Drug Campaign Put on Back Burner as Peru Battles Rebels : Insurgency: Decision puts coca producer in direct conflict with the U.S. But Lima says it lacks resources.

Even before the U.S. invasion of Panama put a crimp in a joint U.S.-Peruvian anti-drug campaign, Peru had already decided to concentrate on fighting a vicious and growing guerrilla insurgency rather than drug trafficking.

That decision has thrust the world’s primary coca producer into direct conflict with the United States, officials from both countries agree.

On top of that, after the Panama invasion Dec. 20, President Alan Garcia said he would not attend a scheduled Feb. 15 meeting with the presidents of the United States, Colombia and Bolivia to discuss drug-fighting strategy, and Garcia’s government announced that it was ending cooperative anti-narcotics operations with U.S. agents in this country. Peru has since relented and resumed its cooperation with the Americans here.

But weeks before Panama became an issue, the Peruvian army, responsible for the counterinsurgency drive, had declared a virtual truce with coca growers in the Upper Huallaga Valley, the world’s largest growing area for the plant used to make cocaine. The goal was to wean the growers from their alliance with Sendero Luminoso (Shining Path) guerrillas, who have flourished in the valley by defending the growers against anti-drug patrols.

The police, who handle the anti-drug program, were able to make only token raids despite publicity tours for journalists to show off captured cocaine labs and airstrips, according to several experts.

Peruvian military and political officials argued that, given the scarcity of resources, concentrating on the rebel threat is the only way to regain the political and economic stability vital for an effective anti-drug program in this poor, politically uneasy nation.

The gravity of the threat from the Marxist rebels became even more apparent recently when guerrilla columns swept into five villages in the Andes Mountains last month and killed 49 peasants. The killings came two days after Garcia visited the area to deliver guns to peasant self-defense militias that agreed to fight the rebels.

For the Bush Administration, cocaine is the No. 1 priority in Latin America, and U.S. officials worry that playing down the anti-drug campaign will make it much harder to stamp out trafficking in the future. Nonetheless, although the Peruvians are outspoken foes of drugs, they have judged the brutal Sendero Luminoso rebels to be a far more immediate and dangerous challenge.

Scores of mayors and candidates were assassinated by the rebels in the weeks before November’s municipal elections, and the death toll of nearly 400 in October was among the highest ever in the 9-year-old guerrilla war.

Since then, the guerrillas have destroyed dozens of power pylons in almost daily attacks, leaving the capital and other districts without electricity for many hours as the government scrambles to keep the power grid functioning. Food rots, and illness has mounted. The psychological damage has been severe, adding to widespread dismay over a crumbling economy and inflation of 3,000% in the last 12 months.

One day in early December, Sendero rebels posing as soldiers entered a village in the Andes with what they said were rebel prisoners. The townspeople applauded, but they quickly discovered the true nature of the “soldiers,” who killed 20 village leaders--a common rebel tactic. Soon after came the even bloodier attacks against villagers who had joined local militias.

As the war intensifies, the army has attempted to change tactics, after years of brutal repression in which many civilians have been killed for allegedly aiding the rebels. A report in November by Amnesty International, a London-based human rights organization, estimated that 3,000 detainees have “disappeared” since 1982, and another 3,000 have been executed in a conflict that has claimed more than 17,000 lives.

A central thrust of the attempt to win back peasant loyalties has taken place in the Upper Huallaga Valley, where more than half of the world’s coca leaves are produced illegally.

Gen. Alberto Arciniega, who took control of the region in April, has helped the peasants form an agricultural cooperative and promised not to interfere with their coca crops. Although he seeks to persuade them to switch to legal crops, no one doubts that the policy in effect protects coca production.

Jorge Salazar, deputy director of the Andean Commission of Jurists, which analyzes the security and drug threats, said: “Arciniega has singled out the gravest danger to the state, Sendero Luminoso, and has recognized that he cannot fight the narcos as well, at least for the moment. . . . He is operating with prudence, not abuse. At least he has stopped the growth of Sendero. This is an important achievement.”

