POLITICS : Peru’s Fujimori Delivers a Jolt, Weathers Storm

LIMA, Peru —  Alberto Fujimori astonished Peruvians when he leaped from political obscurity to win the presidency. His first four months in office have been equally astonishing.

In his boldest move, Fujimori jolted the country with an austerity “shock” against rampant inflation that sent the monthly rate racing to nearly 400%, but has reduced it since to less than 6%. The shock stunned the already depressed economy and added to the hardship of Peru’s poor majority.

Fujimori, 52, has weathered the storm without firm backing from established political parties. He has played one group against another, often startling the nation with his blunt pronouncements.

He has chided the Congress for wasting time in sterile debates. He has criticized judicial inefficiency and corruption, referring to judges as “jackals.” He has quarreled with powerful Roman Catholic bishops over birth control, calling a sector of the church “medieval.”

“He tends to upset rice bowls,” said a diplomatic observer.

The president refuses to meet with his second vice president, Carlos Garcia Garcia, an evangelical Protestant leader. Garcia had helped muster key electoral support for Fujimori among Peru’s well-organized evangelical movement, but the two quarreled after the president declined to name any evangelicals to the Cabinet.

For similar reasons, Fujimori has fallen out with his own political movement, Change 90, which won 46 seats in the 240-member Congress.

Fernando Rospigliosi, a political scientist with the Institute of Peruvian Studies, said Fujimori’s power is based on the strategy of dividing political forces, “playing them off against each other.”

Rospigliosi said Fujimori has built a relationship with army intelligence officers and uses it as a power base. The armed forces governed Peru from 1968 to 1980.

Fujimori, an agronomy professor and former university rector, defeated famed novelist Mario Vargas Llosa for the presidency. Vargas Llosa had made the mistakes of allying himself with discredited political parties and advocating an economic shock against inflation.

Fujimori, in contrast, emphasized his political independence and kept his economic promises vaguely moderate and upbeat. But there is nothing moderate about his so-called Fujishock, imposed by decree in early August.

To stem inflationary deficit spending by the government, he ordered steep hikes in subsidized prices for public utilities and petroleum products. The price of gasoline increased 30-fold overnight, and other prices also multiplied.

The result: Monthly inflation, out of control at more than 60% in July, reached 397% in August; but it quickly subsided to 14% in September, and 5.9% in November. Hoping to maintain the downward trend, the government has severely restricted the amount of money in circulation.

National production in August fell 15% from July, said Armando Caceres, an economist with a private think tank known as GRADE. A rash of looting and disturbances followed the shock, but analysts say Fujimori’s popularity saved Peru from widespread price riots.

An 18-day strike by civil servants, protesting low wages and other austerity measures, fizzled this week. Strike demonstrations brought disorder on the streets, but the government continued to function and Fujimori made no concessions.

Many analysts say the government must soon begin tax, monetary and customs reforms that are needed to follow through on the Fujishock. They question whether the president’s economic team, put together rapidly after his election, has the depth of experience to carry out such a complex package of reforms.

Unless the government can control inflation and revive the depressed economy, it will remain in a weak position for controlling two other major problems, cocaine traffic and guerrilla warfare.

Peru is the world’s leading producer of coca leaves, the raw material of cocaine, and 200,000 families depend on it for their livelihood. The largest coca-growing areas are guarded by the Maoist guerrillas of the Sendero Luminoso, or Shining Path, movement, whose decade-long war has cost about 20,000 lives.