PERU: August 22, 2008


LIMA - Indigenous rights groups called off more than a week of protests on Wednesday at two key Peruvian energy sites after congressional leaders moved to throw out a controversial land law issued by President Alan Garcia.


Protesters fear the new law, which makes it easier for mining and energy companies to buy communally owned land, will lead to a foreign land grab, especially in the Amazon rain forest.

Garcia passed the law by decree earlier this year under special powers Congress granted him to bring Peruvian law into compliance with a new free-trade deal with the United States.

But congressional leaders said he went too far and late on Tuesday, a congressional commission voted to revoke the law. The head of the legislature said it may go to a floor vote on Friday, which persuaded the tribes to end the protest.

"We have lifted the strike," said Alberto Pizango, head of AIDESEP, an indigenous rights group. "We have faith and expect Congress to follow through."

The protests highlighted tensions in Peru over whether to conserve or develop natural resources on lands tribes say they have been using for centuries.

Garcia, whose approval rating has fallen to 22 percent, said overturning the law would be a "huge mistake." He has pushed it as a way to attract capital in the country's poorest regions. "Peru should not fear change," he said.

During the protest, tribal groups seized control of two energy installations -- a natural gas field being developed in southeastern Peru by Argentine company Pluspetrol, and an oil pipeline in northern Peru owned by state-run Petroperu. They also took two police officers hostage.

Pluspetrol has said the protest did not cut natural gas output, while Petroperu was forced to shut its pipeline. Officials at both companies could not immediately confirm if the protests had ended.

The mobilizations spooked the government as they were launched just as energy supplies tightened and two blackouts hit the capital, Lima.

The government declared a state of emergency earlier this week for the provinces of Cusco, Loreto and Amazonas, clearing the way for it to send in the army to disperse protesters.

(Reporting by Dante Alva, Maria Luisa Palomino and Teresa Cespedes; Writing by Dana Ford; Editing by Terry Wade and Cynthia Osterman)


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