Communications minister Amanda Davila said the striking police were stockpiling weapons and pressuring other units to turn over their arms, calling it a "coup scenario."
"Press reports and intelligence reports are now saying that a coup scenario is taking shape," she said in an interview with Erbol radio, a private broadcaster.
"What gets our attention is that the police are putting weapons in police units where there were none before, they are pressuring other units to turn over their weapons," she said.
She said the movement of arms in the cities of Cochabamba and Tarija appeared intended to coincide with the arrival in the capital Tuesday of a march by indigenous people protesting plans for a road through an ecological reserve.
Davila's comments came after talks between interior minister Carlos Romero and striking officers stalled early Saturday with no agreement in sight.
Defense Minister Ruben Saavedra, meanwhile, announced that the military was sending more troops into the streets to protect private property and ensure public order.
"The military police will redouble their personnel in the main cities of the country, with patrols and guards in the streets, to avoid excesses against private property," Saavedra said in a statement.
The mutiny began Thursday when protesters took over the headquarters of the country's riot police and eight other police stations. It has since spread to more than two dozen police stations and command centers across the country.
A crowd of some 300 striking police, dressed in civilian clothes and covering their faces, attacked the National Intelligence Directorate on Friday, smashing windows and pulling out furniture, documents and computers, and even setting flags ablaze.
Roughly 300 protesters later hurled rocks and shattered windows at national police headquarters. Police on duty outside the building offered no resistance.
Police units usually guarding the presidential palace were noticeably absent, though heavily armed soldiers protected the building. There was little police surveillance in the streets of La Paz and other major cities.
The private bank association said all bank branches had closed because they lacked protection from either police or the military.
Protesters had asked to negotiate directly with President Evo Morales, who spent the day Friday in the presidential palace after returning home from the United Nations Rio+20 conference on sustainable development in Brazil.
The strikers are demanding that the base pay level for police be raised to 2,000 bolivianos ($287) from a current average of $195 a month.
Demands also include full pay upon retirement, a police ombudsman and the overturning of a law that bans them from publicly expressing their opinions. In addition, demonstrators are calling for the resignation of the national police chief, Colonel Victor Maldonado.
"We are not demanding crumbs, we are demanding solutions, comprehensive solutions," said Edgar Ramos, leader of the junior officers.
Ramos noted that both sides would attempt to resume negotiations later Saturday because of "the desire we all have to find solutions once and for all."
"We were disappointed by the government because they only want to raise salaries by 200 bolivianos ($28)," said the leader of the police officers' wives, Guadalupe Cardenas, at a press conference after completing the first round of talks.
"They added a safety bonus of 400 bolivianos ($56) to make it appear as a wage increase."
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