UPDATE OF PERU HANDBOOK

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00891A001000010001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 45
• Document Creation Date: December 9, 2016
• Document Release Date: April 16, 2001
• Sequence Number: 1
• Publication Date: November 1, 1971
• Content Type: REPORT

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100
Cr
P e Ca 1~2 0~ -r
No. 0571
November 1971
Update of Peru Handbook
Please replace the June 1970 edition of the Peru Handbook with the
attached. Please retain the cover, map and dividers.
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Page
Location and area . . . . . . . . . . . . . . . . . . . . . 1
Climate . . . . . . . . . . . . . . . . . . . . . . . . . 1
Topography . . . . . . . . . . . . . . . . . . . . . . . 1
Natural resources . . . . . . . . . . . . . . . . . . . . . 2
Human resources . . . . . . . . . . . . . . . . . . . . . 2
Growth rates and trends . . . . . . . . . . . . . . . . . . 1
Main sectors-trends in industry and agriculture . . . . . . . . 1
Transportation and communications . . . . . . . . . . . . . 2
Government economic policy and financial system . . . . . . . 4
Foreign trade . . . . . . . . . . . . . . . . . . . . . . . 6
Balance of payments . . . . . . . . . . . . . . . . . . . . 7
Historical setting . . . . . . . . . . . . . . . . . . . . . 1
Structure and functioning of government . . . . . . . . . . . 4
Political dynamics-parties and electoral system . . . . . . . . 6
Security systems . . . . . . . . . . . . . . . . . . . . 10
The Communist party and front groups . . . . . . . . . . . . 1
Other far left parties . . . . . . . . . . . . . . . . . . . . 2
Insurgency movements . . . . . . . . . . . . . . . . . . . 3
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Manpower . . . . . . . . . . . . . . . . . . . . . . . . 3
Military budget . . . . . . . . . . . . . . . . . . . . . . 4
Logistics . . . . . . . . . . . . . . . . . . . . . . . . . 4
VII. FOREIGN RELATIONS
VIII. US INTERESTS
US investment and economic and technical assistance . . . . . . 1
IX. CHRONOLOGY AND TABULAR DATA
MAP
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INTRODUCTION
Since independence was declared in 1821, Peruvian history has been
marked by turbulence and civil strife. There is a tradition of arbitrary and
frequently unconstitutional government, and fewer than one third of the
administrations have had a constitutional base. In the past decade, there have
been two military overthrows and four different governments. The social
structure, one of the most rigid in Latin America, is now entering a period of
change under a military government that is dedicated to creating a
thorough-going social revolution.
Pressure for political and social change and for amelioration of the
conditions of the Indian communities, which make up 45% of the popula-
tion, has been mounting for more than a generation and was one of the
many factors behind the military coup in 1968. This pressure has stemmed
from the growth of the middle class, the rising importance of organized
labor, the increasing participation of mestizos (persons of mixed Indian and
white parentage) in political activity, the extensive migration of Indians from
the highlands to coastal cities, and the rapid increase in population. A
resolution of the resulting political tensions is not likely to be accomplished
for many years.
The military government led by General Juan Velasco Alvarado, which
took over on 3 October 1968, began as a revolutionary one in the sense that
it sought, or professed to seek, profound and lasting changes in Peru's
political, economic, and social institutions. It is convinced that Peru's socio-
economic development cannot be ensured merely by modifying existing
institutions or machinery, but only by restructuring all phases of Peruvian
society. While much of the program stems from the officers' perceptions of
the extreme inequities of Peruvian life, its method of operation reflects a
strong belief in the superiority of the military institution as a planner,
organizer, and executive.
The government has tried hard to develop a popular base of support on
a broad range of policies. It has used nationalistic appeals to unite Peruvians,
first against a foreign adversary (the US, and particularly US economic
"exploitation"), and then against certain domestic economic interests. Thus
far, this approach and its populist measures have been successful in building
support. President Velasco has come to realize, however, that highly emo-
tional nationalistic appeals discourage foreign and domestic investors on
whom the regime depends for resources to implement its programs. Thus,
Peru iii
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since the expropriation of the International Petroleum Company properties
and the announcement in mid-1969 of major agrarian reform and water
rights measures, the invocation of nationalism has been confined to fewer
and fewer calls for patriotism and support for Peru's development. The
government's growing pragmatism does not represent a dilution of the
regime's commitment to basic reform, but the process of compromising on
programs and on pacing has already begun. To the extent that this dimin-
ishes the friction between the government and its potential opposition, the
pragmatic approach may come to have increasing appeal. At the same time,
the regime appears to believe that its success will depend in large part on its
ability to appear strong and resolute.
As part of the government's campaign to assert its "independence," it
has increased its contacts with Communist countries and has announced its
intention of forming diplomatic ties with Communist China. The admin-
istration has opened commercial relations with Communist China and Cuba
and has indicated that it thinks the question of Cuba's relationship to the
OAS should be re-examined.
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Peru, located on the west coast of South America immediately south of
the Equator, is the third largest country in South America and the fourth
largest in Latin America. Peru is bordered on the north by Ecuador and
Colombia, to the east by Brazil and Bolivia, and by Chile on the south. The
country has approximately 1,500 miles of coastline along the Pacific Ocean
and claims territorial jurisdiction extending 200 nautical miles offshore. Its
maximum east-west dimension is about 800 miles. Its area, 496,000 square
miles, is about one-sixth the size of the United States (less Alaska and
Hawaii).
The climate of Peru is extremely diversified. The coastal area is rela-
tively cool and arid, the interior plain is hot and humid, and the highlands
have a wide range of climatic characteristics. The coastal area is extremely
dry, with annual amounts of precipitation mostly below five inches; in the
Andes, annual precipitation amounts range from less than five inches to
more than 140 inches on the eastern slopes in central Peru. Many locations
average less than one inch. The higher peaks are snow covered all year. Most
of the precipitation falls in December through March; May through Sep-
tember are the driest months. Area temperature variations are pronounced,
although seasonal variations are small. The interior plains are the hottest.
The coast is significantly cooler, and the lowest temperatures occur in the
mountains.
Topography
Peru has four major terrain features: an arid coastal plain in the
northwest; a northwest-southeast highland area, which is part of the Andes
mountain chain; a broad, interior plain in the east; and an elevated basin, the
Altiplano, in the southeast. The highland area and the interior plain are the
most extensive and form over 90% of the country. The arid coastal plain is
generally flat to rolling and contains small, scattered groups of hills. The
highlands (or sierra) consist mainly of high, rugged mountains and hills, a
narrow discontinuous coastal plain, and widely separated basins and valleys.
Elevations range from sea level to 22,205 feet; more than one-third of the
highlands is over 12,000 feet. The interior plain (La Montana), a part of the
Amazon basin, consists of densely forested, predominantly flat to rolling
Peru Nov 71
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plains and a few hill areas. The Altiplano, a continuation of the elevated
basin of Bolivia, consists of flat to rolling plains located along the shores of
Lake Titicaca. Elevations range from 12,260 feet at Lake Titicaca to about
14,000 feet in the hills.
