Since it seized power in 1968 the Peruvian military régime has constantly and somewhat arrogantly dramatized itself as being nationalist and revolutionary. These two terms are not evidence of any great originality in Latin America. Nationalism-of the Left or of the Right-is a common attribute of most of the 20 Latin American republics, once compared by the Guatemalan writer Juan José Arevalo to sardines trying to escape from the voracious North American shark. Some of the manifestations of a nationalist current now running more strongly than ever south of the Rio Grande are the disastrous armaments race, the persistence of anachronistic border disputes, the justification being made of strictly national values, the stagnation of the Latin American Free Trade Association (LAFTA) and the deadlock in the Central American Common Market, the refusal of certain countries to include themselves in what is considered to be the most ignominious region of the third world and the justifiable desire for recovery of national resources.
The consequences of this nationalist trend are not all negative-on the contrary. Concern for being, or for appearing to be, revolutionary is evident. Mexico has "institutionalized" a revolutionary party which sprang from a profound upheaval early in this century. Cuba has related the term "revolution" to all evolutions and all possible techniques over the past 11 years. The great majority of minor political groups of both the Left and the Right in the Caribbean area as well as in Central America are also "revolutionary." The Venezuela of Rafael Caldera, as well as the Chile of Eduardo Frei, have pursued a Christian-Democratic experiment in "revolution." In expelling Perón in 1955, the Argentine military junta affirmed its desire to bring about a "liberating revolution;" and the Brazilian military, which in a coup d'état overthrew the weak but constitutional régime of João Goulart, continues to style its own régime revolutionary. Thus the fact of proclaiming one's policies nationalist and revolutionary in 1971 does not a priori constitute any reason for great interest. That is no doubt why the Peruvian military coup de force was initially received with disapproval and skepticism.
Nevertheless, two and a half years after the seizure of power by General Juan Velasco Alvarado, spokesman for an army which decided to intervene as such, it must be conceded that declarations have been followed by actions. The first spectacular, though anticipated, decision of the Peruvian military government was taken just one week after the overthrow of President Fernando Belaúnde Terry. It consisted of the troops' occupation of the International Petroleum Company (IPC) plant in the northern part of Peru. To be sure, IPC, which had been extracting oil in Talara since 1924, was in conflict with the Lima government, but an agreement (though not wholly satisfactory to the Peruvians) had in fact been reached with the firm by the Peruvian authorities in August 1968. The occupation of the IPC plant, and the expropriation and subsequent seizure of company property and goods permitted the new Peruvian leaders to present themselves from the outset as serious and formidable spokesmen in an inter-American concert of nations just when more and more voices were clamoring for an "agonizing reappraisal" of relations between Washington and Latin American capitals. Unbeknownst to the general public, the long and trying secret negotiations between Washington and Lima in regard to the takeover of IPC goods placed the Lima military régime in the position of a victim "subjected to intolerable pressures" in the eyes of other Latin American leaders.
Moreover, if we are to believe the ministers of General Juan Velasco Alvarado, these "pressures" at times took on a particularly "disagreeable" character. Whatever the extent and seriousness of these "pressures," the fact remains that the denunciation of them by the Peruvians has given the new régime a certain stamp of legitimacy, based on the theory that an arduous struggle has been endured by a Latin American country which dared to confront the United States. It is not by chance that the "defense" of the Peruvian government was one of the foremost preoccupations of the Latin American Ministers of Foreign Affairs and Ministers of Finance when they assembled at the important [European] Economic Committee for Coöperation with Latin America (CECLA) when it met in Viña del Mar, Chile, in May of 1969. Unquestionably-and such is the consensus of the participants at that conference-the conference prompted the United States, which was not officially represented, to adopt a "moderate" tone in the talks going on in Lima at that time. Washington may indeed have desired to avoid any categorical stand in favor of Peru by Latin American ministers instructed by their respective governments to define a "common foreign policy" in negotiations on trade and economic relations with the United States.
