July 19, 2004 - 5:15 AM

Bolivia leader hails referendum victory

By Alistair Scrutton

LA PAZ, Bolivia (Reuters) - Bolivia's President, Carlos Mesa, says the country backs his proposals to allow natural
gas exports and increase state control over the nation's huge reserves in a referendum aimed at appeasing an
impoverished Indian majority.

"The five questions have been answered, each one, with a yes," Mesa told a news conference late on Sunday.

These results -- yet to be confirmed by an official count -- will likely ensure that Mesa stays in power until 2007 and lend
the Andean country some political stability after a bloody indigenous revolt ousted the previous government last year.

The official results, although based on 2.2 percent of the vote counted, supported Mesa's claim of victory. Unofficial
counts by Bolivia's state TV and the leading PAT private TV channel also said Mesa won each of the five questions.

Voting was mostly peaceful as Bolivians voted over an energy issue that has split the country between its majority
Indians and European-descended elites.

The battle over who profits from one of Latin America's biggest gas reserves pits Bolivia's low-income Indian majority,
calling for national control, against elites, who say Bolivia needs the foreign investment that more exports would bring.

Fury at a $5 billion (2.7 billion pound) plan to export gas via Chile, Bolivia's historical enemy, lay behind a siege of the
capital by Indian groups in October in which dozens of protesters were killed by troops. The violence led to the ouster of
pro-Washington President Gonzalo Sanchez de Lozada.

Mesa, his replacement, called the referendum to appease Indians, who made nationalisation a rallying cry of
October's revolt, and he has turned the election into a vote of confidence.

Bolivia's state TV said an unofficial count of 25 percent of Bolivia's 20,500 voting stations showed Mesa winning each
of the referendum's five questions with approval ranging from 45 percent to 66 percent of the votes. The margin of error
on the count was 4.5 percentage points.

This roughly coincided with another unofficial count of 41 percent of the votes by PAT television, a leading private
news channel.

Defeat in the referendum would have forced him from office and plunged Bolivia, with a history of coups and
rebellions, into civil unrest.

There were sporadic reports of violence by radical Indian groups, which threatened to burn ballot boxes and boycott
the vote.

"The referendum's strongest message has been that peace has conquered violence," Mesa said.

The referendum was seen as the best of the worst by foreign investors, given that a "No" vote would have plunged
Bolivia into chaos. Foreign companies will have to deal with stronger state controls and higher taxes.

The vote may come as a relief to Washington, which feared that more unrest in Bolivia, the world's third biggest source
of coca leaf used to make cocaine, could lead to more drug smuggling from an Andean region seeing growing
indigenous anger at "gringo imperialism."