BOLIVIA TO LET MORE FARMERS CASH IN ON COCA

US May Cut $50m Aid Over Fear Of Rise In Cocaine Supply

It is a farmers' market like any other, but there is only one crop on sale:
every week enough coca passes through this row of sheds to make half a
tonne of cocaine.

The Villa Fatima market has nothing to do with the narcotics trade,
however: it is Bolivia's only legal coca market. The country's anti-drugs
laws allow for a 12,000-hectare area (just under 50 square miles) of legal
coca plantations north of La Paz to satisfy demand for its traditional uses.

Peasants in the bleak Andean uplands constantly chew the leaf to offset
cold and hunger, and visitors to La Paz are offered coca tea to treat
altitude sickness

"Coca is not a drug, it's a medicine. It helps you work, and it stops you
getting tired or sad," said Teresa, a farmer who had travelled overnight to
sell a 45kg shipment of the pale green leaves. Following a wave of social
unrest which left scores dead and nearly toppled the administration of
President Gonzalo Sanchez de Lozada, the Bolivian government is considering
a plan to allow thousands more farmers to grow coca within the law.

According to Ernesto Justiniano, the vice minister of social defence, the
government plans to launch a six-month study to determine the scale of the
nation's legal coca consumption, and will subsequently allow farmers
outside the traditional area to grow small crops of the plant.

"We've begun serious dialogues with coca growers with the aim of combating
drug trafficking and maintaining social tranquillity," he said. US
officials say the plan could cause an explosion in cocaine production, and
have hinted that Bolivia - the poorest country in South America - could
lose part of its $50m aid.

"Our policy is very clear and it remains clear. Any proposal that would
legitimise or legalise any coca which is illegal would be a violation of
Bolivian law and a violation of international treaties to which Bolivia is
a signatory," a US embassy official was quoted as saying.

Once the world's largest supplier of coca, Bolivia pledged in 1998 to wipe
out all illegal coca crops by 2002. Aggressive eradication campaigns have
reduced illicit plantations, but the policy has been enormously unpopular,
and violent confrontations with coca growers have become a regular feature
of the country's political life.

In January farmers blockaded main roads and effectively paralysed half the
country for nearly two weeks. Clashes between protesters and police left
about 10 people dead and dozens injured.

Now the government hopes to calm a burgeoning social crisis and weaken the
drug trade by giving the government more control over the many clandestine
coca markets where farmers now sell their crops to the drug mafia.

At Villa Fatima sales are carefully regulated to ensure that only
registered retailers can buy coca for resale in local shops and markets. In
the bustling warehouses bowler-hatted indigenous women haggle, as a
scratchy loudspeaker system broadcasts a steady stream of classical music.

Sitting by a set of brass scales, the warehouse manager, Juan Celso
Quijhua, chews philosophically on a quid of coca as he checks the weight of
a load, and notes the deal in an exercise book. Good quality leaves can
earn up to UKP50 for a 50lb load, a sizeable amount in a country where the
average annual income is around UKP630.

"People have always chewed coca. Farmers only sell it to the cocaine
dealers because the government doesn't want to legalise it all," said Mr
Quijhua.

Increasing the legal coca market will win political breathing space for the
embattled Sanchez government, which was further shaken this month when
violent street protests against IMF-inspired budget cuts left 32 dead and
caused the cabinet to resign.

But the plan is bound to cause problems abroad. American officials have
said that Bolivia risks losing aid money from the US and the IMF, and may
even be excluded from the planned Free Trade Area of the Americas if the
scheme goes ahead. Further increasing the pressure on the government, the
credit rating agency Standard & Poor's lowered Bolivia's credit rating last
week, saying that the unrest had put the government's economic plans in doubt.

"Sanchez de Losada is in a very difficult situation. The social crisis
could bring him down at any moment, and he has very little room for
manoeuvre," said Coletta Youngers from the Washington Office on Latin
America, a US thinktank. "Between the US and the coca growers, he is stuck
between a rock and a hard place."

At the Villa Fatima market Abel Vargas, a farmer who says he is not
interested in politics, gestured at his load of coca leaf as he waited for
a buyer.

"They say that this can be made into cocaine, but I don't know about that.
Coca has grown here for centuries, and it will always grow here. Without
coca there can be no Bolivia."