Restive Bolivian slum city has a love-hate affair with capitalism

Less than four months ago, rowdy protesters were thronging the streets of this slum city, blockading food and gasoline supplies to the capital and forcing President Carlos Mesa to resign.

The spark for the uprising was capitalism, namely Mesa's free-market policies. Yet it's capitalism, with American government help, that may come to El Alto's rescue.

Peek down many of this city's dirt roads, and nestled between rows of bleak cinderblock homes you might spot something surprising: state-of-the-art factories producing everything from textiles and furniture to beer and metal and plastic products. El Alto has big ambitions: to change from Bolivia's capital of protest into its capital of industry.

The immediate cause of last June's protest was the demand to nationalize the natural gas industry, which in private hands was perceived as doing nothing for the poor. But Jose Luis Paredes, the former El Alto mayor, blames a longtime lack of investment in El Alto.

Paredes, who is leading the campaign to attract new business, calls it a chicken-and-egg syndrome: "There are no investments because of the social movements, and there are social movements because there's no employment and no export industry."

Bolivia is South America's poorest country and El Alto, perched on an Andean mountain plain overlooking La Paz, the capital, is one of the continent's fastest growing cities. Its population of 800,000 swells by 30,000 a year, mostly from daily busloads of poor Indian migrants fleeing the poverty of the highlands.

As Bolivia's economy has sagged, El Alto has become the epicenter of the "movimientos sociales," or social movements _ Indian-led urban and rural protests. With President Mesa gone and elections scheduled for Dec. 4, the protesters have calmed down _ at least for now.

The demonstrators were demanding more power to the proletariat and a halt to the free-market reforms many blame for compounding poverty in the country of 8.5 million.

But while the protests were shaking the nation, El Alto already was looking for solutions. Last December it got the Bolivian Congress to legislate a 10-year tax holiday and exemption from tariffs on imported machinery for any company moving into the city. The U.S. Agency for International Development is providing technical help to businesses to boost their exports, along with financing for a national media campaign that promotes El Alto's proximity to Pacific ports as a strategic advantage over the industrial hub of Santa Cruz in Bolivia's distant tropical lowlands.

The city says more than 100 businesses have inquired about moving here since the law was passed, and Paredes said he's optimistic El Alto's promotional campaign will generate 13,000 new jobs to dent the city's 41 percent unemployment rate. El Alto also plans a Web site in English and possibly Chinese.

Even before the law changed, El Alto had 5,000 businesses, some of which are using the tax breaks to finance expansion.

Soalpro, a bakery that has operated in El Alto for 18 years, is building a new soy milk production plant here.

"I believe it's worth it to stay here because we're giving hope to the country," said Gonzalo Rocha, Soalpro's finance chief. "We want to spread the hope. We're a small country with a lot of problems, but we're betting on it."

Abel Mamani, a powerful protest leader, welcomes the effort to attract new business but says El Alto needs a drastic improvement in the quality of life.

"Of course the blockades do damage. We're conscious of that. But how can you think about development, industrialization, in a city that isn't providing basic services?" asked Mamani. He says more than 100,000 people in El Alto lack access to clean water and electricity.

The answer is jobs, said Jesus Botero, manager of a textile plant that produces socks and pantyhose, AP reported.