Protests fail to stop Bolivia law

Feelings over Bolivia's huge natural gas resources run high

A controversial law is set to be passed increasing the tax on foreign energy firms in Bolivia.

The bill was opposed by indigenous groups and trade unions, who led huge street protests in the main city La Paz demanding even higher taxes.

President Carlos Mesa opposed the tax rise for different reasons, saying that it would discourage foreign investment. But when a parliamentary majority backed it, he decided not to veto it, in effect allowing it to become law.

Union threat

The law raises the taxes to be paid by foreign energy firms to 50% of their revenues.

Mr Mesa used a provision of the constitution under which he can pass legislation back to Congress without endorsing it, obliging the speaker to sign it into law.

He acted "according to his conscience" after two weeks of deliberations, said presidential Chief of Staff Jose Galindo.

Jaime Solares, head of the Bolivian Workers Central labour federation, demanded the nationalisation of the oil industry on Tuesday, threatening otherwise to "close Congress".

The BBC's Elliott Gotkine reports from La Paz that the opposition sees the president as a stooge of the foreign energy firms.

Plans to export the country's gas sparked a wave of protests in October 2003 and resulted in his predecessor, Sanchez de Lozada, being forced from office.