The government has been forced to halt its sell-off of the state electricity companies after last week's near-uprisings in the southern Peruvian cities of Arequipa and Tacna. This was the most violent confrontation in Arequipa since a rising against a military dictator in the 1950s.
Last year Alejando Toledo won a presidential election after the resignation of the near-dictator Fujimori. Toledo was seen as a popular hero despite his commitment to neo-liberal economic policies. Now the protests have forced two of his key ministers to resign, and his government is in crisis.
Peru borders Colombia, where there is a civil war between the US-backed government and powerful guerrilla armies, Ecuador, where protests by the indigenous population forced the president to flee the country two years ago, and Bolivia, where riots in the city of Cochabamba forced the government to abandon water privatisation.
The protesters who were arrested last week after a demonstration remembering the Soweto massacre have been released. However, they still face charges.
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