junta had wanted to set up. Orthodox financial
management, especially policies designed to
reduce the foreign debt, inevitably resulted in
hardship, unemployment and protest. There were
many strikes in Lima. In the remote highlands
opposition was being organised by a new guer-
rilla group, the Sendero Luminoso, known in the
West as the Shining Path. Inspired by Maoist doc-
trines, the Shining Path was ruthless in waging
war on the class enemies. Despite sweeps by the
army, the insurgents retained their bases and
plunged the country into bloody strife.
In 1985, Peru’s new hope for recovery was the
election of the leader of the Alianza Popular
Revolucionaria Americana (APRA), Alan Garcia.
Young and dynamic he instituted an economic
reform plan that attempted to promote Peruvian
industry. He was no socialist, preferring to leave
industry in private hands, and his refusal to pay
all the interest due to foreign investors made him
popular. Thus began a long tussle between
foreign governments and banks, with the Latin
American debtors no longer prepared to impover-
ish their people in order to honour their finan-
cial obligations. Initial American reactions were
hostile especially as Garcia also took a stoutly
independent line in foreign policy. By the 1990s,
with the US now taking the lead, it was accepted
that Latin America’s debt burden was too heavy,
and that it was better for bankers to accept a
reduction than repudiation and a breakdown in
trade relations. By the time it came to elections
again in 1990, the economy was in a dreadful
state, crime and drugs were rampant and the
Shining Path was carrying the bloody struggle
from the interior to the shanty towns around
Lima, murdering fifty mayors in the countryside,
as well as missionaries, priests and peasants. In just
one year, 1989, insurgents and the government
death squads, between them, killed over 3,000
people. The people’s disillusionment with their
politicians was vividly demonstrated during the
contest for the presidency in June 1990 when the
son of a Japanese immigrant Alberto Fujimoro, a
university academic promising reform but virtually
unknown before, won by a convincing majority.
Fujimoro was determined to crush the Shining
Path. In return for protection of the coca growers
and drug barons, the Shining Path was financed by
the drug traffic. The president introduced emer-
gency powers and the conflict was stepped up by
both sides. Fujimoro also launched an economic
austerity programme, at the same time liberalising
the economy and denationalising state enterprises.
The immediate result was huge unemployment.
Backed by the military, Fujimoro seized dictator-
ial powers, dissolving Congress and arresting some
of the political leaders.
Fujimoro claimed that he required executive
powers to carry out his programme of deregulat-
ing the economy, cutting subsidies and privatis-
ing, as well as to fight the Shining Path more
effectively. His first success was to capture the
guerrilla group’s leader after an intelligence oper-
ation in a flat in Lima in September 1992. But that
was not likely to end the struggle with the Shining
Path or the drug growers and merchants. For the
Indians the growing of coca leaves had become an
essential part of their survival economy. Great
hardship was suffered by the people of Peru, and
economic reforms – if they succeeded – would
take years to raise the low standards of living.
In 1995 Fujimoro was re-elected. Two years
later he became a popular hero when he rescued
hostages taken in the Japanese Embassy. He had
taken personal charge of the military operation,
which ended with the shooting of their captors.
He waged a successful fight against the Shining
Path guerrillas. This reconciled many to his
increasingly authoritarian rule. But by 2000 the
corruption that was uncovered blighted his
attempts to get re-elected despite a constitutional
bar for a third term. The scandal broke, Fujimoro
left the country. The arrest of his spy chief
Vladimoro Montesimo uncovered a veritable can
of worms, widespread fraud, bribery and kick-
backs. The army generals were deeply implicated
in the subversion of democracy and human rights
abuses. President Alejaudro Toledo, Fujimoro’s
successor, promised to restore democratic rule,
and cut the overpowerful army down to size. A
dozen generals awaited trial in 2003 and large
numbers of officers have been retired. The guer-
rilla movement is not dead but no longer poses a
serious threat. President Toledo’s aim is to return
to democratic civilian government.