Although Peru is a relatively poor and underdeveloped country, it is
endowed with extensive forest reserves and mineral deposits, large fish
resources (especially anchovy used for fishmeal), and the potential for
considerable hydroelectric power generation. Nearly 98% of Peru's large
timber resources are located in the interior plain. The forests, which are
mainly government owned, contain good-quality tropical and subtropical
evergreen broadleafs and a few species of conifers. The marketable stand is
estimated at 4.2 billion cubic meters, but only a limited area is accessible for
commercial extraction because of poor to nonexistent transportation sys-
tems.
Peru is the second largest producer of copper, lead, zinc, and silver in
Latin America. Mining is one of the most highly developed sectors of the
economy and is mainly export oriented. Peru also has substantial reserves of
petroleum and coal. Proved reserves of crude oil, estimated at 600 million
barrels, are located mainly along the northern coast and the central part of
the interior plain. Both bituminous and anthracite coal are found in the
sierra on the central portion of the western slopes of the Andes. Reserves are
estimated at about 400 million tons.
The population in July 1971, as estimated by the US Census Bureau,
was 14,013,000 (excluding the jungle Indians). The present average annual
rate of increase is 3.1%, slightly higher than the Latin American average. The
US Census Bureau estimates that by 1981 Peru's population may increase to
a range of 18.3 to 19.8 million. The population density of about 29 in-
habitants per square mile is considerably less than half the US density, but is
close to the South American average.
In both racial composition and way of life the country is pre-
dominantly Indian. An estimate of the ethnic breakdown in 1959 listed 46%
of the population as Indian, 38% as mestizos (mixed white-Indian), 15% as
white, and 1% Asians, Negroes, and mulattoes. The whites and mestizos live
primarily in the coastal lowlands, the northern third of the Andean high-
lands, and the larger urban areas. The Indians are heavily concentrated in the
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southern two thirds of the sierra in the less urbanized and more remote
communities. The Asians and Negroes are along the coast. The whites hold a
dominant position far out of proportion to their numbers, and the majority
are concentrated on the coast, particularly around Lima and in a few of the
larger cities. The mestizos dominate the social scene in the sierra and also act
as traders and entrepreneurs among the rural sierra Indians.
Two major shifts in the population are occurring; there is a growing
flood of migration to the coast from the highlands and a flow from rural to
urban areas. Many inhabitants of the sierra, especially the southern highlands
where subsistence farming and extremely low income levels and living
standards prevail, are moving to the coast and principal cities in search of
better employment opportunities and living conditions.
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During 1951-1966, Peru's gross domestic product (GDP) grew at an
average annual rate of 5.7%-one of the highest in Latin America. Beginning
in 1967, however, the rate declined, falling to a low of less than 2% in 1969.
In 1970 there was a recovery, with the rate of growth rebounding to about
6%. Per capita GDP is about $500, below the average for Latin American.
Peru's economic growth has been paced by the expansion of exports,
particularly fishmeal, sugar, cotton, and metals. During the 1960s, the
fishmeal industry grew rapidly, becoming the largest in the world. The
production of export crops, except sugar and coffee, and of metals stag-
nated, however, because direct foreign investment remained low, with actual
disinvestment occurring in 1968, 1969 and 1970. Economic recovery in
1970 resulted largely from excellent performance in the fishing and agricul-
tural sectors, sugar and coffee, and increased public investment in irrigation,
transport infrastructure, school construction and water and sewage. In 1970
total investment amounted to about 16% of GDP.
Foreign investment has fallen off since the military came to power
because investors are wary of the intentions of Velasco's "revolutionary"
government. Increasing government pressure on foreign investors to develop
their long-held mineral concessions resulted during 1970 in the start of work
on the $355-million Cuajone copper project and the $12-million Madrigal
mine. In addition, work continued on a $25-million expansion program at
the Marcona iron mine, the Belco Petroleum Company initiated a
$20-million investment program, and Occidental Petroleum Company signed
a contract to invest $59-million in exploration for oil along the Peru-Ecuador
border. Despite these developments, there was a net outflow on total direct
investment of some $15 million, as in 1969. Moreover, the book value of
direct foreign investment fell sharply because of the negotiated nationaliza-
tion of foreign-owned equity in domestic banks and an International Tele-
phone and Telegraph Company subsidiary and the sale of several US-owned
properties to Peruvians.
Main sectors-trends in industry and agriculture
Peru's economy is essentially agrarian. Almost half of the labor force is
engaged in crop farming and livestock raising, but agriculture contributes
only about 15% of GDP and 16% of export earnings. Sugar, cotton and
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coffee are the principal export crops. Because of the hostile climate and
terrain, the area of usable agricultural land is small, Much of the agricultural
output is produced on subsistence farms isolated from urban areas. Partly for
this reason, the marketing of crops and livestock products has lagged behind
the growth of the urban population, and Peru is becoming increasingly
dependent on imported foodstuffs to satisfy urban demand.
Agricultural output has grown slowly since 1960, with an average
annual increase of 2.5% compared with the 3.1% growth rate of population.
The expansion of agricultural output is restrained mainly by the high cost of
placing more land under cultivation, which requires the construction of
irrigation facilities and access roads to remote lands.
Peru's livestock industry is poorly developed. Most livestock are raised
in the sierra on poor natural pastureland under low standards of manage-
ment. Sheep are far more numerous than cattle, and goats outnumber hogs.
Livestock numbers have shown little growth since 1960, with the exception
of hogs and poultry. Since output is insufficient to meet consumption needs,
large amounts of meat, fats, and dairy products are imported.
Manufacturing has been the most dynamic sector of the economy
during the 1960s. Industrial production more than doubled between 1960
and 1970 and the contribution of the sector to GDP increased from 16% to
almost 20%. The industrial sector has also been able to absorb an increasing
proportion of the labor force, providing employment to 15% of the
economically active population in 1970, against 13.5% in 1961. The sector
consists principally of agricultural industries, fish and mineral processing,
and the assembly of machinery and durable consumer goods from imported
components.
Industrial production expanded at an annual average rate of about 9%
during the first half of the 1960s. Although the average annual rate of
growth for the 1965-1969 period was almost 6%, the rate of increase each
year became smaller, until in 1969 industrial output rose by only 2.5%. The
low rate for 1969 was due to a decline of more than 16% in fishmeal
production. Industrial production in 1970 appears to have made a sub-
stantial recovery led by a strong gain in the fishmeal industry.
Transportation and communications
The transportation and communications systems are sparse and of low
quality. The best facilities are concentrated in the narrow coastal plain and
on the western slopes of the Andes. The major through transportation route,
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the Pan American Highway, follows the coastal plain. East of the Andes, the
Amazon and its tributaries are virtually the only means of surface transporta-
tion. The Amazon waterway system and the transportation network west of
the Andes are linked by a single road, and at times it has been necessary to
transport bulky items from the west coast to eastern Peru by ship via the
Panama Canal and the Amazon.
In general, highways are the basic form of transportation in the west.
