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Peru's self-proclaimed "revolution"surprisingly extensive reforms initiated by the military governmenthas aroused great interest all over Latin America and the Third World. This book is the first systematic and comprehensive attempt to appraise Peru's current experiment in both national and regional perspective. It compares recent innovative approaches to Peru's problems with the methods used by earlier regimes, providing original and stimulating interpretations of contemporary Peru from the viewpoints of political science, sociology, history, economics, and education.
Among the issues considered are the military regime's policies regarding income distribution, foreign investment, education, urbanization, worker-management relations, and land reform.
Contributors: Abraham F. Lowenthal, Julio Cotler, Richard Webb, David Collier, Susan Bourque and Scott Palmer, Colin Harding, Robert Drysdale and Robert Myers, Shane Hunt, Peter T. Knight, Jane Jaquette.
Originally published in 1976.
The Princeton Legacy Library uses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These editions preserve the original texts of these important books while presenting them in durable paperback and hardcover editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.
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The Peruvian Experiment
Continuity and Change Under Military Rule
By Abraham F. Lowenthal
PRINCETON UNIVERSITY PRESSCopyright © 1975 Princeton University Press
All rights reserved.
Peru's Ambiguous Revolution
Abraham F. Lowenthal
Peru's "Revolutionary Government of the Armed Forces" has now completed its first six years in power, the equivalent of a presidential term under the country's constitution. Headed by General Juan Velasco Alvarado, the army's top-ranking officer when he led the October 1968 coup which toppled President Fernando Belaúnde Terry, the Peruvian regime has already attracted considerable attention. Military officers and civilian politicians in countries as different as Argentina and Ecuador, Bolivia and Brazil, Cuba and the Dominican Republic, Uruguay and Colombia, have expressed their interest in (and usually their admiration for) the Peruvian experiment. Fidel Castro has acclaimed the Peruvian undertaking; Juan Peron extolled it. Peruanista factions have been identified, and have sometimes identified themselves, in the armed forces of several South American countries.
The Peruvian regime is generally seen not as the typical Latin American caudillo government but rather as an essentially institutional effort. Although a government of force, it is widely regarded as relatively unrepressive. Although led by staunchly anti-Communist officers, many with considerable training in the United States, the Peruvian government has established friendly relations with several Communist nations as part of its campaign to escape external "domination," particularly by the United States.
Most important, although it is the nation's force for order, the Peruvian military has promoted substantial change. Through a burst of laws and decrees unprecedented in Peru, the military regime has set out to transform many basic areas of national life. Major structural reforms have affected land tenure and water rights, labor-management relations, the educational system, the state's role in the economy and in the communications media, the role of foreign enterprise in Peru's economy, and even fundamental concepts of economic and political relationships. Particularly noteworthy has been the regime's announced determination to move steadily away from capitalist principles by creating a new "social property" economic sector (based on collective ownership of the means of production), destined to become the "predominant" mode of economic organization. And the Peruvian regime has emphasized its aim to promote a drastic change in national values, to create a "new Peruvian man," one dedicated to "solidarity, not individualism."
Peru's military regime has unquestionably put the country on the world political map. Host of the "Seventy-seven," active participant in the Algiers conference of nonaligned nations, frequent spokesman for Latin America in the World Bank, chief proponent of reform in the Organization of American States and in the inter-American military system, host and leading supporter of the Andean pact, current member of the UN Security Council, Peru has projected itself into the international arena. Washington, Moscow, Peking, and Havana have all expressed special interest in Peru's affairs. The Lima embassies of the latter three are now probably their biggest in South America, and the U. S. embassy has argued (with limited success) that Washington's policy toward Peru should be sympathetic, despite the political and legal difficulties posed for the U. S. government by Peru's treatment of certain American investments.
From several foreign perspectives, Peru's current process of military-directed change is regarded with hope. For many on the international Left, Peru seems especially significant, particularly now that the "Chilean way" has been so abruptly closed. From this vantage point, Peru is contrasted with Brazil. In Brazil, leftist intellectuals have lost their jobs and rights, and some have suffered torture; many of their counterparts in Peru are advising the regime or are at least sympathetic to it (though a few have been interfered with, and some even deported). Bishops in Brazil condemn their regime; Peruvian bishops generally support theirs. The Brazilian regime promotes capitalist expansion, national and foreign, but the Peruvian government announces its aim to move away from capitalism. And while Brazil has tied itself ever more closely to the United States, Peru has acted to reduce its dependence on Washington.
Paradoxically, many international lenders and even some investors also regard Peru's experiment favorably. The military regime has earned plaudits for its prudent fiscal management and for its pragmatism in dealing with foreign companies. From this standpoint, Peru's regime is contrasted with Chile's under Allende and with Castro's. Whatever the short-term nuisance of renegotiating contracts and absorbing nationalist rhetorical attacks, some foreign investors think the military regime is making Peru safe for them, now and for some time to come.
