LIMA (Reuters) - Peru's next president, to be elected on June 5, will inherit hundreds of festering social conflicts that threaten to paralyze mining and energy investments in one of the world's fastest-growing economies.
Some $40 billion in mostly foreign investment has been lined up for Peruvian projects over the next decade, equal to about one third of Peru's gross domestic product.
But much of that could be rerouted if the government fails to defuse strident opposition in rural areas to the extractive projects that local residents say will cause pollution, use up scarce water supplies and fail to lift them from poverty.
There are 200 conflicts over natural resources in Peru, according to the country's human rights office.
Most of the disputes are in the poorest areas of Peru, where the fruits of a decade-long economic boom driven by surging commodities prices have not been seen.
Left-wing nationalist Ollanta Humala and right-winger Keiko Fujimori are virtually tied in the race for the presidency; whoever wins will have to try to resolve the conflicts to keep the Andean nation's booming economy on track.
The stand-offs often turn deadly. The government put the breaks on a $1 billion project from Southern Copper (SCCO.N), one of the world's top copper producers, after protesting farmers blocked roads and three people died last month in a clash with police.
Two years ago, 30 people died in protests against laws passed to promote investment in the Amazon and implement Peru's free-trade pact with the United States. President Alan Garcia was forced to repeal some of the laws and fire his entire cabinet in the worst crisis his presidency.
While Garcia's government considers granting concessions to foreign companies key to sustaining economic growth, indigenous groups in the Amazon and Andean mountains say the mines, dams and oil fields are destroying their ancestral lands.
"Indigenous people will continue offering their lives in the legitimate defense of their lands," Alberto Pizango, the head of Peru's top indigenous rights organization who led the protests two years told Reuters.
Pizango has long demanded that the government implement a law that would bring Peru into compliance with a U.N. treaty it signed to guarantee broad protections for indigenous groups.
The treaty, known as the Indigenous and Tribal Peoples Convention of 1989, says indigenous groups should be consulted and that they must give their consent before projects are carried out on their lands.
Ivan LaNegra, a director at the national human rights office, said passing the bill would help mitigate nagging social unrest.
But Garcia refused to sign the so-called "Law of Consultation" after Congress passed it in May of last year, saying it would give tribes the power to block big investments needed to create jobs and energy for all Peruvians.
Both Humala and Fujimori say they support the bill and would respect the treaty if they win the June 5 presidential election run-off.
"The Consultation Law will be important so that more investment arrives and rural towns understand the benefits," Fujimori said in a recent interview with Reuters.
Humala, who won most districts in the Amazon in the first-round vote on April 10, criticizes Garcia for allowing in "foreign investment without conditions." His campaign platform says Garcia "sold or rented the hills and land of the country, put them in the hands of buyers or foreign investors, and excluded peasant communities and native groups."
A revised version of the indigenous rights law has been pending in Congress since Garcia vetoed it.
Pizango, who is not endorsing either candidate in the run-off, will continue pushing to get the law enacted.
"We will ask the next government to stop granting concessions to all mining and forestry projects until they pass the law," he said.
Reporting by Patricia Velez; writing by Caroline Stauffer; editing by Anthony Boadle