Forming the backbone of the network are three arterial routes, chief of
which is the Pan American Highway that extends from the Chilean border to
the Ecuadorean border. In the north this highway branches to provide two
connections with Ecuador, and in the south another branch of the highway
leads to the Bolivian border. The second arterial route, the Central Trans-
Andean Highway, extends generally northeast from the coastal port of
Callao to the river port of Pucallpa; and the third, running generally parallel
to the coastal route, connects at Puno with the Pan American Highway
branch to Bolivia, and at La Oroya with the Callao-Pucallpa route. Highways
provide international connections with three of five neighboring countries.
There are two connections with Ecuador, one with Chile, and one with
Bolivia. There are no highway connections with Colombia or Brazil.
Inland waterway transport is the only practicable means of surface
transportation in most of eastern Peru. Major inland waterways comprise the
extensive Amazon system and, in the southeast, Lake Titicaca. The Amazon
system includes all of the important rivers east of the Andes. Iquitos, the
Amazon terminus of shipping from the Atlantic Ocean, is the focal point for
the river traffic and the chief distribution center for eastern Peru. The
Amazon system provides 5,400 miles of navigable waterways with depths
adequate for large river craft. The most important streams of the system are
the Amazon and its confluents, the Rio Maranon and the Rio Ucayali. The
Rio Putumayo rises in the Colombian Andes and flows along the Colombia-
Peru border for 738 miles before joining the Amazon in Brazil. It is navigable
perennially by steamers of 40-ton capacity and provides access to Ecuador.
The Rio Napo rises in Ecuador and is about 600 miles long, of which 268
miles lie within or border Peru. The river is perennially navigable by launches
of three to four foot draft. Lake Titicaca is the highest body of navigable
water in the world. With steamer service over a 130-mile course between
railheads at Puno and Guaqui, Bolivia, the lake provides an international
waterway link in the railroad access route from the Peruvian Pacific port of
Matarani to La Paz, Bolivia.
Peru, with about 2,230 route miles, has the sixth largest rail system in
South America. The most important railroads are the 1,080 miles of stand-
ard-gage lines owned by the Peruvian Corporation, the largest single owner of
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railroads in the country. Over-all, these lines-the 380-mile line between
Callao, Lima, La Oroya and Huancayo, and the 700-mile link between
Arequipa, Juliaca, Cuzco, and Puno-are in the best condition and carry
most of the traffic.
Five scheduled airlines operate in Peru, all of them privately owned
except for the Commercial Air Transport Service (SATCO), which is the
commercial arm of the Peruvian Air Force. In addition, there are about ten
nonscheduled operators and 15 miscellaneous air-work companies. The best
airfields are evenly distributed along the coast and the Andes region; how-
ever, the secondary airfields are more scattered in the Andes region. The
south-central jungle areas of the eastern lowlands have many simple airstrips
along the rivers.
Peru has one principal port-Callao. Secondary ports include Chimbote,
Matarani, San Juan, and Talara. All are on the Pacific coast except for
Iquitos, which is on the Amazon River. Most of the coastal ports have open
roadsteads and generally unprotected harbors.
Merchant shipping is important to Peru in providing the major element
of transport for foreign trade, for local distribution along the 1,500 miles of
coast, and for linking the nation, via the Amazon River port of Iquitos, with
the Atlantic coast ports. The merchant fleet has accounted for about 5% of
the total annual volume of foreign trade, although by 1970 the government
was taking measures to assure that a larger percentage of such trade is carried
by Peruvian ships. By law, the coastal trade is carried exclusively in Peruvian
ships, which compete with coastwise trucking for some types of cargoes.
The distribution of telecommunication facilities is uneven. A moderate
concentration of wire and radio-relay facilities has developed along the coast;
only in the southern third of the country does telephone service extend into
the mountainous interior. The easternmost third of Peru, largely Amazonian
jungle, is served by scattered high frequency radiocommunication stations.
Lima serves as the functional control center for most international services
and as the major switching center for domestic traffic. The domestic system
provides only minimum service to the government and the public. Major
programs to improve local and interurban telecommunications have failed to
progress fast enough to satisfy growing demands for suitable service. Interna-
tional service always has been superior.
Government economic policy and financial system
The military under General Juan Velasco seized power during a period
of severe economic difficulties. The economy had grown at a relatively fast
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pace during the early 1960s, but rapidly rising prices, growing budget
deficits, and increased problems with the balance of payments caused a loss
of business confidence and a flight of capital. A devaluation in September
1967 was not followed by the necessary stabilization measures until July
1968, when President Belaunde acted under special decree powers. By
September 1968, Belaunde's strict austerity program seemed to be bringing
the inflation under control, but the confidence of investors remained low
because of widespread doubts that the President could continue the program
after his decree powers expired.
President Velasco's finance ministers at first continued and strength-
ened Belaunde's program. Strict economic measures and energetic tax col-
lection enabled the government to reduce substantially the 1968 budget
deficit. The austerity program also increased unemployment in the nonagri-
cultural sectors, however, and imports were restricted because of government
policy.
After two years of austerity, budget policy became expansionary during
1970. Investment expenditures increased by 39% while current expenditures
rose about 12%. Because revenues increased only 11%, the budget deficit
widened considerably, although it remained much smaller than in 1966-68.
Despite the lack of new foreign loans to finance the budget deficit, little
recourse to inflationary bank credit was necessary. The forced repatriation
of Peruvian bank deposits abroad greatly increased domestic liquidity and
allowed the government to place about $80 million in domestic bonds,
covering almost the entire deficit.
The Velasco government has taken several steps to increase government
ownership of production facilities. With the expropriation of the properties
of the International Petroleum Company, a large share of petroleum produc-
tion has come under government ownership. The nationalization of a
number of large commercial farms under the agrarian reform program has
greatly expanded government ownership in agriculture, at least until the
farms are redistributed to cooperatives and landless peasants.
In April 1970 the government unveiled new legislation intended to give
the Peruvian state broad new powers in areas hitherto the preserves of
private (largely foreign) investors. The new mining law establishes, among
other things, that all marketing of minerals produced in Peru will be
performed by the state, which will also establish sale prices. A new Industrial
Law states that foreign investors will be guaranteed the recovery of their
capital investment plus a "reasonable" profit within a fixed period of years.
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After that period, the enterprises are to come under Peruvian private, state,
or mixed control and ownership.
Peru's banking system consists of the Central Reserve Bank of Peru, the
National Bank (the depository for central government funds), several govern=
ment-owned investment and savings banks, a government-owned mortgage
bank, private commercial banks, and private savings and loan associations.
The Central Reserve bank, which is responsible for the formulation and
implementation of monetary policy, has the power to regulate interest rates,
set reserve requirements, determine rediscount rates, issue coinage and notes,
and conduct open-market operations. It also is responsible for carrying out
foreign exchange policy. The military government has worked out a program
of negotiated nationalization for the foreign-owned equity in the banking
system.
Foreign trade
The Peruvian economy is highly dependent on foreign trade. During the
past decade, exports have averaged about 20% and imports about 22% of
GDP. Imports provide most of Peru's capital goods and a significant share of
its industrial materials and food. Minerals and metals make up almost half of
the total value of Peru's exports, fishmeal and other fish products 33%, and
agricultural products 16%. A few manufactured items are exported.
