Bolivian Govt Backs Off Water Hikes By PETER McFARREN, Associated Press Writer

LA PAZ, Bolivia (AP) -- The government agreed Monday to back off water price hikes 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 a ''state of siege'' decree giving police and the military a freer rein.

An end to the unrest was in sight Monday evening, 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,'' Vice Minister of the Interior Guido Orias told a journalists alongside the protest organizers.

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 needed 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 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 in the area around Cochabamba.

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

A so-called 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 of Cochabamba to try put down the protests. On Monday, protesters manned roadblocks near the Andean towns of Achacachi and Batallas, where one army officer and two peasants were killed and dozens injured on Sunday.

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

Under Monday evening's agreement, Congress began considering changes in the new sanitation law that had raised outrage by requiring residents and farmers pay fees for digging wells.

The government also confirmed that the international water consortium that was to finance the water project, Aguas del Tunari, was withdrawing from the country. That meant the 20 percent hike in water prices would not come into effect, although it also meant the project now has no foreseeable financing.

The government also agreed to release some of the 20 protest leaders arrested during the demonstrations.

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-- Martin Thompson (mthom1927@aol.com), April 10, 2000