Peru government faces terrorist bombs, tough economy
National monuments from Lima to Cuzco have been polished and dabbed with fresh coats of paint as this nation celebrates 162 years of independence and three years of restored democracy.
But Peruvians also worry that difficult economic times and terrorist attacks may dull the shine of celebration.
Many of them braced for rounds of bombings - like those that rocked Lima in early July - during the July 29 military parade that passed before President Fernando Belaunde Terry.
The expected attacks did not occur, but Peruvians remain skittish. An entrenched terrorist organization, a haggard agricultural sector, and an economy deep in debt keep them worried.
President Belaunde's 1980 election was met with a surge of enthusiasm both at home and abroad, but terrorist violence and the deteriorating economy have since destroyed much of his popular support. One public opinion poll says the President's popularity has plummeted to less than 20 percent and other polls say his party stands to lose the municipal elections this fall.
In the three years since Belaunde took office, Peru has been fighting an increasingly violent war with a Maoist guerrilla band known as Sendero Luminoso, or Shining Path. The group's goal is to stage a revolution along the lines of Mao Tse-tung's peasant revolt in China. The group is said to control much of Ayacucho Province, some 200 miles southeast of Lima.
In January, Belaunde sent 2,000 troops to the impoverished province to crush the growing terrorist movement. Since then, official figures place the death toll at more than 900.
''Every day the government becomes more and more polarized from the population,'' says Enrique Bernales, a senator and member of the opposition United Left party. ''As the government continues to restrict the democratic process, particularly in Ayacucho, Shining Path becomes the only affective voice for the rural poor.''
While most politicians agree that a military coup is not an immediate threat, they say terrorism, coupled with Peru's worsening economy, could force the Army to step in.
Opposition politicians complain that military pressure already has created an unwarranted campaign against foreigners. They cite Belaunde's recent attack on foreign foundations and the Roman Catholic Church, which he has accused of ''indirectly backing the discord and death'' here.
The arrest of three Danish students, who were held for 20 days on charges of terrorist coercion, has sparked new debate over the government's claim of foreign intervention in the guerrilla movement.
In mid-July, Brig. Gen. Clemente Noel y Morales, who heads Peru's antisubversive military operations, said, ''The technical planning of the Accion Popular bombing would indicate at least foreign training.''
Government leaders do not say what foreign country they think may be involved. They have also linked the band with cocaine smugglers and the mafia, but have provided no evidence of such links.
Despite rising tensions, Peru's democracy remains intact, most politicians say.
Alan Garcia Perez, secretary-general of the opposition Aprista Party, says, ''The structure of the state continues in accordance with the Constitution. We have a civilian government and are awaiting democratic elections.''
Soon after a bombing at Belaunde's Accion Popular party headquarters - which left two dead and 31 injured - the President said that although terrorists are ''creating difficulties for our democracy, they will not destroy it.''
But the economy is a source of increasing worry. Last June, Peru signed a $ 900 million loan agreement with the International Monetary Fund (IMF). The government agreed to a drastic austerity program in an effort to bring under control the country's huge deficit, which stood at $11 billion at the end of 1982.
Economists, however, say Peru's economic problems are worse than ever. This is in part because of torrential rains in the north and a severe drought in the south that wiped out much of the most fertile farmlands.
In late July, a Peruvian economic team, headed by Finance and Economy Minister Carlos Rodriguez Pastor, hammered out an accord with creditor-nations that extends interest and principal payments on $1 billion of Peru's debt over an eight-year period. Mr. Rodriguez Pastor says the agreement ''reflects the confidence that Peru's democratic government has inspired in a period of economic and financial difficulties throughout Latin America.''
The economic accord follows an agreement with Peru's 275 commercial creditor banks that roll over some $2.38 billion in short, medium, and long-term commercial bank loans and provides $450 million in fresh capital, central bank sources say.
While the flood of new money may give Belaunde some breathing room, an inflation rate of more than 100 percent has forced most Peruvians - whose average salary is less than $100 a month - to make severe budget cuts of their own.
But ''the government's No. 1 priority now, even more than inflation, is the deficit,'' a US Embassy source says.
Part of that deficit is due to high spending on the military - which could be a sensitive area for the government to cut. A recent IMF study reported that military spending - estimated at nearly 30 percent of the budget - caused a $400 million upward adjustment in last year's deficit, which jumped to 8.8 percent of the country's gross domestic product. And the central bank has noted that ''military spending is not always properly registered.''
At the same time, Peru's tax revenues have drastically declined, due to a drop in production brought about in part by the IMF's stringent money supply guidelines, economists say.
''The situation has gotten so bad,'' says one Peruvian economist, ''that the government is only following the IMF targets as a guideline because they can't possibly stick to the specific goals outlined in the program.''
The recent resignation of Labor Minister Alfonso Grados Bertorini may add to labor unrest, sources say.
''The new labor minister (Patricio Ricketts),'' says Senator Bernales, ''is an intelligent, capable man, but he is very hard line and very antiunion. This could create a grave labor problem for the government.'' But former Minister Grados has just announced his candidacy for mayor of Lima - and this is expected to enhance the governing Accion Popular's chances in the elections.