LIMA, (Reuters) – Peru’s Congress overturned two  controversial land laws yesterday that ignited clashes  between police and indigenous protesters in the Amazon rain  forest two weeks ago, killing at least 34 people.

The vote to throw out legislative decrees 1090 and 1064  could delay foreign investment in mining and energy projects  and may prompt Peru and the United States to reevaluate clauses  of their free-trade pact.

The violence may also force President Alan Garcia to  reshuffle his cabinet in July, when Peruvian leaders  traditionally announce changes. Garcia’s chief of staff, Yehude  Simon, has already said he will step down in coming weeks for  failing to prevent the bloodshed.

Garcia, a promoter of private investment, issued a series  of decrees last year under powers Congress gave him to  implement the U.S. trade deal and create a framework to  regulate investment in the Amazon. After protests turned violent, he backtracked and asked  Congress to repeal two of the most divisive laws, though others  remain in effect.

“This is a historic day for all indigenous people in Peru,”  Daysi Zapata, director of the Indian rights group Aidesep, said  alongside dozens of indigenous people who wore traditional  tunics and headdresses to watch the vote in Congress.

Zapata said she would ask indigenous groups to lift any  remaining blockades of roads and rivers that started in April  in the Amazon basin, but said the government may be pressured  to make more legislative changes.

“There are still seven legislative decrees left,” she said,  suggesting tribal groups could demand future congressional  votes to prevent their ancestral lands from being opened up to  foreign companies.

Political analysts said an emboldened indigenous movement  could constrain Garcia politically for the remainder of his  term, which ends in 2011. There is often discord between urban  elites and groups representing the rural poor.

“The government has deactivated a bomb for the time being.  This bomb could be activated again or be permanently defused —  but it depends on the lesson that President Garcia has learned  from this,” Martin Tanaka of the Institute of Peruvian Studies  said on Canal N TV.

After initially refusing to hear the tribes’ demands,  Garcia has apologized for the violence and for failing to ask  for input from indigenous groups before passing the laws.

“There comes a time to recognize that there were a series  of errors,” he said in a speech in which he urged Congress to  strike down the two laws.