CHACACHI, Bolivia -After centuries of misery and discrimination, indigenous people across the region are flexing their political muscles, moving to wrest power from the largely European ruling elite but also dreaming of an independent state.

Such a state could look a lot like this bleak town in the highlands, where the police and central government authorities were chased out long ago, their offices destroyed by seething Aymara Indians. The Bolivian flag has given way to the seven-color Wipala, the flag of the Indian nation. Roads linking this landlocked country to the world were also blockaded frequently, a lever to prod the government to meet ever-tougher demands.

The political awakening has extended into Peru, where indigenous people have also closed highways and taken over some small towns. In Ecuador, groups of the Pachakutik movement have pledged to step up protests meant to force the resignation of President Lucio Gutiérrez, whom they helped to put in power but who has fallen out of favor over his free-market policies.

It is in Bolivia, the most indigenous country in Latin America, where they hold the most influence. One crossroads for the two visions of Bolivia will come Sunday, when a referendum is held on the issue of how to use the country's abundant natural gas, either exporting it in the hope of conventional economic development, or keeping it for use at home. The outcome could ignite new protests unless President Carlos Mesa is able to finesse the issue through his complicated five-question ballot.

He faces Indians who are increasingly aggressive in taking on the government, and have scored a series of victories. Just nine months ago, their protests forced President Gonzalo Sánchez de Lozado to resign. Now, they want Mr. Mesa to expropriate Bolivia's oil and gas companies, a proposal he rejects.

In local meetings, some Indians now even talk of forming a completely new nation, reaching across the scrub grass of the Andean highlands into Peru and Chile, where the Aymaras also live. It is a idea that has a powerful hold on this swath of the former Inca empire.

"We could remain part of Bolivia, but we want to run things," said Ramón Yujra, the director of a school in Achacachi and an indigenous leader.

Felipe Quispe, a former guerrilla and a prominent indigenous leader, went further. "What we've been doing is taking out the government representatives, the police, the transit force, the judges, the subprefects, even the mayors," he said. "Like a drop of grease that expands, if this movement keeps growing, we will reach all of Bolivia."

Such talk is enthralling to his followers, and unnerving to the ruling elite and the government. Motivated by a distrust of the ruling class for ignoring their poverty, and rejecting global economics, they talk of a vague - critics say naïve - plan of returning to the Inca past, with a communal agricultural society. All decisions should be made by consensus in local councils, or allyus, these Indians say.

The indigenous movement has surged in the first years of this century, using the ballot box, sometimes violence, and popular protest. In 2000, they stopped a plan by the Bechtel Corporation of San Francisco, the huge conglomerate, from privatizing the water system in Cochabamba, Bolivia's third-largest city. Politically, Indians and their allies now control about a third of the 157 seats in Congress, up from a handful a few years before.

But not all Indians, perhaps not even a majority, support Mr. Quispe's plans to found a new society "on the communal system our ancestors lived," fearing that breaking off from Bolivia would only mean isolation, conflict and increased poverty.

Notably, Evo Morales, Bolivia's most influential indigenous leader and a perennial candidate for the presidency, has become a de facto ally of Mr. Mesa and is working within the political system to harness the country's gas riches to help his people.

Still, indigenous leaders are confident that one day, sooner rather than later, the Indians will probably run the nation's government, either by winning the 2007 election, or possibly by capitalizing on the kind of revolt that ended Mr. Sánchez de Lozada's brief presidency. Many politicians agree that the Indians are on the verge of taking power, something that has not happened in Latin America in centuries.

"We want to reconstitute our own state," said Eugenio Rojas, an indigenous leader and academic at the teachers college in nearby Warisata. "There is no other option but a new strike. We need a revolution."

The indigenous have the numbers. They comprise up to 61 percent of the 8.3 million people in this vast country, the size of France and Spain combined, so big that over the years the national government's hold on the countryside has been tenuous, at best.

Of Bolivia's 314 municipalities, 200 have mayors and other government officials who are indigenous. This highland region, where indigenous groups are most radical, contains three million Indians stretching across four states that make up a third of the country.

Indeed, the battles between the indigenous and the nation's ruling classes - those of European heritage or mixed-race people called mestizos - have led to the most tumult here in Bolivia.

Indigenous leaders have been particularly forceful ahead of a referendum Sunday that asks Bolivians about how they want their nascent, but potentially lucrative, gas industry developed. Its five questions ask whether the nation should revive its state-owned oil company, use gas to regain a coastline lost to Chile in war a century ago and exert tighter control over oil and gas. If the questions pass, the government hopes for a new, legal framework that will permit it to raise royalty rates on oil and gas companies and permit the exportation of gas, crucial to this country's development.

