Thousands of demonstrators blocked roadways into Bolivia's capital on Tuesday while protesters clashed with riot police in the city centre.
The demonstrators have cut off La Paz from the rest of the country.
Their demands include the nationalisation of the oil industry. They also oppose an autonomy drive by Bolivia's richest region.
Police used tear gas and water cannons in the narrow streets to disperse the demonstrators, mainly peasants who marched several days to the city of 800-thousand people.
Protestors were joined by miners, students, workers and school teachers.
No detentions
Clouds of tear gas shrouded central La Paz. The blasts of police tear canisters added to the explosion of low power dynamite sticks traditionally used by miners in protests here.
Police said several public vehicles were damaged. There were no reports of injuries or detentions.
A heavy police contingent sealed off the central Murillo plaza, the site of the presidential palace and Congress.
Blocking roads
A general strike in neighbouring El Alto brought the city of 700-thousand people to a standstill.
The strikers blocked the road between La Paz and the airport and several more that connect the capital with other cities.
A key leader of the protests is Congressman Evo Morales, whose Movement Towards Socialism party has demanded higher taxes on the foreign oil companies than the 50 per cent established in a law passed by congress.
Morales also wants President Carlos Mesa to send troops to occupy the oil installations, claiming the contracts between the foreign companies and the government are not valid because they lack congressional approval.
Many demonstrators have more radical positions, demanding nationalisation of the oil industry.
Autonomy drive
The protests are also in opposition to an autonomy drive by Santa Cruz, Bolivia's richest region and the site of its oil industry.
In a communique the day before, the armed forces said they would not tolerate "decisions that violate the constitution," a reference to the situation in Santa Cruz, were civil organisations are planning a referendum on the autonomy.
On Tuesday, army commander General Marcelo Antezana said the military does not oppose greater autonomy for the regions, but rejects "the division of our country."
He dismissed reports that the continued political tension may lead to a military coup, saying "a policy of respect for constitutional order is maintained" by the military.
Jaime Solares, president of the Bolivian Central Workers, the country's largest labour federation, has called on the military to stage a coup and put "a patriotic military officer, a Hugo Chavez in Bolivia" as president, referring to Venezuela's president. (AP)
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