Between 1960 and 1967, imports increased by almost 130%. In 1968,
however, imports declined sharply as a result of the 1967 devaluation,
tightened import restrictions, a slowdown in investment, and a drawing
down of inventories. Although the level of total imports has fluctuated
widely in recent years, little change has occurred in their commodity
composition. The largest was an increase in imports of raw and intermediate
materials from 25% of total imports in 1966 to 34% in 1970. Capital goods
have continued to make up about one third of imports.
Although the United States remains Peru's single most important
trading partner, the US share has been gradually declining over the past
decade. In 1969 the US purchased 35% of Peru's exports and supplied 31%
of its imports. Trade with Western Europe accounted for about one third of
both exports and imports. Sales to Japan in 1969 accounted for about 16%
of total exports; imports represented only 7% of the total. Trade with
Communist countries represented only 2% of imports and 4% of exports in
1969. Exports to these countries, mostly Poland, East Germany, and
Hungary, consist almost entirely of fishmeal. Peru's only important import
from the Communist area is Chinese rice.
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Peru is a member of the General Agreement on Tariffs and Trade
(GATT) and was one of the original signatories of the Treaty of Montevideo
which established the Latin American Free Trade Association (LAFTA).
Peru has also participated with Chile, Colombia, Ecuador, and Bolivia in the
formation of a regional trade association, and on 23 June 1967 signed an
agreement with these countries establishing the Andean Development
Corporation.
Peru faces a marked reduction in its trade surplus during the next few
years. Export earnings are expected to stagnate, and unless controls are
tightened, imports should rise rapidly after being depressed for three years.
The volume of mineral exports may rise slightly, but this gain could be offset
by further price declines. Fishmeal output has about reached an ecological
limit, and the large accrued stocks will tend to hold down prices in the near
future. Although Peru has been able to increase fishmeal exports to Com-
munist countries-including recent sales of 105,000 tons to Cuba, 200,000
tons to China, and 200,000 tons to the USSR-the shift of many US and
West European consumers to other, less expensive protein sources could
force price reductions. Agriculture exports, mainly sugar and cotton, also
may decline as growing domestic demand for foodstuffs causes shifts in land
use.
Balance of payments
Peru's balance of payments performance has improved markedly since
the September 1967 devaluation of the sol. Following a large deficit in 1967,
surpluses of $10 million and $42 million were recorded in 1968 and 1969,
respectively. In 1970 the surplus amounted to an estimated $259 million.
Besides favorable trade factors, this figure reflects the repatriation of $170
million of foreign holdings by Peruvian residents. In 1970, net international
reserves reached an all-time high of an estimated $410 million.
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Historical setting
Since independence was declared in 1821, Peruvian history has been
marked by turbulence and civil strife. When Simon Bolivar and his armies
withdrew from Peru shortly after independence, struggles for power erupted
among the various caudillos (strongmen). By the middle of the century,
especially under the administration of General Ramon Castilla, great strides
had been taken toward internal development and more ettective government.
These gains were, however, suddenly obliterated by a devastating defeat in
the War of the Pacific against Chile (1879-83). The economic consequences
were especially severe, and the nation was forced into virtual servitude to
foreign banking interests.
By the beginning of the twentieth century there had been a consider-
able measure of economic recovery spurred by the growth of a vigorous and
diversified mining industry and by a modicum of political order imposed by
two strong presidents, General Andres Caceres and Nicolas de Pierola.
Political parties were also making their appearance at this time. Historically,
the first real political party was the Civil Party founded in 1872 by Manuel
Pardo to unite the growing forces in opposition to military rule. Although
other parties existed during this time, the Civil Party was the dominant
political force in the country. Almost all, however, were identified with a
dominant personality, a characteristic of Peruvian politics that has held
generally true to this day.
By 1919, when Augusto B. Leguia came to power, the old parties were
bankrupt, having splintered or lost all public support. Leguia, an ex-presi-
dent, won the election of 1919 but, suspecting that congress would oppose
his election, led a successful military coup and assumed the mandate before
his scheduled inauguration. Leguia's ironhanded, sometimes constructive,
rule lasted until he was forced out in 1930 following a military rebellion led
by Colonel Luis Sanchez Cerro. After a turbulent year of short-lived juntas,
Sanchez Cerro assumed the presidency after a closely contested election in
which he was opposed by Victor Raul Haya de la Torre, the founder of the
American Popular Revolutionary Alliance (APRA). This election marked the
entrance into national politics of Haya de la Torre, signaled that APRA had
become the best organized national political party, and began the decades-
long struggle between APRA and the military, still the most significant
elements of the Peruvian body politic. Charging, perhaps with justification,
that he had been defrauded in the counting of the ballots, Haya de la Torre
led his supporters in open defiance of President Sanchez Cerro first in the
Constituent Assembly, then in a massive uprising in Trujillo on 7-8 July
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1932. After being defeated by government troops, Aprista leaders foolishly
ordered the execution of some 60 captured army officers and enlisted men.
In retaliation several truckloads of Apristas were slain. These bloody encoun-
ters created such a gulf between the army and APRA that their basic
hostilities have never been overcome. As a result, APRA has never gained the
presidency.
Following the assassination of Sanchez Cerro in April 1933, the Con-
stitutent Assembly (serving also as a legislative body) named General Oscar
R. Benavides to the presidency. Although he proved to be an enlightened
ruler favoring economic development and social legislation, he canceled the
election results of 1938 as "illegal," when an Aprista-backed candidate won.
With his term extended by congress for another year, Benavides ruled by
decree and then backed the election of a civilian president Dr. Manuel Prado,
in December 1939. Peruvian military leaders then reverted to the traditional
role they have when out of power: working in close harmony with the
conservative and aristocratic men of wealth and position. They continued
this relationship throughout the rule of Prado (1939-1945) and that of his
successor, Jose Luis Bustamante y Rivero, until October 1948. In that
month, a naval mutiny at Callao, allegedly inspired and led by APRA, was
put down with great severity by Bustamante. The President had lost most of
his support, however, and the army leaders who had suppressed the Callao
rebellion ousted him. The head of the resulting junta was General Manuel
Odria, who soon assumed the powers of an autocrat. In July 1949 the Odria
dictatorship was legalized by a decree-law that permanently suspended
individual guarantees. In July 1950 there was an "election" in which General
Odria was the sole candidate; he assumed the presidency for a full six-year
term.
Although unquestionably authoritarian, Odria, during his eight years of
absolute rule, managed to stabilize the country, especially by strengthening
its financial position. In July 1956 he eased his tight rein on the government
and permitted free elections, although APRA was barred from participation.
Odria's choice of successor, Hernando de Lavalle, was defeated by a wide
majority, and Manuel Prado, supported by APRA in return for a promise to
legalize the party, took office.
