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UPDATE 1-Peru's Garcia vows fight against leftists

Published 03/24/2009, 11:00 PM
Updated 03/24/2009, 11:16 PM

* Garcia promises foreign investors long-term stability

* Peruvian leader promises to fight leftist candidates

* Global crisis a threat to growing economy

(Updates with additional comments)

By Teresa Cespedes

LIMA, March 24 (Reuters) - President Alan Garcia promised foreign investors on Tuesday that Peru would enjoy long-term political stability and said he would work to prevent leftist candidates from winning the 2011 presidential election.

Garcia's comments, made in an unusually candid speech to executives from Latin America, came amid fears in the business community about the candidacy of ultranationalist Ollanta Humala, an ally of Venezuelan President Hugo Chavez.

Humala, a former army general who mounted a short-lived insurrection in 2000, nearly won the 2006 election and his plan at that time to unravel years of free market reforms sent financial markets reeling.

"The president can't pick his successor, but he can prevent the next president from being somebody he doesn't want," Garcia said.

Humala has said the government has vilified him to hurt his political chances.

Later in the day, Garcia backed off his remarks.

"I want to definitively clarify that Peru is a democracy and nobody is hand-picked here," he said.

"But if the president and the government do things well, make investments, generate jobs and extend social services, then the result is that it is almost impossible for the people to vote against this model," he said.

Working for these goals does not amount to explicitly trying to block any politician's candidacy, Garcia added.

Garcia has yet to say which pro-market candidate he will support. Keiko Fujimori, the daughter of former President Alberto Fujimori, and Lima mayor Luis Castaneda, are tied for the lead in polls, slightly ahead of Humala.

Garcia, a leftist who moved to the right, said foreign investments would be safe in Peru, which suffered years of devastating political turmoil during the Shining Path leftist insurgency of the 1980s and 1990s.

Peru's mining-heavy economy has enjoyed an economic surge as a result of a commodities boom as well as a credit expansion that has since slowed due to the global financial crisis.

"I guarantee that every cent you bring will be protected by the political stability that Peru will have in the next 10 years. This is my long-term contribution for when after the crisis passes," Garcia said.

Fallout from the global economic crisis would hit Peru hardest in May and June, Garcia said while talking up an economic stimulus plan designed to keep economic growth at 5 percent this year. [ID:nN24355472]

Private economists forecast 2009 GDP growth of around 1 percent, which would mark a sharp slowdown after more than seven years of rapid expansion. (Writing by Terry Wade; Editing by Vicki Allen and Paul Simao)

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