Abimael Guzman has been kept in solitary confinement in his underground cell at a naval base outside the capital, Lima, since he was captured in September last year. Until the arrest, the guerrillas had been going from strength to strength. Some experts were forcing themselves to think the unthinkable: Sendero Luminoso might even win.
Some 30,000 people have been killed since Sendero Luminoso launched its 'people's war' in 1980. By mid-1992 huge car-bombs were exploding in residential districts of Lima and panic was spreading. Guzman's capture changed that overnight. The fighting has gone on, but the guerrillas have suffered a series of reverses. More than 2,000 have been killed or captured, including a number of leading cadres. The government claims that Sendero Luminoso is no longer a serious threat.
On 1 October, President Alberto Fujimori announced to the United Nations General Assembly in New York that Guzman had written to him suggesting peace talks, which the President promptly rejected. Back in Lima he produced a video showing Guzman and his second- in-command (and mistress), Elena Iparraguirre, reading out and signing the letter.
A few days later Guzman wrote again, and appeared in another video, repeating his appeal for negotiations. He admitted that Sendero had been so badly hit by government advances over the past 18 months, particularly in the intelligence field, that its leadership could no longer function effectively. The terminology was uncannily similar to that of Mr Fujimori himself, who has sworn to destroy Sendero Luminoso before his term of office ends in mid-1995.
The transformation was so striking that many guerrilla sympathisers refused to believe the figure in the second video really was Guzman. They pointed out that the slim, neatly dressed man on the screen bore little resemblance to the bearded, dishevelled figure shown to the press shortly after his capture by anti-terrorist police in a Lima safe-house. Even if he was Guzman, they said, he must have been drugged or subjected to psychological torture.
Such claims may not be without foundation. Soon after he was captured, a team of intelligence officers, sociologists and psychiatrists began working on Guzman, priming him with sweets, coffee and cigarettes and encouraging him to talk about himself. They found him vain, garrulous and excessively concerned about his health.
President Fujimori's security adviser, Vladimiro Montesinos, then held a series of one-to-one sessions with Guzman. The guerrilla leader seems to have been convinced that there was no point in carrying on the struggle, and was put under pressure to call on his followers to lay down their arms.
This he has still not done, though the government acclaimed his letters as a 'virtual capitulation' - and announced that more than 150 guerrillas have surrendered since 1 October, under a new amnesty law. The government expects Sendero to split, with a majority giving up the struggle and a desperate minority holding out in remote rural areas.
Intelligence experts believe that the guerrillas' loyalty to their 'chairman', Guzman, whom they regard as the 'fourth sword of Marxism-Leninism-Maoism', is so complete that most will do whatever he orders. But sceptics have pointed out that Guzman is in no position to give orders, or to negotiate, from his prison cell.
Shining Path is both a political party - the Communist Party of Peru - and a guerrilla force, the People's Guerrilla Army. It has evolved highly sophisticated structures that have proved resistant to infiltration. Guerrilla 'columns' are still operating in several parts of the country, particularly the coca- producing areas east of the Andes. Government claims that most senior leaders have been killed or captured are hotly denied by Shining Path apologists.
Fujimori's political enemies accuse him of staging Guzman's capitulation, to woo voters in a referendum on 31 October billed as a plebiscite on the President's administration. The referendum will decide whether to adopt a new constitution that would entrench Mr Fujimori's free-market economic reforms and enable him to stand for a second successive term.
The President assumed virtually dictatorial powers in April 1992 when, with military backing, he closed congress and dismissed senior judges. He complained that the opposition and judiciary were holding back his campaign to defeat the guerrillas and reform a stagnating, state-dominated economy.
Since then he has scored notable successes against Sendero and against economic decline. He calculates - probably correctly - that voters will agree that his authoritarian rule brings results. Opponents allege that the referendum is merely designed to perpetuate him in power. The new constitution, if approved, would not only enable him to stand for re-election in 1995, but would give him the power to close congress again.