From: Reuters
Peruvian President Alan Garcia vowed on Tuesday to push ahead with his pro-business agenda but increase social spending to calm a wave of protests that forced him to reshuffle his cabinet.
He also urged Peruvians frustrated by a slowing economy to reject the leftward shift of other Latin American countries.
In a nationwide address on Independence Day, Garcia said free trade and foreign investment would help cut Peru's poverty rate from 36 percent at present to 30 percent by the time he leaves office in 2011.
Garcia promised to extend universal health care to all Peruvians and improve a lackluster public education system.
"I have two big objectives for this year: defending the rule of democracy and saving Peru from the global crisis by strengthening social programs," he said.
Garcia has struggled since June, when 34 people died in clashes between police and indigenous protesters opposed to laws that would have opened up their lands in the Amazon rainforest to foreign mining and oil companies.
In the worst crisis of his presidency, Garcia replaced his prime minister with Javier Velasquez, a member of his APRA party, to try to breathe new life into his government and lift approval ratings that plunged as low as 21 percent.
A fervent advocate of free markets, Garcia said Peru is in a race against time to raise living standards or risk falling further behind in a globalized world.
"It's my duty to effect change as fast as possible," he said. "If sometimes this appears intolerant, tough or distant, I apologize, but we are in a battle and we need to win it."
Garcia said the best way to avoid social protests is for the state to spend money on infrastructure, and he threatened to punish demonstrators who form roadblocks to demand the government boost wages or build schools.
Critics say Garcia's government is being held back by a weak civil service and will struggle to deliver reforms. A universal health care bill was passed in April, yet so far it has only been implemented in three of 25 regions.
NO CLEAR SUCCESSOR
"There's not much time left to begin new reforms. It's more of a question of trying to keep their heads above water until 2011," said political analyst Augusto Alvarez-Rodrich.
Alvarez-Rodrich said Garcia's new cabinet will likely have a short shelf life and need to be reshuffled again as social protests mount in the run up to elections.
The ruling APRA party has no clear successor to make a bid for the presidency in 2011. Garcia, who cannot run again, has said he will work to prevent leftists from winning office.
But an economy seen braking to 3 percent growth this year from a 10 percent expansion last year could play into the hands of the opposition.
Ollanta Humala, a left-wing nationalist and ally of Venezuelan President Hugo Chavez, spooked financial markets when he nearly won the 2006 race against Garcia, and he is planning to run again.
Some analysts say Garcia may end up throwing his weight behind Luis Castaneda, the major of Lima, or legislator Keiko Fujimori, daughter of former president Alberto Fujimori.
Fujimori was convicted this year of human rights crimes stemming from his two terms as president in the 1990s, when Peru was battling the Maoist Shining Path insurgency. (Writing by Terry Wade, editing by Anthony Boadle)