Today, Peru is one of the strongest economies in Latin America. In 2007, the Peruvian economy grew 9% and continued at that rate through 2008, only slowing in 2009 due to the world economic crisis. However, it remains structurally strong with a gross domestic product that surged 9.84% in 2008; it’s fastest pace since 1994. In addition to achieving economic growth, Peru has also successfully implemented market friendly policies, and increased property rights while recently ratifying a mutually beneficial Free Trade Agreement with the United States. Economists agree that things are looking up for Peru. Unfortunately, this doesn’t sit well with some; in particular Venezuela’s Hugo Chavez who has targeted countries that develop peacefully because their success proves to the world and the majority of Venezuelans that his policies are completely misguided.
In June 2009, Peru was rocked by violent confrontations between normally peaceful indigenous groups in the city of Bagua and local police. Bagua is a province of the Amazonas region, which is located in the north and central part of the department of Amazonas, rich in oil and gas resources.
Peru has started to restructure their economy under a 2006 free trade deal with the U.S. and key is a focus on property rights and titling of property, which is essential for capital formation. Earlier this year, President Alan Garcia used his executive authority to give title to land in the north of Peru and government officials spoke with indigenous people there, 400,000 of whom still live in Peru’s Amazon. In January of 2009, Garcia gave them title to 12.4 million hectares of land and another 15 million hectares were set aside for ecological sanctuaries. 
In an unprecedented move, native groups, led by indigenous leader Alberto Pizango, started to violently demonstrate to "reclaim" more than half of the land that was to be kept as sanctuary. Pizango, 43, a member of the Shawi-Campu Piavi tribe of the Loreto region had worked as a teacher in Yurimaguas in the Loreto region until he was elected president of Aidesep, in December 14, 2008. Aidesep is the Association for the Development of the Peruvian Jungle (Asociación Interétnica de Desarrollo de la Selva Peruana), which in reality is a radical proponent of "indigenous rights" and a vicious opponent of free market policies.  Ideologically, Aidesep is aligned with the Peruvian Communist Party, and former presidential candidate, radical leftist Ollanta Humala, Chavez’s handpicked candidate for the presidency of Peru.
These demonstrations were accompanied by propaganda that blamed the Garcia regime for, according to them, "robbing land and refusing to talk." The natives appeared defiant on TV with spears and feathers while leftist organizations and the mainstream media began to portray Peru as an oppressive state that doesn’t deserve free trade because it exploits its population.
During this time, a major highway in Bagua had been blocked for fifty-five days by approximately five thousand indigenous protesters. Many analysts agreed that the tactics used by these people looked eerily similar to the ones used by radicalized indigenous protesters in Bolivia in recent years.  In such demonstrations, roadblocks are basically used to isolate cities by halting shipments of food, medicine and energy, as well as trade, to make the government give concessions to avoid major confrontations. Garcia had sought to avoid conflict by engaging Aidesep in dialogue for more than five weeks, seeking agreements to end the road and river blockades. But its leader, Pizango, would not cooperate and it was clear from the start that he was looking for a violent row with the government to gain supporters, delegitimize the government and appear as a victim of the "inhuman" free trade agreement signed with the United States. The native leader had a clear agenda with the mindset to cause unrest and plenty of cash to mobilize people. Insiders close to Pizango said from the beginning that he was operating under Hugo Chavez’s orders, which had provided him and his followers with financing, promising them a safe haven just in case things went south. On the other hand, if successful, Pizango and Aidesep would achieve great riches, paving the way for Ollanta Humala to become president, and converting Hugo Chavez into the supreme leader of yet another Latin American nation, in addition to Bolivia, Ecuador, Venezuela and Nicaragua.
On June 4th, the local police received orders to end the blockade of the Belaúnde Terry highway, one of the country’s principal land routes for the transport of passengers and goods, which passes through Bagua. Unfortunately, the officers in charge of the operation, under-estimated the violent protesters. Only three hundred police officials were deployed without adequate anti-riot gear and when they tried to clear the highway on June 5, they were attacked by several thousand protesters, many of whom were armed. A total of thirty-three people died including twenty-four unarmed police officers whose throats were brutally cut by the natives.  Only nine indigenous protesters were killed but only after they clashed with their own forces who were members of Aidesep.
Police investigations indicate that Pizango ordered armed gunmen to attack the police and that he personally approved the executions of the police officials. The Peruvian government has already charged Pizango with homicide  but the native leader has been granted asylum by Nicaragua’s President, Daniel Ortega. Pizango now lives comfortably in Managua and openly gives speeches promoting Chavez’s cause while thousands of Peruvians yell for his return.