The police, meanwhile, battled to maintain the momentum of their ballyhooed 3-month-old crackdown on drug traffickers. Operating from a U.S.-financed base at Santa Lucia, helicopter-borne patrols attack cocaine laboratories and airstrips in the Upper Huallaga. The patrols have stopped trying to eradicate coca plantations, accepting the fact that such attacks aid Sendero Luminoso, and are concentrating on the traffickers.

Underlining the government’s backing for Arciniega, journalists attending a drug conference recently were flown to Arciniega’s base to attend a public rally by thousands of peasants in support of his policies.

“The problem is that the United States has established that its first priority is the fight against drug trafficking, leaving aside all other problems,” Arciniega said in an interview with the magazine Si. “The magnitude of the problems we face is far greater than narcotics. My order is: Nobody must touch the campesino (peasant) coca grower. This doesn’t mean I support drug trafficking.”

He noted that the Peruvian-U.S. anti-cocaine program was unable to function between February and September because of the threat from the alliance of coca growers and Sendero Luminoso.

If the coca eradication program were to be resumed, he said, “each campesino who was attacked would become, the next day, one more Senderista , and the subversives would have 150,000 combatants.”

He said the army does not pay the peasants for the food they provide to the troops, “because with the budget we have, we cannot even feed our own men.” But he said that the police anti-drug unit has planes, helicopters and good food.

“They have all they need to do their job,” he said. “Well, let them do it.”

Peru’s new approach cost Sendero Luminoso 80% of its control in the region, Arciniega said, adding: “Now we face only sporadic attacks. And we know they are worried because they have stopped collecting $1.5 million a month (from peasants) in protection money.”

A senior U.S. Embassy official, speaking before Peru withdrew from the program, agreed that “to go after the traffickers, you’ve got to neutralize Sendero Luminoso.” And he acknowledged that “Arciniega has to some extent disrupted the guerrilla organization’s structure.”

“They don’t have the run of the place they once did, due to the people’s changing attitudes toward the military,” he said.

But the drug program, he said, has suffered.

“We hit laboratories,” he said, “but there are no arrests, no seizures. It’s just harassment. We’re not making major progress here.”

The police have seized two labs that were operating just a couple of hundred yards from a small army post, he said, a clear sign of the contradictory police and army strategies.

The diplomat said a key factor is that virtually none of the promised $261 million in aid for the Andean cocaine countries has arrived yet, three months after President Bush’s declaration of total war on drugs.

Furthermore, the aid initially is to go to the police and the military, with no money for economic development. Peruvian officials, including President Garcia, have complained that the anti-drug program cannot succeed without economic aid to encourage farmers to plant alternative crops.

Craig Chretien, director of the U.S. Drug Enforcement Administration operation in Peru, assessed the anti-drug initiative more positively. He said patrols are hitting a target every two days or so, and clandestine flights from Peru to Colombia have fallen by half. The price paid to farmers for coca leaf is half the level before the combined Colombia-Peru crackdown, he observed, and “considering the resources we have, we’re doing pretty well.”

Melvin Levitsky, U.S. assistant secretary of state for narcotics affairs, said in September that unconfirmed reports linked Arciniega to payoffs from traffickers “and other types of collusion.”

But he said of Arciniega: “He himself is a very honest man. He is very driven, very dedicated. And we believe it is a good strategy to draw the campesinos away from Sendero Luminoso. But the problem is time. When do you start addressing the other part of the problem? Six months is already too far down the road. We strongly disagree with his approach, and we are trying to look for common ground.”

Chretien acknowledged that the army is desperately short of resources.

“If you go to the barracks, it’s pathetic,” he said. “Guys are sleeping on cement floors. Sendero is your priority, sure, but let’s split this up. Sendero and the traffickers are both the problem. You can’t go after one without going after the other.”

Some analysts question the degree of Arciniega’s success against the guerrillas in the valley. Two reporters for the Lima newspaper El Comercio, traveling by bus through the area, reported that their vehicle was stopped at two army roadblocks and that soldiers asked for “contributions.”

A short distance from the second roadblock they were halted again, this time by a column of 200 guerrillas. The guerrillas were checking the papers of each passenger on dozens of buses and demanding payments of money and food.

After a three-hour delay, the bus was allowed to proceed. After the third shakedown, the reporters said, the peasants had nothing left.