PRESIDENT Alberto Fujimori, better known for strong-arm tactics than diplomacy, faced his toughest dilemma ever yesterday as he struggled to resolve Peru's hostage crisis.
Traditionally tough against enormous international pressure to negotiate and avoid shedding the blood of around 400 hostages held captive in the Japanese ambassador's home since Tuesday by heavily armed Marxist rebels.
"This is a nightmarish situation for Mr Fujimori, the worst possible scenario," said one western diplomat with colleagues from his embassy inside the residence. "It's all or nothing now."
So far, the hard line has prevailed. Mr Fujimori turned down early yesterday a demand by the Tupac Amaru Revolutionary Movement (MRTA) guerrillas for the release of jailed comrades.
He also ignored a rebel ultimatum to come and negotiate in person, naming the relatively low-profile education minister to talk instead.
"He's playing firm but obviously not too tough or provocative for fear of a backlash," said the diplomat.
Tough by nature, Mr Fujimori was probably tempted to take strong and immediate action against the rebels, who are holding one of the richest groups ever captured by guerrillas. But the hard line has, already led to problems. Japan signalled overnight serious differences with Peru over the handling of the crisis. Foreign ministries around the world have been pleading for restraint, too.
"The government is caught between a rock and a hard place," said a political analyst, Mr Mirko Lauer. "Setting free the MRTA prisoners would mean losing years of effort and would give a dangerous second wind to armed subversion.
"The murder of many or some hostages would put the country into irretrievable mourning," he said. "They're probably seeking a middle way."
Peru's reputation, which had been improving abroad as it emerged from 16 years of guerrilla violence and economic crisis, would be further tarnished in the event of bloodshed.
The guerrillas threatened several times to kill hostages if their demands were not met, but they have already allowed one ultimatum for Mr Fujimori's presence to pass without incident.
Mr Fujimori has faced some difficult times in an extraordinary presidency that began when he emerged from nowhere as an obscure university professor to defeat the renowned novelist, Mario Vargas Llosa, in 1990 elections.
When he took over, Peru's previously best-known guerrilla movement, the Maoist Shining Path, was on the verge of toppling the government and the economy was a shambles.
But Mr Fujimori introduced free-market reforms that initially sent prices rising but eventually brought the relative economic stability Peru enjoys today. He also took a tough stance against the Shining Path and the MRTA, giving the armed forces virtual carte blanche in their war on the rebels.
The fruit of this policy came in 1992 when anti-terrorism police captured both the MRTA leader, Victor Polay, whose release is top of the guerrillas' current agenda, and the Shining Path leader, Abimael Guzman.
The 57-year-old has survived several failed internal coups against him in 1991 and 1992, and himself carried out a stunning "auto coup" in 1992 in which Congress and the judicial bodies were closed and the constitution rewritten to increase Mr Fujimori's power.
Mr Fujimori's task now is to resolve the crisis as soon and as peacefully as possible while convincing the world the guerrilla strike is a one-off incident which does not mean Peru is back in the dark days of the late 1980s or early 1990s, analysts said.