A short overview of modern Peru

As WCCN starts working on Peru, I would like to share a brief overview of the country’s modern history and highlight benchmarks during the last 40 years. This information contributes to an understanding of what the country has been through and provides a window to the future.

1. Velasco-Alvarado’s agrarian reform (1969-1975)

An understanding of modern Peru requires consideration of the agrarian reform promoted by the military government of General Velasco-Alvarado. Peru implemented one of Latin America’s most radical agrarian reforms, comparable only to the magnitude of the agrarian reforms developed by the Mexican (1917), Cuban (1959) and Nicaraguan (1979) revolutions. Before the land reform, labor relations in rural Peru were characterized as feudal, or pre-capitalistic, especially in the Andean region. The hacienda was the main economic, political and social unit, and workers lived in servitude-like conditions. Although peaceful, the agrarian reform in Peru also was messy. Outcomes fell short of expectations, generating frustration. For better and for worse, the reform changed the agrarian landscape in Peru.

2. Rise and fall of the Shining Path (1980-1992)

Latin America has a long tradition of guerrilla type groups, such as those Sandino organized in the 1930s to fight against the U.S. Marines’ occupation of Nicaragua. The classical leftist guerrilla groups in the region are the ones led by the Castro brothers and Che Guevara in Cuba at the end of the 1950s. After that successful experience and following Guevara’s example with his guerrilla group in Bolivia in the 1960s, many guerrilla groups formed all over Latin America. However, as an armed leftist movement, the Shining Path was unique and perhaps comparable to the genocidal Khmer Rouge in Cambodia.

Abimael Guzman, a philosophy professor at San Cristobal of Huamanga University, founded the Shining Path. Guzman and his followers professed a fundamentalist Maoist ideology. Violence was central to its political action and idea of destroying the “old order” to install a new one. The Shining Path started operations in the 1980s and -- by the end of the decade -- controlled much of Peru’s central and southern countryside and maintained a large presence in Lima’s outskirts. The capture of Guzman and other main leaders in 1992 resulted in the collapse and, shortly thereafter, the disbanding of the organization.

A Truth and Reconciliation Commission concluded that at least 69,280 people died or disappeared between 1980 and 2000 as a result of the armed conflict. The commission attributed about 54% of the casualties to the Shining Path and roughly one third to the government security forces. Another small guerrilla group, the MRTA, was responsible for 1.5% of the victims. The rest remain unattributed to this day.   

3. The 1980s: the lost decade

Most evaluations of Latin America describe the 1980s as a lost decade for the continent, leading to economic collapse, increased poverty and internal armed conflicts. Peru epitomizes that description. From 1980 to 1990, Peru’s GDP had a -0.1% growth average and inflation averaged 1,117%. President Alan Garcia (1985-1990) nationalized the bank system and defaulted on Peru’s sovereign debt. As a result, international financial institutions and private banks stopped lending to Peru for several years. The war initiated by Shining Path worsened conditions.

4. Fujimori’s years (1990-2000)

Alberto Fujimori appealed to voters as an outsider instead of part of the political establishment, leading to his election as president in 1990. Chancellor of the Agrarian University at the time, he lacked prior experience in an elected post. Once in power, he faced two formidable challenges: an economy in ruins and a country fighting a bloody insurgency driven by terrorist actions against civilians. Following the recipe of the International Monetary Fund, Fujimori applied a drastic adjustment program. The economy stabilized in a relatively short period of time, although at a huge social cost. By 1997, inflation dropped to single digits and has remained this way since.

The government’s efficiency extended to its fight against the Shining Path. The 1992 capture of its leader halted the threat of this terrorist group. However, this fight against terrorism included widespread human rights violations. While fighting against the Shining Path, Fujimori also used the state security apparatus for his own interest and became a corrupt, authoritarian leader. He performed the first ever “self coup d’etat,” closing Congress and the Supreme Court with the support of the armed forces. Later he called for a Constitutional Assembly that was dominated by his followers. They wrote a new constitution, eliminating the main economic and social rights established by the pluralistic constitution of 1979. During Fujimori’s government, Peru went to war against Ecuador in 1993 over border-related conflicts.  

5. Democratic rebirth, economic growth and social debt (2001-2011)

Unexpectedly, the Peruvian society was able to remove Fujimori from power and little by little changed some of the most anti-democratic aspects of his authoritarian regime. Ollanta Humala, a middle rank military officer, led an October 2000 unsuccessful military revolt in a remote military garrison. That sparked the revolt against Fujimori and led to him stepping down. Days later Congress impeached Fujimori and he left the country permanently. Congress then pardoned Humala for his insubordination.

During the last decade, under the governments of President Alejandro Toledo (2001-2006) and Alan Garcia (2006-2011), Peru has enjoyed an impressive economic recovery. From 2001 to 2010, GDP grew at an average of 5.7% and inflation grew only at 2.4%. Mining accounts for much of the economic boom. As in other Latin American countries, however, mining currently causes social unrest because the business clashes with local populations and indigenous peoples. These populations oppose the exploitation of natural resources and the decision-making process behind those projects, which does not consult or benefit inhabitants of the surrounding areas. The local population’s concerns include the social and environmental impact of the process of extracting these natural resources.   

In 2011 voters elected Ollanta Humala president under a center-left political platform. He has promised to create a more equitable framework for the distribution of wealth from the country’s key natural resources. He also has promised to maintain foreign investment and economic growth in Peru while working to improve the conditions of the impoverished majority.

Clearly, Peruvian society has faced multiple problems during the last 40 years. I also must highlight that Peru now has the most developed microfinance industry in Latin America and the most developed agricultural cooperatives involved in fair trade. We are excited to contribute our part to improve living conditions of the Peruvian poor.