As of March 1971 this Latin American "solidarity" has in fact permitted the Peruvian régime to gain time, but it has not resolved the fundamental problems involved. The cooling of relations between Washington and Lima, provoked by the IPC affair, continues today, and the consequences of this tension for the Peruvian economy are obvious. The important thing, at this stage, is that the nationalist ambitions of the Peruvian military have been fully justified by the IPC affair, both on the domestic as well as on the international scene. That does not mean that General Velasco Alvarado's government knowingly provoked the crisis in order to obtain nationalist credit. On the contrary, everything indicates that the resentment aroused within the Peruvian army by the details of the agreement reached between the government of Belaúnde Terry and the IPC was the real detonator of the October 1968 coup d'état In this case, emotional reflex preceded intellectual reflection. In expelling President Belaúnde Terry-guilty in their eyes of having "betrayed the true interests of the nation"-and in attacking the IPC from the very outset, the Peruvian military, nationalistic and virtuous, wanted to express its disapproval of conduct which it judged not sufficiently independent. It was only after the event that the leaders in Lima, schooled at the Center for Advanced Military Studies (CAEM), realized the logic and the risks inherent in the process of recovering their national resources.
The Peruvian military brand of nationalism, then, has turned out to be both authentic and resolutely pragmatic. Unlike the Cuban, it does not trouble itself with ideological considerations. The ministers of the Velasco Alvarado government and the men who are to be reckoned with in Lima today have most certainly been influenced during their studies at CAEM by economics and history professors whose vision of the world often approaches that of Marxism. Most of them have retained from that training only an analytic method and some directing ideas which they employ in the service of what they imagine to be the Peruvian national interest. It is certainly tempting-as some have shown-to see in General Fernández Maldonado, the dynamic Minister of Mines and Energy, a socialist éminence grise within the government. After several conversations with Fernández Maldonado, my impression is that like his colleagues he is working toward an essentially pragmatic policy.
The manner in which he guided the difficult negotiations which resulted in the important settlement with the Southern Peru Corporation is further evidence of this. Many in Lima also believe that personally the Minister of Mines would have preferred even stricter conditions than those which were actually offered to Southern Peru for the extraction of significant copper deposits in the south of the country. The fact that he went along with a compromise agreement, preserving the interests of the nation but sparing the Southern Peru Corporation the stringencies of the new law on exploitation of mines, perfectly illustrates the military régime's concern for pragmatism. The Cuajone accord is important because it provides for the investment of tens of millions of dollars. The leaders in Peru may well have signed the accord because they were aware of the difficulty of finding on the international market foreign companies with available know-how and enough goodwill. But this agreement should, in their minds, result in a certain "thaw" in foreign investment. Several months ago, one Peruvian, the manager of a large foreign finance firm in Lima, expressed the hope that Cuajone would once again encourage foreign industrialists and bankers to place "confidence in the new Peru." In March of 1971 this seems an empty hope.
The fairly cautious constraints and the freeze on credit which have paralyzed economic development in Peru since the spring of 1969 have not disappeared since the signing of the Cuajone agreement; most large foreign concerns, especially North American ones, requested by Lima to furnish "long-range plans of action" seem somewhat reluctant to do so. And it is precisely because they did not make their intentions clear within the stipulated time that several mining companies today find themselves about to lose their rights to mineral concessions. Such is the case, particularly in regard to the deposits at Michiquillay. This decision, taken by the Lima government by applying the new Mining Code, has often been described abroad as a new nationalization. In fact? it is more in the nature of a threat to annul claims of mining companies that hesitate-and with good reason from their viewpoint-to get involved in close collaboration with the Peruvian military government. With hindsight it is quite understandable why Fernández Maldonado insisted on announcing the enactment of a new Mining Code just a few hours after the signing of the Cuajone accord with Southern Peru.
But the minister's sense of realism is no less evident in the signing of a contract with the Marcona Mining Corporation last January for the exploitation of iron mines south of Lima. This agreement represents investments in the order of 22 million dollars. It is a modest one. Announced at a time when problems were arising with other companies over an increase in mineral extractions within the more rigorous stipulations of the new Mining Code, the agreement does prove that the Peruvian leaders do not seem to want to use their veto power for political reasons. A desire to salvage what in developing countries are termed "national resources," and to use them in so far as possible for the greatest public good, is undeniable. Obvious enough in the key area of mining, this same desire is no less evident in other sectors of the Peruvian economy which are in their turn affected to some degree by the military government's reforms: banks, the fishing and fish-meal industries, industrial firms. Such a move naturally collides head-on with very great obstacles but the most formidable ones are not necessarily those one would expect.
