In the face of a mass protest movement led by the indigenous people living in the Amazon basin, the government of President Alan García and the Peruvian parliament overturned two decrees aimed at opening the vast natural resources of the Amazon jungle to exploitation. The repeal of the measures represents a severe blow to the Free Trade Agreement signed between Peru and the United States.
The daily La Republica reports, “The president admitted that he was mistaken for having excluded the indigenous people when drafting the laws, and that the lack of dialogue provoked the death of 34 people, among natives and policemen.”
...Encouraged by the hundreds of thousands of workers and students that joined them in a nationwide day of protest June 11, as well as the growing international support from Mexico, as well as native organizations from neighboring Ecuador and Bolivia, indigenous organizations had stepped up their protest, taking control of major roads used to carry produce from the jungle to the coastal cities, including the capital, Lima.
At checkpoints, the natives, armed with spears, decided which trucks could pass and which not. With the majority of Peruvians blaming the government for the massacre of Bagua, the police were in no position to intervene.
Under these conditions, the use of force would have provoked a nationwide conflict that could potentially have brought down the government.
The US government was also forced to retreat from its initial position of intransigently backing the use of force. Prior to the massacre of Bagua, Washington was indicating to Peruvian officials that if Lima failed to enforce the decrees opening up the Amazon region to exploitation, the US would consider annulling the Free Trade Agreement...
http://www.wsws.org/articles/2009/jun2009/peru-j23.shtml 
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