QUILLABAMBA, Peru | A national strike by thousands of  rain-forest Indians is spawning accusations of a proxy war involving Venezuela  and an emboldened peasant movement seeking to undermine Peru's pro-U.S.  president.
For more than two months, thousands of natives have been  protesting land reforms issued by President Alan Garcia. The laws -- required by  a U.S.-Peru Free Trade Agreement -- open vast tracts of rain forest to private  energy and agriculture investment.

In April, natives angered by the new laws donned war paint  and grabbed spears, overran roads and rivers, seized control of jungle oil  facilities and blocked rural airports.

Mr. Garcia initially said that the protesters would not  force his hand. But he backtracked after a June 5 confrontation in the oil-rich  Amazon region of Bagua left more than 30 police and protesters dead.

Congress voted down two of the laws on June 18, handing  Mr. Garcia a defeat and the natives a new sense of power.

Mr. Garcia, who appoints the prime minister, also has  agreed to name a replacement for Prime Minister Yehude Simon. On Friday, Mr.  Simon said he planned to step down this week in response to criticism of the  government's handling of the protests, Reuters news agency reported. Mr. Simon  had indicated in mid-June that he would resign, but had not set a date.

Human rights groups say dozens of protesters were killed  or are missing and are not accounted for in the official toll.

Opposition parties have blamed Mr. Simon for the violence.  He was appointed in October after a corruption scandal led to a major government  reshuffle.

His resignation would force the entire Cabinet to offer to  step down, but Mr. Garcia is not expected to replace heads of key departments,  such as the Finance Ministry. Mr. Garcia has not yet indicated who would replace  Mr. Simon.

The conflict has threatened to slow Mr. Garcia's push to  attract billions of dollars in foreign investment.

Critics say the president's investor-friendly policies  have not done enough to lift incomes in a country where 36 percent of a  population of 29 million live in poverty.

Still, many here have questioned how rain-forest peasants,  who live hand to mouth, found the resources to strike for weeks.

Fingers have been pointing at Venezuelan President Hugo  Chavez, who has been promoting socialist policies in this strategic region known  for cocaine and energy resources.

Peruvian Congressman Edgar Nunez told The Washington Times  last month that the congressional committee he heads has hard evidence that Mr.  Chavez funded protesters through a network of grass-roots groups called "casas  de ALBA." He declined to describe the evidence, saying only that investigations  are ongoing.

Venezuela's government denies supporting the network.

Mr. Garcia, however, has accused his former presidential  rival and Chavez acolyte, Ollanta Humala, of working with Venezuela's president  to convince Indians to carry out what many in Peru see as acts of domestic  terrorism.

Mr. Humala narrowly lost the presidency to Mr. Garcia in  2006. He embraced a Chavez-style populist platform including promises to  nationalize oil, gas and mining. He is set to make another presidential run in  2011.

"Its obvious that the natives are being manipulated," said  Roberto Ugarte, owner of a hotel not far from Cuzco, a major tourist attraction.  "And its obvious that Chavez and Humala are involved. Our economy is working  well, and now they want to change it."

Alvaro Vargas-Llosa, a senior fellow at the  Washington-based Independent Institute, agreed.

"I give credibility to claims that they are involved," he  said.

"Past experience shows that Humala, and more widely, the  Chavez government, are heavily involved in efforts to destabilize outlying  provinces and further an anti-democratic cause based on vaguely nationalist and  very anti-democratic ideas."

Many say that Perus estimated 500,000 natives --  increasingly hemmed in and clamoring for their share of Amazonian oil and gas  projects -- have found new organizations and resolve that will help Mr. Humala.

"This is the first time Indians have worked together and  made a change," said Vincent Alagon, a Peruvian peasant who was interviewed  recently standing near a flaming effigy of Mr. Garcia in the jungle town of  Quillabama. "Alan Garcia is a murderer and a thief. We will make Humala  president."

Mr. Vargas-Llosa said that natives are being manipulated  and lack the organization and national agenda needed to make real political  change.

"Natives have long been ignored by a government, so they  respond when people come around with offers to help," he said. The protesters  are being "bamboozled."

He added, "What these people really want is the opposite  of what Chavez and Humala stand for. They want to own things, to exploit the  rain forest themselves and to have property rights."

He said the Garcia presidency wont be the same following  the protests.

"For the remainder of his term, he will have to take a  defensive posture rather than a proactive one," Mr. Vargas-Llosa said.

Emboldened natives are likely to keep up demands for  schools, roads, clinics and a seat at the oil-and-gas table.

While Mr. Humalas National Party has denied giving funding  to protesters, many Peruvians - especially wealthy elites - think that Humala  loyalists help protesters by dipping into local government checkbooks made fat  by oil and natural-gas royalties.

For example, in the town of Quillabamba, native political  organizers from an Indian federation called COMARU were openly given rides in  government vehicles.

On June 11, a truck bearing a regional government seal  carried native protesters to a planning meeting near the Urubamba River town of  Ivochote in southeastern Peru.

Prohibited by a pending state of emergency, the meeting  was held in a remote building where participants laid plans to take over a  pumping facility on a natural-gas pipeline on June 15. The action was canceled  at the last minute owing to progress in government negotiations.

The mayor of Convencion, which receives millions of  dollars in royalties from the U.S.-backed Camisea Natural Gas Project, is a  Humala loyalist named Hernan de la Torre. Mr. la Torre did not show up at a  scheduled interview this month and failed to answer questions left on his  voicemail about the government vehicles.