Restless populist Alberto Fujimori dominates Peru. Here he talks to World Statesman about his achievements and his future plans

Public opinion surveys suggest that Peruvians are the most optimistic people in South America with regard to their country's progress. Why is this?

My explanation, which seems logical to me, is as follows. In a relatively short time there have been several very positive changes with regard to economic stabilisation and the pacification of the country, especially the latter, and this encourages optimism amongst Peruvians. Most people are constantly contrasting the situation in Peru before 1990 and that in 1996.

What is more, now, because of national reconstruction and the resulting climate of confidence, we have investment. Everywhere there are new buildings, new businesses, the urban landscape has changed and the rural environment is undergoing a significant transformation as a result of the construction of roads and bridges and the arrival of the telephone and other services. Peruvian optimism can be explained in the light of all this.

What are the key immediate economic and social challenges?

The first challenge is to maintain control of our economy in order to guarantee our continued growth, perhaps not as spectacular as heretofore, but certainly above the regional average. This means continuing to conduct economic policy with financial discipline whilst at the same time aiming to encourage production with a view to promoting healthy growth.

Another important challenge is to get a real market economy up and running once and for all, with economic agents respecting and conforming with the regulations.

And our social challenge is to deliver in the next five years the most we can in the way of education, roadworks, health and energy infrastructure to economically deprived areas in the countryside and in the cities. That is, to make all possible progress with social development and the fight against poverty.

You have faced criticism about the dissolving of Congress and your ruling without it. How do you respond to this criticism?

This criticism is rather untimely and, what is more, Peru's own political development provides the answer. A period of emergency measures was required in order to defeat terrorism and save Peruvian democracy. That is the great historical justification. Some may say that the 5th of April and the emergency measures, which by the way were not extreme, were unnecessary. However, for ten years, from 1980 to 1990, those critics did nothing, with the result that terrorism in 1990, when my government came to power, was a very strong presence and a threat to civilised co-existence.

Such criticism, apart from being opportunistic, lacks authority. What is more, after the 5th of April we have had the Constituent Assembly and three absolutely faultless elections, with international observers who certified to the integrity of the democratic process. These elections had only one defect: my critics and opponents did not win. That was not my fault. The people made their choice.

Do you think that you have done enough to change the social and economic conditions which led to the emergence of the violent Left in the 1970s?

I always call myself a pragmatist and a realist in this sense, and I cannot say for certain that enough has been done, only that we have done our best to reverse that situation. The social and economic conditions which provide the background for terrorist violence have been building up for decades; the symptoms of under-development, backwardness and poverty are acute in various parts of our country, but - as I am one of the presidents who has travelled most in the interior of Peru and who knows it well - I can assure you that we are now working extremely hard and investing every dollar of our resources in the most rational and effective way.

Five years' work in hundreds of Andean communities, amongst the most isolated and backward, and work in the marginal areas of Lima and other cities, which I always invite foreign journalists to find out about for themselves, is the best proof of what I am saying. I like to respond with actual facts rather than mere words.

How do you assess your current relationship with the army?

My relationship with the army has never been other than normal: I am the Supreme Head of the armed forces in Peru. I can indeed say that the directions given to the armed forces to work with the people in the eradication of poverty are being fulfilled to the letter. The Peruvian army not only handles weapons and tanks, but engineering batallions and bulldozers; they open the way through for roads and take part in development work just like other military organisations.

How do you see your current relationship with Ecuador?

Good, in the hopeful context of the peace talks which stemmed from the Itamaraty Agreement and which have a broader context in the Rio de Janeiro Convention.

As you know, in January 1995, Ecuadorian troops invaded Peruvian territory in the Alto Cenepa area. With the support of the governments of Brazil, Chile, Argentina and the US, in their capacity as guarantors of the 1942 Rio de Janeiro Convention, the Itamaraty Peace Declaration was signed on 17th February 1995.

The guarantor countries attached to the said Declaration another document reaffirming that the legal framework for resolving disagreements between Peru and Ecuador was the Rio Convention. From January this year we have begun holding diplomatic talks, firstly in Lima and then in Quito, where an agreement was reached. As a result, in March last year, after signing this agreement in Quito, Ecuador and Peru submitted their respective 'lists of the points of impasse'.

