The Allied victory in World War II reinforced the relative democratic tendency in Peru. As Prado’s term came to an end in 1945. José Luis Bustamante y Rivero), a liberal and prominent international jurist, was overwhelmingly elected president as a candidate for the Frente Democratico Nacional, a moderate, left-of-center party that aligned itself with the now legal APRA, controlling 18 out of 29 seats in the Senate and 53 out of 84 in the Chamber of Deputies.

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 characterised 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 labour unrest that ultimately destabilised 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 organised by elements of APRA broke out in 1948, the military, under pressure from the oligarchy, overthrew the government and installed General Manuel A. Odría hero of the 1941 war with Ecuador, as president. José Luis Bustamante y Rivero (1894 – 1989) later became Member of the International Court of Justice (ICJ) in The Hague from 1961 to 1970, and – being the first Latin American in this position – acted as ICJ’s President between 1967 and 1970.

Odría’s Personalistic Dictatorship

Odría imposed a personalistic dictatorship on the country and returned public policy to the familiar pattern of repression of the left and free-market orthodoxy. Indicative of the new regime’s hostility toward APRA, Haya de la Torre, after seeking political asylum in the Embassy of Colombia in Lima in 1949, was prevented by the government from leaving the country. He remained a virtual prisoner in the embassy until his release into exile in 1954. However, along with such repression Odría cleverly sought to undermine APRA’s popular support by establishing a dependent, paternalistic relationship with labour and the urban poor through a series of charity and social welfare measures.

At the same time, Odría’s renewed emphasis on export-led growth coincided with a period of rising prices on the world market for the country’s diverse commodities, engendered by the outbreak of the Korean War in 1950. Also, greater political stability brought increased national and foreign investment, particularly in the manufacturing sector. Indeed, this sector grew almost 8 percent annually between.

1950 and 1967, increasing from 14 to 20 percent of gross domestic product. Overall, the economy experienced a prolonged period of strong, export-led growth, amounting on average to 5 percent a year during the same.

Not all Peruvians, however, benefited from this period of sustained capitalist development, which tended to be regional and confined mainly to the more modernised coast. This uneven pattern of growth served to intensify the dualistic structure of the country by widening the historical gap between the “Sierra” and the coast. In the “Sierra”, the living standard of the bottom one-quarter of the population stagnated or fell during the twenty years after 1950. In fact, the “Sierra” had been losing ground economically to the modernising forces operative on the coast ever since the 1920s. With income distribution steadily worsening, the “Sierra” experienced a period of intense social mobilisation during the 1950s and 1960s.

Intensification of Rural-Urban Migration

This was manifested first in the intensification of rural- urban migration and then in a series of confrontations between peasants and landowners. The fundamental causes of these confrontations were numerous. Population growth, which had almost doubled nationally between 1900 and 1940 (3.7 million to 7 million), increased rapidly to 13.6 million by 1970. This turned the labour market from a state of chronic historical scarcity to one of abundant surplus. With arable land constant and locked into the system of “latifundios” (large “semi-feudalistic” estates), ownership-to-area ratios deteriorated sharply, increasing peasant pressures on the land.

Peru’s land-tenure system remained one of the most unequal in Latin America. In 1958 the country had a high coefficient of 0.88 on the Gini index, which measures land concentration on a scale of 0 to 1. Figures for the same year show that 2 percent of the country’s landowners controlled 69 percent of arable land. Conversely, 83 percent of landholders holding no more than 5 hectares controlled only 6 percent of arable land. Finally, the “Sierra”’s “terms of trade” (value exchange ratio) in agricultural foodstuffs steadily declined because of the state’s urban bias in food pricing policy, which kept farm prices artificially low.

Many peasants opted to migrate to the coast, where most of the economic and job growth was occurring. The population of metropolitan Lima, in particular, soared. While standing at slightly over 500,000 in 1940, it increased threefold to over 1.6 million in 1961 and nearly doubled again by 1981 to more than 4.1 million. The capital became increasingly ringed with squalid “barriadas” (shantytowns) of urban migrants, putting pressure on the liberal state, long accustomed to ignoring the funding of government services to the poor.

Peasant Mobilisation in the “sierra” and New Political Parties in Lima

Those peasants who chose to remain in the “Sierra” did not remain passive in the face of their declining circumstances but became increasingly organised and militant. A wave of strikes and land invasions swept over the Sierra during the 1950s and 1960s as “campesinos” demanded access to land. Tensions grew especially in the Convención and Lares region of the high jungle near Cusco, where Hugo Blanco, a Quechua-speaking Trotskyite and former student leader, mobilised peasants in a militant confrontation with local “gamonales.”

