World Bank tried to "blackmail" Bolivia: Morales

By Louis Charbonneau

UNITED NATIONS (Reuters) - Bolivian President Evo Morales on Wednesday accused the World Bank of trying to "blackmail" his country several years ago by demanding free-market reforms in exchange for aid loans.

"In the first year of my government some World Bank representatives came to Bolivia and they tried to blackmail me," Morales told reporters at U.N. headquarters, where he attended a General Assembly session that voted to establish an "International Mother Earth Day."

"I said -- OK, if it's unconditional help, fine," he said through an interpreter. "But if it's conditioned on privatization of basic services, privatization of natural resources, then no."

Morales, the country's first Indian president and a fierce critic of the United States, said the World Bank has improved since that time by dropping such conditions on aid lending. He also expressed his support for a thorough reform of the International Monetary Fund.

"I welcome Brazil and Argentina's proposal to radically reform the IMF and I also welcome the World Bank's change of attitude," he said.

Morales, who attended last weekend's Summit of the Americas in Trinidad and Tobago, gave no details of the Brazilian and Argentine proposal for reforming the IMF. Brazil has called for emerging markets to have a greater voice inside the organization.

APPEARANCE CANCELED - HEALTH CITED

The Bolivian leader recalled a series of violent demonstrations that broke out in 2003 in South America's poorest country after the government had raised taxes on gasoline and other items at the recommendation of the IMF in order to reduce its fiscal deficit.

"Our fiscal deficit did not improve and now ... without this huge tax on petrol, we're doing better," he said.

Morales was to have spoken at a church in New York's Harlem neighborhood after his U.N. appearance but canceled a few minutes before he was to speak due to health reasons, said Carla Esposito, a counselor to Bolivia's U.N. Mission. She gave no details.

Morales, a socialist, has nationalized energy and telecommunications companies and has increased social spending, using some of the extra revenues the state now has to fund social programs.

The cornerstone of his pro-indigenous and leftist policies is a new constitution, which was approved in a referendum in January with more than 60 percent support.

Speaking about the global financial crisis, Morales voiced skepticism about the efficacy of stimulus plans the United States and other members of the so-called Group of 20 large developed and developing economies have proposed.

"The culprits of this financial crisis, this crisis of capitalism, will not solve it just by injecting money, because there has to be real support (for economies)," he said.

"Many countries, many of us do not really believe in these stimulus packages with the G20 for example," Morales said.

(Editing by Eric Beech and Todd Eastham)