In the next elections-June 1962-Haya de la Torre won a plurality of
the vote (32.99%), but barely missed the one third required by the Constitu-
tion. Fernando Belaunde of the Popular Action Party won 32.14%, and
General Odria 28%, with the remainder scattered among four other con-
tenders. Belaunde immediately charged that the election had been marked
by fraud, a cry echoed by the army, even though it had supervised the
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election. In the face of insistent demands by the army that he annul the
election, President Prado stood by the official canvass of the returns by the
National Electoral Board. Since Haya de la Torre, the leading candidate, had
not polled 33 1/3% of the votes, the Peruvian Constitution required the
Congress to pick the president. In the following weeks, however, Haya de la
Torre came to realize that the army would not permit him to occupy the
presidency. Therefore, he withdrew and asked his supporters in Congress to
vote for Odria. Army leaders who could not tolerate Haya de la Torre
himself also refused to let him dictate who would become president. Military
leaders, headed by Chief of Staff Ricardo Perez Godoy, an army general,
staged a bloodless coup and President Prado was shipped off to exile in Paris.
On seizing power, the military installed a four-man military junta,
which held a new presidential election in June 1963. With the tacit endorse-
ment of the military, Belaunde polled more than 708,000 votes to top Haya
de la Torre's 623,000 and Odria's 463,000.
Belaunde exerted strenuous efforts in his early years in office to
accomplish the programs he had endorsed during his campaign. In spite of
his difficulties with an opposition coalition (Apristas and Odriistas) in
Congress, he succeeded in enlarging the agrarian reform program of his
military predecessors and made a start on the construction of the Andean
Highway.
In his last two years, however, Belaunde was beset by a deepening
economic crisis following a decline in the price of fishmeal in world markets,
which created a serious balance of payments problem. This, together with
increased government expenditures, made it impossible to balance the
budget and resulted in rapidly mounting inflation. With Aprista cooperation,
in July 1968 Belaunde won approval for a wide-ranging financial stabiliza-
tion program that imposed new and higher taxes and gave the President
special powers for 90 days to implement the program. The new program
produced an immediate improvement in the nation's financial status and
gave some hope to Belaunde that he could weather the crisis.
In August 1968, Belaunde reached an agreement with the US-owned
International Petroleum Company (IPC). recognizing Peruvian ownership of
the long-contested La Brea y Parines oil fields. This provision of the "Act of
Talara" fulfilled one of Belaunde's campaign promises and he regarded it as a
major triumph of his administration. In return for title to the oil fields.,
however, Belaunde agreed to cancel a $144-million debt which IPC allegedly
owed Peru in unpaid taxes. This and other concessions to IPC in the
agreement quickly led to strident attacks on Belaunde from a wide assort-
ment of nationalists. Even Belaunde's own party split over the President's
"sellout" to the IPC.
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With Belaunde under attack from all sides, General Juan Velasco
Alvarado, the commanding general of the Army, and his fellow officers,
judged the time appropriate to initiate a long-planned coup. The controversy
over Belaunde's agreement with the IPC was the immediate pretext, but
military fear of an APRA victory in the elections scheduled for June 1969
was also a compelling factor. On the morning of 3 October 1968, Lima-based
troops took control of the capital and sent Belaunde into exile. By prear-
rangement, the troops proclaimed the creation of a governing junta com-
posed of the commanders of the army, navy, and air force. This junta shortly
named General Velasco as the new President and he then proceeded to select
a cabinet composed entirely of high-ranking military officers.
Since taking power, the military government has had no real challenge
to its control. The Velasco administration has implemented some far-reach-
ing social and economic reforms, sometimes to the detriment of the over-all
economic situation. It has broadened Peru's foreign contacts and, within the
past year or so, has moved to improve its relations with the US. President
Velasco has stated that the military intends to remain in power for at least
five years, and no date has been set for elections. In June 1971 the National
System for Support for Social Mobilization was established, headed by a
cabinet-level military officer. There are some indications that this organiza-
tion eventually could be the basis for a military-backed political party, but
there is also a strong body of opinion that favors a complete withdrawal
from politics by the military after the "revolution" is completed.
Structure and functioning of government
Since the military coup on 3 October 1968, the congress has been
disbanded and the government has been operating under the terms of an
eleven-article document entitled the "Statutes of Revolution." The Constitu-
tion of 1933, which served as the basis of government until that time, has
not been entirely discarded, but parts of it have been set aside by the
Statutes. The military government has said that it will reform the Constitu-
tion, but has not revealed many of its plans so far.
The Statutes of the Revolution present only the bare outline of the
military government. The document designates the function and composi-
tion of the key posts and assigns to the President both the executive powers
granted in the 1933 Constitution and the power to legislate. The com-
manders of the army, navy, and air force are identified by the Statutes as a
revolutionary junta, which has assumed the responsibility of carrying out the
Statutes and the plans of the armed forces. The junta members hold the
positions of ministers of war, navy, and aeronautics in the Council of
Ministers, and the minister of war serves as prime minister and presides over
the cabinet. The junta also approves the President's selection of other
members of the cabinet, excluding the three defense posts. Cabinet ministers
may be either members of the armed forces or civilians. The President,
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according to Statute 6, exercises the functions that the Constitution grants
to the chief executive and, with the approval of the cabinet, exercises
legislative power by issuing law decrees jointly with the junta.
Although the Statutes appear to give the President a position sub-
ordinate to that of the junta, Velasco has dominated its members from the
first days of the administration. The inner workings of the relationship
between the President and the junta cannot be determined from the available
information, but as time passes the junta members do not seem to have
significantly greater influence over the decision making process than any of
the other members of the all-military cabinet. President Velasco has not
announced when he will give up the office, but has made it quite clear that
his regime will not be a mere caretaker government and that the military
intends to stay in power as long as it takes to effect a complete transforma-
tion of the society.
The military government has passed legislation in the form of decrees.
Some decrees apparently are initiated and become effective with the ap-
proval of General Velasco and the junta only. Others seem to require the
consultative or deliberative vote of the cabinet. Those in the latter category
are proposed by the cabinet minister concerned and submitted to the
President through the Advisory Committee to the Presidency (COAP). A
final draft is put on the agenda of the cabinet if the President wishes. The
COAP is the coordinating body where the final legislative product is pre-
pared for approval by the President and the cabinet. It is a key organization,
particularly in the timing and emphasis of new legislation promulgated by
the military government. It does not originate policy, however. It is com-
posed of military officers, mostly from the army, who were drawn from the
group at the Center for Advanced Military Studies that was largely responsi-
ble for drafting the government's manifesto and the Statutes of the Revolu-
tion. Working with the COAP are civilian advisers to the President whose
salaries are paid from the presidential budget.
Justice is administered by a single national court system, which is
highly centralized. The Supreme Court heads the regular judicial hierarchy.
Below it in order of authority are the superior courts, the courts of first
instance, and the justices of the peace. In addition to the regular court
system, there are military tribunals and labor courts to handle worker-
employer disputes.
The country is divided into 24 Departments, including the so-called
constitutional province of Callao. The departments are divided into prov-
inces, and these in turn into districts. The number of departments is fixed at
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24, but the number of provinces and districts into which each department is
divided is generally determined by area and population density.
Political dynamics-parties and electoral system
Until the 1920s the Peruvian political system was one of the most static
in South America. The balance of political power was shared between the
small, but extremely wealthy national elite and the top military leaders. The
latter helped preserve power for the oligarchy, while receiving in return a
fairly generous military budget. This power coalition was often divided by
factional loyalties and competing economic interests, and the governments it
controlled often rose and fell by force.
