Rampant corruption, terrorist attacks and rising inflation were once the recurring nightmares of Peru. President Alan Garcia knows that well enough. His first administration, from 1985 to 1990, was pummelled by those problems. But, since taking office for a second time in July 2006, he appeared to be have successfully avoided those old horrors. Until last week.
The problems today are not quite what they used to be: then inflation was 2.1 million percent, thousands of people were killed in terrorist violence and corruption scandals tarnished Garcia and many of his closest advisors. But this time, they seem to be hitting all at once and have forced Garcia's Cabinet to resign and have the president groping for ways to refine his administration. And the country's murderous bugaboo, the guerrillas of the Shining Path, have chosen this moment to stage their biggest attack in years.
Meanwhile, rising prices have been at the root of Garcia's exceptionally low popularity, with his approval ratings in the capital Lima falling to 23% in mid-October, his lowest since taking office in July 2006. (As a point of comparison, George Bush has an approal rating of 24%.) The corruption and terrorism headlines may force Garcia's popularity down further. All in spite of Peru's booming economy. "I would not be surprised if Garcia dropped to 10%. Peru is certainly not in bad shape, it just seems that way to many people because we can't get Garcia's first government out of their heads," said Eduardo Farah, head of the national association of industries. "The president has a serious image problem."
Garcia has been dealing with a far-reaching corruption scandal that began Oct. 5, with the release of a secretly taped audio of two men talking about how they could grease the wheels for a Norwegian company to get oil and gas concessions in country. Garcia and his Cabinet chief, Jorge del Castillo, hastily called a press conference as soon as the audio was played on a local news show, trying to put distance between themselves and the men on the tape, who are also members of ruling APRA party.
It did not help. On the tape, one of the voices is identified as Romulo Leon, who, as Garcia's agriculture minister in the 1980s, was accused of taking kickbacks. Nothing ever came of the investigation, but his apparent reappearance in shady dealings dredged up memories that Garcia and APRA believed had been buried. On the tape, Leon, who admits it is his voice but denies wrongdoing, talks about top party leaders, boasting about meetings and inside deals.
In the wake of the controversy, Garcia was forced to do cabinet-cleansing. The first to go was the energy and mines minister, but his resignation was not enough for the opposition. Lawmakers wanted more and eventually compelled Del Castillo and the remaining 15 ministers to step down.
A week ago, Garcia reached outside his party and picked a left-leaning governor as the new Cabinet chief. But the scandal has not faded. Congress has appointed a special committee to investigate 17 oil and gas exploration contracts awarded in September, including the five given the Norwegian company in a consortium with Peru's state-owned oil company, as well as 36 others handed out in the past two years. The head of the committee, Rep. Daniel Abugattas, said he expects to find a pattern of deceit. "The government has been giving away our natural resources to the lowest bidders under the guise of attracting investment. This has not benefited Peru, but the administration's friends," said Abugattas, who began hearings on Oct. 14.
To make matters worse for Garcia, a major operation against remaining rebel strongholds in the central jungle went south during the week, with important losses and allegations of human rights abuses. A roadside bomb detonated Oct. 9 by remnants of the Maoist Shining Path (Sendero Luminoso) rebels killed 13 soldiers and two civilians, including a young boy, in the remote Huancavelica state. A soldier was killed the previous day and two others on Oct. 14. It was the deadliest attack since 10 people were killed in a bombing in Lima, the capital, in March 2002, on the eve of a visit by President Bush.
The terrorist bombing was a response to a major military campaign started in August to eliminate Shining Path positions from a jungle-mountain stretch known as the Apurimac-Ene River Valley or VRAE. Besides housing the Shining Path, the VRAE is also the second most important area in Peru for coca, from which cocaine is produced. The VRAE has close to 40,000 coca plants and can produce around 100 tons of cocaine annually.
Gen. Otto Guibovich, a representative of the joint chiefs of staff, told foreign journalists that subversion and drug trafficking had merged into one in the zone. He said that thousands of pounds of coca leaves and chemicals for making cocaine were found in one Shining Path camp. He accused Shining Path allies of propagating false allegations that soldiers had caused the disappearance of 11 people. The guerrillas and their associates, said the general, fear that a long-term military presence will destroy the illicit drug business and their livelihoods. Said Guibovich: "I can categorically say that there have been no illegal detentions, no disappearances. This is a smear campaign by narco-terrorists to get us to leave the zone. It is psychological warfare."
The charges revived memories of the Shining Path terror campaign in the 1980s and 1990s and the military response to it. A commission that investigated 20 years of political violence between 1980 and 2000 reported that more than 70,000 people were killed or missing because of political violence, with the Shining Path responsible for more than 50%. Until this attack, the Shining Path had been fading slowly since its top leaders were caught in 1992. Guibovich estimated that the outlawed party has around 300 armed fighters in the VRAE. A smaller number of armed guerrillas are also active in another coca-growing region, the Upper Huallaga Valley.
The one-two punch of corruption and terrorism came as Garcia has been battling a small, but stubborn jump in inflation. Inflation is absurdly low when compared to the seven digits from the 1980s, but it still has Peruvians worried because at 5.3% through September it is more than double the initial forecast for the year. The administration has reacted with anti-inflationary policies, cutting expenses and reducing government, which seem oddly out of touch with the rhetoric about the country's economy, which is otherwise booming. The economy has expanded by nearly 10% monthly since Garcia took office and indicators even during the international financial meltdown look good. Peru, for the first time in his modern history, now has more international reserves than it owes on its foreign debt. Too bad none of that good news appears to be rubbing off on the President.