In the early 1990s, Peru was hit by a cholera epidemic, which highlighted longstanding health care problems. Review of health statistics amply illustrates Peru's vulnerability to disease and the uneven distribution of resources to combat it. The most and the best of the health facilities were concentrated in metropolitan Lima, followed by the principal older coastal cities, including Arequipa, and the rest of the country. The differences among these regions were not trivial. Whereas Lima had a doctor for every 400 persons on average, and other coastal areas had a ratio of one doctor for every 2,000, the highland departments had one doctor for every 12,000 persons. The same levels of difference applied with respect to hospital beds, nurses, and all the medical specialties.

In the early 1990s, over 25 percent of urban residences and over 90 percent of rural residences lacked basic potable water and sewerage. Thus, the population has been inevitably exposed to a wide variety of waterborne diseases. The incidence of disease not surprisingly reflected the inequities evidenced in the health system: the leading causes of death by infectious diseases have varied from year to year, but invariably the principal ones have been respiratory infections, gastroenteritis, common colds, malaria, tuberculosis, influenza, measles, chicken pox, and whooping cough. The cholera epidemic, which began in 1990 and claimed international headlines, ranked well down the list of causes for death behind these others, which have been endemic and basically taken for granted. In a typical case, during one year in Huaylas District, which had a small clinic and often was fortunate enough to have a doctor in residence, 40 percent of all deaths registered were children below four years of age, who died because of a regional influenza epidemic.

Although Peru's infant mortality rate per 1,000 live births dropped from 130 to 80 over a 26-year period (1965-91), the rate in 1991 was still over twice the rate of Colombia and four times the rate of Chile. The mortality rate for children under 5 was also brought down greatly, from 233 per 1,000 in 1960 to 107 per 1,000 in 1991. Both measures for 1991 still exceeded all the other Latin American countries except Bolivia and Haiti. The only direct measure of social welfare that deteriorated was nutrition: calorie consumption per capita fell 5 percent from the average for 1964-66 to 1984-86. In 1988 calorie consumption was 2,269, as compared with 2,328 in 1987. Because calorie consumption levels generally parallel income levels, the decrease must have been concentrated at the level of the extremely poor.

Peru's lack of general well-being was further suggested by the nation's high and growing dependence on foreign food since 1975 through direct imports, which had increased 300 percent, and food assistance programs, which showed a tenfold increment. The United States has been by far the largest provider of food assistance to Peru through its multiple programs administered under the Food for Peace (Public Law 480) projects of the United States Agency for International Development (AID). During the 1980s, food aid amounted to over 50 percent of all United States economic assistance. The aid was delivered as maternal and child health assistance and food-for-work programs administered by CARE (Cooperative for American Relief), church-related private voluntary organizations, or by direct sale to the Peruvian government for urban market resale.

Peru's totally inadequate social security system, operated by the Peruvian Institute of Social Security (Instituto Peruano de Seguridad Social--IPSS), did not remain exempt from the Fujimori government's privatization policy. As a result of two legislative decrees passed in November 1991, Peru's system for providing social security retirement and health benefits underwent significant modification. The changes were similar to those made by the military government of Chile in the early 1980s, when employees were given a choice of either remaining with the existing system or joining private systems set up on an individual capitalization basis. The Fujimori government decided to adopt the Chilean social security model almost completely. The stated objectives were to permit open market competition, alleviate the government's financial burden by having it shared by the private sector, improve coverage and the quality of benefits, and provide wider access to other social sectors. Private Pension Funds Administrators (Administradoras de Fondos de Pensiones--AFPs) were expected to begin operating in June 1993. A presidential decree in December 1992 ended the IPSS's monopoly on pensions. This provided a boost to Peru's small and underdeveloped capital market by allowing the AFPs to invest in bonds issued by the government or Central Reserve Bank (Banco Central de Reservas--BCR, also known as Central Bank) as well as in companies.

The cholera and other health and social issues in Peru were interrelated closely with the country's steadily worsening environmental conditions. The high levels of pollution in large sectors of Lima, Chimbote, and other coastal centers had resulted from uncontrolled dumping of industrial, automotive, and domestic wastes that had created a gaseous atmosphere. The loss of irrigated coastal farmland to urban sprawl, erosion of highland farms, and the clear-cutting of Amazonian forest all have conspired to impoverish the nation's most valuable natural resources and further exacerbate social dilemmas. Although Peru is endowed with perhaps the widest range of resources in South America, somehow they have never been coherently or effectively utilized to construct a balanced and progressive society. The irony of Peru's condition was captured long ago in the characterization of the nation as being a "pauper sitting on a throne of gold." How to put the gold in the pauper's pockets without destroying the chair on which to sit is a puzzle that Peruvians and their international supporters have yet to solve.

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