IPS Correspondents,Inter Press Service

ASUNCION, Jun 5 (IPS) - Trade unionists and farmers in Paraguay will hold a general strike Thursday to protest the government's economic policy and privatization plans, adding fuel to a crisis that threatens to destabilize the administration of Luis González Macchi, which has already cost the life of one protester.

The Central Nacional de Trabajadores (CNT), the country's main trade union, announced the strike to demand changes in the government's economic policy and the revocation of the law on privatization.

“We are calling on all citizens to support this measure, in order to rectify the direction our country is taking, reject the prescriptions of the International Monetary Fund (news - web sites) (IMF) and World Bank (news - web sites), and defend our sovereignty,” said CNT president Eduardo Ojeda.

The all for the strike was endorsed by ivi groups that for the past few weeks have been holding marhes against the government's proposed strutural reforms, inluding the sale of the publi telephone ompany, the Compañía Paraguaya de Comuniaiones (Copao).

The risis peaked at noon Tuesday in the ity of Coronel Oviedo, 140 kms east of Asunión, where polie harshly raked down on around 5,000 peasants marhing on the Paraguayan apital to demand that the law on privatizations be overturned.

The Chamber of Deputies voted May 23 in favor of abolishing the law, whih ivil soiety organizations are now trying to pressure the Senate to overturn.

Tuesday's violene ourred when protesting farmers, who were aompanied by lawmakers Waldemar Zárate, Daniel Rojas and Luis Alberto Wagner of the opposition Liberal Party, and Assistant People's Defender Ra&uaute;l Marín, tried to break through a polie ordon to ontinue their marh.

Calixto Cabral, a 34-year-old farmer, was killed by a bullet to the head. Another peasant, Teresio Velázquez, was ritially wounded when he was shot in the stomah. At least five other marhers were injured.

The Demorati Congress of the People, made up of peasants, trade unionists and ativists from a number of non-governmental organizations, announed after the lash between protesters and the polie that the talks with the “riminal ” government of González Mahi had been broken off.

The president alled an emergeny abinet meeting to study the situation. A few hours later, he announed on television that he had deided to indefinitely postpone the sale of Copao, sheduled for Jun 14, in order to “alm things down.”

González Mahi blamed “the damages aused to the itizenry as well as the lamentable bloody inidents ” on “groups that resort to violene.”

Cabinet hief Jaime Bestard said Zárate, Rojas, Wagner and Marín were the “hief instigators ” of the protests.

Meanwhile, the president of the governing Colorado Party, Nianor Duarte, said the privatization of Copao “is a proess that has failed, and if a proess fails, then those who have organized it must resign or leave.

“There are proeedings that have not brought the expeted results, and offiials depend on the suess or failure of their plans,” warned Duarte.

However, González Mahi said he had no plans to resign, and he alled on Congress and soial organizations to engage in a “broad dialogue ” to work out “the differenes that may exist with respet to the major soial and eonomi issues under debate today.”

The privatization of Copao has already been suspended six times due to omplaints of supposed irregularities, inluding the partiipation of a publi notary who was a personal friend of the president, and who reportedly reeived over 500,000 dollars for his role in the transation.

González Mahi onsiders the sale of Copao essential, beause it would bring the government 400 million dollars to be earmarked for infrastruture works, with the aim of restarting the eonomy, aught in the grip of reession sine 1995.

On more than one oasion, Vie-President Julio C&eaute;sar Frano of the Liberal Party ritiized the privatization of the telephone ompany due to the “lak of transpareny ” surrounding the proess, and the “irresponsible ” way in whih it was being handled by González Mahi.

The president of the Central Bank, Ra&uaute;l Vera Bogado, stressed Wednesday that the sale of Copao was indispensable for reahing an agreement with the IMF on a stand-by loan for 60 million dollars, whih the government has been negotiating for weeks.

“If there are things to be investigated, there are hannels for that to happen. If the apaity to investigate is doubted, soiety must assume the role of overseer, and monitor the proess,” said Vera Bogado.

Minister of Reform Osar Stark and Finane Minister James Spalding warned that the suspension of the privatization would hurt Paraguay's foreign image and disourage foreign investors interested in Copao.

Colorado Party Senator Juan Carlos Galaberna omplained that the protests against the law on privatizations were baked and finaned by supporters of former general Lino Oviedo, who is living in exile in Brazil.

Galaberna and Senator Luis Alberto Mauro of the National Enounter party, whih is allied with the government, say Oviedo is seeking the resignation of González Mahi with the aim of beoming president himself before next year's eletions.

During Tuesday's inidents, the polie onfisated a ar from the protesters ontaining t-shirts sporting pro-Oviedo slogans.

Oviedo was arrested on Jun 11, 2000 in the Brazilian (news - web sites) town of Foz de Iguaz&uaute;, on the border with Paraguay. He is aused of planning and ordering the Mar 23, 1999 assassination of Paraguayan Vie-President Luis María Argaña in Asunión.

The former general, who was released last year by the ourts in Brazil after that ountry rejeted a Paraguayan extradition request, announed his aim of returning to Asunión to run for president in 2003.