Peru's Model Self-Help Town. Villa El Salvador has won international praise for its effective grass-roots management. COMMUNITY DEVELOPMENT

VILLA EL SALVADOR is always the good news in the Peruvian press. Among the articles reporting higher inflation, peasants massacred, and a deteriorating presidency, journalists and readers alike look forward to the stories about this ``new town'' of more than 300,000 people on the outskirts of Lima. In only 18 years, residents have created a community that is a remarkable example of self-help development. Ever-expanding shantytowns - pueblos jovenes (young towns) surround Lima. Many are literally sand dunes made into cities by poor people fleeing rural poverty and warfare where guerrillas and government soldiers compete for the peasants' loyalty.

Villa is just one pueblo joven, but its triumphant style of self-management has thrust it onto the national political scene and the international as well. It has won two awards: the prize of the Prince of Austurias, which is voted on by the Latin American ambassadors to Spain, and the designation of Peace Messenger by the United Nations.

``Since its birth, the people of Villa El Salvador had in mind that this couldn't be a traditional pueblo joven,'' said second-term mayor Miguel Azcueta. ``The people have achieved a unity and their own identity on a national level in Peru.''

Politicians from every party want to take credit for supporting Villa El Salvador. The most recent law passed on Villa's behalf took nine days, a record in Peru.

``The poor people have always been used by politicians to get elected,'' said attorney Patricia Iturregui. ``Now it's the contrary.'' In this case, a popular poor community has gained influence over elected leaders. Villa has been the salvation of thousands of families, and 300 more people arrive monthly hoping to start a new and better life.

Your shoes fill with sand as you walk along the unpaved roads. The streets are busy with vendors selling food, people hauling their garbage toward the truck that stops momentarily at each corner, and many residents are destined for meetings with a women's club, youth group, or trade union.

Seventy percent of Villa's inhabitants are under 25 years old. Wage-earners make an average of $70 per month. (The national average in 1984 was $940.) But Villa has electricity, water every two days (though for some it is delivered by a truck in plastic bags), schools, and health centers. And it is the only city managed from the grass-roots level in Peru. For these reasons it has been visited by world leaders such as Pope John Paul II, former Tanzanian President Julius Nyerere, and Nicaraguan Minister of the Interior Tom'as Borge.

In addition, Villa is a sister city to cities in Spain, France, West Germany, and the Soviet Union. This year the World Assembly of Mayors of Sister Cities brought 200 mayors from around the globe to Villa.

The community's success story began in the early morning hours on May 1, 1971, when 500 poor families living in unsanitary, crowded Lima slums, packed their belongings and invaded an unused piece of private property. By May 3, there were 4,000 settlers. And by May 5, the confrontation between them and the government resulted in Villa's first martyr.

Gen. Juan Velasco, who had come to power in a coup in 1968, was determined to accommodate the poor peasants arriving in Lima from the countryside (some as a result of his failed agrarian policy). He designated a parcel of state land southwest of the capital for them, giving free lots so that they could construct their own homes, albeit from straw. For this his likeness is depicted by Villa's only public statue.

Now, only the newest arrivals live in straw houses.

In 1973, the people designed their own type of government, officially called CUAVES, the Self-Managed Urban Community of Villa El Salvador. They follow their own model of urban development, which allows for private enterprise in a communally focused system. The plan, the Popular Integral Development Plan, is nationally famous.

Everyone has a voice in this highly organized and decentralized system. There are 110 residential groups of 2,500 people each. Within a residential group are 16 blocks, each of which consists of 24 families. The block elects a leader, and because of the small number of families, many people get a chance at the two-year position. Each residential group has a secretary-general, who is responsible for developing his or her area according to the development plan.

For example, each residential group has a central park which normally consists of a basketball court, surrounded by the the meeting hall, health post, communal kitchen, and kindergarten. These are planned by the people themselves, and built on Sunday, the communal labor day.

The leaders of the blocks bring their concerns to the secretary-general of the residential group, who brings the concerns to CUAVES. This bottom-up democratic structure is an unprecedented Peruvian experience.

``We struggle for our own method of development with the participation of everyone,'' says Mayor Azcueta. ``That's extremely rare in Peru.''

The system is not flawless. Some new arrivals do not want to live in such a structured environment. They refuse to integrate themselves into a residential group and do not participate in the Sunday work projects.

Although many residents have learned to help themselves, that is often not enough to overcome the obstacles of poverty. Maria Theresa Mendieta-Theodor, a United Nations volunteer, must confront the worst side of Villa as a nurse in one of the clinics.

``They come traumatized,'' she said of the children who arrive from areas of guerrilla warfare. Many have speech problems or cannot speak at all. Her sympathy and coaxing are not enough to compensate for the lack of professional attention.

Despite the problems, you can always find progress somewhere in Villa.

Currently the industrial park is making headlines. Twenty-five local enterprises are moving their cramped home workshops into the park. The United Nations Development Programme (UNDP) is financing the 17-year-old dream. Not only in Villa, but in all of Lima, thousands of entrepreneurs are operating in informal sectors of unregistered vendors and industrialists. They make up 60 percent of the active economic population and produce 38 percent of the country's gross domestic product.

Some 800 of these businesses are operating in people's homes in Villa El Salvador. Sewing machines and scraps of material crowd Elva Suarez's kitchen. The shoe-making machinery of Fidel and Rosalia Castro fills their house with dust. And the noise from Maximo Huarcaya's metalworks provokes his neighbors to throw rocks on his roof. The industrial park is only one of many activities percolating in Villa.

A farm in the middle of the sand dunes produces cotton, papaya, corn, oranges, and is the site of cattle- and pig-raising.

The Youth Federation has just finished the production of a video about the history of the young town, and other youths have created their own cement-block factory.

The Women's Federation distributes 70,000 glasses of milk a day for Villa's children. And in each residential group there is a communal kitchen, a project initiated by the poorer families to reduce their food bill: They buy their food together in bulk and the women take turns cooking the meals.

Church members, of which 90 percent are Roman Catholic, participate in active parishes. And high school graduates are attending Villa's first institution of higher education - Universidad Libre - which opened a year ago with funding of $200 collected from community members.

ALTHOUGH Villa cannot yet be considered a major political force, it is part of a growing popular movement in Peruvian politics, and has earned respect and attention from the government.

``Our strategy consists of mobilization and conciliation,'' said Azcueta. ``We work first and then approach the government to get such things as water, schools, health services, and support for the industrial park. We do a lot of work and then the government has to do something also.''

Villa supported President Alan Garc'ia in his more popular days, but with inflation at 2,000 percent and unemployment on the rise, Garcia has lost support from virtually every sector. And Villa political parties from left and right have joined the race to fill the current political void.

Azcueta, a member of the United Left coalition, an alliance of seven leftist parties, including socialists and communists, is a possible candidate for Lima's mayoral election. And his party is seen as a potential victor of the 1990 presidential election.

Azcueta and other Villa residents are determined not to make Villa an island, but rather a model for others to follow. Talks are given in other towns and encouragement given to those seeking to develop along similar lines. Villa is also the headquarters of the National Popular Assembly, a national organization of groups which promote communal, democratic organization.

But most significant is what Villa has taught those who have grown up in a residential group and helped work for free on Sundays. Children born in Villa have learned the fruits of organization and participation.

``Even when they play soccer, they elect a president, vice-president, and secretary,'' says Ms. Mendieta. ``Their parents are an incredible people. They have a courage that keeps them struggling.''