"The objective of the referendum is to immediately end the obstacles toward the sale of gas," Mr. Mesa said in an interview in La Paz, the capital. "If the response is positive, we can begin negotiating contracts for the sale of gas."

But the referendum does not ask the question many indigenous leaders wanted: whether to expropriate gas installations. Mr. Mesa's government said it opposes such a plan, citing the cost of buying out foreign-owned properties at more than $5 billion, more than half of Bolivia's tiny annual economic output of $8 billion.

Many indigenous and labor groups, including the country's militant miners, remain frustrated at how natural resources have long been taken out of the country, with little to show in return.

In Corpaputo, a town of mud-brick homes on the edge of snowcapped mountains, the people ask why gas should be exported to the United States when they have never known what it is like to bathe with hot water, or have heat in their homes.

"We do not have light, we do not have gas, we cook with wood," said Julián Poma, 42, the leader of Corpaputo. "They sell gas to other countries, and we get nothing."

Directing much of their anger at foreign exploitation, those indigenous groups are pushing for a nationalization of properties owned by British Gas, PetroBras, Repsol-YPF of Spain and others. The threat has slowed investments by oil and gas companies, dropping from $680 million in 1998 to $160 million last year.

Mr. Sánchez de Lozada's plans to export gas by piping it to the Pacific Ocean through Chile, Bolivia's historic enemy, prompted bitter protests in which security forces killed dozens of demonstrators, most of them Indians. With the furor, Mr. Sánchez de Lozada was forced out of office.

Mr. Mesa is now responding more gingerly to the pressure, to protect the nation's economic development and its brittle democracy

That has not stopped some indigenous leaders - Mr. Mesa calls them a radical fringe - who say they plan to burn ballot boxes and hold strikes, particularly in El Alto, a city of 700,000 that is mostly indigenous and has been at the forefront of militancy.

"They have become even more radical and they seem more open to resorting to violent acts," Ricardo Calla, the indigenous affairs minister, said of Aymara groups in the highlands east of the capital. "You cannot underestimate its presence and how it is passing down to lowland regions."

President Mesa has tried to defuse tensions by pledging to negotiate and avoid the use of force, even in villages where officials have been forced out. The government has, in many indigenous towns, never really had much of a presence, and Mr. Mesa has been reluctant to wield force in an action that could provoke unrest.

The president said he was instead undercutting support for them by giving Bolivia's Indians more say. Mr. Mesa is permitting a constituent assembly to rewrite the Constitution, a move that will give Indians and others in rural areas more powers. He has also embarked on a campaign to explain to Bolivians how the export of natural gas can become the engine for economic development.

"We want to sell gas to benefit Bolivians," Mr. Mesa said.

Polls in Bolivia's urban centers show the referendum will probably pass, but political analysts say that does not mean Mr. Mesa's troubles are over. The five questions have been described as artfully written, vague enough that they will be open to interpretation.

"I'm concerned about those who lose, " said Eduardo Gamarra, a Bolivian who directs Latin America studies at Florida International University in Miami. "Are they willing to accept the results?"

The indigenous have made important strides since a miners' revolution in 1952 instituted universal suffrage and expanded education. A 1994 law provided the distribution of funds to municipalities across the country in an effort to decentralize Bolivia. A Ministry for Indian Affairs has functioned for years. The Constitution recognizes Bolivia's multicultural and multilingual society.

But for many, it is not enough. In three days of interviews in four indigenous villages across a swath of Andean highlands, Aymara leaders spoke of all kinds of ideas: separating from Bolivia, pressing for more resources, or simply having more autonomy. The clear message, though, was that they had little faith in their government and preferred to run things themselves. It is an idea that is already at work in many villages, even those that do not want a clean break from the capital.

"Each community is like a semi-state: they regulate water, their internal conflicts, their politics," said Álvaro García, a sociologist who is close to Indian leaders. The state, he said, "has not been completely expelled, but there is semiautonomy."

In schools and town offices in the highlands, the posters of past presidents or Independence-era generals have been replaced by those of Túpac Katari, who led a insurrection against the Spanish in 1781. Local councils have banned officials from the state or central governments. Prospective investors with mining companies have been chased out.

"We go to a crime scene but the people tell us we will be lynched," said Marco Antonio Nina, a government investigator who has been unable to investigate the murder of a mayor and other crimes in isolated villages. "People see you, and see the white face, and they do not want to let you in.''