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Next Step : What the Winner Won: A Peru in Political, Economic Shambles : Alberto Fujimori just inherited South America's biggest headache. A splintered government, rebel fanatics, drought, debt and the scourge of drugs await the president-elect.

June 19, 1990|JAMES F. SMITH | TIMES STAFF WRITER

LIMA, Peru — Novelist Mario Vargas Llosa looked positively relieved as he conceded defeat in Peru's presidential election. His wife, Patricia, was radiant.

Meanwhile, President-elect Alberto Fujimori, who defeated Vargas Llosa in a landslide on June 10, smiles only rarely now as he looks ahead to the gigantic task of governing what may be the least governable country in South America.

Fujimori, 51, hopes that his status as a moderate independent who was virtually unknown a few months ago will help him achieve the impossible in Peru: to build a genuine consensus government that puts aside fractious party squabbling in favor of longer-term reconstruction.

Perhaps this confident man, consistently underestimated by his opponents in the campaign, will again confound the pundits when he takes office July 28 and tries to break the Peruvian habit of narrow, sectoral self-interest.

The problems:

* An economic catastrophe that feeds all the other problems: Buying power has dropped 60% over the last two years; the per capita gross domestic product fell 22.4% in that same period. Inflation ran to 2,775% in 1989 and is humming along at an intractable 30% a month this year.

One think-tank study calculates that 54% of the population was adequately employed in 1984. That total is now down to 18%, with millions of people drifting into the "informal" or black-market economy that makes up roughly half of all economic activity.

The growth of the informal sector and inflation have helped drive down tax revenues to about 4% of the gross domestic product, when the government needs to bring in at least 12%, and preferably 15%, to meet its already reduced expenses.

* Violence has worsened as Sendero Luminoso (Shining Path), a fanatical Maoist guerrilla movement, assassinates local officials, aid workers and others associated with "the system." In all, more than 18,000 people are estimated to have been killed in the 10-year war, most of them innocent peasants.

Accusations of human rights abuses have increased as the level of violence has surged. More than 3,000 people were reported killed last year, up 62% over 1988, and the violence was 80% worse in the first three months of this year than during the same period last year. Sendero attacks against the electric power grid reduce production, and destruction of roads and bridges keeps products from markets.

* Drug trafficking is profitable for Peru, the world's largest coca producer, drawing somewhere between $600 million and $1.6 billion per year in scarce hard currency. But it is causing terrible ecological damage, common crime and recruits for Sendero.

On top of all this, a severe drought has led to water and power shortages and slashed agricultural output, forcing Peru to import still more food and further deplete its scarce hard-currency reserves.

Fujimori, an agricultural engineer and former rector of the national agricultural university, won partly on the strength of his image as an outsider and thus someone not responsible for this depressing state of affairs.

But his year-old party, Cambio 90 (Change 90), won only a minority of seats in Congress, so he must turn to other parties to get legislation passed. His meager ranks can't even fill the estimated 5,000 political bureaucratic posts needed to run the machinery of government.

That could be a blessing. Neighboring Bolivia emerged from dreadful hyper-inflation in the mid-1980s only after all parties got together and formed a consensus government. All made concessions, and the rate of inflation plunged to 10% a year. Even after a national election and a new president there, the consensus system still holds. Chile's coalition of parties that defeated Gen. Augusto Pinochet, and then went on to win the presidency, also offers some parallels.

Fujimori pledges to seek such an accord, and the other parties--weakened by their poor showings--say they are willing to talk. Outgoing President Alan Garcia, discredited by the crises, could salvage some status for his left-of-center American Popular Revolutionary Alliance by working with Fujimori. The same is true for parties farther to the left.

At the same time, the parties in Vargas Llosa's right-wing coalition, the Democratic Front, also share some common goals with Fujimori, including reform of the state bureaucracy and a commitment to free-market principles.

Accepting at face value the stated willingness to forget the spiteful campaign, some analysts think a consensus government might work--especially since Sendero Luminoso provides a common enemy for democratic parties.

Fujimori insists that there are many other areas of common ground and that in any case he intends to look for technocrats and other independents for what he wants to be a depoliticized, more efficient and more honest government.

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