Peru's Congress repeals laws behind Amazon clashes

LIMA (Reuters) - Peru's Congress overturned two controversial land laws on Thursday that ignited clashes between police and indigenous protesters in the Amazon rain forest two weeks ago, killing at least 34 people.

The vote to throw out legislative decrees 1090 and 1064 could delay foreign investment in mining and energy projects and may prompt Peru and the United States to reevaluate clauses of their free-trade pact.

The violence may also force President Alan Garcia to reshuffle his cabinet in July, when Peruvian leaders traditionally announce changes. Garcia's chief of staff, Yehude Simon, has already said he will step down in coming weeks for failing to prevent the bloodshed.

Garcia, a promoter of private investment, issued a series of decrees last year under powers Congress gave him to implement the U.S. trade deal and create a framework to regulate investment in the Amazon.

After protests turned violent, he backtracked and asked Congress to repeal two of the most divisive laws, though others remain in effect.

"This is a historic day for all indigenous people in Peru," Daysi Zapata, director of the Indian rights group Aidesep, said alongside dozens of indigenous people who wore traditional tunics and headdresses to watch the vote in Congress.

'BOMB' DEFUSED FOR NOW

Zapata said she would ask indigenous groups to lift any remaining blockades of roads and rivers that started in April in the Amazon basin, but said the government may be pressured to make more legislative changes.

"There are still seven legislative decrees left," she said, suggesting tribal groups could demand future congressional votes to prevent their ancestral lands from being opened up to foreign companies.