The Legacy Of The Old Guard

Shortly before Sunrise, the military police huddled in the doorways of the Plaza Murillo begin to stir beneath their capes.

The door of the presidential palace creaks open and the guards, in scarlet tunics and white webbing, begin a rigmarole of shuffling, stamping and saluting that is the changing of the guard.

The police are muscular white guys. The guards, armed with muskets, are willowy young indigenous kids - the regiment has always recruited from the "indios" for ethnic novelty value.

Now, as the police strut away, the guards smile nervously at each other from beneath their kepis: then they collapse in a fit of giggles.

Evo Morales . "Look," President Morales tells Paul Mason of the BBC, "60 years ago, our grandparents didn't even have the right to walk into the main square - not even in the gutter. And then we got into parliament - and now we're here."

He looks around apologetically at the long Rococco state room we are meeting in - at the ormolu chairs we are sitting on. He has installed a portrait of Che Guevara in the presidential suite but, apart from that, the palace remains as it was under his neo-liberal predecessors.

"It's been a great victory - now this is a stronghold for the indigenous people. And we're not going to stop," Mr Morales says.

"The most important thing is the indigenous people are not vindictive by nature. We are not here to oppress anybody - but to join together and build Bolivia, with justice and equality."

In truth, the Morales presidency is fast getting beyond the "peace, love and understanding" phase. The first indigenous leader to run Bolivia has been two months in office, but he does not feel like he is in power - yet.

"You want to issue a decree to help the poor, the indigenous people, the popular movements, the workers... but there's another law. Another padlock. It's full of padlocks that mean you can't transform things from the palace... I feel like a prisoner of the neo-liberal laws."

For a man who rose to prominence as a union leader, and to office on the back of social movements with mainly economic grievances, economic policy has hardly figured in the first 60 days.

Instead, he has used the parliamentary majority that came with his 54% landslide to push through a law convoking a Constituent Assembly, and allowing regional referendums on autonomy.

"In last year's election we only captured government - with the Constituent Assembly we want to capture political power.

"Who makes the decisions here - the poor and indigenous people or those families who've done so much damage to our country in the past? They discriminated against, marginalised, oppressed, hated and totally disregarded the indigenous people. It's a political fight - it's a fight for power."

If the economic conditions Mr Morales has inherited are relatively benign that is because of Bolivia's newfound hydrocarbon wealth.

The trillion-cubic-metre gas field was discovered in the late 1990s and, originally, leased at what Mr Morales sees as knock-down prices to the oil and gas corporations.

He has got a judge beavering away at declaring the original contracts illegal, and plans to nationalise the gas and oil industries.

But here is the problem. Most of the gas is in the Chaco region, administered from the city of Santa Cruz, which represents 33% of the country's GDP and 25% of the population.

Santa Cruz is the traditional base of the Christian right-wing parties - it is the centre from which the US anti-drug operation is run, it is where Repsol, Petrobras and British Gas are headquartered.

Now Santa Cruz wants autonomy and the right to all but 10% of the hydrocarbon revenues.

President Morales appears unfazed by veiled threats of disinvestment.

"Of course, there could still be sabotage - we've just heard the news that some transnational companies are putting $2m into a campaign to boycott my government. It doesn't matter - we're monitoring the problem," he says.

Meanwhile, his own mass base is restive.

The miners of Huanuni, buoyed by the rising international price of tin, paralysed the southern quarter of the country with a series of roadblocks, enforced with dynamite. Their demand? Fifty-five extra teachers in their local schools.

Mr Morales' response - to announce he would provide 3,000 extra teaching posts, paid for by closing embassies and scrapping "decorative" civil service posts.

He seems to sense there is only so long you can go on like this, but as the first indigenous leader in the continent, he has some unique cards to play, the first one being himself:

"I have a lot of trouble understanding all the detail of finance and administration - but if you combine intellectual and professional capacity with a social conscience, you can change things: countries, structures, economic models, colonial states."

That position has visceral support in a place like El Alto, the shanty-city of one million Aymara people which dominates the high plain above La Paz.

There the talking point is not whether the president should nationalise the gas and neutralise the opposition - but what they will do to him if he fails.

They will tolerate Evo, one tells me, for a year or two - though they will never move against him if it weakens the united front against "the whites".

Mr Morales, for now, is more than capable of meeting the wave of rising indigenous cultural consciousness with concrete reforms. But soon the crunch will come - the form and costs of nationalisation for the hydrocarbons industry must be concretised.

How it all pans out now depends on whether he can forge his political party, the Movement Towards Socialism - until now more of a federation of disparate social movements - into a disciplined political force.

It scored a big election victory not only because it mobilised the poor but because the young, white, foreign-educated middle class mobilised themselves to vote for change.

Their vote was more of a rejection of the failure of their fathers' generation than an endorsement of Evo Morales.

"We hope the delegates to the Constituent Assembly will represent not only the indigenous people and popular movements but patriotic professionals, intellectuals and business people. If these patriotic sections take part we'll succeed," Mr Morales tells me.

What happens if they drift away, if the foreign gas companies play hardball, if the rumours of paramilitary arms stockpiles around Santa Cruz turn out not to be scare stories?

Well, at that point the farce played out at the palace gate between the president's ceremonial guards and the muscular remnants of regimes past may turn nasty, on a national scale.