Chapter 5: War and its Causes

Outcome:

The Bolivian President sends his Foreign Minister to Lima. The Foreign Minister hands you an ultimatum: cede the territory and pay the sum within 15 days or face the consequences.

What do you do now?

Hold the Foreign MinisterDeclare that he will only be released when the Bolivian President softens his stance and signs a binding agreement that Bolivia will never again make demands on Peruvian national territory.
Refuse and mobilize troopsMove several thousand troops to the Bolivian border in case of an invasion, but ensure that they are under strict orders not to engage until further notice. Warn Bolivia that Peru is prepared to fight to protect its territory, and demand that Bolivia rescind its demands.
Ignore the ultimatum entirelyThe demands are likely a bluff; the Bolivian President should know that he will lose a war, and will not risk escalating the conflict.
Submit to demandsPay the reparations and give Bolivia the territory. It is not worth risking a war with an unpredictable dictator. Peru might lose a lot more than that if Bolivia launched a war of conquest, and the war effort would likely cost significantly more than the sum Bolivia is demanding.
Pre-emptively strike BoliviaLaunch airstrikes against key government and military targets, and send troops to the border to protect against a counterattack. Declare that Bolivia's demands constituted a hostile act, and you were forced to respond militarily to pre-empt the threat and protect Peru's national interests.
Raise the issue at the UNRequest economic sanctions or other punitive measures be levied against Bolivia. This is an undeniable encroachment on Peruvian sovereignty, and must be punished.