President Alan Garcia said the government will continue seeking dialogue with the country’s indigenous groups while also giving Peru’s national police commanders orders to "dialogue faster and act immediately" when confronted with road blockades and other indigenous protests which disrupt the free transit of people and goods. Interestingly, Garcia blamed the violence in Bagua on "external" forces, which are competing with Peru’s oil and gas resources. Clearly, he was referring to Venezuela and Bolivia.
There is mounting evidence that the Chavez regime provides financial support to Pizango and Aidesep. Venezuelan funds seem to be flowing to the protesters through Ollanta Humala and the ALBA houses, grass roots support centers named after Chavez’s alternative trading bloc, known as the Bolivarian Alternative for the Americas. The Peruvian congress is actively working on closing these "medical centers" and those lines of financing. Peruvian newspapers claim that radical Bolivian indigenous militants supported by Evo Morales are also working with radical Peruvian indigenous groups including Pizango’s group. These people are extremely poor, so you have to ask how they can afford to travel large distances, camp, obtain weapons and feed themselves for weeks at a time.
Separately, Chavez and Morales hold other grudges with the Garcia regime when it gave asylum to top Venezuelan dissidents, including Manuel Rosales, who ran against Chavez for president in 2006, and Carlos Ortega, the oil workers union boss who crossed Chavez. More recently, Peruvian writer, Mario Vargas Llosa, delivered a highly critical and apparently quite effective speech that ridiculed Chavez at a conference in Caracas. With regards to Bolivia, Peru granted political asylum to three former Bolivian cabinet officials accused of involvement in the killing of sixty-three demonstrators in the Andean city of El Alto in 2003 during the Sanchez de Lozada administration. 
In fact, local authorities have known for some time that Pizango and Aidesep are associated with the Congreso Bolivariano de los Pueblos (CBP), which was created in 2003 by Chavez to finance and promote his Bolivarian revolution together with the ALBA houses. The CBP is a consortium of indigenous groups in various Latin American countries that embraces a radical strategy and openly supports the idea that if the revolution cannot achieve power peacefully and democratically, it will trigger social, economic and political unrest.  To accomplish such a goal, they portray themselves as oppressed, and engaged in class warfare between the poor and the "mean imperialist elites," lead by the "Satan" United States.
Bolivia initially denied any involvement with the violence in Bagua, but President Morales finally said he supported Pizango’s indigenous movement. "It’s not possible that most reviled (people) in Latin American history should be humiliated as we have just seen," Morales declared, adding that the "Indigenous movement of Latin America is a great defender of the planet Earth, of the environment, and that is why the struggles to defend equality and social justice will continue." In addition the Bolivian President has called the government crackdown "genocide," stating that "free trade agreements break up harmonious human relationships with nature; they illegally sell natural resources and national cultures; they privatize basic services; they try to patent life itself."  Peru responded to the genocide comment by recalling its ambassador to Bolivia for consultation. The government has stated that there is no excuse for Morales to refer to the Bagua incident as "genocide" since a United Nations special rapporteur on the situation of human rights and the fundamental freedoms of indigenous peoples ratified this past week that no genocide had occurred. The Garcia government sees the Morales administration as meddling in Peruvian sovereignty and has even publicly implied that Bolivia has manipulated the Peruvian indigenous groups in order to stir them to action. Separately, Bolivian Justice Minister, Celima Torrico, accused the Garcia government in Peru of unleashing a "bloody repression" against the country’s indigenous population.
For her part, Venezuela’s Minister of Indigenous Peoples, Nicia Maldonado, launched a furious public tirade against Garcia, accusing him of perpetrating "genocide…a terrorist act," and "confirming (he) is a fascist." "Unlike the Chavez government," she added, Garcia has confirmed he "hates the people, hates the poor, hates the indigenous tribes" of Peru. "We absolutely and categorically condemn this genocide against our brothers of the Peruvian Amazon jungle," Maldonado continued. She also said, without offering any proof, that Peruvian police had burned some bodies and thrown others into rivers in order to obscure the number of people killed. By publicly embracing Pizango’s cause, they have given the indigenous leader international political recognition, which makes him seem more influential in Peru than he actually is.