By the 1920s, basic changes in the structure of society were under way.
A significant middle class and the beginning of an organized urban working
class was developing, portending the end of the traditional duality of the
elite and the military. The regime of Augusto B. Leguia (1919-30), brought
to power by support from the lower classes and the middle class business and
professional elements, was a harbinger of political change, for it marked the
end of total domination by the elite.
I iri the 1920s and 1 930s social change was also reflected in the growth
of movements that sought to align the more radical elements of the middle
class with the urban working class. These included socialist, Communist,
labor and student movements and, most notably, the American Popular
Revolutionary Alliance (APRA) which has been the only grass-roots political
force since the 1930s. In the 1950s, several new reform parties arose,
notably the Popular Action (AP) party, and the Christian Democrat Party
(PDC), as well as a number of smaller splinter parties on the left. The urban
labor and student movements as well began to grow in numbers and
militancy. Moreover, changes within the military led it to question its
traditional role as ally to the upper classes, and its leaders became in-
creasingly committed to the cause of orderly social reform.
Since the October 1968 coup, organized political activity by civilian
parties has almost ceased. APRA and the more moderate wing of former
President Belaunde's Popular Action Party can be considered parties, al-
though political opposition to the Velasco government has been remarkably
restricted. Most of the parties further to the left of the political spectrum,
including the radical wing of the AP, the Christian Democrats, and the
Communist Party, have generally supported the Velasco government. The
government's announced intention to postpone elections for at least five
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years has forced all party leaders to face up to the possibility of being out of
office for a lengthy period. Some have been quietly negotiating for official
positions within the regime in exchange for supporting it.
APRA, founded by Victor Raul Haya de la Torre in 1924 during his
exile in Mexico, was one of the first national revolutionary movements to
have an important impact in Latin America. It is one of the few parties in
Peruvian history to have a solid organization, an ideology, and broad popular
support. Since its founding, APRA has been and remains the largest single
party. It draws support from middle class elements, intellectuals, and es-
pecially from the labor movement.
APRA was conceived as a continental movement, embracing all of
mestizo Latin America. This goal, however, was never achieved. The party
was strongly influenced in its formative stages by Marxist doctrine and by
the Russian and Mexican revolutions. From the beginning, however, it
reserved the right to modify Marxist doctrine to fit the Latin American
context, and in 1928 APRA leaders declared an open break with interna-
tional Communism.
The philosophy of APRA envisions economic protectionism for Peru
but does not espouse radical economic nationalism. In agriculture, APRA has
called for land reform and an extensive system of cooperatives to emancipate
the rural lower classes. The party is concerned with the economic and social
integration of the indigenous population into the national scene, a vigorous
labor movement and the full participation of laboring groups in political life,
the protection of rural workers, social security legislation, free and adequate
secondary education, and reform of the universities. Apristas envision a
legislature based on a system of "functional democracy," in which would sit
elected representatives of all occupational categories such as employers,
employees, and the professions.
Although APRA has commanded considerable power within the govern-
ment at various times, the party has never been able to implement its
programs. Moreover, since the late 1950s it has slowly but continually lost
support, as many of its younger elements have splintered off to form
dissident Aprista groups. Newer parties such as the AP and the PDC have
increasingly challenged APRA's supremacy within the non-Communist left.
Reliable data are not available on total party membership, but the major
source! of APRA's organized strength is still in the labor movement, although
it is now being seriously challenged in this field by the Communist-led
General Confederation of Peruvian Workers (CGTP).
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Although the Velasco government has incorporated many of APRA's
programs into its own, there seems to be little chance that the two will begin
to cooperate. The coup was at least partly conceived to prevent the Apristas
from gaining power through an electoral victory in 1969. APRA has con-
sistently demanded a return to constitutional government, but the party
leadership has discouraged both the advocates of violent opposition and
those who want to cooperate with the military.
The Popular Action Party (AP), the second largest political party, was
organized shortly after the 1956 presidential election in an attempt to
consolidate the various elements that had supported Fernando Belaunde's
unsuccessful bid for the presidency. Belaunde's major purpose was to de-
velop a popular movement to rival APRA and to win the presidency for
himself. AP's program is somewhat similar to that of APRA in that it gives
high priority to economic development and planning, agrarian reform, and
integration of the Indian population into national society.
The AP split into two factions in September 1968 over the Interna-
tional Petroleum Company (IPC) issue. The more orthodox wing consists of
those who support ex-President Belaunde. The radical wing is made up of
those supporting Edgardo Seoane, former vice president under Belaunde.
The Seoanistas, who are cooperating with the Velasco government, still
regard Belaunde's followers as traitors for having entered into the agreement
of 13 August 1968 with the IPC, and there appears no possibility of a
reconciliation in the foreseeable future. The split cost the party some of its
most able and attractive members and it lacks the top-flight leadership
required to rebuild it into an effective political organization. The latent
hostility of the military, scarcity of funds, loss of patronage, and low
prestige are additional factors preventing the party's resurgence as a united
organization.
The small Christian Democratic Party (PDC) was formed in 1955 by
professional and intellectual members of the middle class. Originally a
centrist party, the PDC later tried to cultivate a left-of-center electorate. The
electoral alliance it formed in 1963 with the AP resulted in the victory of
Belaunde, and the PDC later maintained a parliamentary alliance with the AP
that carried over into the executive branch. Two PDC members were in
Belaunde's cabinet. Unlike the AP, however, the PDC is not an aggregation
of personal followers of a political hero but has party principles based on the
social Papal Encyclicals and on the models provided by the older Christian
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Democratic parties in Chile and Western Europe. There are no reliable
statistics on its present membership, but it was the fourth ranking party in
congress before the 1968 coup. Its influence is disproportionate to its 1963
electoral showing because of its alliance with the AP in 1963 and the high
quality of its congressional leadership. In mid-December 1966, a group of
dissident moderate Christian Democrats defected and formed a separate
Popular Christian Party (PPC). The split was not unexpected. For some time
the PDC had been divided into two major factions-a more numerous radical
faction associated with former party president Hector Cornejo Chavez, and a
smaller moderate faction composed of most of the party's original founders,
such as Luis Bedoya Reyes and Javier Correa Elias. Since the coup the PDC
has moved further to the left and has worked closely with the military
government on several issues.
The major asset of the more moderate PPC appears to be Lima's former
mayor Luis Bedoya, although the party has other prestigious leaders who
may attract a following. Most of its founding members are well-to-do,
successful businessmen and professionals, whereas the backbone of the PDC
is mostly students, intellectuals, and younger, self-employed professionals.
The PPC's greatest hope for national office and influence in the future rests
on the possibility of the party entering a coalition. As the leading critic of
the military government until his elected term as mayor of Lima expired in
December 1969, Bedoya has enhanced his credentials as a political leader. At
the same time he apparently has not completely alienated the military, and
probably still has good prospects as a future leader of Peru.
