A growing cocaine trade and a remnant group of Shining Path rebels in Peru's Ene and Apurimac River Valleys, known as the VRAE, have become President Alan Garcia's toughest domestic issue.

Prime Minister Javier Velasquez warns that increasingly powerful drug traffickers could gain influence in Congress, although most analysts say the mounting violence in the VRAE does not yet pose acute risks to stability in Peru.
 

Longer term, anti-drug officials say these are their main concerns:

Security push stumbles, death toll mounts
Considered the most likely outcome, Garcia's security strategy fails to make significant progress and the Shining Path kill more soldiers and police in ambushes. Presidential candidates try to exploit the VRAE as a campaign issue in 2011, when Garcia - who is liked by foreign investors but unpopular at home - cannot run.
 

Keiko Fujimori, a conservative lawmaker, enjoys broad support among the military and is a frontrunner in the race. But her father, former President Alberto Fujimori, was convicted of human rights crimes stemming from his heavy-handed counter-insurgency efforts.

Shining Path grows, runs candidates
Rival leaders of the Shining Path in the VRAE and a calmer coca-growing valley called the Alto Huallaga, could put aside their differences and unify, causing more security headaches.
 

Rebels in Alto Huallaga still profess a certain allegiance to the jailed founder of the Shining Path, Abimael Guzman, while analysts say those in the VRAE have broken with him.
 

Lawyers for Guzman have formed a political party and plan to run candidates in regional elections next year, although Garcia insists it will not happen.
 

Guzman launched his war against the state in 1980 after turning his back on elections and unleashing his rebel army. Analysts say his more conciliatory tone now reflects his group's weakness and may also be part of an attempt to get his life sentence shortened.

Ollanta Humala
Coca growers could try to strengthen ties to Peru's only significant left wing party, the Nationalist Party of Ollanta Humala. The party already includes several prominent members sympathetic to coca farmers.
 

Humala unnerved financial markets when he nearly won the 2006 presidential race but he is trailing in polls for the 2011 general election.
 

Coca growers have elected politicians to municipal posts, and a few legislators in Congress represent specific coca raising valleys, but they remain fragmented nationally.

Sacred leaf, more planting
Peruvian officials occasionally defend traditional uses of coca in food and tea, but less stridently than leftist Bolivian President Evo Morales, an Aymara Indian and a former coca grower in the world's No 3 producer.
 

Anti-drug experts worry that efforts to promote the "sacred leaf" of indigenous groups could end up creating a more permissive environment for trafficking.
 

UN officials say curbing growth in the VRAE, which has an estimated 16,000 planted hectares, is crucial because Peru could overtake Colombia as the world's top coca grower in coming years.
 

Output in Colombia is falling as it receives the biggest slice of US anti-drug aid in the region. The United Nations estimates Colombian cocaine output in 2008 was 430 tonnes, while in Peru it was 302 tonnes and in Bolivia 113 tonnes.
 

Source: Reuters