Greek-style Austerity Measures

Bolivian President Cancels Gasoline Price Increase

January 1, 2011

AP – Bolivian President Evo Morales on Friday abruptly canceled a decree that sharply raised fuel prices, reacting to widespread protests and the threat of more to come in the biggest setback of his five years in office.

Sunday's price hikes had caused a burst of street protests, many of them by core supporters of the leftist who is Bolivia's first indigenous president. Protesters vowed to renew their demonstrations after the New Year holiday, with workers from the crucial mining industry vowing to join in.

Morales said in a televised message about 90 minutes before midnight that he had listened to unions and social groups and decided "to obey what the people say by abrogating the decree raising gasoline and everything that accompanied that measure. That means that all of the measures are withdrawn."

The government announced Sunday that it was raising gasoline prices by 73 percent, to 92 cents a liter ($3.48 a gallon) for regular gasoline, up from 50 cents ($1.89).

Diesel jumped to 97 cents a liter ($3.67 a gallon) from about 50 cents. Some other fuel prices doubled.

The prices had been frozen for six years, and Vice President Alvaro Garcia said the state was paying $380 million a year to subsidize gasoline imports, with much of it smuggled to neighboring countries with higher prices.

The sharp rise prompted strikes by bus and taxi drivers that hobbled transit in many cities, and mass street protests on Thursday turned violent. At least 15 people were reported injured.

Protesters carried posters denouncing the president as a traitor and some shouted,

"Evo, the people are angry!"

Morales' government at first tried to mitigate the blow of the higher prices by announcing a 20 percent salary increase for troops, police, health and education workers. The government also offered help for rice, corn and wheat farmers.