Although the Peruvian Armed Forces say they have regained control of almost all the Central Sierra emergency zone from Maoist guerrillas, the government of President Alan Garcia says only a prolonged development effort will permanently eradicate the five-year-old insurgency.

"Eighty percent of the emergency zone has been pacified," said Minister of War Gen. Jorge Flores Torres, 56, in an interview recently. And on Monday the government reduced the size of the emergency zone from 25 to 19 provinces.

When the military were sent into the emergency zone, a region southeast of Lima about the size of Virginia, in early 1983, guerrillas of the group known as Sendero Luminoso, or Shining Path, had forced the poorly equipped police to retreat to a handful of major towns and the city of Ayacucho.

The Peruvian armed forces had been prepared for conventional warfare, having purchased sophisticated Soviet and European equipment, but had not studied counterinsurgency tactics.

"Our prior knowledge [about guerrilla] warfare served us very little," said Flores, "We've had to improvise on the march."

The armed forces have about 7,000 troops garrisoned at 58 counterinsurgency bases from which foot patrols search out guerrilla units in the emergency zone. But Flores said that, because of the rugged terrain, the security forces' main tactical advantage comes from having helicopters for operations, logistics and command.

Because the population is scattered, the military command has organized peasants into 600 Civil Defense groups that defend against surprise guerrilla attacks.

"We instruct them on how to defend themselves but we do not give them weapons," said Flores. Human rights groups have charged that these groups have engaged in "seasonal pillaging" and settling old scores with rival communities, which they accuse of being guerrilla sympathizers.

The military progress has come at a high price. The government has said security troops have lost nearly 300 men, and an informal count by local media indicates that there have been about 7,000 deaths and disappearances in the emergency zone in three years. Most of these casualties have been peasants caught in the cross fire between guerrillas and the occupying Army.

An estimated 100,000 people have fled their homes, settling near counterinsurgency bases, major towns and the capital of Lima, church relief agencies have reported. The disruption of the regional economy, already one of the poorest in the Americas, has been enormous.

The military's upbeat talk in public is not echoed in government circles. Carlos Franco, a close adviser of Garcia, said, "The military are telling us that without a political strategy, the long-term war is lost."

Sendero Luminoso, a tightly knit organization, has meshed selective ruthlessness with long-term tactical flexibility. The main leaders have eluded capture and say they expect to wait up to 30 years to achieve their objectives. Sendero's strongest suit is playing off deep-seated resentment against a social system that seems to stack the cards against the poor.

The pivotal issue is that Sendero Luminoso has not lost its strike capacity, having an estimated 1,500 to 2,500 guerrillas and cadres. While security forces are pinned down in the emergency zone, Sendero Luminoso has redeployed many of its units outside the region.

In addition, social workers report an active recruitment and indoctrination effort in Lima shantytowns, where Sendero Luminoso finds plenty of frustrated, jobless youths. "Every neighborhood has a Sendero cell," said a community worker.

Garcia has taken the threat seriously, frequently conferring with the National Defense Council and the Joint Chiefs of Staff. In late October, about 60 peasants who had previously supported the guerrillas in the Ayacucho jungle stronghold surrendered to security troops. The leaders were flown to Lima to be questioned by Garcia.

According to a Peruvian anthropologist, when Sendero Luminoso takes over a peasant community, it eliminates the traditional communal order and imposes a primitive revolutionary rule, frequently installing a young cadre over peasants who revere age and kinship. All cash crops are forbidden and only subsistance farming is allowed. Sunday fairs and trade are outlawed, in an attempt to apply Mao's formula of cutting the countryside off from the city.

The government has decided that the only way to win Andean peasants' allegiance is to offer more than military pressure. The Garcia administration has given top priority to agriculture and rural development, which are to receive 40 percent of government investment next year. Funds budgeted for education and health services have been increased by 150 percent.

Thirty-nine Andean "micro-regions," considered especially prone to the guerrillas' message, have been picked for special development projects. The most depressed campesino communities will also receive cash grants from a $2.3 million fund to be used as they see fit, in an attempt to avoid bureaucratic bottlenecks.