Peru is at war. That is how a Lima politician described the government's latest crackdown on Sendero Luminoso, a small but powerful guerrilla group based in the highland province of Ayacucho some 200 miles southeast of Lima.
''They're no longer fighting an isolated group of terrorists,'' he says, ''but a guerrilla band that has become an increasing threat to the government's survival.''
On June 3, Peruvian President Fernando Belaunde Terry declared a nationwide state of emergency, suspending civil rights in this Andean nation for 60 days. And last week he extended for another 60 days a state of emergency that had been in force since December in three particularly troubled southern provinces.
More than 500 people have been arrested this month, including labor leader Isidoro Gamarra. Critics have accused the government of conducting a ''leftist witch hunt.''
''For the government,'' says Javier Diez Canseco, a deputy in congress and member of the United Democratic Popular Party, ''subversion is a monster that walks on three legs: terrorism, the trade union movement, and the legal left.''
According to Mr. Diez Canseco, the government's latest target is the foreign community. International relief organizations came under fire this month when Belaunde accused them of ''indirectly backing the discord and death'' here. Among such institutions operating in Peru are Oxfam, the British world-hunger organization, and the Ford Foundation.
Despite the government's hard-line counterinsurgency campaign - 2,000 government soldiers were sent to Ayacucho earlier this year - Sendero Luminoso, or ''Shining Path,'' has shown no signs of weakening. Recently explosive charges were set off in Lima and terrorists in Ayacucho shot and killed the city's public prosecutor.
According to an Army intelligence source, the military misjudged Sendero's strength when it earlier predicted the guerrillas would be finished off by Christmas. ''Sendero will be with us for a while,'' he says.
The guerrillas are said to combine ancient Indian beliefs with communist dogma, preaching a revolution along the lines of Mao Tse-tung's peasant-worker revolt in China.
According to Peru's labor minister, Alfonso Grados, Ayacucho's bitter poverty and radical student community have helped foster revolt. ''In this sector is being spawned one of the most radical, revolutionary movements this country could ever create,'' he says, describing the 50-odd villages and towns in the province, one of the poorest in Peru.
While political analysts say Sendero has no more than 2,000 fighters, they caution that the terrorist threat to the government is nonetheless real. ''At this point,'' a Lima political scientist says, ''the danger is psychological.''
Since January, when Belaunde sent the Army to Aya-cucho, political observers have drawn comparisons with 1965, when the first Belaunde administration used the armed forces to put down a guerrilla threat. Three years later the military, convinced that only the Army could carry out the fundamental changes needed in Peru, overthrew Belaunde.
It is unclear if today's Army officers are similarly inclined, but civilians are worried. Last month, for example, Peru's two weekly news magazines ran cover stories on the possibility of a coup.
Meanwhile, tensions are running high at the presidential palace because of the Army's failure to crush the terrorists and the increasing savagery of its counterinsurgency campaign. Official figures place the death toll at more than 900 since the Army moved in January. That is nearly seven times the number of deaths between 1980 and 1982.
Recently a Lima political journal blasted what it called military ''terror tactics'' in routing suspected guerrillas.
''There have been no attempts to prosecute soldiers who have tortured suspects or killed innocent peasants,'' says Ricardo Letts, a leader in the Revolutionary Vanguard Party. ''The military has assumed absolute control in these matters and their word is law.''
Congressional deputy Diez Canseco adds, ''As the government shuts off every possibility of negotiation with Sendero, it pushes the country closer and closer toward the terrible experience Central America is now suffering.''