consumption and there should be more legal
coca. We have about 12,000 hectares legal for traditional uses.

Q: How big a threat is Morales to your government?

A: I don't think he is a threat in the sense that he is a viable
alternative. As I said before, he has to accept the fact that the only way a
person with that profile could be accepted by Bolivia or the international
community is through elections. He only has one route to go. If he tries to
do it the way he tried to do it the beginning of the year -- stick the knife
in and see where he hits bone -- I think it would be disastrous for him and
the country. It would just be totally unacceptable.

Q: Could Morales win in 2007?

A: He might. He has to change the way he does things. Right now, he has my
popularity, and that's not good. We sort of embraced each other in a death
wish. We both dropped in the polls like stones. The only difference is that
I know it, and he doesn't seem to realize it. They see him as part of the
problem. They see me as the president -- he should fix things, he shouldn't
be part of the problem. There's only a one point difference in the polls.

If you want to win an election, you have to learn to be [a political]
opposition, not to be seen as obstruction. It's tough to win elections.
These guys have to learn, you can't just walk in with a mob and take over
the country.

Q: What are your poll numbers?

A: I'd rather not talk about it, like I'd rather not talk about my weight.
As my wife says, at this point in life, I'd rather talk about my age.

They're not good. We've gone from about 50 to 25, and that's less than you
really need. We have to pull it back up. We were doing relatively well until
January and February, when we took a terrible beating.

In democracy, if you want to win votes, you have to do it differently, not
control streets, do blockades and cause riots. Evo and Manfred are both very
mistaken. Right now, if they were successful in getting me out of government
and had any type of transparent election, there would be a third party to
kick the pants off both of them. That's not a problem. We have a
constitution, I am sworn to uphold it, and that's what I plan to do.

Slowly, if we can get our act together, we have a chance.

Q: You surprise me -- you are a realist.

A: I learned that long ago because I was never a charismatic leader. I
always signified change and sacrifice. But I just know that I've got to do
better. Well, maybe it's because of the business background. I am accustomed
to reading balance sheets: If they are red, you've got to do something about
it.

Democracy is changing popularity into respect. If you are a good president,
you should never be popular. You should be respected.

Q: Are you enjoying it?

A: No, but I am a masochist.

Q: Why are you president?

A: It didn't make sense to keep making more money [laughs]. Frankly, I'll
tell you what happened. I came back to government because I left what I felt
was a legacy, and I was conscious of the fact that I wanted to come back to
improve and correct what I had done. It took a tough five years [1993-'97],
people beating me up, saying it was awful. I wanted to come back and finish.
But I didn't expect to get the can of worms: four years of recession, a very
disillusioned population, a world economy in disarray and people who no
longer feel democracy and market economy was the magic solution.

So I came back for that, but I got more than I bargained for. It's very
tough to be president without the margins, without the moment that I had
before. And so, well, you know, you pay for your sins on earth. You don't
have to go to hell.

Q: What's the next step?

A: The next and toughest step is to do what I promised to do. Basically,
what I offered people was a very intensive public works program that hasn't
gotten off the ground, and it's not because of lack of money. It's because
we were badly distracted, and I've had a nonfunctional government because of
problems with this coalition. I hope to overcome them, and I hope to get
over these things: months of battling blockades and crisis. I had to cut
down government spending almost 20 percent. That's pretty brutal. I couldn't
raise taxes, so I decided to cut expenses.

But I just hope. I know the time margin is short, and we've got to get
going. I hope I can do it.

Q: What changes are in store for you, your government, your agenda, after
something so dramatic?

A: First of all, we were obliged to reorganize the government so that it
represented a greater level of consensus.

We have three goals, one of them is to recover the police, to reorganize.
What happened is, in the war against drugs the very best people in the
police have gone to that area. They had special pay situations, they had a
lot of privileges and have done a good job. This has taken the very best of
the police academy's graduates. It has left the weakest, the lesser people,
taking care of order.

And they have some very, very valid gripes. You can't do it with the
strikes; they become an armed union.

The second thing I think is a real challenge: land tenure. We have to
protect people that have productive land. But at the same time -- thank God
Bolivia does have a lot of land still available -- make sure that other
people, the people who need the land, get land.

The third big goal is gas exports to the U.S. As you know, Bolivia, after
Venezuela, has the largest hydrocarbon reserves in Latin America. It could
change the economy -- and it could make a real difference for the Bolivian
people.