Security systems
Peru has three civilian organizations charged with the responsibility for
maintaining public law and order-the Civil Guard, The Republican Guard,
and the Investigations Police of Peru. Since April 1969 these three services
have been under the direct control of the newly created Interior Ministry.
The Civil Guard is a uniformed national police force responsible for the
enforcement of all laws relating to the maintenance of public order and
peace. Authorized 21,500 officers and men, the Civil Guard performs the
regular duties of a civil police force and is also responsible for action in all
cases of public disorder. It is commanded by a career Civil Guard officer and
its headquarters are in Lima. For a nine-month period (April to December
1969), its budget was about $43.4 million.
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The Republican Guard, with about 4,500 officers and men, is directly
responsible for protecting government buildings and other vital installations,
for providing guards for Peru's prisons, and for guarding some of its
frontiers. It also reinforces the Civil Guard when required and has established
a special antisubversive unit. The most senior officers of the Guard are
regular army officers detailed to it for regular tours of duty. Officers of the
rank of lieutenant colonel and below are career officers in the Republican
Guard. Its headquarters are in Lima and its budget for nine months in 1969
was a little over $8 million.
The Peruvian Investigations Police (PIP) is a semiautonomous plain-
clothes force operating under the Ministry of Interior. The PIP, roughly
equivalent to the Federal Bureau of Investigation, is composed of about
4,000 men charged with investigating criminal disorders and subversive
activities. The PIP is also expected to provide advance warning of impendin
disturbances so that the Civil Guard can take effective action.
estroying illegal cocaine laboratories and arresting smugglers of illegal
narcotics. The Director of the PIP is directly subordinate to the Minister of
Interior. The PIP also maintains investigative units in the intelligence and
military police sections of the armed forces and at some Civil Guard posts in
areas where the PIP maintains no posts. The PIP's budget for nine months in
1969 was about $9.4 million.
n addition, the PIP recently has taken an active role in
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Although the Civil Guard and the PIP constitute Peru's first line of
defense for internal security, they fail to achieve their full operations
potential principally because of inadequate logistical and operational sup-
port. Thus far, both have demonstrated an adequate operational capability in
the cities, but they have not yet been tested by prolonged or intensive urban
terrorist activity.
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The Communist Party and front groups
Although Peru's social and economic problems cause discontent and
afford the opportunity for continuous exploitation, the Communist move-
ment has been generally weak and fractionalized. It has not had legal status
because of the constitutional prohibition against political parties that have
international affiliation.
The Communist Party of Peru (PCP), originally known as the Peruvian
Socialist Party, was founded in 1930. In 1962 the party split into pro-Mos-
cow and pro-Peking factions at the party's Fourth National Congress. The
split was formalized in January 1964 when the rival factions held separate
conferences in which each faction expelled the leaders of the other. After
the split, the two factions set up separate organizations, each claiming to be
the authentic Communist Party. The continuing bitter quarrel between the
two groups has dissipated their energies and has produced deep dissatisfac-
tion among Communist and pro-Communist youth.
The pro-Soviet Communist Party (PCP/Soviet) has an estimated mem-
bership of 2,000 with about 10,000 sympathizers. The party's leaders have
favored a gradual approach to its objective of class revolution, to be carried
out by the penetration of key groups, the political system, and the govern-
ment. The PCP/Soviet strategy in its relations with the Velasco government
appears to be to support the government's reform program whenever possi-
ble and to oppose the government when it seems to be straying from the
revolutionary path. At a plenum of the Central Committee in July 1971 the
party decided to try to establish good contacts with the military, in par-
ticular the army, and to form an "anti-imperialist" front with dissidents
from the Popular Action and Christian Democratic parties.
In recent years, Communist influence has been most noticeable in the
universities, although some of the social and economic reforms of the
military government have begun to undercut this support. In addition, there
is a tendency for students to become considerably less radical after gradua-
tion. Despite this looseness of ties between the party and the majority of its
student supporters, the student leadership is usually firm in its conviction
and dedicated to improving the party's position at the universities.
The pro-Soviet Communist Party has accelerated its activities in the
labor field since forming the General Confederation of Peruvian Workers
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(CGTP) in June 1968, and particularly since the military took over the
government in October 1968. A paper prepared by the secretary general of
the CGTP in November 1970 estimated that the CGTP represented about
140,000 workers, slightly more than the APRA-controlled confederation.
The growth of the CGTP has been tolerated, and in some cases indirectly
assisted, by the military government, which sees the organization as a means
of neutralizing APRA. Recently, however, the government has become
irritated by CGTP-led labor agitation, in particular at government-owned
installations. At the Central Committee meeting in July 1971 the party
decided to try to keep union disputes within "reasonable" bounds.
There is strong evidence that the CGTP receives financial aid from the
USSR either through the PCP/Soviet or the Communist-controlled World
Federation of Trade Unions. Such funds apparently were used in 1969 by
the CGTP to carry on an intensive organizing campaign with the objective of
attaining official recognition from the Ministry of Labor.
The pro-Chinese section of the PCP has split into three factions. As of
December 1970 it was estimated to have a total of about 1,200 members, of
whom 500 were militants. In general, the pro-Chinese Communists con-
centrate their activities in the universities. They are most active in Cuzco,
Puno, and Piura.
Other far left parties
The release in December 1970 of political prisoners as a result of the
general amnesty has given impetus to the splintered leftist groups, most of
which espouse violence as a necessary revolutionary tactic. Efforts at unity
now are being made under the direction of the former guerrilla leaders. The
extreme left now is a conglomerate of socialist and Communist-oriented
factions: disillusioned Apristas who broke with APRA and formed the
Leftist Revolutionary Movement (MIR); the Revolutionary Vanguard (VR),
consisting of former Communist Party members; the National Liberation
Army (ELN); and various Maoist splinter groups.
Although there is no unified political theory, in general most extreme
leftists believe that the campesinos should play an important role in the
revolution. These leftists, believing that the military government's reforms
are only half-hearted efforts to solve the country's basic problems, are
nonetheless fearful of being undercut by these reforms. They are therefore
seeking to stimulate "the masses" toward greater political militancy.
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Insurgency movements
Peru has had only one active insurgent group-the Movement of the
Revolutionary Left (MIR). Originally known as Rebel APRA (APRA
Rebelde) after its explusion from APRA, it gathered a variety of extreme
leftists together in the early 1960s, sending a number of them to Cuba and
other countries for guerrilla training. In mid-1965 the MIR began an aggres-
sive guerrilla campaign that lasted until early 1966, when it was completely
routed by government forces, its ranks decimated, and its leaders either
killed, imprisoned, or forced into exile. A small remnant of the party
continues to be active, however. As recently as September 1969 nine
members of the MIR were arrested and found to possess arms, ammunition,
explosives, and Communist propaganda.
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VI. ARMED FORCES
The armed forces of Peru, which have a strength of about 49,800 men,
consist of an army of 35,000, a navy of 9,500, and an air force of 5,300. In
time of war or other national emergency they would be supplemented by
two national police forces-the Civil Guard of about 21,500 men and the
Republican Guard of 4,500 men. The army is capable of maintaining internal
security and is deployed defensively to protect primarily the vital northern
and central coastal areas of the country.
