Peru: The Message From Garcia

The inauguration of 36-year-old Alan García Pérez as president of Peru on July 28 opened a new and uncertain chapter in that country’s tortured modern history. The youngest chief executive in South America, García has quickly reversed the image of a do-nothing presidency, replacing it with that of an energetic, driven national political leader. The dynamic young president is personally directing the government’s attack against the progressive deterioration of the economy. He has challenged the fast-growing illicit drug trade. Since his inauguration, García has restructured the military leadership and purged the police, declared a war against corruption, promised to decentralize the national government, and cut the once sacrosanct military budget. He is actively seeking policies to undermine the messianic guerrilla group, Sendero Luminoso (Shining Path). To reestablish a link between the government and the governed, the president announces decisions and discusses new initiatives with the people from a second-story balcony of the presidential palace in downtown Lima.

At the international level, he has threatened to abandon the International Monetary Fund (IMF) if that institution insists on further domestic austerity as the price for its approval of an economic recovery plan. Further, the president has stated flatly that his government will dedicate no more than ten percent of its annual foreign exchange earnings to service the outstanding debt of $14 billion owed to private commercial banks, about $2.5 billion of it owed to U.S. banks. By mounting his own public campaign on the debt issue, García has effectively taken on Fidel Castro, who is attempting to polarize the debate on debt in Latin America. Moreover, García’s declarations on debt have helped to redefine that issue as political and not merely financial.