History of Peru: Democratic Restoration to the Present Day

During the 1980s, cultivation of illicit coca was established in large areas on the eastern Andean slope. Rural insurgent movements, like the Shining Path (Sendero Luminoso, SL) and the Tupac Amaru Revolutionary Movement (MRTA) increased during this time and derived significant financial support from alliances with the narcotraffickers.

In the May 1980 elections, President Fernando Belaúnde Terry was returned to office by a strong plurality. One of his first actions as President was the return of several newspapers to their respective owners. In this way, freedom of speech once again played an important part in Peruvian politics. Gradually, he also attempted to undo some of the most radical effects of the Agrarian Reform initiated by Velasco, and reversed the independent stance that the Military Government of Velasco had with the United States.

Belaúnde's second term was also marked with the unconditional support for Argentinian forces during the Falklands War with Britain in 1982. Belaúnde declared that "Peru was ready to support Argentina with all the resources it needed." This included a number of fighter planes and possibly personnel from the Peruvian Air Force, as well as ships, and medical teams. Belaunde's government proposed a peace settlement between the two countries, but the British rejected it and launched an attack on an obsolete Argentinian carrier transporting troops back to the mainland, away from the Malvinas (Falkland) Islands, and outside of the British-designated exclusion zone, killing hundreds of conscripts. In response to Chile's support of Britain, Belaúnde called for Latin American unity.

The nagging economic problems left over from the previous military government persisted, worsened by an occurrence of the "El Niño" weather phenomenon in 1982–83, which caused widespread flooding in some parts of the country, severe droughts in others, and decimated the schools of ocean fish that are one of the country's major resources. After a promising beginning, Belaúnde's popularity eroded under the stress of inflation, economic hardship, and terrorism.

In 1985, the American Popular Revolutionary Alliance (APRA) won the presidential election, bringing Alan García to office. The transfer of the presidency from Belaúnde to García on July 28, 1985, was Peru's first exchange of power from one democratically elected leader to another in 40 years.

With a parliamentary majority for the first time in APRA's history, Alan García started his administration with hopes for a better future. However, economic mismanagement led to hyperinflation from 1988 to 1990. García's term in office was marked by bouts of hyperinflation, which reached 7,649% in 1990 and had a cumulative total of 2,200,200% between July 1985 and July 1990, thereby profoundly destabilizing the Peruvian economy.

Owing to such chronic inflation, the Peruvian currency, the sol, was replaced by the Inti in mid-1985, which itself was replaced the nuevo sol ("new sol") in July 1991, at which time the new sol had a cumulative value of one billion old soles. During his administration, the per capita annual income of Peruvians fell to $720 (below the level of 1960) and Peru's Gross Domestic Product dropped 20%. By the end of his term, national reserves were a negative $900 million.

The economic turbulence of the time acerbated social tensions in Peru and partly contributed to the rise of the violent rebel movement Shining Path. The García administration unsuccessfully sought a military solution to the growing terrorism, committing human rights violations which are still under investigation.

Concerned about the economy, the increasing terrorist threat from Sendero Luminoso, and allegations of official corruption, voters chose a relatively unknown mathematician-turned-politician, Alberto Fujimori, as president in 1990. Fujimori implemented drastic measures that caused inflation to drop from 7,650% in 1990 to 139% in 1991. Faced with opposition to his reform efforts, Fujimori dissolved Congress in the auto-golpe of April 5, 1992. He then revised the constitution; called new congressional elections; and implemented substantial economic reform, including privatization of numerous state-owned companies, creation of an investment-friendly climate, and sound management of the economy.

Fujimori's administration was dogged by several insurgent groups, most notably Sendero Luminoso (Shining Path), which carried on a terrorist campaign in the countryside throughout the 1980s and 1990s. He cracked down on the insurgents and was successful in largely quelling them by the late 1990s, but the fight was marred by atrocities committed by the both Peruvian security forces and the insurgents: the Barrios Altos massacre and La Cantuta massacre by Government paramilitary groups, and the bombings of Tarata and Frecuencia Latina by Shining Path. Those examples subsequently came to be seen as symbols of the human rights violations committed during the last years of violence. With the capture of Abimael Guzmán (known as President Gonzálo) on September 1992, Shining Path receive a severe blow which practically destroyed the organization.

In December 1996, a group of insurgents belonging to Tupac Amaru took over the Japanese embassy in Lima, taking 72 people hostage. Military commandos stormed the embassy compound in May 1997, which resulted on the death of all 15 hostage takers, one hostage, and 2 commandos. It later emerged, however, that at least eight of the rebels may had been killed after surrendering, following the orders of Fujimori's security chief Vladimiro Montesinos.

Fujimori's constitutionally questionable decision to seek a third term and subsequent tainted victory in June 2000 brought political and economic turmoil. A bribery scandal that broke just weeks after he took office in July forced Fujimori to call new elections in which he would not run. The scandal involved Vladimiro Montesinos, who was shown in a video broadcast on TV bribing a politician to change sides. Montesinos subsequently emerged as the center a vast web of illegal activities, including embezzlement, graft, drug trafficking, as well as human rights violations committed during the war against Sendero Luminoso.

On November 2000, Fujimori resigned from office and self-exiled to Japan, avoiding prosecution for human rights violations and corruption charges by the new Peruvian authorities. His main intelligence chief, Vladimiro Montesinos, fled Peru shortly afterwards. Authorities in Venezuela arrested him in Caracas in June 2001 and turned him over to Peruvian authorities; he is now imprisoned and charged with acts of corruption and human rights violations committed during Fujimori's administration.

A caretaker government presided over by Valentín Paniagua took on the responsibility of conducting the new presidential and congressional elections. The elections were held in April 2001; observers considered them to be free and fair. Alejandro Toledo (who led the opposition against Fujimori) defeated former President Alan García.

The new elected government, took office July 28, 2001. The Toledo Administration has manage to restore some degree of democracy to Peru following the authoritarianism and corruption that plagued both the Fujimori and García governments. Innocents wrongfully tried by military courts during the war against terrorism (1980-2000) are now allowed to receive new trials in civilian courts. Trials of those accused of corruption and collusion in the corrupt dealings of the Fujimori years are underway.

On August 28, 2003, the Truth and Reconciliation Commission (CVR), which had been charged with studying the roots of the violence of the 1980–2000 period, presented its formal report to the President. The Government of Peru is now weighing its response to the CVR's recommendations that human rights violators be tried and that the government take measures to, in some fashion, indemnify parts of the population that suffered during those years, chiefly rural Peruvians of ethnically Indian descent.

President Toledo has been forced to made a number of cabinet changes, mostly in response to personal scandals. Toledo's governing coalition has a plurality in Congress and must negotiate on an ad hoc basis with other parties to form majorities on legislative proposals. Toledo's popularity in the polls has suffered throughout the past year, due in part to family scandals and in part to dissatisfaction amongst workers with their share of benefits from Peru's macroeconomic success. After strikes by teachers and agricultural producers led to nationwide road blockages in May 2003, Toledo declared a state of emergency that suspended some civil liberties and gave the military power to enforce order in 12 regions. The state of emergency has since been reduced to only the few areas where Shining Path was operating.

Potential candidates and their parties are already beginning to maneuver with an eye on the 2006 elections.

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