(Bloomberg) -- Bolivia’s socialist President Luis Arce defied an ultimatum from his bitter rival as their supporters attacked each other with stones and fireworks, bringing turmoil to the streets of La Paz on Monday.
Former President Evo Morales mobilized thousands of followers on a seven-day march through the Andes to the capital, leading Arce to accuse him of fomenting a coup.
Backed by the security forces, and his own civilian supporters, Arce faced down Morales’ warning that he had 24 hours to fix the fuel shortages and overhaul his cabinet if he wanted to stay in office.
“We’re here to safeguard the presidential palace, and democracy,” said Maribel Avalos, one of the Arce supporters standing outside the presidential palace on Monday evening to bar the approach of Morales supporters.
Arce won that round, as Morales left the capital on Monday, and his supporters began to disperse over the following hours. But as shortages and inflation worsen, more unrest is likely as the two factions fight for control of the ruling socialist party ahead of the 2025 elections.
It’s still unclear whether Morales will be able to run.
The nation of 12 million people has been suffering an economic crisis since the central bank almost ran out of foreign currency last year, causing its currency peg to the US dollar to collapse. That in turn led to shortages of fuel and other key goods, as well as rising consumer prices, creating fertile soil for disorder.
In June, a group of soldiers stormed the presidential palace in an apparent coup attempt.
Morales became Bolivia’s first Indigenous president in 2006, with Arce, a UK-educated economist, as his finance minister. But the two fell out last year, as Morales became increasingly critical of his protégé’s handling of the economy.
The yield on the nation’s sovereign bonds due 2028 is currently close to 24%, indicating that investors see a high risk of default.
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