- The Washington Times - Wednesday, April 11, 2001

LIMA, Peru Peru's former president Alan Garcia, who frightened investors by winning a place in next month's presidential runoff, refused to accept responsibility yesterday for the economic crisis his government left behind in 1990.
His mesmerizing oratory has led many Peruvians to forgive his past performance and catapult him from an overwhelming 80 percent negative rating to 70 percent approval in a few weeks.
Many Peruvians say they believe he is unstoppable and will likely overtake Monday's biggest vote-getter, Alejandro Toledo.
Memories of the hyperinflation, food lines, nationalized banks, worthless currency and a guerrilla war under Mr. Garcia, yesterday jolted financial markets fearful Mr. Garcia might restore his policies of refusing to pay the country's foreign debts.
"Peru's country risk has gone up 50 basis points," Carlos Janada, vice president of investment bank Morgan Stanley in New York, told CPN radio. More risk is likely to discourage much-needed foreign investment.
Asked directly in an interview yesterday who is responsible for the economic chaos his 1985-1990 government left behind, Mr. Garcia was evasive.
"No one has the sole responsibility for the economic crisis," he said.
"There were many causes. All of Latin America had record inflation. The previous government left me with 250 percent inflation in 1985. Then terrorism stopped investment.
"Plus, also, there were errors of the government that hurt the economy. There is a responsibility, but not for one person."
Speaking after a news conference yesterday, Mr. Garcia was asked if had changed his economic policies.
"I have changed my ideas," he said, "but the whole world has changed, too."
Many in Peru, however, remain skeptical that Mr. Garcia has indeed changed his ideas enough to salvage Peru from a deep economic slump that hit soon after the Asian economic crisis of 1997.
However, Mr. Garcia did stress that "stability of the currency is essential," and said "there won't be a revision of privatization" under which ousted President Alberto Fujimori sold off many major state-owned enterprises.
Mr. Garcia fled abroad in 1992 after the government of Mr. Fujimori accused him of corruption. Recently the charges were dropped as political by the Supreme Court, allowing him to return from exile.
Mr. Fujimori himself fled abroad to Japan last year amid corruption allegations that led yesterday to formal charges by State Prosecutor Jose Ugaz.
Mr. Fujimori was charged yesterday with organizing a 1992 coup, of joining in a criminal organization headed by his intelligence chief, Vladimir Montesinos, and of using government funds in his 2000 election campaign.
Mr. Garcia lived in Colombia and Paris the past nine years, returning to Peru only in January.
"When Mr. Garcia was president," recalled one young Peruvian, "my parents told me we could not buy sugar or food in the markets."
Others told of waiting in lines for hours only to find all the food was sold out and they had to sleep overnight in some other line.
To cope with the crisis, Mr. Garcia declared that Peru would pay no more than 10 percent of its total earnings from exports each year. That led the World Bank, IMF and international banks to isolate Peru.
Mr. Garcia also fought to keep his popularity high by raising salaries and printing the money to pay them even though the currency lost its value and all savings of Peruvians were eaten up by inflation that exceeded 7,000 percent annually.
Then Mr. Garcia arranged a system of allowing businesses to obtain dollars at a rate of exchange more favorable than the free market, which found the local currency near worthless.
This allowed for favorite businesses, claiming they needed the dollars for investment purposes, to simply send the money abroad.
Mr. Toledo, the first Peruvian of Andean Indian ancestry, topped the polls Monday with 36 percent of the vote. He was in seclusion yesterday with his advisers and family and did not make himself available to the media.
Analysts said he must change his campaign technique in order to stave off the rapidly ascending campaign of Mr. Garcia.
Chief among the complaints by Peruvians interviewed at random in recent days are that Mr. Toledo is too emotional and changes his campaign promises from hour to hour.
Even though many Peruvians admire Mr. Toledo for having stood up to Mr. Fujimori's increasingly authoritarian rule, many also fear his impetuous calling of his followers into the streets to protest fraudulent counting of last year's elections.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide