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PERU: Embattled Toledo Moving Away From Free-Market Ideas
July 24, 2002
Summary
Less than a year after Alejandro Toledo was elected president of Peru, his popularity has plummeted due to his erratic governing style and growing perceptions that he is a poor manager who can be manipulated with ease. Toledo's critics, including members of the ruling party, are beginning to speculate openly that the best outcome for Peru might be to hold new elections.
Analysis
Only a year into his five-year term, Peruvian President Alejandro Toledo's popularity has plunged from 59 percent approval in August 2001 to only 15 percent in June 2002, while all of his pro-free-market ministers resigned last week. Privatization chief Ricardo Vega Llona also resigned last weekend after claiming that Toledo lacks the "vision and strategy" needed to address the country's critical unemployment and poverty crises, according to news reports from Lima.
The collapse of Toledo's popularity -- and the growing instability of his government -- likely are due to a combination of factors, including his lack of management experience, perceived inability to make tough decisions, unrealistically high voter expectations and even disdain for his indigenous roots. Moreover, instead of confronting his mounting difficulties with sound policies and a more decisive and coherent political discourse, Toledo is bowing to the pressures of his critics and moving away from investor-friendly free-market policies.
For instance, Toledo suspended the government's plans to sell off state-owned enterprises after violent protests in June blocked the privatization of two electrical power companies in the southern Arequipa region. He also restructured his Cabinet to include eight new ministers more to the liking of the ruling leftist Possible Peru Party and the main political opposition Peruvian Aprista Party, led by former President Alan Garcia.
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Dan
Peru: Embattled Toledo Moving Away From Free-Market Ideas . . .