While economic stagnation prodded peasant mobilisation in the Sierra, economic growth along the coast produced other important social changes. The post-war period of industrialisation, urbanisation, and general economic growth created a new middle and professional class that altered the prevailing political panorama. These new middle sectors formed the social base for two new political parties – Popular Action (Acción Popular / AP) and the Christian Democratic Party (Partido Demócrata Cristiano / PDC) – that emerged in the 1950s and 1960s to challenge the oligarchy with a moderate, democratic reform program. Emphasising modernisation and development within a somewhat more activist state framework, they posed a new challenge to the old left, particularly APRA.

Haya de la Torre – Triumph and Defeat

For its part, APRA accelerated its rightward tendency. It entered into what many saw as an unholy alliance (dubbed the “convivencia,” or living together) with its old enemy, the oligarchy, by agreeing to support the candidacy of conservative Manuel Prado y Ugarteche in the 1956 elections, in return for legal recognition. As a result, many new voters became disillusioned with APRA and flocked to support the charismatic reformer Fernando Belaúnde Terry, the founder of the AP. Although Prado won, six years later the army intervened when its old enemy, Haya de la Torre (back from six years of exile), still managed, if barely, to defeat the upstart Belaúnde by less than one percentage point in the 1962 elections. Almost inevitably, the army took control, annulled the elections, and denied Haya de la Torre and Belaunde the opportunity of power for another year. A surprisingly reform-minded junta of the armed forces headed by General Ricardo Pérez Godoy held power for a year (1962-63) and then convoked new elections. This time Belaúnde, in alliance with the Christian Democrats, defeated Haya de la Torre and became president.

Fernando Belaúnde Terry – Developmentalist Optimism

Belaúnde’s government, riding the crest of the social and political discontent of the period, ushered in a period of reform at a time when United States president John F. Kennedy’s Alliance for Progress was also awakening widespread expectations for reform throughout Latin America. Belaúnde tried to diffuse the growing unrest in the highlands through a three-pronged approach: modest agrarian reform, colonisation projects in the high jungle or “montaña,” and the construction of the north-south Jungle Border Highway (the “carretera marginal de la selva” or “la marginal”), running the entire length of the country along the jungle fringe.

The basic thrust of the Agrarian Reform Law of 1964, which was substantially watered down by a conservative coalition in Congress between the APRA and the National Odriist Union (Unión Nacional Odriísta / UNO), was to open access to new lands and production opportunities, rather than dismantle the traditional “latifundio” system. However, this plan failed to quiet peasant discontent, which by 1965 helped fuel a Castroite guerrilla movement, the Movement of the Revolutionary Left (Movimiento de la Izquierda Revolucionaria / MIR), led by rebellious Apristas on the left who were unhappy with the party’s alliance with the country’s most conservative forces.

Growing Social Unrest

In this context of increasing mobilisation and radicalisation, Belaúnde lost his reformist zeal and called on the army to put down the guerrilla movement with force. Opting for a more technocratic orientation palatable to his urban middle class base, Belaúnde, an architect and urban planner by training, embarked on a large number of construction projects, including irrigation, transportation, and housing, while also investing heavily in education. Such initiatives were made possible, in part, by the economic boost provided by the dramatic expansion of the fishmeal industry. Aided by new technologies and the abundant fishing grounds off the coast, fishmeal production soared. By 1962 Peru became the leading fishing nation in the world, and fishmeal accounted for fully one-third of the country’s exports).

Belaúnde’s educational expansion dramatically increased the number of universities and graduates. But, however laudable, this policy tended over time to swell recruits for the growing number of left-wing parties, as economic opportunities diminished in the face of an end, in the late 1960s, of the long cycle of export- led economic expansion. Indeed, economic problems spelled trouble for Belaúnde as he approached the end of his term.

Faced with a growing balance-of-payments problem, he was forced to devalue the Peruvian currency (Sol) against the USD in 1967. He also seemed to many nationalists to capitulate to foreign capital in a final settlement in 1968 of a controversial and long-festering dispute with the International Petroleum Company (IPC) over the La Brea y Pariñas oil fields in northern Peru. With public discontent growing, the armed forces, led by General Juan Velasco Alvarado, overthrew the Belaúnde government on 03 October 1968 and proceeded to undertake an unexpected and unprecedented series of reforms.

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