From this point of view, a careful study of the conflict provoked by the seizure of the IPC property is especially revealing. Within a third world which economists and ideologists have made more sensitive to the problems posed by foreign exploitation of a nation's raw materials, an oil dispute would quite naturally assume exceptional importance. The crisis provoked in March 1938 by the nationalization of Mexican oil is still fresh in their memories. The generation in power in Latin America today grew up believing that economic development and political stability in most Latin American nations depended to a great extent on a judicious exploitation of their raw materials: oil in Venezuela, tropical fruits in Central America, coffee in Colombia, tin in Bolivia, copper in Chile, wool and meat in Argentina and Uruguay. After all, the changing nature of the Cuban revolution-the first socialist experience on either American continent-first manifested itself in 1960 with a commotion over refined oil.
Such a view of relations between North and South America is not altogether erroneous. A similar view is less true-or more precisely, it is less so on a global scale-in 1971 than in 1960. The struggle against "foreign interests," today seen as a categorical imperative by third-world nationalist governments, cannot be limited to a battle with those companies which directly exploit the raw materials of these countries. Modern Latin American economists, usually products of the U. N. Economic Commission for Latin America (CEPAL) such as the Brazilian Celso Furtado or the Chilean Oswaldo Sunkel, have skillfully thrust the real problem into the limelight: that of questioning whether there actually exists in Latin America an industrial class with the "maturity and sense of national identity necessary to take the lead in the development of their own countries." It is within this broader and more subtle context that it is realistically proper to study the different nationalist measures adopted by the Peruvian military régime since its accession to political power.
The offensive which they directed against IPC was out in the open, and, objectively, it was a spectacular one. But its true significance and its limitations-as well as those of other analogous reforms decreed in the past two and a half years-cannot be separated from the overall framework of an attempt to reassert national identity.
There is no doubt that the Peruvian military is attempting to create, or to strengthen, a national industrial sector; by this method they hope to ensure that the central decision-making process of economic development will become wholly Peruvian. Apparently they do not question-at least not yet-newer forms of penetration of foreign capital into Latin America. Agrarian reform, enacted in June 1969, is the second most important part of the "revolutionary" program envisaged by the Peruvian military; it clearly demonstrates their concern for promoting the "industrial sector" while discouraging the traditional landed oligarchy.
Certainly one can also detect other motives in the enactment of this agrarian reform which has been defined by the Cuban leaders themselves as "truly revolutionary." There is, for example, a political purpose: that of weakening the agricultural unions of the northern seaboard, which are in most instances under the control of the APRA party (Popular American Revolutionary Alliance) headed by Víctor Raúl Haya de la Torre, number-one adversary of the Peruvian armed forces since the time of the Trujillo revolt in 1932. The fact that agrarian reform has been applied on a priority basis to the large agricultural-industrial sugar complexes in the Trujillo and Chiclayo regions, political fiefs and unions traditionally controlled by APRA, has effectively placed the Peruvian unions in a difficult situation. Unable to criticize openly an agrarian reform which has figured in their programs for some 30 years, APRA union leaders still recognize quite clearly the menace such reform poses to their organizational control of the peasant masses of this region; they have no choice but to try to infiltrate the new organizational structures of the worker coöperatives. From this vantage point, the Peruvian military agrarian reform has pulled the rug out from under the APRA hierarchy and can be considered, at least in this crucial sector of the country's economy, as a political weapon.
In the sierra, where the agrarian situation is far more complicated than it is near the coast, gradual application of reform is likewise aimed at halting, to some degree, peasant agitation which has cropped up with a good deal of bitterness in some Andean valleys in the past 15 years, especially in the Convención valley where from 1960 to 1962 the Trotskyite leader Hugo Blanco had unionized the farm workers. When General Velasco Alvarado cries, "Peon, the landowner will no longer eat the bread of your affliction," at a gathering of farm laborers he cannot fail to elicit favorable echoes in the hearts of the dispossessed peasants of Peru's mountainous regions.
These two secondary considerations cannot conceal the principal element of agrarian reform. In fact, in terms of the law, landowners affected by expropriation are compensated in the form of bonds payable in 20 years at five percent interest. But if they promise to invest in industry, landowners may be reimbursed within five years. They thus enjoy the benefits of special advantages and privileges. In some cases landowners or companies, either Peruvian or foreign, owning vast expanses of land, have found it profitable to reinvest in industry, thus avoiding the inconvenience of indemnities offering illusory benefits.