Within Peru, however, the military regime's program is not so widely acclaimed. Articulate observers from both sides of the political spectrum assail the government. Though the traditional (Moscow-line) Communist party openly supports the military regime, many on the Left regard it as far from "revolutionary," but rather as an ally of international capitalism, exploiting the Peruvian masses for the sake of dominant minorities. From the Right, the military government's program is also viewed with deepening distrust. Even those businessmen who had adjusted themselves to the agrarian reform, a greatly extended state role in the economy, enforced profit-sharing and worker-management schemes, and countless other changes they might have resisted under other circumstances, found themselves alarmed by the sudden nationalization in 1973 of the entire fishmeal industry (Peru's main earner of foreign exchange) and by the repeated, escalating stress on social property.
Despite its international stature, the Peruvian regime finds itself almost bereft of conspicuous support at home. No group is likely soon to displace or even seriously challenge the military, but the government encounters concerted opposition within several important sectors: labor, business, peasants, students, and professionals. One politically meaningful election after another reflects antiregime sentiment; opposition candidates have won the recent polls held by sugar workers' and teachers' cooperatives as well as the laywers', doctors', and engineers' associations, and militantly antiregime student groups hold sway in practically all Peruvian universities. Some backing, particularly among the urban poor and among highland peasants who have benefited from the agrarian reform, is demonstrated from time to time, especially through mass meetings, but contrary evidence is even more striking. General strikes in several provincial areas, including Arequipa, Cuzco, and Puno, forced the regime to suspend constitutional guarantees temporarily in mid-1973 and again later that year, and major antigovernment demonstrations have occurred on several other occasions.
The National System to Support Social Mobilization (SINAMOS) established in 1971 partly to organize support for the government, has instead been the object of intensifying attack from all sides, and even of some backbiting from within the regime. And though the army is surely Peru's preeminent middleclass institution, middle-class distress is increasingly perceptible. Housewives, bureaucrats, teachers, taxi drivers, secretaries: all are grumbling.
How should the Peruvian process be characterized? What accounts for its international reputation, and for its trouble at home? What has the regime accomplished? Where is the regime heading, or likely to head? For that matter, where did the Peruvian process come from? What explains the adoption by Peru's armed forces of its comprehensive program?
These questions cannot all be discussed, let alone answered, in a brief essay: readers will find illumination in each of the following chapters. It is appropriate here, however, to highlight some of the main points and to attempt an overall, if interim, assessment as of early 1975.
Characterizing the Peruvian Regime
The current Peruvian process cannot yet be easily labeled. Many of the regime's key activities remain ambiguous or apparently contradictory. In other areas, gaps have developed between rhetoric and practice, and it is hard to tell which, if either, will eventually be modified.
In the economic sphere, the regime's most obvious accomplishment has been to expand and fortify what had been one of South America's weakest states. The government has announced its intent to control all industries it defines as basic. It has already taken over, in addition to the fishmeal industry, a major share of mining and metal refining; all petroleum refining, most petroleum marketing, and some oil exploration; the railroad, telephone, and cable companies, and Peru's international air carrier; cement companies and a steadily increasing share of the electric utilities; 51 percent of every television station and at least 25 percent of each radio station; cotton, sugar, tobacco, and mineral exporting; importing and distributing of several key commodities; considerable food marketing; a majority of the banking system and of the insurance business; all reinsurance; even the operation of the airport's duty-free store and of a small chinchilla farm. Incipient government participation in pharmaceutical manufacturing and distribution may portend further expansion in this and other areas. All told, the state's share of national investment has jumped to almost 50 percent from 13 percent in 1965 (though this change reflects some decline in private capital formation as well as the expansion of government spending).
The Peruvian government's increasing strength has been evident in many other ways as well. All sorts of previously flouted regulations are now being taken more seriously, as Peruvians experience, in some ways for the first time, a government that governs. Strict regulation of credit, of the use of foreign exchange, and of other major aspects of national economic life is increasingly a fact; collection of taxes already on the books has risen substantially. The public sector's capacity is strengthening rapidly as professionals from business and the universities take government jobs.
But while the Peruvian state grows, the military regime repeatedly asserts it does not mean to end major private economic activity. When the fishmeal nationalization shocked the private sector (the official 1971–1975 national plan had assured that the fishmeal industry would remain private), no fewer than seven cabinet ministers stressed within a week that the measure was exceptional and that complete abandonment of private enterprise was by no means contemplated. Reassurances to private business have not been limited to verbal expressions; generous tax incentives, tariff breaks, efforts to reorganize Lima's stock exchange, and other measures to stimulate private investment and reinvestment have accompanied the regime's moves in some sectors toward state ownership. Repeated government statements advocate "economic pluralism" and talk of four types of enterprise (state, social property, reformed private, and unreformed private for small-scale firms). No one explains convincingly, however, how such very different modes of economic organization can effectively coexist. Some Peruvians believe the private sector is doomed to extinction, therefore, and cite the measures taken against Empresas Electricas (universally considered a model firm) as further evidence that the regime means to finish off private enterprise. Others regard the social-property sector as an elaborate facade and point to cases like Bayer's acrylic fiber plant (accorded especially favorable treatment as a "strategic" industry) or the deal, highly favorable to the company, by which ITT transformed its assets in the telephone company into a hotel investment, as indicative of what is really happening. Not only Peruvian industrialists, but even the regime's own former minister of economy and finance, have had to call for clarification of the "rules of the game" under which Peru's economy is to operate.
