President Hugo Banzer resigned in August 2001, due to being diagnosed with lung cancer. He was succeeded by his vice-president, Jorge Quiroga. In the 2002 presidential elections, Sánchez de Lozada ran again, and narrowly beat NFR's Manfred Reyes Villa and the cocalero and indigenous leader Evo Morales of the Movement Toward Socialism (MAS) party, in an election claimed to have been tainted by clear signs of electoral fraud.
Several days before Bolivians went to the voting booths, the U.S. ambassador, Manuel Rocha, warned the Bolivian electorate that, if they voted for Morales, the US would cut off foreign aid and close its markets to the country. Morales nonetheless received nearly 21% of the vote, putting him only a couple points behind Sánchez de Lozada.