Alan Garcia - The Peruvian President Who Got a Second Chance

When general elections were held on June 4, 2006, Alan Gabriel Ludwig Garcia Perez, a member of the APRA party (Alianza Popular Revolucionaria Americana) a left-center Peruvian political organization, became the current President of Peru. As the head of APRA, he is the only member of the party to have served as President of Peru. His first term in office was from 1985 to 1990 and was marked by social unrest, violence and the collapse of the Peruvian economy. He ran again for the office of President in 2001 but lost in a run-off election to Alejandro Toledo.

A very bad presidency
When Garcia took office in July, 1985 for his first term, he was very popular with Peruvian voters. However, by the end of this first term, the economy had suffered from hyperinflation, which reached 7,649%, and became extremely destabilized. The Peruvian currency, the Sol (meaning Sun), was replaced by the Nuevo Sol, the per capita annual income of the Peruvian people fell to $720, which was below the 1960 level and the Gross Domestic Product was reduced by 20%. National reserves reached a negative US$ 900 million.

Social tensions in Peru were aggravated by the poor economic conditions and contributed to some extent to the rise of the communist rebel Shining Path movement. The movement attacked the countryside and the city of Lima itself, causing major blackouts. The Garcia administration retaliated with military force, allegedly committing human rights violations in the process. However, Garcia’s direct personal involvement in these events is not clear. It was also reported that his party and other officials in the government were tied to the attempted bombing of the El Diario newspaper, which at the time was linked to the Shining Path movement, with possible involvement in executions and sending terrorists to train in North Korea. In general, it was claimed that the many poor decisions Garcia made in office during his first term led to the rise of the authoritarian leader Alberto Fujimori.

Garcia gets a second chance
In July 2006 Garcia became President of Peru for the second time, with his party holding the second largest block of seats in the 120-seat unicameral Congress. For his second term, Garcia sought to improve relations with Venezuela and endeavored to establish a trade agreement with the United States and possibly with Brazil. His disagreements with Venezuelan President Hugo Chávez were resolved at the second South American Community of Nations Summit. The free trade agreement with the United States was passed during the Bush administration, with a majority in the Peruvian Congress favorable towards the agreement and twelve commercial agreements with Brazil were signed in 2006 that strengthened the relationship between the two countries.

In 2008, Peru had a 9.8% increase in the Gross Domestic Product following years of increases that began in 2001. These increases were due mostly from policies that were initiated to promote trade and attract investment and Garcia and his economic team have continued to implement these polices. Construction, mining, private investments, exports and domestic consumption have contributed to recent economic expansion with public debt dropping to $19.2 billion in 2008 and foreign reserves up to $31.2 billion.

It appears that Garcia’s second term as President of Peru has served to improve the economic and social status of the country, despite concerns regarding the control that foreign companies hold over Peru's wealth of natural resources. However, whatever these concerns may be, Garcia is certainly making better progress in office than during his first attempt.

Author: Gary Sargent - Escaped to Peru / Escaped to Latin America