Peru - Impact of the Depression and World War Ii

Impact of the depression and world war ii

After 1930 both the military, now firmly allied with the oligarchy, and the forces of the left, particularly APRA, became important new actors in Peruvian politics. This period (1930-68) has been characterized in political terms by sociologist Dennis Gilbert as operating under essentially a "tripartite" political system, with the military often ruling at the behest of the oligarchy to suppress the "unruly" masses represented by APRA and the PCP. Lieutenant Colonel Luis M. S�nchez Cerro and then General Benavides led another period of military rule during the turbulent 1930s.

In the presidential election of 1931, S�nchez Cerro (1931- 33), capitalizing on his popularity from having deposed the dictator Legu�a, barely defeated APRA's Haya de la Torre, who claimed to have been defrauded out of his first bid for office. In July 1932, APRA rose in a bloody popular rebellion in Trujillo, Haya de la Torre's hometown and an APRA stronghold, that resulted in the execution of some sixty army officers by the insurgents. Enraged, the army unleashed a brutal suppression that cost the lives of at least 1,000 Apristas (APRA members) and their sympathizers (partly from aerial bombing, used for the first time in South American history). Thus began what would become a virtual vendetta between the armed forces and APRA that would last for at least a generation and on several occasions prevented the party from coming to power.

Politically, the Trujillo uprising was followed shortly by another crisis, this time a border conflict with Colombia over disputed territory in the Let�cia region of the Amazon. Before it could be settled, S�nchez Cerro was assassinated in April 1933 by a militant Aprista, and Congress quickly elected former president Benavides to complete S�nchez Cerro's five-year term. Benavides managed to settle the thorny Let�cia dispute peacefully, with assistance from the League of Nations, when a Protocol of Peace, Friendship, and Cooperation was signed in May 1934 ratifying Colombia's original claim. After a disputed election in 1936, in which Haya de la Torre was prevented from running and which Benavides nullified with the reluctant consent of Congress, Benavides remained in power and extended his term until 1939.

During the 1930s, Peru's economy was one of the least affected by the Great Depression. Thanks to a relatively diversified range of exports, led by cotton and new industrial metals (particularly lead and zinc), the country began a rapid recovery of export earnings as early as 1933. As a result, unlike many other Latin American countries that adopted Keynesian and import-substitution industrialization measures to counteract the decline, Peru's policymakers made relatively few alterations in their long-term model of export-oriented growth.

Under S�nchez Cerro, Peru did take measures to reorganize its debt-ridden finances by inviting Edwin Kemmerer, a well-known United States financial consultant, to recommend reforms. Following his advice, Peru returned to the gold standard, but could not avoid declaring a moratorium on its US$180-million debt on April 1, 1931. For the next thirty years, Peru was barred from the United States capital market.

Benavides's policies combined strict economic orthodoxy, measures of limited social reform designed to attract the middle classes away from APRA, and repression against the left, particularly APRA. For much of the rest of the decade, APRA continued to be persecuted and remained underground. Almost from the moment APRA appeared, the party and Haya de la Torre had been attacked by the oligarchy as antimilitary, anticlerical, and "communistic." Indeed, the official reason often given for APRA's proscription was its "internationalism," because the party began as a continent-wide alliance "against Yankee imperialism"-- suggesting that it was somehow subversively un-Peruvian.

Haya de la Torre had also flirted with the Communists during his exile in the 1920s, and his early writings were influenced by a number of radical thinkers, including Marx. Nevertheless, the 1931 APRA program was essentially reformist, nationalist, and populist. It called, among other things, for a redistributive and interventionist state that would move to selectively nationalize land and industry. Although certainly radical from the perspective of the oligarchy, the program was designed to correct the historical inequality of wealth and income in Peru, as well as to reduce and bring under greater governmental control the large-scale foreign investment in the country that was high in comparison with other Andean nations.

The intensity of the oligarchy's attacks was also a response to the extreme rhetoric of APRA polemicists and reflected the polarized state of Peruvian society and politics during the depression. Both sides readily resorted to force and violence, as the bloody events of the 1930s readily attested--the 1932 Trujillo revolt, the spate of prominent political assassinations (including S�nchez Cerro and Antonio Mir� Quesada, publisher of El Comercio), and widespread imprisonment and torture of Apristas and their sympathizers. It also revealed the oligarchy's apprehension, indeed paranoia, at APRA's sustained attempt to mobilize the masses for the first time into the political arena. At bottom, Peru's richest, most powerful forty families perceived a direct challenge to their traditional privileges and absolute right to rule, a position they were not to yield easily.

When Benavides's extended term expired in 1939, Manuel Prado y Ugarteche (1939-45), a Lima banker from a prominent family and son of a former president, won the presidency. He was soon confronted with a border conflict with Ecuador that led to a brief war in 1941. After independence, Ecuador had been left without access to either the Amazon or the region's other major waterway, the R�o Mara��n, and thus without direct access to the Atlantic Ocean. In an effort to assert its territorial claims in a region near the R�o Mara��n in the Amazon Basin, Ecuador occupied militarily the town of Zarumilla along its southwestern border with Peru. However, the Peruvian Army (Ej�rcito Peruano-- EP) responded with a lightning victory against the Ecuadorian Army. At subsequent peace negotiations in Rio de Janeiro in 1942, Peru's ownership of most of the contested region was affirmed.

On the domestic side, Prado gradually moved to soften official opposition to APRA, as Haya de la Torre moved to moderate the party's program in response to the changing national and international environment brought on by World War II. For example, he no longer proposed to radically redistribute income, but instead proposed to create new wealth, and he replaced his earlier strident "anti-imperialism" directed against the United States with more favorable calls for democracy, foreign investment, and hemispheric harmony. As a result, in May 1945 Prado legalized the party that now reemerged on the political scene after thirteen years underground.

The Allied victory in World War II reinforced the relative democratic tendency in Peru, as Prado's term came to an end in 1945. Jos� Luis Bustamante y Rivero (1945-48), a liberal and prominent international jurist, was overwhelmingly elected president on the basis of an alliance with the now legal APRA. Responding to his more reform- and populist-oriented political base, Bustamante and his Aprista minister of economy moved Peru away from the strictly orthodox, free-market policies that had characterized his predecessors. Increasing the state's intervention in the economy in an effort to stimulate growth and redistribution, the new government embarked on a general fiscal expansion, increased wages, and established controls on prices and exchange rates. The policy, similar to APRA's later approach in the late 1980s, was neither well-conceived nor efficiently administered and came at a time when Peru's exports, after an initial upturn after the war, began to sag. This resulted in a surge of inflation and labor unrest that ultimately destabilized the government.

Bustamante also became embroiled in an escalating political conflict with the Aprista-controlled Congress, further weakening the administration. The political waters were also roiled in 1947 by the assassination by Aprista militants of Francisco Grana Garland, the socially prominent director of the conservative newspaper La Prensa. When a naval mutiny organized by elements of APRA broke out in 1948, the military, under pressure from the oligarchy, overthrew the government and installed General Manuel A. Odr�a (1948-50, 1950-56), hero of the 1941 war with Ecuador, as president.

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