Bolivia is relatively free of the terrorism, insurgency, and criminal violence that afflict other Andean nations, although corruption and favoritism in the political arena are rampant. The public sector encompasses some 500 agencies, providing opportunities for graft. Tax evasion is widespread. In an attempt to keep the national currency at market rates, the government legalizes the black market.
The cocaine industry increases corruption at all levels of public institutions. The cocaine business also fuels a new kind of crime among coca-paste addicts. Increasingly militant and powerful unions of coca growers hamper Bolivia's attempts, with U.S. support, to implement a program of cocaine interdiction and coca eradication. Cocaine-related acts of terrorism increase.
President Paz Zamora orders an attack on terrorists and breaks up a number of drug-trafficking networks, but he allows lenient sentences to the biggest narcotics kingpins. Paz Zamora is later suspected of having ties to some accused traffickers, as are the head of the anti-narcotics police and the interior minister. Mass arrests follow social protests and demonstrations.
Demonstrations become more frequent as various segments of society protest privatization, low wages, and poor living conditions. Three weeks of civil disturbances in 1995 prompt the government to arrest more than 300 labor leaders and suspend constitutional rights so it can hold people without trial.
President Banzer makes the elimination of illicit coca growing a central goal of his government and succeeds in reducing production and trafficking. Widespread poverty and increased migration to cities, however, contribute to a rapid increase in crime. Protests in 2000 leave five dead and many wounded after 13 days of government-imposed siege.
Fierce strikes and riots seize La Paz for over a month, spurred by the government's failure to ease the rampant poverty mainly afflicting the majority indigenous population. Troops deployed to restore order clash with protestors, resulting in at least 80 deaths. Sánchez de Lozada's political backing erodes amid the violence, and he resigns, fleeing the country with his family.
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