MESA SUBMITS RESIGNATION TO CONGRESS

LA PAZ, Bolivia (Reuters) - Bolivian President Carlos Mesa, worn down by Indian protests and wrangling over how to develop massive gas reserves, submitted his resignation to Congress Monday and left opposition lawmakers to decide the fate of his mandate.

Congress will most likely meet Tuesday. Analysts said it could reject the surprise move announced by Mesa Sunday as an influential indigenous majority's protests to nationalize foreign investments, especially in the gas sector, swelled.

In El Alto, a poor and mainly Indian city on the outskirts of the capital, protesters clashed with scores of Mesa supporters throwing rocks. Below in La Paz, thousands filled the presidential palace square and chanted support for Mesa.

"I cannot continue to govern besieged by a national blockade that strangles the country," Mesa, a political independent, said in his resignation letter read on television by Presidency Minister Jose Galindo.

In recent weeks, protests and highway blockades, including from a regional autonomy movement, have grown. Demonstrators in El Alto have threatened to cut off La Paz's water supply and occupy the international airport.

If Congress accepts Mesa's resignation, it will be the second time a Bolivian president has quit in less than two years over basically the same issue: the poor Indian majority's drive to have a greater voice in Bolivia's economy.

U.S.-ally Gonzalo Sanchez de Lozada fled the country in October 2003 after 67 people died in the "gas war," nearly a month of protests against his plans to export gas through traditional foe Chile. Mesa was his vice president and planned to finish the mandate in August 2007.

In his speech Sunday, Mesa singled out coca growers' leader Evo Morales and his Movement Toward Socialism, or MAS, which had planned nationwide protests this week to push for heavy state intervention in new gas legislation.

MAS followers were in the midst of highway blockades and occupation of oil fields. One company had closed down one of its wells this weekend to discourage occupation.

Morales lost the 2002 presidential election to Sanchez de Lozada and is Washington's Bolivian bete noire for his opposition to the U.S.-led campaign to eradicate coca leave cultivation, the raw material for making cocaine.

Now he wants high royalties and less rights for multinationals that have invested over $3 billion to exploit South America's second largest natural gas supply behind Venezuela.

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