From Reuters News Service -- excerpted:
By Jude Webber
LIMA (Reuters) - Peruvian Vice President Francisco Tudela quit on Monday as a row mounted over government plans to tie promised elections to a sweeping amnesty for rights abuses and the shock return of former spy chief Vladimiro Montesinos.
The departure of Tudela, who deputised for President Alberto Fujimori and had been widely tipped to be the government's candidate in the new polls, was the highest-profile defection from the president's camp and the clearest sign yet of his crumbling support.
Cornered by a corruption scandal involving Montesinos, Fujimori last month announced he would step down in July after elections four years early.
He summoned his ministers to an emergency cabinet meeting after Tudela's resignation, Montesinos's sudden reappearance and the mounting row over the amnesty plan which would shield military and government officials from charges they violated human rights in Peru's fight against ... [narcotics traffickers] and rebels.
Opposition leaders said those conditions ensured the amnesty law was tailor-made for Montesinos, who ran the notorious intelligence service (SIN) for Fujimori amid allegations he ordered torture and authorised death squads.
The deepening political turmoil -- which opposition leaders say puts the elections at risk -- punished financial markets, hitting Peru's Brady bonds in New York and its ... currency.
Montesinos, who sparked Peru's worst political crisis in a decade when he was seen in a video apparently bribing an opposition congressman to switch sides, arrived back in Peru in the early hours on Monday after Panama refused him asylum.
He flew to Pisco, some 156 miles (250 km) south of Lima, via Ecuador as the government fleshed out its demands for a wide-ranging amnesty ....
With tension rising, Second Vice President Ricardo Marquez said the ball was in Fujimori's court. "I think in the next few hours the president is going to take decisions and address the country," Marquez told CPN radio.
Peru's respected government ombudsman, Jorge Santistevan, stepped up his calls for Fujimori to act or quit now.
"President Fujimori's ... authoritarian administration must end," he said. "More than ever we have to demand decisions from the president because Peruvians are asking who's in control."
Opposition leaders called for protests in Lima at 3:00 p.m. (2000 GMT) to try to force Fujimori to quit immediately.
"Peru cannot be kidnapped by the military commanders and you cannot permit negotiations with a gun to your head," main opposition leader Alejandro Toledo said.
COUP FEARS?
Montesinos' clout with Peru's powerful military raised instant questions about whether his return would now spark a coup by military leaders, loyal to Fujimori for 10 years, who felt exposed by the bombshell election decision.
Peru's top military officials are due to retire at the end of the year and are believed to be hell bent on securing protection from prosecution before they go.
Montesinos' whereabouts were unclear six hours after he landed but Santistevan said he had information he was headed for Lima in a military aircraft.
The United States had supported Montesinos' asylum bid, fearing the military could seek to seize power in Peru. Washington expressed concern at the ex-spy chief's return.
But military analyst Enrique Obando told Reuters it was more likely a bid "to negotiate the amnesty law by the false threat of a military coup."
The government issued its new amnesty demands, which would extend current laws and shield officials from charges of rights abuses during Peru's war on drug trafficking, late on Sunday in a five- page statement couched in dense legal language.
That came ahead of scheduled talks between the government and opposition struggling to free the media, election authorities and courts from a decade of Fujimori control and ensure transparent elections after fraud-tainted polls in May.
(Lima newsroom +511 221 2134, fax +511 221 2133, lima.newsroom@reuters.com))