After these incidents, the Garcia administration was forced to repeal the two decrees that caused the crisis in the first place. President Garcia even admitted that it was a mistake not to consult the heads of the indigenous groups prior to implementing the decrees. This may signify that the political elite in Peru is coming to terms with the fact that Peruvian indigenous groups are much better organized now than they were in the past.
The problem with these protests and what has the government confused is that, according to the polls, the overwhelming majority of Peruvians, over 80%, including a substantial percentage of its indigenous people support sustained economic development of the country’s abundant energy and mineral resources. So it is clear that someone is manipulating these people with the sole purpose of crippling the economy and destroying Garcia’s popularity while setting up a radical like Ollanta Humala for election as president in 2011. Peru would then be the next Marxist revolutionary and anti – American regime of the Chavez – Morales – Ortega – Correa axis. This would leave Colombia’s Alvaro Uribe almost alone at the mercy of the FARC.
The implications of the conflict in Bagua are ominous for Peru and for the stability of the region. Garcia faces powerful enemies who have instigated violence inside the country; especially Hugo Chavez and Evo Morales. In addition, he has to contend with powerful organizations dedicated exclusively to "protecting the environment at all costs" and preserving, intact, the world’s remaining indigenous cultures and tribal societies. A case in point is the NGO, Amazon Watch, infamous for supporting the harassment of Chevron in Ecuador and paying protesters and launching a new campaign against "Big Oil." Peru has the world’s third largest tropical rain forests, after Brazil and the Democratic Republic of Congo. Deforestation rates in Peru are significantly lower than in Brazil, Ecuador or Colombia and the Andean nation has large reserves of oil, gas and minerals in its rain forests. But these resources remain untapped, and the forces against Garcia want to make sure they remain unexploited – at least until the radicals take power in Peru.
Unfortunately, not many are at Mr. Garcia’s side since Chavez has transformed the Organization of American States (OAS) into his echo chamber. By generously giving away oil to companies such as PetroCaribe and many nations represented in the OAS, Chavez has brought them around to his revolutionary cause. So far the Obama Administration treats Chavez as a nuisance to be left alone but not challenged or reckoned with in any substantial way. Brazil’s President Lula da Silva avoids direct confrontation with Chavez but in regional disputes always sides with the Chavista countries, as does Argentina. Looking South, Chile’s Michele Bachelet is unlikely to back Garcia in a diplomatic standoff with Chavez and Morales since OAS Secretary-General Jose Miguel Insulza is Chilean and has sat placidly as Chavez has devoured democracy in his own country. Chilean diplomacy will stay away as long as its territory is left alone.
It is clear that President Garcia faces increasing pressure from Venezuela and Bolivia and that subversive groups are likely to increase its operations inside the country to intensify the conflict and destabilize the regime. Colombia and Brazil would be wise to cooperate on the intelligence front to protect their territories from this violence.
The Bagua attacks could provide an opportunity for Mr. Garcia to balance strong economic growth with social programs, even in the most remotes areas. The goal should be to stop fostering conditions for the emergence of radicals who only want violence and conflict with the current government.
Radicals in the Peruvian Congress from the Nationalist Party wanted to impeach Prime Minister Yehude Simon and Interior Minister Mercedes Cabanillas for the clashes, placing the Garcia regime in a precarious position to govern; fortunately sanity prevailed: Congress gave them a vote of confidence and it appears that democracy still has a chance in Peru. But the situation is far from over and the upcoming months will be vital for the stability of Latin America.
Nicole M. Ferrand is the editor of "The Americas Report" of the Menges Hemispheric Security Project. She is a graduate of Columbia University in Economics and Political Science with a background in Law from Peruvian University, UNIFE and in Corporate Finance from Georgetown University.
 Chavez’s War On Free Trade In Peru. Investor’s Business Daily. June 9, 2009.
 Miembros de Sendero y el MRTA se infiltraron en las protestas del Cusco. June 24, 2009. El Comercio, Peru.
 Gobierno asegura que policías en Bagua fueron asesinados a sangre fría. June 6, 2009. El Comercio, Peru.
 Investor’s Business Daily – Ibid.
 Perú: Gobierno denuncia que los indígenas traman un golpe de Estado. June 8, 2009. Infolatam.
 Evo Morales vuelve a criticar: "Lo que pasó en Perú es el genocidio del TLC." July 13, 2009. El Comercio, Peru.
 Ministra Venezolana: Hubo un genocidio en Perú en protestas de nativos. June 8, 2009. Radio Programas del Peru.
 Los Movimientos Populares Indígenas en la encrucijada. July 1, 2009. Indymedia.