Can my ISP monitor me?

You can always route your internet traffic in encrypted channel. Depending on your background, Tor or SSH tunnelling might be the easiest (with the latter being better performance-wise).

I think that you should seek some more professional legal advice about situation in your target country. If there's a risk that your online activities might be controlled, then it's also likely that attempts to use secure channels will make you look suspicious.

Why not take a break from the Internet? Or at least some parts of it that you feel concerned about?

Why worry about your ISP? That's just a business trying to make some money, they probably won't bother. It might be much easier to reveal what you've been up to by examining your own computer. Like: which Flash-enabled websites has your computer visited since you bought it?

However, as for your current government administration things may be different. Just a few examples:

  • The Electronic Police State, 2008 National Rankings: 1. China, 2. North Korea, 3. Belarus, 4. Russia, 5. United Kingdom: England & Wales, 6. United States of America, 7. Singapore, 8. Israel, 9. France, 10. Germany, 11. Malaysia, 12. Ireland, 13. United Kingdom: Scotland, 14. Netherlands, 15. South Korea, 16. Ukraine, 17. Belgium, 18. Australia, 19. Japan, 20. New Zealand, 21. Austria, 22. Norway, 23. India, 24. Italy, 25. Taiwan, 26. Denmark, 27. Hungary, 28. Greece, 29. Canada, 30. Switzerland, 31. Slovenia, 32. Poland, 33. Finland, 34. Sweden, 35. Latvia, 36. Lithuania, 37. Cyprus, 38. Malta, 39. Estonia, 40. Czech Republic, 41. Iceland, 42. South Africa, 43. Spain, 44. Portugal, 45. Luxembourg, 46. Argentina, 47. Romania, 48. Thailand, 49. Bulgaria, 50. Brazil, 51. Mexico, 52. Philippines

  • Somebody in London is stopped and searched every three minutes, and while the number of arrests says nothing about the actual threat, so the number of arrests can hardly be used to calculate a "success rate": The Metropolitan Police used section 44 of the Terrorism Act more than 170,000 times in 2008 to stop people in London. [..] Of all the stops last year, only 65 led to arrests for terror offences, a success rate of just 0.035%.

  • New and worse secrecy and immunity claims from the Obama DOJ, Kevin Bankston of the Electronic Frontier Foundation, in an interview with Keith Olbermann: The Obama administration is embracing the same aggressive secrecy arguments that the Bush administration did, and is going them one better, by arguing this incredible immunity argument. By saying that despite the many laws that we have that are meant to restrict the government from wiretapping us or accessing our communications records without warrants, that the US government is immune from any lawsuit for violating those statutes, and essentially eviscerating the privacy rights of millions of ordinary Americans.

  • British cops identify 200 schoolchildren as potential terrorist: 200 children in the UK, some as young as 13, have had files opened on them by the British anti-terror cops as potential terrorists -- even though they have committed no crimes. The children were reported to the anti-terror squad by their teachers on the basis of school work, journals and conversations that, in the teachers' view, indicated that the children were susceptible to extremist beliefs. The programme is only 18 months old and has already identified 200 children who should be treated as terrorism suspects. At this rate, every child in Britain should be on the watch list by, what, 2018?

The answer to that question is: Yes. That has nothing to do with your location, that is simply how the internet works: Unencrypted Protocols send their data in clear text, and anyone in between can read it, so yes, your ISP can read everything you send unencrypted. In fact, sometimes they are forced by the government to do so (for example the FBI uses Carnivore, Germany is working in their Bundestrojaner, and pretty much every other country is having some sort of monitoring/surveillance system as well).

As said, using an SSL Tunnel would be a way, although of course it's also a great way to raise suspicion as well.