Peru rebels demand huge ransom

There are no portraits of Che, no romantic graffiti. Today's revolution in Peru is an entirely new phenomenon.

The Tupac Amaru Revolutionary Movement guerrillas still holding some 340 people hostage in Lima are said to have a very specific aim. Their public demands are for up to 500 comrades to be freed from jail, and for President Alberto Fujimori to do an about-turn on his free market economic policies. But diplomats here say their true goal is far simpler: they want several billion dollars from the big Japanese corporations, including Mitsubishi, NEC and Toyota, whose executives are among the hostages.

Since the armed group disguised themselves as waiters and seized the Japanese ambassador's residence during a celebration of Emperor Akihito's birthday on Tuesday night, a parallel and far more private set of talks have been conducted, well away from the face-to-face contacts at the building. "It's all being done by cellular phone. They're asking for several billions," said one European diplomat who narrowly escaped Tuesday night's guerrilla assault. "And the chances are they'll get a decent percentage of that. There's a lot of bilateral negotiating going on." Compare that with the official news from the Canadian ambassador to Peru, Anthony Vincent, who told a seething press conference outside the residence: "We have accomplished our mission. Sixteen new portable toilets have been brought in."

The Tupac Amaru members, from a movement which the Peruvian authorities thought they had all but suppressed, are describing their ransom demand as a "war tax". But they are insisting on transfers of hard cash to specific foreign bank accounts, some of them in Switzerland. "They know full well that if the Japanese corporations chip in, they won't have to pull another operation like this for a long time," the diplomat said. "This is a far cry from beards and beads. The message is - posters of Che don't pay the bills. If these people come out alive, they're going to come out very rich." Last year the group gained almost pounds 600,000 by kidnapping a Bolivian businessman.

While the private bargaining goes on, most Peruvians still have no idea how some two dozen Tupac Amaru guerrillas could take control of one of the most heavily-protected buildings in the capital at a time when many of Peru's most senior officials and foreign residents were gathered there. Although some have subsequently been released, a cabinet minister, the ambassadors of several leading Western countries and prominent businessmen were among the hostages being held in various rooms of the Japanese residential compound in Lima's exclusive San Isidro district.

Peruvian troops in armoured vehicles have taken up positions a block from the diplomatic residence in an apparent attempt at a show of strength, and anti-terrorist experts have poured into Lima, including, it is reported, a team from Britain's SAS. But most of the foreign governments whose ambassadors are being held are urging Mr Fujimori not to launch a military assault on the residence, which according to international law is part of Japanese soil.

An unhappy precedent is set by South America's biggest guerrilla assault of this kind, the seizure of the Palace of Justice in the Colombian capital, Bogota, by the M-19 group in 1985. More than 100 people, including Supreme Court judges, died when troops battered down the door with armoured cars and fought a gun battle with the guerrillas.

Among some ordinary Peruvians there is a kind of perverse pride that Tupac Amaru has drawn world attention back to their country, four years after the group's leaders were caught and jailed. Like the better-known Sendero Luminoso (Shining Path), the movement was founded by middle-class student radicals, but looks for its inspiration in Cuban Marxist-Leninism as embodied by Che Guevara, rather than Sendero's Maoism.

Much smaller than Sendero Luminoso - it was estimated to have 1,000 activists at its peak, compared with 10,000 for the Maoists - and focusing on urban rather than rural campaigns, Tupac Amaru takes its name from a 16th-century Inca leader who led an Indian uprising against the Spanish colonisers.

When Mr Fujimori took power in 1990, the war against the two movements had brought Peru close to chaos. Most Peruvians supported his vigorous campaign to crush the insurgents, which culminated in the capture and jailing in 1992 of both Abimael Guzman, the Sendero leader, and his counterpart in Tupac Amaru, Victor Polay. But that victory did not persuade the president to take a softer line, and many say his authoritarianism is responsible for the upsurge of guerrilla activity in Peru. They criticise the president for having staged a "do it yourself coup" to stay in power and crush terrorism; some suspect him so deeply that they are prepared to speculate that the present crisis is in some way aimed at helping him achieve his aim of overriding the constitution and gaining a third five-year term in the year 2000.

Guerrilla groups now appear to be drawing their support from the slums around Lima as well as from Andean mountain villages, and their comeback is not confined to Peru. Other movements are reappearing across South America after years of relative tranquillity in which democracy seemed to be putting down firm roots. The Peruvian attack was the biggest in Latin America since the so-called Zapatista National Liberation Army took over five towns in the Mexican state of Chiapas on New Year's Day in 1994.

"We could be going back to the Sixties," said one West European diplomat in Lima. "There are presidents clinging to power, and people are getting fed up. They're hungry and they have no work. The rich are getting richer and the poor are dropping dead. The seeds have been sown for a return to the days of the guerrilla groups."