Return of the Shining Path

Terrorist group kidnaps 40 workers less than a week after Peru's President said it had been 'totally defeated'

Less than a week after President Ollanta Humala declared Peru's Shining Path rebel group "totally defeated", the terrorist group has reportedly demanded a $10m (£6.3m) ransom for the return of around 40 gas workers kidnapped in the Amazon.

A heavily-armed group burst into a hotel housing the workers in the remote town of Kepashiato in the early hours of Monday morning. They used two stolen pickup trucks to flee with their victims.The government has sent around 1,500 soldiers to the area and declared a state of emergency in the vast rainforest district of Echarate.

Peru's Ministry of Defence said the troops "will cordon off the zone with the objective of isolating the narco-terrorist criminals". But relatives of the victims – most of who were working for construction contractor Skanska – appealed to the government to avoid a shoot-out.

"The government or the company should reach an agreement [with the Shining Path]," said Vanessa Estrada, wife of one of the workers, Alberto Quispe Luza, 35, a crane operator who had been working for Skanska for less than six months. Speaking to the Peruvian newspaper La Republica, she added: "They shouldn't send soldiers because that could lead to a confrontation in which no one knows who will die. They should pay the $10m."

The Defence Minister, Alberto Otarola, is due to travel to Echarate and the head of Peru's police force, Raul Salazar, is already believed to be there.

There are also unofficial reports that the government has sent a unit of "sinchis", Peru's elite commando force, feared for its no-holds barred approach to fighting terrorists – to the area.

Kepashiato is now in a state of lock-down, with soldiers and police searching all vehicles passing through the town. Locals, meanwhile, were making the most of the quiet before the gathering storm of likely army action. "We are all scared because we are unprotected," one told the daily newspaper El Comercio. "At any moment there could a confrontation and deaths."

All eyes are now on President Humala, as pressure mounts over how he will handle the terrorists' latest outrage. A former army major who saw armed action against the Shining Path in the 1990s, he has previously vowed to crush the surviving remnants of the terrorist group once and for all.

The incident is the most serious involving Shining Path since 2003, when the group kidnapped 70 workers for Argentine oil firm Techint. They had also been working on the Camisea gas project, one of Peru's largest ever infrastructure projects, which is projected to provide the country with cheap gas for decades to come. The hostages were released unharmed within 24 hours after Techint privately negotiated with the terrorists.

Rather than represent a resurgence of activity by the Shining Path, the kidnapping of the Skanska workers appears to be a desperate response to the arrest in February of Florindo Eleuterio Flores, alias "Comrade Artemio".

Flores was Shining Path's most senior commander still at large from the group's murderous heyday in the 1980s and 1990s. He had been leading a small group of rebels as they continued to attack police and military patrols, occasionally even downing a helicopter, from their jungle hideout.

The days when the group effectively laid siege to Lima by detonating bombs in the city centre, are long gone, as is the revolutionary fervour that once marked the Shining Path and motivated its Khmer Rouge-style scorched earth tactics.

For most of the past decade, the Shining Path has been divided into two small groups operating in the remote cocaine hotspots of the Huallaga Valley and the Valley of the Apurimac and Ene Rivers (VRAE), where it charges the drugs cartels for protection.

Nevertheless, the group refuses to die and Victor Quispe Palomino, known as "Comrade Jose", who commands the VRAE faction, is said to have a fortune of $100m at his disposal to spend on arms including AK-47 machine guns and anti-aircraft missiles.

Timeline: Shining Path

Late 1960s Abimael Guzman, nicknamed Comrade Gonzalo, founds the group with the aim of imposing "new democracy" in Peru.

1980 Group launches its first military operation, burning ballot boxes.

1983 Slaughters 69 people, including 15 children, in Ayacucho. This marks the start of a new trend of killings.

July 1992 A huge bomb explodes in downtown Lima, killing 25 people.

September 1992 Guzman is captured and paraded in front of the world's media in a prison jumpsuit.

2012 Comrade Artemio, the group's leader, is captured after a shoot-out.