For more than 40 years, Ecuador has been putting forward various 'theses' with regard to their political aspirations. It is satisfying to see that these matters have been finally dealt with once and for all. This was the result of the valuable support of the guarantor countries, who are convinced of the need to study in depth the bilateral process established in the Rio Convention for the resolution of disagreements.

Therefore, there does appear to be a real possibility of managing to overcome the existing impasses, which it is thought will take some time. The Peruvian government will do all it can to achieve this, encouraging the government of Ecuador to pursue the same objective.

Is there any future for the proposed Andean Community?

Indeed, there is a very promising future for the Andean Community. It is necessary to understand that in these times of globalisation and liberation of the international economy, countries such as those which make up the Andean Community - Peru, Bolivia, Colombia, Ecuador and Venezuela - must act in a concerted way if they are to participate effectively both on the level of economic-commercial exchange and in the promotion of social and political integration, which is becoming increasingly necessary.

In order to perfect this co-ordination of aims and interests we were able to sign not long ago, in Trujillo in northern Peru, the Modification to the Cartagena Agreement, in which this Andean Community is established. It has been our wish to set aside for the integration of the Andean sub-regions the necessary instruments for economic progress, at the same time creating new links to integrate our peoples, over and above the purely commercial ones, connecting them with all the other sectors of importance for our respective countries. In particular, we understand the idea of community to mean the participation of people, together with the various Andean organisations and institutions, in the achievement of a common objective.

This qualitative advance in the ideal of sub-regional integration will even include a new perception of the necessary community democracy, providing for the establishment of direct universal suffrage for choosing representatives to the Andean Parliament, in five years' time at the latest.

For Peruvians, it is particularly significant that this new Andean prospect has been achieved in our country, as it demonstrates unequivocably that we are on the side of integration, and that in order to achieve this we will continue to overcome constructively the differences which still exist between our different perceptions of the model of integration.

You plan to bring in US$1,000 million through privatisation in 1996. Is the programme on course to achieve this?

Privatisation is one of the key reforms for transforming Peru into a market economy based on the private sector. Since my re-election as president we have been accelerating privatisation. Companies in key sectors are being privatised in the coming months. We hope to start privatising the state oil company PETROPERU, the mining complex CENTROMIN, and the energy generating system ELECTROPERU. All these concerns are privatised by units of production. By 1998 most of the state-owned companies will be privatised. Income from privatisation in 1996 will be approximately US$1,500 million, including the sale of the state's minority share in the telephone and electrical distribution companies.

What are the key sectors for foreign investment?

Peru has become a magnet for foreign investors. Foreign investment has increased substantially from US$1,300 million in 1990 to US$5,400 million in 1995. What is more, two-thirds of this is direct long-term foreign investment. In spite of the considerable increase in foreign investment already, there are still enormous opportunities awaiting foreign investors.

Peru has a huge potential in agriculture. Peru has a natural 'greenhouse' climate on the central coast, an area which is very close to the sea, with no rain or pests, and which can be cultivated all year round. Peruvian asparagus and mangos are already well known throughout the world for their superior quality.

Peru is one of the main producers of silver, lead, copper and gold. The privatisation of the state oil company will increase investment in oil exploration and exploitation. Peru offers tourists a whole range of climates and eco-systems and an impressive array of landscapes and natural sites. Peruvian culture and its historic heritage, with its many archeological sites, also make it a great tourist attraction.

What measures have you adopted to encourage investment?

It is well known that a necessary condition for investment to flourish is a stable macro-economic environment. Peru has achieved this stable macro-economic environment, with low inflation, decreasing interest rates and sound progress towards high and sustained growth. Peru has the most favorable laws for private investment in Latin America: a completely open capital account, no restrictions on remittances, no tax on dividends, a flexible labour market, tax stability agreements and a system of income tax on companies which is in line with international standards.

Finally, are you optimistic about the future of Peru?

Wholly optimistic. Peru is changing; its people are hard working and they have a new, progressive mentality. This is the best that can happen to a country

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©Kensington Publications 1996