THIS TIME, 80'S POPULIST SOUNDS CAPITALIST THEME IN PERU

PUNO, Peru, May 28 -- As the former president Alan Garcia campaigned
across the Andean highlands, there were flashes of his old populist
allure.

Aymara and Quechua Indian women herders abandoned their llamas to run
and touch him. People poured confetti into his hair and draped him with
flowers as his caravan stopped in little towns. Defying the thin
mountain air with a few gulps of coca tea, Mr. Garcia rode a bicycle
through the streets of one town and danced a torrid huayno with a young
Quechua woman in another.

But running for a second term in Sunday's presidential election has its
challenges for the man who was once viewed as Latin America's premier
social democrat.

After serving as president between 1985 and 1990, Mr. Garcia left office
widely abhorred. Terrorism raged across the country. Consumers were
forced to wait on long lines for food, with bags of money made almost
worthless by a four-digit inflation rate and repeated devaluation. The
government was virtually bankrupt and several social programs were
ruined by corruption.

Mr. Garcia, having just turned 52 and his hands now slightly shaking, is
attempting a comeback mixing touches of nostalgia with large dollops of
repentance. At virtually every campaign appearance, he now says he is
deeply sorry for the mistakes of his youth.

"I recognize the errors that I made," he told a campaign rally in the
Aymara Indian market town of Llave, his head slightly bowed. "I have
learned from my experience."

The night before, on a popular television talk show, Mr. Garcia spoke as
if he were in a confessional. "It's been tough for me to take 10 years
of insults," he said. "I need to put my name right in Peruvian history."

Mr. Garcia may just get his chance after squeaking past several mediocre
candidates in the first-round balloting in April to get into the runoff
on Sunday with Alejandro Toledo, a former World Bank official. Three
nationwide opinion polls released over the weekend differed widely, but
all showed Mr. Garcia creeping up.

Mr. Toledo has long been the overwhelming favorite to win the presidency
since he led the campaign last year to unseat President Alberto K.
Fujimori, now in exile. But Mr. Toledo has been put on the defensive in
recent weeks by reports that he used cocaine, associated with
prostitutes, abandoned an illegitimate daughter and laundered campaign
contributions.

Still, even in one poll that showed Mr. Garcia only 4 percent behind Mr.
Toledo, 49 percent of respondents said they would never vote for the
former president. The poll, taken by Apoyo Opinion y Mercado, surveyed
1,822 people and had a margin of error of plus or minus 2.5 percent. As
a protest, 23 percent said they would spoil their ballots or leave them
blank.

In the final days of the campaign, Mr. Garcia is concentrating on the
urban middle class and rural impoverished voters with two distinct
messages to ease the widespread unease over his candidacy.

On television shows popular with the urban middle class he has pledged
to make fighting inflation, containing government budget deficits and
maintaining a solid currency his primary concerns. He has promised that
his government will not depend solely on his APRA party, a cult-like
political machine with socialist tendencies, and has dropped the names
of several conservatives as possible appointees to the posts of prime
minister and economy minister.

On the stump in rural provinces, he returns to his old populist
rhetoric, promising to raise teachers' salaries, provide jobs to the
poor with public works projects, grant free education to all students
through college, and increase regulations over telephone and electricity
monopolies in order to lower utility rates for consumers.

Before he began speaking at the rally in Ilave, an announcer promised,
"Alan Garcia will be president of the peasants. He will govern for the
poor." Mr. Garcia told the crowd that his government would "build roads,
put more resources into health care and provide more hydroelectric power
for local needs." But his old plans to nationalize the banking system
and defy international bankers by limiting debt payments are long gone
from his speeches.

Mr. Garcia attacks Mr. Toledo at every opportunity, though he tends to
do so in an indirect manner. In a television debate with Mr. Toledo, Mr.
Garcia said that no one who uses cocaine deserves to be president, but
without mentioning his opponent by name. He repeatedly taunts Mr. Toledo
for recent misstatements about the circumstances of his mother's death
and about a visit to an impoverished village he never actually made.

In Azangaro, a Quechua market town plagued by the Shining Path terrorist
group a few years ago, Mr. Garcia threw political red meat to the crowd.
"No, Mr. Toledo," he said, "We will not allow Shining Path terrorism to
return through you."

In turn, supporters of Mr. Toledo threw stones at Mr. Garcia and played
loud campaign music from a loudspeaker until Mr. Garcia's security aides
cut the wires.

Even as Mr. Garcia attempts to reassure voters that he would be a very
different president next time, he is plagued by the notions a majority
of voters have, that he and his first government were corrupt. Several
criminal complaints have been filed over the years that Mr. Garcia took
kickbacks for purchases of jet fighters and for the building of a rail
system in Lima that was never completed. Some of the complaints have
been dismissed by the courts, and others are still pending.

Mr. Garcia has been further bruised by a congressional revelation over
the weekend that his former interior minister, Agustin Mantilla, had
$2.8 million in various bank accounts shortly after Mr. Garcia left
office. Mr. Garcia has denied all the corruption charges, and said he
has less than $10,000 in the bank.

In an interview, Mr. Garcia sounded like a convert to moderation. He had
kind words for President George W. Bush, saying he hoped to work with
him to create a hemisphere-wide free-trade zone and broaden the Plan
Colombia anti-narcotics program across the Andean region with economic
projects appropriate for Peru.

"I guarantee fiscal stability, monetary stability," he said. "Whatever
dollar is invested in Peru will not be at risk due to a devaluation." He
added that he hoped to encourage domestic business by decreasing
interest rates on overdue taxes.

Mr. Garcia said he had changed in large part because the world had
changed since he took office in 1985 and froze dollar bank accounts. "In
1985 emerging markets didn't exist," he said. "Now any political
decision you take has an impact on financial instruments, including the
value of Brady bonds. We don't have the flexibility we used to have."

As for his campaign by confession, Mr. Garcia said, "There is a
Christian, Catholic dimension to this. Asking to be pardoned does not
diminish a politician."