President Alejandro Toledo’s approval ratings doubled (to 15.2 %) after he opened personal bank accounts to public scrutiny, resumed gas extraction and signed agreement with Bolivia to allow Bolivian gas to be exported via port of Ilo, creating special commercial zone for Bolivian companies.

Protesters overran southern city of Ayacucho 1 July, setting fire to buildings after police used tear gas to break up demonstration by teachers. Government blamed followers of Shining Path rebel group for mayhem. CGTP labour union called 1-day general strike 14 July in protest at government’s economic policies; 76 arrested. President Toledo’s approval rating reportedly remains below 7%.

Shining Path rebels killed 4 in 3 ambushes in central region. Unrest resurfaced in border town of Ilave with protests against provisional mayor, accused of ineptness and links to predecessor, who was lynched by angry mobs. Mayor and councilmen taken hostage 18 June by leaders of popular movements in province of San Román.

Unrest in southern town of Ilave subsided after deal with government. Security forces to be reduced, community grievances addressed. Interior Minister Rospigliosi forced to resign after failure to end 3 weeks of violence, including lynching of mayor. Coca growers continued to demonstrate, clash with police in Tingo Maria. Anti-government strike in Cusco 27 May killed 2 when bus hit road block set up by demonstrators. Protests continued in Lima prompting President Toledo to miss EU-Latin America leaders summit. President Toledo's approval rating reportedly down to 6%. Peru pressed Japan for response to extradition request for former President Fujimori.

Claimed leader of rebel group Sendero Luminoso (Shining Path) announced armed struggle would commence if government did not provide adequate response. Congress approved murder charge against ex-president Fujimori for decade-old killing. Indigenous protesters beat allegedly corrupt local mayor of Ilave to death after he refused to step down.

Government announced intention to dissolve its intelligence agency on grounds agency still had ties to former President Fujimori and his jailed spy chief Vladimiro Montesinos. Intelligence chief resigned early in month for allegedly plotting against government; successor resigned 2 days later after being investigated for corruption. Supporters of Fujimori launched new political party - though he faces numerous criminal charges if returns from exile in Japan.

Beleaguered President Toledo reshuffled his cabinet for fourth time in less than 3 years. Polls show his popularity at 7%. Ex-President Fujimori, in exile in Japan, seeking to build political support for possible return to Peru – facing criminal charges if he does return. Angry coca farmers demanded greater financial assistance from government to grow alternative crops.

Interior minister warned of possible marches, road blocks and national strike during February 18-20 convention of coca growers in Lima. Widespread dissatisfaction with President Toledo may lead to further protests in coming months. Former spy chief Vladimiro Montesinos went on trial 20 January on charges he arranged supply of arms to Colombian FARC rebels.

Prime Minister Beatriz Moreno resigned 15 December at request of President Toledo, claiming she was victim of smear campaign. Toledo reshuffled cabinet, appointed Carlos Ferrero as PM. One of new ministers resigned within days after accused of corruption. Toledo claims mafia backed by ex- President Fujimori attempting to destabilise government by making unfounded allegations in media.

President Alejandro Toledo apologised for estimated 70,000 deaths during 20 year fight against Shining Path (Sendero Luminoso) rebel group. Peru’s Congress approved new charges against ex-President Fujimori, lifted his presidential immunity. Fujimori, in exile in Japan, still plans to run in 2006 presidential elections. Prominent leader of Shining Path captured by army.