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Peru Economy Booms, but Garcia Unpopular

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By LESLIE JOSEPHS
The Associated Press
Saturday, July 28, 2007; 3:26 AM

LIMA, Peru -- Alan Garcia took over the presidency last year eager to redeem himself after his disastrous first term in the 1980s left Peru nearly bankrupt and mired in hyperinflation. With the economy now vibrant, his legacy would seem on well on the road to recovery.

Yet Garcia's popularity is slipping, and poor Peruvians are increasingly pessimistic that his free-market policies will improve their lives.

Peasant farmers, unionists and teachers took to the streets this month in sometimes violent demonstrations, blocking roads, closing airports and making travel harrowing at the height of tourist season.

They had one underlying demand: better distribution of wealth.

"In our situation of growth in the midst of great poverty, deep inequality and terrible distribution of wealth, a certain level of tension, protest and conflict is unavoidable," said political analyst Gustavo Gorriti.

Known for radical populist rhetoric in the 1980s, Garcia, 58, recast himself as a market-friendly alternative to Venezuelan President Hugo Chavez to win last year's election. He has become one of Washington's strongest allies in Latin America.

Peru's Congress amended a free trade agreement with the United States in June to speed its passage by U.S. lawmakers, who had demanded better labor laws and intellectual property protection.

Bolstered by high metal prices, Peru's economy grew 8 percent in 2006, the Andean nation's eighth consecutive year of growth. But almost half of the 27 million Peruvians live in poverty and many feel left out of the boom.

It's a problem that also dogged Garcia's predecessor, Alejandro Toledo. Although Toledo left office with Peru's economy looking its best in decades, unemployment remained high because growth came largely in sectors like mining that generate few jobs.

"Economic growth is necessary but not enough to reduce poverty and inequality," said Peruvian economist Humberto Campodonico. "That is what the protests of Peru's poor, above all in the southern highlands, remind us of every day."

Peruvians initially cheered the austerity measures Garcia imposed after he took office in July 2006. He slashed the salaries of public officials, including his own. Toledo had drawn frequent criticism for his extravagant lifestyle.

But Garcia's honeymoon is clearly over.

A recent poll by the Apoyo firm, Peru's top pollster, showed Garcia's popularity plunged from 63 percent in August 2006 to 32 percent this month.

Garcia's Aprista party was trounced in November regional elections, retaining control of only two of the 12 regional governments it won in 2002.

The president, however, has pushed forward with his market-friendly agenda and taken a hard line against the protests. He decreed last week that regional government leaders would be fired if they participated in strikes.

Resentment toward Garcia is most visible in the rural highlands, where Indian and mestizo voters voted overwhelmingly for his opponent, Ollanta Humala, in the June 2006 presidential runoff.

Humala had promised radical redistribution of wealth, but during the campaign Garcia pegged him as a pawn of Chavez, frightening many into voting against him.

Humala, whose political fortunes faded after the election, has taken advantage of protests against Garcia to push himself again into public view.

Garcia's government is "not making us a priority," said Jorge Quinto Palomares, a government official in the Huancavelica region, where the poverty rate in nearly 90 percent. "The Huancavelica hospital is the only one in the region. The equipment is more than 50 years old."


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© 2007 The Associated Press

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