Peru's Garcia names new Cabinet as popularity sags
By Maria Luisa Palomino
LIMA (Reuters) - Peruvian President Alan Garcia swore in a new Cabinet led by a prominent leftist as prime minister on Tuesday, hoping to overcome a corruption scandal and regain popularity.
Garcia fired all 17 of his ministers last week after audiotapes surfaced linking two of them to a scheme to steer lucrative petroleum contracts to favored bidders in exchange for bribes.
Although he ended up reappointing much of his Cabinet, Garcia made one drastic change. He named Yehude Simon, governor of the northern province of Lambayeque, who is not a member of Garcia's APRA party, as prime minister.
"It's a balanced Cabinet, representing the business sector, which is crucial, and social movements," Simon said.
Garcia told Simon to work to boost investments by foreign and domestic firms during a time of international turbulence and to fight corruption.
By picking Simon, who was jailed a decade ago for ties to a guerrilla group, Garcia has shown he will try to place greater emphasis on social programs, neutralize critics on the left and win back support in the provinces.
The new job will give national exposure to Simon, a pragmatist who now supports private enterprise and who may run for president in 2011, when Garcia is constitutionally barred from re-election.
Simon's appointment could hurt the chances of Ollanta Humala, the ultra-nationalist who worried investors when he nearly beat Garcia in the 2006 presidential race and who plans to run again.
Garcia's approval rating has fallen to 19 percent, a new low for his current term as president, despite surging economic growth of 9 percent a year that unions and the poor say has yet to trickle down to the poor.
Garcia, a former leftist whose first term in the 1980s ended in economic chaos, now firmly believes in free markets and mainstream policies.
He named seven new ministers and reappointed Finance Minister Luis Valdivieso, a former IMF executive who says inflation must be kept under control.
Pedro Sanchez, an energy specialist with the World Bank, was named energy and mines minister.
Sanchez will oversee concessions for mining, petroleum and gas. The job includes luring investments for electricity generation and the development of natural gas fields that the country's mining industry, one of the world's most productive, says are crucial for Latin America's fastest-growing economy.
(Additional reporting by Teresa Cespedes; Writing by Terry Wade; Editing by Peter Cooney)