Is Peru next?

By Angel Paez

Thursday, Apr 06, 2006, Page 9

On Sunday, when Peruvians elect a new president, they will choose between Ollanta Humala Tasso, a nationalist former army commander who proposes radical economic and social change, and Lourdes Flores Nano, who would maintain the country's current neo-liberal policies. Whoever wins, the results will echo across Latin America.

A victory for Humala would seem to confirm the waning appeal of the neo-liberal policies that have dominated the continent since the 1980s. It would bolster the informal axis of Venezuela's populist President Hugo Chavez (also a former soldier) and President Evo Morales in Bolivia, but also the line supported by Brazil's leader Lula da Silva and Argentina's Nestor Kirchner who combine administrative efficiency and left-leaning rhetoric.

On the other hand, a victory for Flores would stand out as an exception in the area, together with Alvaro Uribe in Colombia, whose re-election at the end of next month seems certain today.

Flores, a Social Christian candidate representing a rightist alliance, wants to maintain present President Alejandro Toledo's neo-liberal policies, which have boosted economic growth, foreign investment and exports spectacularly over the past four years. The problem for Flores is that half the population has not yet benefited from Toledo's policies and lives under the poverty line, giving Humala his political opening. Humala calls for overhauling Peru's economic policy in particular by revising foreign companies' concession contracts, increasing taxes on the rich, and lowering the salaries paid to congressmen and government members -- "old fashioned populism that will ruin the country," claim his opponents.

Flores, who was the favorite for most of the campaign, has now lost support as a result of popular frustration over the distribution of wealth and because of her links with powerful domestic and foreign business interests. Her running mate, Arturo Woodman, is an old associate of the richest man in Peru, Dionisio Romero, a businessman who had no qualms about asking favors from Vladimiro Montesinos, the loathed adviser to former president Alberto Fujimori, who is now in jail on corruption charges.

But Humala is hardly a saint. He concealed information about his military past when the election campaign started, and is now under investigation for alleged human rights violations. In 1983, he attended a course at the infamous School of the Americas, the counterinsurgency training institute where many of the region's most brutal military officers learned their craft.

In 1992, he commanded a military base in an Amazon village where coca leaf was grown -- and where Sendero Luminoso guerrillas and drug trafficking bands worked together. Families of the disappeared, killed and tortured told the press that Humala ordered the atrocities.

In November 2000, Humala led a small-scale military uprising against Fujimori's dying regime. But Humala's detractors claim he took up arms to help the escape of Montesinos, who was already wanted by the law, but managed to flee aboard a sailboat toward Galapagos on the day of the coup.

Humala denies everything, and none of the allegations has harmed him. Even so, not only foreign investors and local big businesses are worried by his rise in opinion polls. The US is also concerned.

In its most recent report on the global trade in illegal drugs, the US State Department stressed the increase in coca leaf crops in Peru and Bolivia last year. It attributed the rise to the "nationalistic preaching" that has taken root in both countries. Washington believes anti-drug policies will fail, to the benefit of drug dealers, if coca growers continue to identify themselves with nationalists who vindicate the leaf's production.

Ollanta Humala opposes compulsory and mass coca eradication, claiming that he would industrialize and export the product to keep it from falling into drug dealers' hands. In a meeting with Morales, he spoke of a joint agenda to discuss the issue with US officials. But for the US, an anti-drug policy designed by nationalist leaders whose countries account for more than half of the US' cocaine market hardly inspires confidence.

The same is true for investors, particularly those from Chile, who have assets worth US$1.5 billion in Peru. Humala glorifies two Peruvian military dictators: Caceres, who fought against Chile, and Velasco Alvarado, who nationalized oil and mining companies, redistributed land and controlled the press. In fact, Humala has singled out Chilean contracts and investments as targets for revision. At the same time, he has spoken of reinforcing the armed forces, which implies buying weapons.

Flores, by contrast, offers legal security for businessmen and investors. At the same time, acknowledging that in Peru there has made little progress in fighting poverty, she is promising to create 650,000 jobs a year. Regardless of whether that promise is realistic, many consider her candidacy important for maintaining democratic continuity, whereas Humala proposes to overhaul the political system by drafting a new constitution.

When Peruvians vote on Sunday, after many years of poverty and inequality, it is likely that popular indignation will prevail. That emotion has led many candidates to victory in Latin America. The last of them was Morales, an explicit and staunch supporter of Humala.

Angel Paez, a teacher and researcher at Universidad de Lima, Peru, is head of the investigative team of Lima's newspaper La Republica. Copyright: Project Syndicate