In the political arena, the regime has been similarly active, but again with ambiguous results. The government has vowed to destroy the traditional political system dominated by special interests and to replace it with one open equally to the influence of all citizens, a "social democracy of full participation." The task of destruction is being rapidly accomplished, but the second task is still far from realization.
The military regime has systematically undercut almost all organizations politically influential in Peru before 1968 except the church and, of course, the armed forces. Established parties have been severely hampered. Economic interest groups have been crippled; the once-powerful National Agrarian Society has been dissolved, and the National Industries Society has been stripped of its formal standing and has been forbidden to represent itself as national; its president has been deported. The government has weakened the labor unions by playing rivals (the CGTP and the CTP) off against each other and against a regime-blessed alternative (CTRP), and there are signs it expects to move eventually toward a government-sponsored and controlled united labor federation.
Lima's newspapers, once influential, were first cowed into al most total blandness by a skillful combination of legislation, intimidation, and incentives, and then taken over by the regime and entrusted, under conditions that amount to probation, to diverse political and social groups. The judicial system, perceived by the regime as a restraint, has been "reorganized" and is being made much more responsive (to say the least) to government desires. Private universities, until 1969 governed individually, have had their autonomy curtailed by the creation of a central national university system. Autonomous peasant federations, which gained some strength in the 1960s, were first pushed toward atrophy and then effectively banned under a law establishing the National Agrarian Confederation. Individuals and families who only five years ago were among Peru's most powerful — Pedro Beltran, the Prados, the Pardos, the Gildemeisters, and the Ayulos, to name just a few — have had their influence, if not their wealth, very sharply reduced.
What is not clear, however, is whether the new political order is really to be anything different from a particularly efficient version of a traditional dictatorship, governed this time by a military-technocrat coalition. Despite all the regime's talk about full participation, very few Peruvians have a prescribed role in influencing government decisions, and few feel that the regime is responsive to their claims. It is no wonder that the regime lacks public support: citizens, particularly those whose views used to find expression through established political channels, resent an autocratic regime, completely military at the cabinet level, which can act arbitrarily without restraint.
The government's dealings with labor and peasant unions, professional and student organizations, business lobbies, and other groups suggest that the regime distrusts any autonomous organizations and wishes to deal only with units established or legitimized by the regime. The implicit — and sometimes explicit — concept for political organization is corporatist. The regime is steadily building up the apparatus by which one group after another is to be tied directly to the executive, which will attempt to harmonize all interests perceived by the regime as legitimate and expressed through channels considered appropriate. Political parties are not so regarded; persons with recent party responsibilities are specifically prohibited from becoming officials of various newly-created participatory mechanisms: in the shanty towns, in educational units, in agricultural cooperatives, etc. Although repeatedly proclaiming its desire for participation and dialogue, the government evinces increasing impatience with those who question any of a number of central ideas. In short, the regime is authoritarian, and increasingly so.
Excerpted from The Peruvian Experiment by Abraham F. Lowenthal. Copyright © 1975 Princeton University Press. Excerpted by permission of PRINCETON UNIVERSITY PRESS.
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Table of Contents
- Frontmatter, pg. i
- Contents, pg. vii
- List of Tables, pg. ix
- Preface, pg. xi
- Contributors, pg. xix
- 1. Democracy and National Integration in Peru, pg. 3
- 2. The Evolution of Peru's Economy, pg. 39
- 3. State Capitalism in Peru: A Model of Economic Development and Its Limitations, pg. 65
- 4. The Anatomy of an Economic Failure, pg. 94
- 5. International Capitalism and the Peruvian Military Government, pg. 144
- 6. The Peruvian Military Government and the International Corporations, pg. 181
- 7. State Autonomy and Military Policy Making, pg. 209
- 8. Ideological Orientations of Peru's Military Rulers, pg. 245
- 9. Velasco, Officers, and Citizens: The Politics of Stealth, pg. 275
- 10. When the Military Dreams, pg. 309
- 11. Revolution and Redistribution in Latin America, pg. 347
- 12. The Economics of the Peruvian Experiment in Comparative Perspective, pg. 387
- 13 The Peruvian Experiment Reconsidered, pg. 415
- Index, pg. 431