As an army captain in the early 1990s, Ollanta Humala fought the Shining Path guerrillas in the Peruvian jungle to end one of Latin America’s bloodiest civil conflicts. Now president of the region’s fastest-growing economy, Humala is looking to finish the job, re-equipping the nation’s armed forces and police to capture holdout members of the Maoist-inspired insurgency and deal a blow to the cocaine trade that funds their activities. The government will boost defense and counter-narcotic spending next year as it taps record tax revenue from copper and gold exports to halt a boom in the coca crop that the United Nations says now rivals Colombia’s as the world’s largest. In Humala’s sights is the valley of the Apurimac, Ene and Mantaro Rivers, or VRAEM, the last bastion of the Shining Path.
The group has stepped up attacks against companies working on a natural gas pipeline crossing the country’s largest coca-growing area, threatening $1.5 billion in annual gas exports and 40 percent of the country’s power supply. “Shining Path remnants pretty much have a free rein over the area and want to keep it that way to support their main interest, drugs,” said Jaime Garcia, a former deputy interior minister, in an Oct. 15 phone interview from Lima. “They’ve placed in jeopardy gas exports as well as supplies to the rest of the country.” At risk is an $850 million plan to double the capacity of the pipeline that crosses the VRAEM on its way from the Camisea gas fields to the capital, Lima. The project will help prolong an economic boom that has seen the economy expand an average 6.4 percent over the past 10 years.
Transportadora de Gas del Peru, owned in part by Italian billionaire Paulo Rocca through Techint SA, and closely held Texas-based Hunt Oil Co. and Buenos Aires-based Pluspetrol SA, built and operate the pipeline under a 33-year concession that started in 2000. The conduit runs through the heart of the VRAEM, more than 30,000 square kilometers (11,580 square miles) of mountains and forests near the cities of Ayacucho and Cuzco. Mounting violence in the region means the expansion project is already a year behind schedule and won’t start operating before 2016, Barbara Bruce, country manager for Hunt Oil, said by phone on Oct. 30. “If there was ever any doubt about how vital this project is, that’s been dissipated,” by the government’s determination to protect the installations, Bruce said. Skanska
Work to expand the pipeline has slowed since April after guerillas abducted 40 people, mostly employees of Swedish construction company Skanska AB (SKAB), in the jungle adjacent to the VRAEM. Eight police and military officers were killed during an operation to free the kidnapped workers, who were released unharmed after five days. The government’s failure to capture any rebels led the defense and interior ministers to resign. Transportadora temporarily stopped maintenance work on the pipeline on Oct. 6 after rebels broke into an airfield at Kiteni in Cuzco and blew up three helicopters used to inspect the conduit. The incidents raise the possibility of an attack on the pipeline itself and the loss of power in Lima, which accounts for about half of Peru’s gross domestic product, said Humberto Speziani, president of the country’s business confederation, in an Oct. 22 phone interview.
The mounting threat has goaded Humala into action, Speziani said. In September, the government budgeted a 68 percent increase in spending on the VRAEM to 2.75 billion soles ($1.1 billion) next year, including new military bases and night vision equipment. Defense Minister Pedro Cateriano said Oct. 13 the government is also seeking to purchase 20 helicopters for operations in the region, while police officers will receive new firearms for the first time in 25 years. The Shining Path has about 400 fighters in VRAEM and a smaller faction in the Alto Huallaga valley to the north, another coca-producing region, according to Ricardo Soberon, a Lima-based drugs specialist and former adviser on drug issues to Humala.