Eastern Bolivia has long resisted Morales's sweeping socialist reforms, battling him over the distribution of natural gas revenues and a plan to redistribute fallow land to the poor.
Last week's protests targeted a referendum on a proposed constitution that among other changes would let Morales run for reelection.
Morales said Fernandez was arrested on charges of genocide for allegedly organizing an armed ambush of his supporters.
At least 15 were killed, 37 were injured and about 100 were still unaccounted for yesterday, raising fears that the death toll could rise.
Morales sent troops to Pando to enforce martial law.
Morales has accused the United States of meddling in the conflict and last week expelled the US ambassador.
Yesterday, a day after more than 1,000 government supporters marched on the US Embassy, the United States announced it has suspended the Peace Corps program in Bolivia and advised other Americans to leave Bolivia if they can.
The Peace Corps pulled out all of its 113 volunteers over the weekend and sent them to neighboring Peru.
"Our first priority is the safety and security of our volunteers," Peace Corps Director Ron Tschetter said.
More than 2,500 Peace Corps volunteers have served in Bolivia.
The current volunteers - who worked in agriculture, business development, environment, health, and youth development - will be given a choice between continuing their service in another country or returning home, Tschetter said.
American Airlines over the weekend temporarily suspended the only nonstop daily flights between Bolivia and the United States.
President Bush, meanwhile, increasing the diplomatic pressure on Bolivia, determined yesterday that Bolivia is no longer cooperating in the war against drugs and placed the Latin American country on a counternarcotics blacklist.
However, he spared Bolivia from cuts in US assistance that can accompany the finding.
"I hereby designate Bolivia, Burma, and Venezuela as countries that have failed demonstrably during the previous 12 months to adhere to their obligations under international counternarcotics agreements," Bush said in a statement released by the White House.