MercoPress. South Atlantic News Agency

Peru new cabinet blends leftist MP and orthodox economics

Peruvian President Alan Garcia announced Saturday that he has appointed a leftist governor as Peru's prime minister, a day after the entire Cabinet resigned amid a brewing oil kickbacks scandal. Longtime politician Yehude Simon, 61, will replace outgoing Prime Minister Jorge del Castillo, Garcia said.

Simon said Finance Minister Luis Valdivieso, a former IMF official who recently joined García's administration, would stay on, as would Foreign Minister José Antonio García Belaunde and Foreign Trade Minister Mercedes Aráoz. "I want to build a great alliance, friendship between sectors of the left and the government, and I have no doubt that businessmen of the so-called right will also draw near," Simon said. "The country needs a truce". President Garcia, whose approval rating hit a low of 19% prior to the scandal, mostly because of rising inflation, must rebuild his administration in the midst of a global financial crisis and a month before leaders from 21 countries gather here for the annual Asia-Pacific Economic Cooperation summit. Simon served as member of Congress for the United Left party from 1985 to 1990 during Garcia's first administration. He went to prison for alleged links to leftist Tupac Amaru guerrillas, but was pardoned in 2000 and elected governor of the northern Lambayeque province in 2003. According to the Lima press by picking Simon García may be trying to place greater emphasis on social programs, neutralize critics on the left, and regain support in the provinces, where he is especially unpopular. Although the Peruvian has become the fastest growing economy in Latinamerica averaging 9%, critics say expansion has failed to lift millions out of poverty. He had faced calls from opposition leaders to reshuffle his Cabinet after audio tapes emerged that linked members of his APRA party to a plan to steer lucrative petroleum contracts to favoured Norwegian bidders in exchange for bribes. Former Prime Minister Jorge del Castillo, García's right-hand man, was mentioned in the taped conversations as someone who would provide favours in a plan to rig auctions of oil and gas concessions. Earlien in the day Presdient Garcia said "I will ask the newly designated prime minister to establish a broad-based government which is as plural as possible ... and at the same time to incorporate regional actors in the running of the republic". He described his decision as a significant democratic renewal and "we will all help him in the fight to totally wipe out corruption". Members of Mr. Simon Peruvian Humanist Movement party say he is planning to run for president in 2011.