Bolivians in fuel price protests

The government says the fuel subsidies encourage smuggling

Protests have brought two of Bolivia's largest cities to a standstill amid continuing tension over a government decision to cut fuel subsidies.

Workers in Santa Cruz, the country's economic capital, set up road blocks to halt public and private transport.

Demonstrators in El Alto continued an indefinite strike over the subsidies and in protest at the way the city's water system is being run.

The government has accused protesters of trying to destabilise Bolivia.

President Carlos Mesa has threatened to resign if the demonstrations result in loss of life.

Bus strike

Hundreds of thousands of people in Santa Cruz - which has more than one million inhabitants - joined the protest on Tuesday, blocking routes out of the city and closing factories, shops and offices.

Residents are angry that the government's move will lead to price rises of between 10% and 23% for petrol and diesel.

The latest protest follows a 24-hour strike by bus owners and drivers last week, which stopped transport services in two of the other main cities, La Paz and Cochabamba.

Strike organisers in El Alto, where action began on Monday, have called for plans to cut subsidies to be dropped and have vowed to continue their protest until the government agrees to their demands.

Residents also want the cancellation of a government contract with the French-owned company which operates the city's water system.

Routes from the city to the capital, La Paz, and elsewhere were blocked by protesters.

The government has agreed to negotiate with the strike leaders and has said the water contract may be "reviewed" if the service is not extended to poor neighbourhoods of El Alto, the Associated Press news agency reports.

But officials say they will not backtrack on the move to cut fuel subsidies, arguing that they are financially unsustainable.

The subsidies also allow Bolivians to resell fuel abroad illegally, the government says, encouraging smuggling and threatening domestic supply.