Convoys of dusty green troop carriers, their machine guns at the ready, patrolled Lima's main streets yesterday in an effort to contain embittered an violent workers who have paralyzed this city since early Monday morning.
For the second day in a row, Peru's major cities were completely shuttered, wracked by intermittent violence as a result of a 48-hour general strike called to protest harsh austerity measures taken here last week, the measures implemented by the government last week.
Violence erupted just after the government announcement last week and more than a dozen deaths have been reported. A state of emergency was declared on Friday.
The new regulations have sent basic food and transportation costs soaring and have left this country's poorest citizens protesting that that are in worse shape than ever before. The belt-tightening is part of a last-ditch government effort to solve a balance-of-payments crisis that threatens to throw Peru into default on $500 million worth of international loans due over the next few weeks.
The austerity measures are designed to bring Peru's inflation rate down to 20 per cent this year and drastically cut imports to save export earnings for debt repayments. Such steps were demanded last year by the International Monetary Fund and a consortium of private banks, which have lent Peru as much as $2.5 billion dollars over the past four years.
In effect, the IME and the international banks told Peru that it would be cut off from international money markets unless it accepted the austerity measures - despite the effect they would have on the country's 16 million people.
After a year of trying a figure some other way out of the impending crisis, Peru's military government, headed by President Francisco Morales Bermudez, captulated last week to the IMF demands. Since them, it has become apparent that the government traded one crisis for another, without yet being certain that it has solved the first crisis.
Well informed sources here said the IME and Peru are still negotiating a $100 million loan that Lima hopes to receive from the Fund in 10 quarterly payments over the next two and one half years. Although negotiations are said to be going well inlight of the loan is still uncertain.
Meanwhile, a delegation of Peruvian officials left Lima Monday for New York, where they are meeting with members of the private bank consortium, which includes some of the largest banks in the United States, Europe and Japan.
Peru is asking the banks for an immediate $80 million loan and a second loan of $260 million to be available after July 1, according to sources here.
The money will be used to pay off old loans as they come due and to help finance Peru's continuing balance of payments deficit, the sources said.
In a speech Saturday night, Morales warned the banks that, with the present measures he has done all he can to deflate the economy and correct Peru's balance of payments. During the same speech, Morales asked the Peruvian people not to join the general strike that has since crippled the nation.
Even before the strike began Monday morning, there were reports of widespread work stoppages and violence in cities outside Lima. At least 10 persons were reported killed in clashes last week immediately after the austerity measures were announced.
Morales reacted by decreeing the state of emerfwnxy that went into effect last Friday, suspending all constitutional guarantees and closing all of Peru's nongovernment-owned magazines until further notice. Over the weekend. Baella Tuesta, editor of E1 Tiempo, one of Peru's most respected independent political publications, waseportedto have been detained without charges.
Once the general strike began, Lima shut down completely and violence flared within the first few hours. Mobs of angry demonstrators looted and burned banks and shops, barricaded most of the main highways into and out of the capital and threw rocks at cars and trucks that attempted to get through. Three more persons were reported killed Monday and several more were reported killed and injured yesterday as the violence continued in outlying parts of Lima.