In next spring's presidential elections, Peruvian voters will face the most stark--and certainly the most interesting--choice they have ever had in electing a new president. As it is now shaping up, the contest will pit a popular Marxist former mayor of Lima against novelist Mario Vargas Llosa, the leader of a nascent Center-Right coalition. The outcome of this high-stakes battle has the potential to shape the future course not only of troubled Peru but of the entire region as well.
On a continent famous for foreign debt, bloated state bureaucracies, entrenched corruption, economic stagnations, and political instability, Peru has the dubious distinction of having all of the problems of its neighbors, in spades. A bloodthirsty Maoist insurrection is increasing its terrorist operations throughout the country, forging ties with Peru's notorious drug lords to undermine the country's fragile political institutions.
The economy is on the brink of collapse: Inflation for the second half of 1988 was 9,000 percent and more than 20,000 percent for its last four months; the treasury is $300 million in the red, and unemployment is at a record high. The minimum wage is only 50 cents a day, which will not even buy a bottle of beer in the hyperinflated economy. Shortages of wheat, sugar, milk, rice, and cooking oil are rampant. According to a recent poll, two-thirds of Peruvian 14-17 years old wish they had been born elsewhere.
Much of the country blames Alan Garcia Perez, the young, populist, nationalist Peruvian president who took office in 1985 amid great hope, but who has proved unequal to the task. Garcia's American Popular Revolutionary Alliance had never held power in its 60-year history and so had little idea of how to govern. What is more, Garcia's style of governing was personalized and authoritarian.
Garcia thus enacted a program based more on high-flying anti-Yankee rhetoric than on sound economic principle. During his first two years in office, a government-sponsored boom in consumer spending that was achieved through limiting debt payments, draining savings and hard currency reserves, freezing prices, and hiking wages, produced high growth rates. But all of this came home to roost in 1987 when the government ran out of foreign exchange reserves. Looking for new funds, Garcia ordered all private banks nationalized. This had two effects: It lost Garcia the remaining support he had among urban lower- and middle-class workers, those who had enough money to have a bank account. It also awakened the sleepy political opposition.
At the time the nationalization was announced, Vargas, one of the world's greatest living novelists, was at a resort in the north of Peru. "When I heard President Garcia announcing this nationalization on the radio, I said to myself, 'Well, this democratic process is finished because this populist measure will receive great support in the country. Who is going to protest against it?'" Vargas recalled in a recent interview. He returned to Lima and wrote a manifesto accusing Garcia of attempting to turn Peru into a "totalitarian" state. A group of friends signed it and arranged to have it printed in newspapers throughout the country.
Challenge to Democracy
Vargas was an overnight political sensation.
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