August 13, 2005

Peru’s problem minister steps down

By Eduardo Orozco

LIMA, Peru (Reuters) - The man whose appointment as Peru's
foreign minister detonated the biggest Cabinet crisis of
President Alejandro Toledo's four years in office stepped down
on Saturday with a withering attack on the outgoing premier.

Claiming to be the victim of "disloyalty and betrayal,"
Fernando Olivera told reporters neither he nor his Independent
Moralizing Front party, Toledo's coalition partner since he
took office in 2001, would again hold any ministry.

His withdrawal was expected -- Toledo had said on Friday
Olivera was not expected to figure in the new Cabinet he was
forced to assemble after Prime Minister Carlos Ferrero quit in
protest over Olivera's appointment on Thursday.

Ferrero and other ministers had disagreed publicly with
Olivera over a regional law in southern Peru legalizing some
cultivation of the raw material for cocaine.

Ferrero and Toledo's most popular minister, Housing and
Construction Minister Carlos Bruce, both quit immediately after
Olivera was sworn in. The rest of the Cabinet also resigned, as
Peruvian law requires whenever a prime minister quits.

The ministers remain in office in a caretaker capacity
until a new Cabinet is named, something expected within days.

Olivera said Ferrero's decision to sign the supreme decree
ratifying his appointment, and then quit minutes after he was
sworn in was "proof of ... premeditation and treachery in a bid
to assassinate me morally and politically."

The appointment of Olivera, Toledo's closest ally but a man
widely distrusted for his privileged access to the president,
was greeted with incredulity from politicians on all sides and
many members of the public.

He drew further ire on Friday when he appeared to be trying
to cling to his new position, attending a ceremony at the
foreign ministry where he acted as if nothing had happened.

The debacle was expected to hammer Toledo's popularity --
which has recently crept up to 14 percent in opinion polls.


Though markets saw Peru's latest political crisis as
business as usual, Toledo needs to patch up his Cabinet quickly
to avoid more damaging turbulence in his final year in office.
The government has admitted public spending is rising too
quickly and more job and pay protests are brewing.

Toledo has been holding two days of talks with outgoing
ministers and lawmakers in his quest for a new cabinet. Olivera
did not make clear whether the coalition remained intact, a key
question since Toledo lacks a Congressional majority.

The president, who proclaimed only on Monday his government
was stable, has sought to paint the Cabinet reshuffle as a
revamp of a team that was expected to lose several members
soon. Those who plan to run for Congress or president in April
2006 must quit by early next year.

Toledo is barred from seeking re-election in a race that is
still wide open, and hands over power next July.

Outgoing Economy Minister Pedro Pablo Kuczynski was seen as
a strong contender to take over the prime minister's job --
something he is long believed to have coveted -- as well as his
current portfolio.

Henry Pease, a senior member of Toledo's Peru Posible
party, and current Labor Minister Juan Sheput, a close Toledo
ally, were seen as hot prospects for prime minister.

Olivera, who in 2000 unveiled a video that sparked a huge
corruption scandal, eventually felling former President Alberto
Fujimori, was Peru's ambassador to Spain until this week.