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By Pav Jordan

SANTA CRUZ, Bolivia

Bolivia's richest region of Santa Cruz votes on greater autonomy from the central government on Sunday in a referendum that poses the biggest challenge yet for leftist President Evo Morales.

The region's conservative leaders have defied the former coca farmer by organizing the ballot, which he says is illegal. It would theoretically give them more control over taxes, policing and natural resources like fertile farmland and natural gas reserves.

Morales, Bolivia's first indigenous president, has called his rivals racists and separatists, and his supporters have vowed to boycott the referendum.

But a resounding "yes" vote could force him to negotiate to avert further rebellion in opposition strongholds in the east that also want more autonomy.

Sunday's vote is seen as a rejection of Morales' policies, particularly his drive to rewrite the constitution, which seeks to redistribute large estates to peasant farmers and empower Bolivia's poor, indigenous majority.

"This is the worst government in 50 years," said Roberto de Castillo, who used to work for the state oil company YPFB but quit because he was opposed to reforms imposed since Morales took office in 2006.

"It's time Bolivia left behind its centralism, where when the brain fails, everything else goes wrong too," he said, standing before a public building daubed with anti-Morales slogans. Passersby carried the green-and-white regional flag.

Tensions rose in the tropical region before the vote, and protesters blocked highways in Santa Cruz with burning tires and mounds of dirt late on Saturday to protest the referendum.

Reuters photographers said roads were blocked leading into the communities of San Julian, Villa Paraiso, Cuatro Canadas and Los Angeles and residents had pledged not to allow anybody to vote in the referendum.

Earlier, peasant farmers in the Yapacani district blocked highways to prevent local authorities from setting up polling stations.

Opposition to Morales is strong in lowland Santa Cruz, home to a quarter of Bolivia's people, a third of its economy and about 10 percent of its oil and natural gas reserves.

Its large, European-descended population is nervous about Morales' pledges to make up for centuries of discrimination against Indians.

Morales supporters in Santa Cruz plan to boycott Sunday's referendum, meaning a solid "yes" vote is expected. Political analysts say the poll would lose legitimacy if turnout were less than 50 percent.

"More people will abstain than are admitting to it now, and more people will actually vote 'no,'" said Alvaro Puente, an analyst in Santa Cruz, the main city in Santa Cruz province.

The referendum in Bolivia, South America's poorest country, could heighten tensions between the autonomy-hungry eastern provinces -- home to Bolivia's vast natural gas reserves -- and the more indigenous west, where Morales has his support base.

In Santa Cruz, Morales' supporters are the poor minority, found in small pockets near the outskirts of the tropical capital of the same name, and in outlying villages.

"This vote, it is for the rich, the people who have money and want to dominate the rest of us," said Mamerto, 53, a truck driver in the rundown Santa Cruz neighborhood of Plan 3000.

(Editing by Helen Popper and Peter Cooney)

Source: Reuters