Government Refuses to Negotiate over Hostages
On February 12, 2012, Florindo Eleuterio Flores Hala, known as Comrade Artemio, was badly wounded after fighting with Peruvian troops. Head of the Shining Path faction based in the Upper Huallaga Valley, Artemio was arrested after the battle. President Humala released a statement, saying that the capture of Artemio meant the Shining Path were now defeated in the Alto Huallaga valley. This marked a major victory for the Peruvian Government because the Alto Huallaga valley is a major area of cocaine production. On March 3, Walter Diaz was captured. Diaz was a major candidate to replace Artemio as leader. Exactly one month later, another leading candidate to succeed Artemio, Jaime Arenas Caviedes was arrested. With Caviedes in custody, President Humala said that the Shining Path was no longer operational in Alto Huallaga Valley.
On April 9, 2012, another major faction of the Shining Path kidnapped 42 workers in the Ene and Apurimac valleys. The area is the last stronghold of the rebels, who once were a major problem for the government. However, after recent captures of leaders in the Upper Huallaga Valley faction, the Shining Path has been limited to small gangs and only participating in drug trafficking. The hostages were employees of Skanska, Coga, and Construcciones Modulares. They were working on a new gas plant when they were abducted.
The Shining Path demanded ten million in ransom for the safe return of the hostages. The Peruvian government refused to negotiate. On local TV, Justice Minister Juan Jiménez said that they would "not negotiate with terrorists, the government acts within the law." The government sent 1,500 troops to the area. Defense Minister Alberto Otarola also traveled to the area to lead the effort to free the hostages.
On July 23, 2012, Prime Minister Oscar Valdés and his government resigned. The resignation came after Valdés received heavy criticism on how he handled the Conga mining project, a project involving surface mining of a copper quarry that also contains gold. Valdés came down hard against activists who protested against the project as well as other social issues. Juan Jiménez was named the new prime minister. However, Jiménez resigned a little over a year later, on October 29, 2013. He was replaced by César Villanueva, president of San Martin, a region in northern Peru.