May 2 (Bloomberg) -- Bolivia's wealthiest province votes this weekend on whether to back autonomy from the central government in a vote President Evo Morales says is ``illegal'' and backed by a ``radical'' opposition.

Voters in the eastern province of Santa Cruz, where the country's natural gas industry is based, cast ballots May 4 on a statute for more control over security, energy and farming policies in a challenge to central government rule.

Santa Cruz's leaders are chafing at Morales's two-year push to breakup large landholdings and exert more control over Bolivia's natural gas reserves, the second-largest in South America after Venezuela, by redirecting more energy taxes to the central government. Morales's effort is backed by the impoverished indigenous majority in the western highlands of Bolivia, South America's poorest country.

``This is a real challenge to the government and to Morales's skills as a leader,'' said Peter DeShazo, director of the Americas program at the Center for Strategic and International Studies in Washington.

The Organization of American States has said the vote may spark violence between Morales supporters and those backing the Santa Cruz referendum. The OAS has called for the province and the president to engage in talks to settle their grievances. Clashes between government supporters and opponents protesting a plan to change the constitution left four dead in November.

Resistance to Morales has spread to four of the country's eight other provinces, where regional leaders are considering similar referendums later this year.

`Revolution'

Residents of Santa Cruz will vote ``yes'' or ``no'' on a statute that would allow the province to create its own police force, develop energy policies, build highways and settle land disputes. It would also allow for direct election of the governor, stripping Morales of his power to designate regional leaders.

``This is part of a revolution without violence, without hatred,'' Santa Cruz Governor Ruben Costas said April 29, according to the province's official Web site.

Bolivia's National Electoral Court said it is the only agency authorized to oversee elections and that it won't be involved in the May 4 vote. Finance Minister Luis Arce froze bank accounts belonging to the province on April 24, saying the government hadn't received required reports on the region's budget, the newspaper La Razon said.

Ruled since colonial days by a white or mixed-race political elite, most indigenous Bolivians -- the majority are Aymara or Quechua -- didn't have the right to vote until a 1952 revolution abolished Spanish-language literacy requirements.

`Something Grave'

Morales, the country's first indigenous president, denounced the referendum in an April 22 interview with Bloomberg Television.

``I view this as a poll or a survey, not a binding referendum,'' Morales, 48, said. ``We're not going to recognize the results because they are illegal and unconstitutional.''

Morales's approval rating fell to 54 percent in April from 56 percent in March, the third straight monthly decline, pollster Ipsos Apoyo Opinion y Mercado said April 29, according to La Razon. The survey of 1,022 people in four cities had a margin of error of plus or minus 3 percentage points.

Dante Caputo, OAS Secretary for Political Affairs, made his third trip to Bolivia this year on April 30 to try to facilitate negotiations between the central government and Santa Cruz.

``The May 4 vote could generate something grave that we're going to regret afterwards,'' OAS Secretary-General Jose Miguel Insulza said during a special hearing on Bolivia April 26 in Washington.

Vote, Investment

Venezuelan President Hugo Chavez, an ally of Morales, said in April that Santa Cruz leaders are trying to create a separate state. ``The fascist right doesn't want dialogue, but war, to oust President Morales,'' he said.

Representatives of Venezuela, Bolivia, Nicaragua, Cuba and Dominica last month signed a statement of support for Morales against the autonomy vote.

``Nobody has the right to stop this vote, not Chavez, not anyone,'' said Branko Marinkovic, president of the Pro-Santa Cruz Committee, in a speech April 30.

Morales's efforts to re-take control of the country's energy industry, which include forcing foreign companies to renegotiate their contracts, have led to lower investment amid energy shortages in neighboring Argentina, Brazil and Chile.

Investment in exploration and production in Bolivia's oil and gas industry fell to $149 million last year, the lowest since 1996, according to the Santa Cruz-based Hydrocarbons Chamber. The chamber's members include Petroleo Brasileiro SA, Total SA, and BG Group Plc.

``Investment has already been a problem for Bolivia and certainly this kind of standoff is something companies will take into account,'' DeShazo said.

To contact the reporter on this story: Bill Faries in Buenos Aires at wfaries@bloomberg.net

Last Updated: May 2, 2008 02:00 EDT