Peru Economy Grows, But Problems Abound

García is also facing rising violence from the Shining Path, the communist guerrilla movement that caused havoc in his first administration. García has launched a new offensive against the remnants of the group, and 17 soldiers were killed last month, the most in years. Nearly half the estimated 70,000 deaths that resulted in the fight against the group from 1980 to 2000 came at the hands of the Peruvian military, according to the country's Truth and Reconciliation Commission. Many government officials, including García, have been accused of war crimes during that period. García attracted fresh criticism recently when legislators from his party proposed an amnesty for members of the military and police facing trials on human rights violations.

García's supporters believe he is being unfairly blamed for the country's problems and has not received enough credit for its strong economic performance. Peru's economy grew by nearly 9 percent in 2007 and is projected by the IMF to reach similar levels this year, higher than any other country in Latin America. The government says the poverty rate has fallen, from more than half the country affected to 39 percent.

First Vice President Luis Giampetri blamed García's current unpopularity on inflation creeping up, as well as regional officials' failure to spend all the money coming from the central government.

"They continue thinking that the government is responsible, when at this time they're the ones with money to invest," Giampetri said.

Before the 2006 election, García apologized for past mistakes and presented himself as a changed man. In a series of essays and books, he laid out his new free-market vision of how to develop Peru by exploiting its natural resources, including mineral wealth, to generate jobs, while also encouraging major foreign investment. Developing the millions of acres of idle and unused lands and mineral deposits does not benefit only large companies, García wrote in one essay, "but also will create hundreds of thousands of formal jobs for Peruvians who live in the poorest zones of the country."

García has said he wants Peru to be a First World nation by 2021, its bicentennial year, but some political observers say his rush to modernize has not been inclusive. "Drag them out of the jungle and the highlands, concentrate more people into larger cities where the state can provide them with services, and put all those lands in value, with large-scale private investment," Sanborn said, describing García's approach. "And really no concern with rights and consensus-building and consultation."

Giampetri said García is essentially a "pragmatic" politician who realized there was no escaping globalization and that leaders such as Hugo Chávez in Venezuela and Evo Morales in Bolivia are "marching against history."

"We have an advantage over other countries in Latin America: We have lived very closely with the communist ideas in the country in the time of the military government," Giampetri said. "This historic memory has made it clear that the system of supply and demand, of free enterprise, is the system that until now has worked better."

But others say that while the macroeconomic numbers look good on paper, not enough people say they are benefiting.

"There's growing frustration, after all we've gone through, after all the violence and the crisis, we still don't have a government who is paying attention to the people," Burt said.

Special correspondent Lucien Chauvin contributed to this report.