Toledo’s Stock Continues to Fall

-Peruvian President Alejandro Toledo has seen his approval rating drop to 11 percent, the lowest among current Latin American leaders.

-Amidst personal scandal and a presidency without achievement or distinction, Toledo has announced that Perú has reached a “breaking point,” with purportedly widespread changes now on the agenda.

-Toledo must deal with the contempt in which he is held by most Peruvians, as well as strive to maintain his ruling coalition if he hopes to have a chance to rehabilitate his tainted presidency and finish the two remaining years of his term on a positive note, inconceivable as that now appears.

-Perú has been threatened with suspension of U.S. military aid over its backing of the International Criminal Court.

On May 27, 2003, Peruvian President Alejandro Toledo declared a 30-day state of emergency after a violent week of strikes, in which protestors took to the streets to call for a wide array of demands that included salary increases, lower taxes and import protection. The nationwide state of emergency was lifted, as scheduled, on June 26, except in the areas of Junin, Ayacucho, Apurimac, and La Convención, where it would last for another month. A few days earlier, on June 24, Prime Minister Luis Solari and the remainder of the cabinet tendered their resignations. The resignation of the Peruvian cabinet, which some believe to have been induced by the rejection two weeks ago of the president's new tax plans, marks the third such reshuffling since Toledo took office.

Arriving concurrently with Toledo’s announcement that Perú has reached a “breaking point,” this cabinet’s resignation is of particular significance. Its reorganization would allow Toledo to bring in new ministers who would reflect the viewpoint of a broad coalition of political positions. With even the most remote of prospects that he can revive his most unfortunate reputation and do something about the disdain in which he is held by most Peruvians now eager for change, he seems determined to make the attempt. The shuffling, however, does not appear to be the miracle drug to cure Peru’s chronic social, political, and economic illnesses.

Toledo, Peru’s first elected president of indigenous background, has seen his approval rating fall from 60 percent at the beginning of his term in 2000 to today’s abysmal 11 percent level, the lowest figure for any Latin American president. Only 23 months into a five-year term, Toledo, like never before, is hearing ghosts calling for his resignation. Personal scandal has also compounded his already disgraced presidency. His repeated denials that he had fathered a child out of wedlock 14 years ago continued until late last year, despite the existence of blood tests indicating a 97 percent positive confirmation of his paternity. In his defense, Toledo weakly claims that, “No president has been as scrutinized as I have,” and that these past 23 months of his presidency have been a “learning experience,” but with the average Peruvian regrettably having to bear their president’s expensive tuition payments. This is quite a lengthy learning experience for a man who already possesses postgraduate degrees in education and economics and had held high posts at both the United Nations and the World Bank.

Perú’s Political Shake-up New Cabinet appointments came on June 30, six days after the previous cabinet members had offered their resignations, with the naming of Beatriz Merino, an independent lawyer as prime minister. A former parliamentarian and head of the tax administration agency, Merino became the country’s first female prime minister and replaces the head of the Perú Posible party, Luis Solari. At her swearing-in ceremony, Merino stated, “In a difficult moment for the country, we will have to work together and I want this cabinet to build a democracy based on consensus and on harmony.” Merino also has cited the need of the country “to be directed with austerity, discipline and firmness.” Toledo further attempted to rejuvenate a lifeless corpse by adding five new ministers while two more ministers changed places. However, still uncertain is whether such a cabinet change will provide substantive benefits to a population now reeling with despair and deeply felt disillusionment, or merely will serve as a cosmetic fix accompanied by a return to Toledo’s maddening propensity for business as usual.

One person who feels optimistic about changes in Toledo’s cabinet is Augusto Alvarez, director of the Daily Perú 21 newspaper. Alvarez, commenting from Lima, maintained that “These new people will give the president the chance to provide a precise new agenda” and that he will be setting up his new cabinet by spelling out a well-defined agenda which will help rebuff critics who claim that Toledo’s presidency has been marred by indecisiveness and disorganization at best, and by gross insensitivity and poor judgment at worst.

Rafael Rey, a congressman from the National Union Party, offered a dissenting opinion that “Perú’s problem has a name and a last name, and the No. 1 problem is Alejandro Toledo.” He also expressed his belief that the cabinet resignations would not bring any solution to the current situation. Carlos Basombrio, Toledo’s former vice interior minister who resigned in January, expressed similar sentiments: “Sadly, everything points in one direction: This is about the President.”

Toledo’s failure to replace important members from prominent cabinet positions, including economy minister and interior minister, clearly indicate that his cabinet moves have not gone beyond mere shuffling. The selection of Merino to fill the vacant prime minister position is a step in the right direction but clearly does not go far enough. This viewpoint is well illustrated by Lourdes Flores, an opposition candidate who ran for president in 2001, when she observed, “If the government doesn’t resolve its credibility today—a resolution based on reality and immensely open—there will be no patience for hope.” Other opposition party members share similar sentiments to those of Flores. Secretary General of the American Popular Revolutionary Alliance, Jorge del Castillo Gálvez , commented that the new cabinet led by Beatriz Merino “does not satisfy the expectations” for change of the Peruvian people.

