GALA AT GUNPOINT

By Kevin Fedarko

The place to be in Lima last Tuesday night was the elaborate residential compound of Japan's veteran ambassador to Peru, Morihisa Aoki. In recent years Aoki's receptions have enjoyed an enviable acclaim, thanks to the munificence of his banquet table and glitter of his guest lists. And last week's party commemorating the birthday of Emperor Akihito (he turned 63 this year) was no exception. More than 1,000 invitations were sent out, and by 8 p.m. anyone interested in glimpsing a real-life Who's Who in Lima only needed to peek over the embassy's garden wall, where more than 600 guests, largely government officials, foreign diplomats and corporate executives, were preparing to make a run at the sushi buffet and raise their pisco sours to toast Aoki's hospitality. Even Peru's President Alberto Fujimori, the son of Japanese immigrants, was expected. His mother Rosa, brother Pedro and sister Juana were already there.

At 8:35, however, the birthday party came to a crashing halt. In quick succession, a hole was blown in a retaining wall from an adjoining house, hand grenades were thrown at the embassy guardhouse and about 25 rebels belonging to a group known as the Tupac Amaru Revolutionary Movement stormed into the compound. As the insurgents engaged police in a ferocious gun battle, everyone--Peruvian ministers, blue-chip business tycoons, assembled diplomats and their wives--dropped to the ground. "Don't lift your head," the rebels barked, "or it'll be shot off."

Thus was launched what is possibly the single most audacious act in the history of terrorist hostage taking. The prominence of the prisoners, along with the fact that the siege was technically taking place on the soil of a foreign embassy, turned what might have been simply a debilitating domestic emergency in Peru into an international scandal. It dealt a staggering blow to Fujimori, who has staked much of his political fortune on stamping out homegrown terrorism. At the same time, it lent worldwide recognition to a group of insurgents that Fujimori only two years ago dismissed as a spent force. With some 340 hostages still in rebel hands by week's end, Fujimori faced an appalling choice: confrontation or accommodation. Challenging the terrorists would risk hundreds of lives, including those of ambassadors from at least 11 countries. Giving in to rebel demands, however, would encourage similar hostage taking in the future and open the door to a violent past that the President has claimed to have welded shut.

It is a dilemma no head of state could envy, and it took Fujimori's security forces completely by surprise. In recent months they had become convinced that they had won the war on terrorism that Peru had been fighting for more than 15 years. Forty minutes after the initial attack, the police withdrew from the compound and began shouting at the guerrillas. The guerrillas yelled back the suggestion that the security squads go find themselves a megaphone. When police lobbed tear gas into the compound, the rebels simply pulled on their gas masks while the hostages sputtered and choked.

Three hours after the seizure, communications were established and the insurgents gradually began releasing some 300 women and elderly people (including Fujimori's mother and sister). In phone calls to local television and radio stations, the rebels then issued a list of demands. Among them: safe passage to a haven in the Amazon jungle and release of about 450 comrades being held in various jails, where conditions are so harsh that prisoners are said to be trapping rats to feed themselves.

Any hopes that the initial hostage release presaged a weakening of the insurgents' will were dampened on Wednesday when the commander of the rebel operation announced that if the government did not open talks within one hour, he would start executing hostages. Fortunately, the deadline passed safely--a reprieve that seemed to underscore Tupac Amaru's reputation for favoring bargains over bloodshed.

Tupac Amaru has always been something of a poor cousin to Peru's most infamous terrorist group, the Maoist-inspired Shining Path, which nearly succeeded in its violent bid to topple the Peruvian state in the early 1990s. Smaller than its notorious rival, Tupac Amaru drew inspiration not from China but from Cuba, and recruits from the countrys farthest shantytowns of the dispossessed poor. The organization's name has a bloody history. It first belonged to the nephew and heir of Atahualpa, the Incan King whom the Spanish conquistadores garroted in 1533. Tupac Amaru (which means "Royal Serpent" in Quechua) resisted his uncle's executioners for years, but was finally captured in 1572, whereupon he was paraded on a mule through the streets of Cuzco and beheaded with a cutlass. Two centuries later, his name was appropriated by another Incan rebel who, after his own arrest, was torn apart by four horses in Cuzco.

From its first attack in 1982, the group has leaned toward urban terrorism, much of it aimed at the U.S. It hurled a rocket-propelled grenade at the American embassy, lobbed mortars at the U.S. ambassador's residence and bombed several Kentucky Fried Chicken restaurants in Lima. Those acts initially imbued the guerrillas with an aura somewhere between Robin Hood mystique and radical chic. In 1990 the group staged its most spectacular stunt when nearly 50 members tunneled out of the Canto Grande prison near Lima, supposedly the nation's most secure jail. The crowning indignity was that the operation was videotaped by the escapees, who included Victor Polay, Tupac Amaru's top leader at the time.

Two years later, Fujimori seized near dictatorial powers in a "self-coup" that savaged virtually every democratic institution in the country but enabled him to implement draconian security measures that eventually crippled both rebel movements. By 1993 Abymael Guzman, the Shining Path warlord whose face had not been seen in 25 years, was in jail and Polay had been recaptured. An elated Fujimori boasted to a Chilean reporter that "no one here in Peru any longer doubts that [Tupac Amaru] will be defeated this year."

Now, through a well-planned operation designed to catapult itself into the international spotlight, Tupac Amaru has upstaged the President. Even if its bid does not succeed, the group will bask in exposure for as long as the crisis lasts. And by week's end it looked as if that may be a prolonged period. When the initial fireworks subsided, a more grinding routine ensued as an exhausted Red Cross mediator shuffled between embassy and presidential palace, conveying requests for toothbrushes and toilet paper. Batches of hostages were released, but the impasse remained unbroken. Meanwhile, the Peruvian government withdrew behind an official wall of silence, and Fujimori wrestled with conflicting advice from his two most important allies: Japan pressed for negotiation, and the U.S. counseled him not to cut any deals. A team of Delta Force commandos, who specialize in hostage rescues, was on standby in Lima.

As for the hostages, the task before them was perhaps best expressed by Etsuko Taguchi, 59, who attended the ill-fated reception with her husband Yoshimoto, 57. Etsuko was released on Wednesday night, but Yoshimoto remained. On Thursday she attempted to hand a packet of stomach tablets to the Red Cross workers who were acting as go-betweens, with a note addressed to her husband in Roman alphabet. Added to it was the single Japanese word, ganbatte. It means "hang in there."

--Reported by Eric J. Lyman and Douglass Stinson/Lima and Irene M. Kunii and Satsuki Oba/Tokyo

With reporting by ERIC J. LYMAN AND DOUGLASS STINSON/LIMA AND IRENE M. KUNII AND SATSUKI OBA/TOKYO