By Gideon Long
BBC News, Santiago
**The Chilean government has held talks with its ambassador to Peru amid an escalating spying scandal between the two South American neighbours.**After the talks in Santiago, Chile reiterated its position that it had nothing to do with the scandal.
Peru has arrested one of its own air force officers, Victor Ariza Mendoza, and accused him of passing secret information to the Chilean military.
It has demanded a full investigation from the Chilean government.
After the spying scandal erupted at the weekend, Peruvian President Alan Garcia cancelled a scheduled meeting with his Chilean counterpart Michelle Bachelet at the Apec summit in Singapore, and announced he was returning to Lima a day early to deal with the case.
On Monday, he accused Chile of acting like a tinpot republic and of offending Peruvian sovereignty.
The Chileans say Peru’s response is over the top and have urged restraint.
The spying scandal is the latest in a long line of diplomatic spats between the two countries.
They have been mired in a border dispute since the late 19th Century when Chile defeated Peru in the War of the Pacific and annexed some of its land.
They also disagree on their maritime border, and are currently seeking a resolution in the International Court of Justice in The Hague.
Tensions were further strained following a military exercise staged by Chile last month near the disputed border with Peru.