PERU/CHILE: President Alan Garcia takes office pledging to claw Peru away from a "social catastrophe."

President Alan Garcia took office on Friday (July 28) pledging to claw Peru away from a "social catastrophe" by creating jobs and ending growing inequality to emulate the economic success of neighbouring Chile. Two decades after he was first elected, left-leaning Garcia told Congress he would mix a state-funded drive to reduce poverty and plans to renegotiate contracts with natural gas companies with an open-door policy to foreign investment. Quoting Karl Marx but promising austerity to achieve an investment-grade debt rating and reassure bondholders, Garcia said he had learned from the mistakes of his 1985-1990 term. He promised to modernise a corrupt state apparatus that few ordinary Peruvians believe in. "We proclaim now in Peru, the moment for the people has arrived. It's the moment for the 13 million poor people who have nothing and, to quote scripture, we say those who are last will be first," said Garcia. Around half of Peru's 27 million people are poor and thousands leave the country every year to try to make a better life in Europe and the United States, many illegally. Peru is the world's No. 2 cocaine exporter and thousands of farmers live from growing coca, the drug's raw material, because they are unable to find jobs in Peru's cities. Sporting sideburns and decidedly chubbier than the 35-year-old elected 21 years ago, Garcia said he aimed to renegotiate lower domestic gas prices with Peru's Argentine-led Camisea gas consortium and signalled he wanted mining companies to pay "extraordinary" amounts into government coffers. But he said he aimed to avoid new taxes on Peru's key industry to prevent scaring away investment in the world's No. 3 copper producer, a big mineral exporter to China. Investors worry that Garcia, who caused Peru's economic collapse in the 1980s, has not ditched his leftist tendencies and wants to increase state control over the economy. Garcia said a cut in public sector salaries ranging from diplomats to lawmakers would allow his government to invest $1.5 billion in Peru's crumbling infrastructure and avoid increasing the country's $30 billion debt. In a ceremony filled with pomp, Garcia's inauguration was attended by Latin American and Hispanic world leaders including Brazil's President Luiz Inacio Lula da Silva, Colombia President Alvaro Uribe, Ecuador President Alfredo Palacio, Chile President Michelle Bachelet and Spain Prince Felipe. Thousands lined the streets of Lima to view Garcia walking in the presidential parade. After the procession, Garcia retreated to the palace for bilateral meetings with Uribe and Bachelet, who said it was fruitful. "With President Garcia, just as when he went to Chile as president-elect, we had an extraordinary working meeting to advance topics that we want to move ahead-- as in the economic accord that has been beneficial to both countries, to look and see if we can move towards a free trade agreement-- it's all very auspicious and we expect to be able to complete it soon," said Bachelet. Nationalist leader and former military commander Ollanta Humala, who lost the presidency to Garcia in a second-round poll, said Garcia's two-hour inauguration speech was filled with deceit. "It's the continuation of the Fujimori-Montesinos, Toledo era without Toledo and without Fujimori," he said outside his party headquarters. "The basics haven't changed. The basics were the changing of the rules of the game-- something they themselves, Alan Garcia and his APRA party, have written into their government plan: a return to the Constitution of '79, not a constitutional reform which is what Alan Garcia has now proposed. That is tricking the people of Peru," said Humala. But the former Peruvian President Alberto Fujimori wished Garcia success and asked him to fulfil the benchmarks that he has set to reduce poverty without hurting the economy and while maintaining the country's economic growth. "Well, I'm following all the politics in Peru closely, making my own analysis. Of course, we're talking about a speech, an inauguration message, this message for the 5-year period. There are goals. I noticed there are concrete goals," Fujimori said before entering a dinner to celebrate his 68th birthday with friends, his youngest son Kenji and Kenji's girlfriend. "Like all Peruvians, patriotically, I wish him success and that these goals be fulfilled," he said. Fujimori is wanted for extradition by Peru to face human rights and corruption charges. In 1990, Garcia handed over the presidency to Fujimori, who ruled until 2000 when he fled Peru for exile in Japan. In November of 2005, he suddenly arrived in Santiago, Chile. Fujimori remains in Chile awaiting a court decision on Peru's extradition request.

ITN Source | July 29, 2006

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