In his public speeches as well as in private conversations, General Velasco Alvarado, born in Piura of modest background, frequently refers to the need for "breaking the back of the oligarchy." The Peruvian head of state clearly feels little tenderness for the landed oligarchy, which has for a long time (in the words of the military men themselves) considered the armed forces as the "watchdogs of their privileges." But this motive obviously does not fully explain the new régime's strategy of encouraging to the maximum the transfer of land-based capital into industry. The commanders of the Peruvian army have plainly made a very simple discovery: in their own country, as in so many other Latin American nations, the landed, semi-feudal interests constitute a serious obstacle to capitalistic economic development because they prohibit any growth of the domestic market. Up to June 1969, 99 landowners or companies on the coast, and just under 200 landowners in the interior, retained possession respectively of 40 percent and 60 percent of the arable land in the two regions. Owning an average of more than 2,500 hectares [6,175 acres] of land, 1,026 landowners controlled nearly 60 percent of the area, while several million peons had at their disposal only small parcels of land which could not provide a decent living for an average family.
The large and highly profitable capitalistic enterprises of the Peruvian coast contrast, with few exceptions, with the huge but poorly utilized estates and minifundia in the high Andean valleys. The agrarian reform decreed by the Belaúnde Terry government, intent on respecting the promises contained in Alliance for Progress programs, in practice spared the great agricultural-industrial operations on the coast. Now, the Peruvian military brand of agrarian reform aims to transform these coastal complexes into workers' coöperatives, with a management in which workers' representatives would participate. It also aims to subdue the two plagues of the highlands: the latifundia and the minifundia. By offering to those landowners affected by an eventual expropriation the possibility of immediate investment in industry of one-half of the indemnities, agrarian reform becomes organically linked with the industrialization process. Thus, the tempo has been relatively rapid. On the coast, the first coöperatives have been set up; in the sierra, the expropriations continue.
The agrarian reform of June 1969 was unquestionably a radical one. But it is not too soon to ask whether it will really contribute to a dismantling of the country's agrarian structure, and also if it will permit changes in personal and social relations. Some of the best economists in Lima are also already asking themselves whether this transfer of the land oligarchy to the industrial sector will in the long run effectively promote the strategy of national development sought by the military and their advisers. In other words, is it still possible for Peru to create a national industrial sector capable of breaking down a system whose decision-making centers lie abroad?
It is impossible to achieve all your desires at once. Peru belongs to a region of the world where the chains of dependence are already very heavy. By breaking all ties with the United States, by struggling to transform a Western-oriented capitalistic economy into a communist bloc-oriented socialist economy, Cuban leaders have made a clean sweep of the ambiguities which clearly characterize the Peruvian experiment But today the Cubans themselves perceive that they have merely replaced dependency with another form of servitude, and they face overwhelming economic problems. According to the new Chilean leaders, Fidel Castro personally recommended to President Allende that he proceed with the greatest caution in order not to provoke a needless crisis with the United States. Fault cannot be found with the Peruvian leaders for being less "revolutionary" than the Cubans and for being concerned with what is realistic and efficacious.
But in the different areas in question-mining, agrarian reform, the law aimed at the creation of joint ownership and profit-sharing in industry, banking reforms-the necessary concessions and unavoidable problems are likely once more to call the military régime's philosophy into question. Moreover, are these concessions and problems not directly tied into a system which Peru already cannot escape from without resorting to the drastic measures which it refuses to adopt?
The adversaries of the military régime, those of the Left as well as of the Right, are in an excellent position to cite: the advantages of the Cuajone agreement; the deficiency of agrarian reform in the north (secondary activities of the agricultural-industrial complexes belonging to the Grace Company, for example, are untouched); the indemnification of the Cerro de Pasco Corporation, using the much more palatable agrarian reform law of the Belaúnde Terry government as a basis; the repurchase, at an outrageous price, of ITT shares in Lima; the scandal (admitted as such by the authorities) of the repurchase of shares of the Banco Continental which was linked to the Chase Manhattan Bank and the Rockefeller group.