Peru PM says he will quit over clashes

By Teresa Cespedes and Terry Wade

LIMA, June 16 (Reuters) - Peruvian President Alan Garcia's cabinet chief will step down in the face of opposition demands for his ouster over deadly clashes between police and Amazon tribes in resource-rich jungles on northern Peru.

Prime Minister Yehude Simon said on Tuesday he plans to resign after persuading the Peruvian Congress to repeal two controversial laws that native groups say would speed up the destruction of their jungle habitat.

"I am going to go for sure as soon as calm returns in the coming weeks," he said on RPP radio, a day after apologizing to indigenous leaders and acknowledging the government had failed to win their support before passing the laws.

At least 34 people died in police raids ordered 11 days ago to end blockades of roads and rivers in the forest. Both police and protesters died in the violence that shocked the country.

The conflict, the worst since Garcia took office in 2006, has threatened to slow his drive to lure billions of dollars in foreign investment to a country rich in natural resources but where 60 percent of rural people live in poverty.

The clashes have also drawn criticism from Peru's Andean neighbor Bolivia, whose first indigenous head of state, President Evo Morales, said the violence amounted to genocide against native peoples.

Peruvian Foreign Minister Jose Antonio Garcia Belaunde rejected the charge on Tuesday, calling leftist Morales "an enemy of Peru" in an interview with Reuters.


The Amazon tribes said they would call off lingering protests if the laws, which they fear would turn the rainforest over to foreign oil, gas and mining companies, are repealed. Congress is expected to do so in a few days.

"They all were saying the government couldn't be flexible, and now the government is finally backtracking," said Gino Costa, a former interior minister, who expects more heads to roll in Garcia's cabinet.

Costa said he expects the justice, environment, trade and agriculture ministers to be fired next month for first botching the negotiations with protesters, then resorting to force, only to cave in to the demonstrators' demands when the violence was widely condemned.

"How many people had to die for the government to realize that the laws were poorly done?" said Daysi Zapata, a leader of Aidesep, an indigenous rights group.

Garcia, whose approval rating is at 30 percent, issued a series of decrees last year using special powers Congress gave him to implement a free-trade agreement with the United States. The tribes say he went too far and wrote laws that undermine their control over ancestral lands and natural resources.

Even if the laws are overturned, Garcia plans to push ahead with his development model based on free trade and foreign investment. He hopes eventually to convince the tribes that his plans would lift millions out of poverty.

"I am one who looks to the future and I don't get hung up on obstacles," he said on Tuesday. "Time will show that those who reject something today will end up being the first to ask for it in the future because they need development, investment and a better life."

Additional reporting by Dana Ford; Editing by Anthony Boadle