Peru: Second Chance President


Peru's president elect, Alan Garcia, promises to be rather different to the Alan Garcia who became president in 1985

Then he was determined to avoid orthodox economics, limit his country's debt service payments and build what he called "un Peru diferente" ("a different Peru"). The Alan Garcia of the second round of elections on 4 June 2006 said that he acknowledged his past mistakes and will respect the rules of neo-liberal economics. Garcia won the elections with 53 percent of the vote, while the nationalist candidate, Ollanta Humala, got 47 percent.

During the campaign Garcia promised that a new government under his leadership would be "responsible". It would keep the public sector deficit in check, support the December 2005 Free Trade Agreement (FTA) negotiated with the US by the outgoing administration, and create a climate that favours foreign investment. This message was music to the ears of Peru's worried business community, for whom Alan Garcia had long been a bĂȘte noire.

Humala's campaign, by contrast, had proclaimed the need for much tougher rules for foreign investment. He had virulently opposed the FTA, which he portrayed as a sell out to US economic interests that would have damaging economic consequences for the poorest in Peru. Support for Humala was strongest among poor voters.

The Garcia government of 1985-90 left the country in a disastrous state, with consumer prices spiralling out of control and the economy mired in the deepest recession since the 1929 Wall Street crash. Garcia made repeated attempts to restore relations with the International Monetary Fund and the World Bank, but these institutions reacted with cold indifference.

Garcia's first government was also a major disappointment to his Alianza Popular Revolucionaria Americana party (Apra). Apra, founded in 1924, is Peru's oldest mass party, but its previous attempts to gain office were systematically blocked by the conservative armed forces. It had to wait until 1985, and the Garcia breakthrough, to win power.

In its infancy Apra was a progressive party that sought to overturn the country's archaic social structures through land reform and policies of industrialisation. By the 1950s, during the Cold War, its outlook had become more conservative and markedly anti-Communist. Garcia set out in the 1980s to re-establish the party along more modern, social democratic lines.

Outside interference

Garcia spent much of the second round campaign attacking Venezuela's President Hugo Chavez, who he repeatedly accused of meddling in Peru's domestic affairs by supporting Humala's candidacy. This helped Garcia to tap into a Peruvian nationalism of his own - defending the country from what he described as outside interference. The election of Garcia was welcome news in the US. Coming a week after the electoral victory of Alvaro Uribe in Colombia, it helped reinforce an anti-Chavez axis among the Andean countries.

However, Alan Garcia will not find it easy to govern Peru. He does not have a majority in the new 120-member single chamber congress. The largest single grouping in this body, also elected on 9 April, will be Humala's Union por el Peru (UPP), with 45 seats against Apra's 36. Apra will have to strike deals with smaller parties if it is to gain enough votes to secure legislation.

Peru's political system gives enormous power to the president, but the lack of a stable majority in the congress can easily lead to constitutional gridlock. The last time a government ruled Peru without a majority, tensions between the executive and the legislature paved the way for a palace coup in April 1992 when President Fujimori closed congress and sacked the supreme court.

Garcia may also find relations with his own party problematic. If he strays too far in a rightward direction he is likely to arouse hostility. Apra has a reputation for being a disciplined party, but several prominent party figures elected to the new congress harbour ambitions for the party leadership.

Therefore, Garcia will need to maintain a delicate political balance - maintaining business confidence and preserving macro-economic stability, while at the same time honouring his party's historic ambitions to build a more equitable society.

More than 50 percent of Peru's population live in poverty, half of them in extreme poverty. Perhaps the biggest challenge of all will be to find ways by which the country's booming export economy begins to benefit the millions of Peruvians who live in urban shantytowns or in rural communities. Though these are the people who voted for Humala, they will be looking to Alan Garcia for a transformation that brings them some tangible benefits.

John Crabtree is the editor of the recently published book Making Institutions Work in Peru, published by the Institute for the Study of the Americas. A longer version of this article can be read on