Uneasy calm returns to Bolivia

The government only defused the crisis by cancelling plans to raise income tax and awarding police a hefty pay rise.

" We'll never [solve our grave problems] through violence, looting and destruction "
President Gonzalo Sanchez de Lozada

Trade union and opposition leaders unhappy with President Gonzalo Sanchez de Lozada's austerity policies want to continue the protests.

But residents lined the streets of La Paz on Thursday to cheer police officers as they went back on patrol.

Shops, government buildings and one of the city's main shopping malls were ransacked during the unrest as the army tried without success to contain protesters with tanks and live bullets.

President Sanchez de Lozada went on national television to offer his condolences to the families of the dead and appeal for peace.

"Hopefully together we can find solutions to our grave problems, but we'll never find them through violence, looting and destruction," he said.

Looted ministries

Most of the deaths occurred on Wednesday when the violence erupted during a protest outside the presidential palace.

Doctors have confirmed that most of the victims, many of them policemen, had wounds from bullets fired by the army.

On Thursday a sniper shot dead a 21-year-old nurse in the city centre as she helped load an ambulance with wounded people, and four other people were killed in a shooting in the Alto area, which adjoins La Paz.

A dozen government buildings were among the properties looted in the business capital of one of Latin America's poorest states.

One looter emerging from the Ministry of Sustainable Development boasted of the valuables being snapped up inside as crowds cheered out on the street.

"There were great things inside, computers, radios, but they beat me to it," he said, brandishing a metal trophy he had managed to snatch for himself.

Drug trade

Teachers, farmers, and union workers all demonstrated in the city's streets on Thursday, with a march of 5,000 unionists nearly reaching the presidential palace again.

Protesters threatened the US Embassy and warned the president to "resign or die".

The BBC's South America correspondent, Tom Gibb, says that some union and opposition leaders want to continue the protests to try to force the president to resign.

They are backed by small farmers who grow coca - used to make cocaine - who are angry at US-backed attempts to eradicate the crop.

Bolivia's president is a key ally of Washington in its war against drugs, our correspondent says and he is not out of trouble yet.

Police deal

The police seem satisfied with an agreement to give them a financial bonus and to pay the families of officers killed during Wednesday's violence $10,000 each.

About 10,000 officers - nearly half of the nation's police force - had been refusing to work.

Officers in La Paz are paid about 880 bolivianos ($105) per month - a salary which would have been eroded by the government's planned income tax of up to 12.5%.

The government argued that the tax hike was necessary to reduce its deficit - now 8.5% of the budget - to the 5.5% demanded by the International Monetary Fund.