Planting the Seed of Discontent

Critics who cite Toledo’s failure to generate respectable results in expanding the nation’s living standards point to the government’s announced plan to undertake major public works efforts in order to tackle social issues. While being constrained by fiscal prudence and so-called responsible economic planning, Toledo still has to draft new policies and then vigorously ensure their passage if he hopes to bring about meaningful change. Toledo said, “Because I want to be a president who makes a difference, I’m paying a high political price in the short term, planting the seed before I am able to harvest.” Toledo’s especially polarizing neo-liberal policies, however, have not generated their desired outcome and instead have planted the seed of massive popular discontent.

Toledo has delivered on all too few of his many promises. The list of unfulfilled pledges to the public includes the proposed creation of one million new jobs, updated irrigation systems, improved public housing, and increased investment in education. Toledo also pledged to begin a “frontal assault on poverty” in order to ameliorate the plight of the 28 million Peruvians living on less than $2 per day. Riots in May by Peruvian farmers illustrate that the population has yet to reap the benefits of the country’s recent economic growth. The farmers expressed their bitter disaffection over Toledo’s economic policies by placing boulders and burning tires on highways to inhibit public transit.

Despite vowing to embrace a change of philosophy by being responsive to the demands of the populace, Toledo has not exactly endeared himself recently to his people. Last week, he announced that he would slash his monthly salary that started at $18,000 per month at the beginning of his presidency down to $8,400. Taking into account that the monthly salary for Peruvian teachers is $190 per month, Toledo should not be surprised to find his self-imposed salary cut hardly being seen as sacrificial by most Peruvians. Drawing further ire, Toledo blithely left the country in the midst of the on-going 30-day state of emergency during which time the Sendero Luminoso or Shining Path, a Maoist guerrilla organization, kidnapped 71 people in southeastern Peru. The purpose of the trip was to honor a speaking engagement at Stanford University, his alma mater.

In spite of his genuflecting to Washington on a number of issues, Perú was still disqualified by the Bush administration yesterday from receiving U.S. military aid because of Perú signing the 1998 Treaty of Rome setting up the International Criminal Court, an institution loathed by the White House. In contrast to this chilling act, Toledo initially received rave reviews from Washington for his free trade advocacy and stringent orthodox fiscal policies. Interestingly, however, these have done little to aid the average Peruvian in spite of the fact that the country was registering one of the fastest growing economic growth rates in the hemisphere in 2002. After declaring a state of emergency during the strikes in late May, Toledo, although belatedly, began to acknowledge the shortcomings of his government’s policies by recognizing its inability to sufficiently reduce poverty while generating economic growth.

Toledo’s Last Stand Left struggling to hold onto his position in the aftermath of the violent protests that crippled the beleaguered country and which almost brought the government to its knees nearly a month ago, Toledo now finds himself in a precarious situation. His failure to deliver real results and effect positive change have led to rumors about a movement to impeach him which is now picking up steam. But Toledo hopes that the installation of the first female premier along with other new cabinet members, packaged along with a proposed tax increase in taxes and cuts in spending intended to prevent fiscal stress, will quell the discontent. He also intends to cut back public salaries and raise taxes on consumer goods. Such contractions in fiscal policy may increase stability in the Peruvian economy, but bear no guarantees for the president to be able to hold onto power.

Unable to solve many of the questions plaguing his current presidency, Toledo has definitively answered one question regarding his personal future by announcing that he will not seek the presidency in 2006. Speaking in front of a crowd in Nuevo Chimbote, Toledo urged the Congress to work more for those most in need, calling for the resurgence of social programs, instead of losing time by “talking too much.” If only Toledo had followed his own advice throughout his presidency, he might not be fighting an uphill battle to save his tattered reputation.

Lima-based political analyst, Alberto Adrianzen, offers the most concise analysis of the situation, stating, “There are no good reasons why we should be in this situation.” Toledo desperately needs to hold onto the country’s governing coalition of his Perú Posible party and the Independent Moralizing Movement, which together proudly holds 41 seats in the Peruvian Congress. Given Toledo’s abhorrent past and the current state of a country devoid of political talent at the top post—a legacy bequeathed to the country from the days of the authoritarian rule of Alberto Fujimori— he must decide whether he is going to step up to the plate and deliver, or merely conjure up more of the same while he stands on the sidelines, little more than a spectator.

This analysis was prepared by George Dorko III, a research associate at the Council on Hemispheric Affairs. Issued 2 July 2003.

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