Dec. 18 (Bloomberg) -- Bolivian Indian activist Evo Morales, who favors increased state control over the nation's natural gas reserves and opposes U.S. efforts to eradicate coca production, is poised to win election as president of the South American country.

Morales, 46, will take 30.1 percent of the vote today, a November poll by Bolivia's Bolivision showed. Ex-President Jorge Quiroga, 45, who supports foreign investment in Bolivia's energy industry, will place second, according to the poll. Congress will decide the winner next month if no candidate takes a majority.

An ally of Venezuelan President Hugo Chavez, Morales on Dec. 16 said he was ``the United States' worst nightmare'' and pledged to oppose ``parasitic businesses that grow richer at the expense of the poor.'' Morales, who led protests to topple the government in 2003, warned of possible rioting if he isn't elected.

The election in South America's poorest nation may increase opposition to U.S. policies in the region and discourage foreign investment. Morales, a coca-growers leader, vows to legalize planting of the leaf, a traditional medicine in the country that is also used to make cocaine. He also backs increasing the government's role in tapping Bolivia's natural gas reserves, the second largest in South America after Venezuela, and lessening that of international companies such as Irving, Texas-based Exxon Mobil Corp. and Reading, England-based BG Group Plc.

State Role

``We could definitely see a greater role of the state, driving out some foreign companies,'' said Theresa Paiz-Fredel, a sovereign debt analyst at the Fitch Inc. ratings service.

Bolivia's 9 million inhabitants are the poorest in the region. The country's gross domestic product totals $2,600 per capita, compared with $10,200 in Argentina and $7,600 in Brazil.

Economic growth slowed to 3.9 percent in the second quarter after a 4 percent expansion in the first quarter and 5.1 percent in the fourth quarter of last year. Investment in the oil and gas industry dropped 40 percent to $62.5 million in the first six months of 2005 from a year earlier.

About 50,000 police and soldiers were deployed along the main avenues of La Paz to help guard against protests during the election. More than 200 international monitors also are in Bolivia for the vote.

Bolivians lined up from 6 a.m. New York time schools and government buildings used as polling stations to cast their ballots. Popular protests have toppled two governments in the country in the past two years.

`Wasn't Easy'

``It wasn't easy to make it to December 18,'' President Eduardo Rodriguez said at a ceremony at the National Electoral Court in La Paz broadcast on television station Bolivision. ``We overcame many dangers along the way.''

The elections, originally scheduled for Dec. 4, were set back after Congress was unable to agree on congressional seat distribution. Rodriguez established seat allocation by decree last month.

The nation's 3.6 million voters today also will elect the 157- member Congress and prefects for the country's nine departments.

Horacio Serpa, head of an Organization of American States' election observer delegation, said on La Paz-based radio station Radio Panamericana said the election was largely without incident. Observers reported the theft of ballots in the southern department of Chuquisaca and several political parties who violated electoral rules by displaying campaign banners, he said.

The year after losing the 2002 election, Morales headed anti- government protests in which at least 70 people died and forced President Gonzalo Sanchez de Lozada, 75, from office. In May, Morales again led protests, prompting Congress to hike royalties on oil and gas output.

President Carlos Mesa, 52, resigned in June as protests continued. His successor, Rodriguez, 49, called elections for this month.

``The people could react if we're stripped of victory,'' Morales, an Aymara Indian and former llama herder, said at his final campaign rally Dec. 16 in the eastern city of Cochabamba.

Ahead of the election, United Nations Secretary General Kofi Annan called for calm.

`Constructive Attitude'

``The UN urges the Bolivian people to maintain a peaceful and constructive attitude during these elections,'' Annan said in a Dec. 16 statement. ``I'm confident that Bolivians will exercise their vote in a free, fair and transparent way so that the people respect the election results.''

The Bolivision poll of 8,000 people showed cement executive Samuel Doria, 46, winning 12.9 percent of the vote in the presidential election. The survey, taken from Nov. 14 to Nov. 28, has a margin of error of plus or minus 3.5 percentage points.

Supporters of Jorge Quiroga, nicknamed ``Tuto'', fear Morales will bring greater instability if elected.

``You can see Tuto's a professional who's prepared to govern,'' 46-year-old waiter Victor Mendoza said in an interview in La Paz. ``We don't know how long Evo would last as president or if his own people will eventually kick him out.''

Quiroga, a former IBM executive and finance minister who studied at Texas A&M University, says Morales' policies and anti- U.S. sentiment will scare away investment and fail to spur economic growth.

`Missed the Boat'

``Bolivia's missed the boat in many ways,'' Fitch's Paiz- Fredel said. ``Oil companies are investing the bare minimum.''

Morales, seeking to become Bolivia's fifth president since 2002, says he wants Venezuela's state oil company, Petroleos de Venezuela SA, to replace the dozen multinationals whose exploration and production contracts were annulled by Bolivia's Congress in May. An accord with PDVSA would give Bolivia's government more income from gas sales, enabling it to boost spending, according to Morales. Venezuela is the world's fifth-largest oil exporter.

Energy Talks

Rodriguez replaced his energy minister last month after talks to renegotiate contracts with eight companies, including Exxon Mobil and BG Group, broke down. The companies are demanding that the government honor bilateral investment-protection agreements.

BG spokesman Neil Burrows said the company remains committed to Bolivia, despite some concern with legislation. Exxon Mobil spokesman Len D'Eramo said his company wants to do business ``under attractive fiscal terms and in a fair and equitable investment climate.''

An ongoing dialogue with Brazil's President Luiz Inacio Lula da Silva and a realization that Bolivia needs foreign investment to tap its reserves will have a moderating influence on Morales, said investors such as James Barrineau at Alliance Capital Management LP in New York.

``Cool heads will prevail before kicking foreign investors out of the country,'' said Barrineau, senior vice president responsible for Latin American economic analysis at Alliance Capital, which manages $163 billion in fixed income securities and had $8 billion in emerging market debt as of Dec. 1.

If elected, Morales says he will press the Inter-American Development Bank and other lending agencies to forgive his country's $4.9 billion of international debt, equivalent to 60 percent of GDP.

IMF

International Monetary Fund Managing Director Rodrigo de Rato urged Bolivia's next president to hunt for private capital to tap the country's gas.

``To mobilize those natural resources, the Bolivian authorities will need financial resources that the country doesn't have today,'' de Rato said at a Dec. 16 news conference in Washington.

Morales, who chews coca leaves while campaigning, also opposes U.S. efforts to eradicate plantations of coca, claiming the leaf has been used for thousands of years in the Andes as traditional medicine. He accuses the U.S. of spurring demand for illegal drugs.

``We expect whatever government comes next in Bolivia to honor those commitments that they have made to fight the production and transport of illegal drugs, U.S. State Department spokesman Sean McCormack said at Dec. 15 briefing in Washington.

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net

Last Updated: December 18, 2005 14:01 EST