Peru in the 1990 the year Alberto Fujimori was elected president was a country
bordering on collapse. Spiraling hyperinflation had devastated the economy,
guerrilla violence was on the rise, and widespread corruption was eroding the
government’s credibility. To everyone’s surprise, Fujimori not only managed
to tame inflation, but he also put Shining Path mastermind Abimael Guzmin behind
bars. These achievements made Fujimori popular among Peruvians of all social classes.
He then went on to implement a series of neoliberal reforms that have been lauded
nationally and internationally for getting Peru’s economy “back on track.” As this NACLA report reveals,
however, questions remain not only about the methods that Fujimori used to pull off these “successes,”
but about the costs they have incurred along the way.
Fujimori, who lacks a political party or any other form of organized support, has relied on the military
to govern from day one. When congressional opposition mounted to his neoliberal reforms and Draconian
counterinsurgency measures, Fujimori shut down Congress and gutted the Constitution with military
backing in his April, 1992 autogolpe. With his hands freed, Fujimori imposed his neoliberal program and
granted the military broad powers in the counterinsurgency war. He then set up a system of “faceless” mil-
itary courts to try suspected guerrillas. These courts, whose guiding philosophy is guilty until proven inno-
cent, have sent hundreds of innocent people to prison.
Although Fujimori held new congressional elections in late 1992 to appease international critics, the
government continues to trample on the most basic notions of democratic checks and balances. Since
demolishing Peru’s democratic institutions, Fujimori has governed in an extremely personalistic, auto-
cratic manner. Congress is a virtual extension of the executive, with a pro-government majority willing to
do anything that the President orders. The new Constitution, written by this majority, overturned Peru’s
one-term presidential limit in order to permit Fujimori to run for re-election. The judicial branch remains
completely subordinate to the president. Judges who hand down sentences that are not to the government’s
liking risk losing their jobs. In addition, the military has used its clout to stop congressional inquiries into
human rights abuses and to ensure impunity for human rights violators.
Fujimori’s particular mix of neoliberalism and authoritarianism has served him well until now.
Circumstances, however, are changing. Fujimori can no longer justify his acts by appealing to the war
against Shining Path or inflation. People were willing to endure poverty and even authoritarian rule given
the depths of the crisis of the 1980s. The recent upsurge in protest activity indicates that their tolerance is
wearing thin. The realization is setting in that Fujimori’s neoliberal makeover of Peru has benefited only
select groups: the financial sector, importers, and international investors who scooped up state-owned
enterprises at rock-bottom prices. For the rest, poverty has risen dramatically. Today, two of every three
Peruvians is poor. Only one out of ten Peruvians is fully employed, and of the seven who are under-
employed, four eke out a living in the informal sector. Despite strong economic growth between 1993 and
1995, real wages fell by 10% between December, 1994 and October, 1995.
Just as people begin to demand some economic relief, Fujimori finds himself in an IMF-tailored strait-
jacket. The recent high growth rates had more to do with old-style populist spending than successful
neoliberal reforms. The IMF, fearing that Peru’s looming trade deficit could precipitate a Mexico-style
crash, has chided the Fujimori government for its free-wheeling spending. After some arm-twisting,
Fujimori signed a new “letter of intent” in May promising further cutbacks in state spending.
The IMF is singlemindedly preoccupied with ensuring that Peru continues to repay its foreign debt-
now 22% of the GDP, up from 16% in 1990. As new waves of austerity are imposed on an exhausted pop-
ulation, protest will no doubt rise. Given the virtual disappearance of political parties and the moderating
influence they often exercise over social discontent, things might get ugly. As social conflict increases, the
government’s authoritarian tendencies will likely become more manifest.
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