Strengths of the armed forces include the well-educated and reasonably
well-trained officer corps, good morale, and fairly high esprit de corps.
Weaknesses include dependence upon foreign sources for all major and many
minor military items, low pay, an unintegrated .and inefficient logistical
system, lack of a trained noncommissioned officer corps, and ranks filled
largely with illiterate conscripts.
The President of the Republic is the commander in chief of the armed
forces. He presides over the Permanent Council of National Defense, the
highest organization concerned with national security. The Council includes
the prime minister, the ministers of war, navy, aeronautics, interior, foreign
relations, and finance, and the president of the Joint Command of the
Armed Forces. The Council determines national defense policy, coordinates
the actions of the governmental agencies in executing defense plans, and
determines what resources are necessary and the means of providing them.
The Joint Command of the Armed Forces is charged with planning and
coordinating the activities of the army, navy, and air force but has no
command authority. It is composed of a president who is a military officer
and the military chiefs of the three services appointed by the President. It is
responsible for advising the President and the Permanent Council of National
Defense on defense problems, especially on preparations for war and on the
conduct of wartime operations.
The military government that came to power in October 1968 an-
nounced plans for reorganizing several ministries. Most of the plans were
implemented on 1 April 1969, but the proposal to merge the Ministries of
War, Navy, and Aeronautics into a single Ministry of National Defense has
not been effected, presumably because of inter-service jealousy. For that
reason, final responsibility and authority in army, navy, and air force matters
remains vested, respectively, in the three coequal ministers, who are com-
manders of their services. The Civil Guard and Republic Guard are normally
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under the minister of interior, but come under control of the army in time
of national emergency.
The army, with 35,000 men, has the missions of defending the country
and of maintaining internal security in conjunction with the police forces.
Combat effectiveness is low by US standards but is above average for Latin
American armed forces. The army is capable of maintaining internal security
and of conducting effective short-term offensive operations against any of its
neighbors. It could not, however, defend the country against attack by a
major power. The officer corps is well educated, intelligent, and reasonably
well trained. Enlisted men are loyal, inured to hardship, and are also
reasonably well trained considering the short duration of their obligated
service. Combat effectiveness is handicapped by the absence of a career
noncommissioned officer corps, inadequate unit training, and an insufficient
number of combined arms exercises. I n its civic action work the army is
constructing highways, bridges, and airstrips, and is working at other com-
munity improvements. Undera program instituted in April 1962, industrial
training is given to some conscripts prior to release from service in order to
give there skills that are generally needed in the country.
In South America, the navy ranks fourth in size (9,500 men) and
general effectiveness, and its submarine force is the best. The navy is
primarily maritime, but has a small fluvial force in the remote Amazon
headwaters of the northeast. Its missions are to defend the 1,500-mile
coastline, protect shipping, patrol the inland waters, and assist in the defense
of the Western Hemisphere by providing patrol, escort, and antisubmarine
warfare support. The navy also engages in civic action such as commercial
shipping, chiefly in the Amazon Basin. Its effectiveness is handicapped by
limited operational experience and the generally poor condition of equip-
ment. It is the navy that seizes tuna boats that fish without licenses within
Peru's claimed 200-mile territorial limit.
Subordinated to the navy is the Mobile Artillery Group (marines),
which was established in 1959. Until 1966, strength stood at 1 company of
about 250 men, but during that year it was raised to about 700. In 1968, its
strength was reduced to 600, and was redesignated the Naval Infantry. All
marines are volunteers. Officers are naval line officers who request assign-
ment to the corps, and enlisted men enlist directly. The mission of the
Marine Corps entails security, especially of naval installations and amphibi-
ous warfare.
Peru also has a Naval Air Service, which was established in 1963. It is an
integral part of the navy, and its commander is immediately subordinate to
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the Commander of the Navy, but he is under the staff supervision of the
Director of the Naval Air Service. Loosely organized, it has only 17 pilots
and 9 aircraft. It has no air facility of its own but operates out of Jorge
Chavez International Airport near Lima. The Naval Air Service provides
shuttle passenger service, a small amount of logistic support to the Amazon
base near Iquitos, and some offshore aerial surveillance.
Peru's air force is one of the best in South America, in both its
defensive and offensive capabilities. The air force has effectively assisted
ground forces in putting down disorders and in maintaining internal security.
It could provide effective close air support for ground troops in operations
against Ecuador, but against Chile its support of any operations would be
severely handicapped by the lack of support facilities. In addition, the air
force provides commercial and military air transport, monitors government
aerial photography activities, and assists in the economic and social develop-
ment of the country. I he air torce has a personnel strength of 5,300
including 800 officers, 2,000 noncommissioned officers, and 2,500 privates.
There are more than 330 pilots, about 30% of whom are jet qualified. In
January 1971 the inventory totaled 236 aircraft, including 99 jets. These
include 16 Mirage-5 supersonic jet fighters purchased from France in 1967.
Manpower
As of I January 1971, Peru had about 3,180,000 males 15-49 years old,
about 68% of them fit for military service. Approximately 125,000 males
reach conscription age (20) annually. All male citizens age 18-50 years are
liable for military service, but peacetime conscription is limited to men
20-25 years of age. Induction is accomplished in four increments annually
(three in jungle areas), and the term of conscript service is two years.
Because of military training received in school, high school graduates who
are drafted are obliged to serve only one year. College graduates with
military training are exempted from peacetime conscription for the same
reason. As a result, those actually called up are usually the poor and
illiterate. Some 15,000 men are conscripted annually and conscripts consti-
tute over 75% of the army, about 50% of the navy, and nearly 30% of the air
force.
The armed forces' strength has slowly increased since the late 1940s,
growing at less than half the rate of the general population increase. Since
1960, total armed forces strength has increased about 7,950, or 19%. The
army's increase has been only 15%, while that of the navy has been 32% and
that of the air force has been 25%.
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Military budget
Under the direction of its minister, each of the three services prepares
its budget estimate for the fiscal year. The three service budgets and those of
other government departments are coordinated by the minister of finance
and submitted to the President and cabinet for review. Since the suspension
of the national legislature after the October 1968 coup, all budgets receive
final approval by the President, with the advice of the cabinet, and are
published by decree.
The total military budget for fiscal year ending 31 December 1970 was
$192,826,872-17.2% of the total central government budget. The military
budget as a percent of GNP was 3%.
Logistics
Peru has no joint military logistics organization. Each service is re-
sponsible for its own procurement, storage, distribution, and supply. The
services are dependent chiefly on appropriated funds included in the formal
budget but also partly on funds outside the regular budget.
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VII. FOREIGN RELATIONS
Nationalism and a strong desire to demonstrate Peru's independence of
the US have been the primary determining factors in the Velasco govern-
ment's foreign policy. Peru's traditionally close ties with the US were
severely strained as a result of the expropriation of the IPC just six days after
the military ousted President Belaunde. Relations between the two countries
have improved somewhat, but the effects of the controversy, which remains
unresolved, continue to influence the military government's foreign policy.
Another major irritant in US-Peruvian relations, also involving Peruvian
nationalism, is Peru's claim to a 200-mile limit to its territorial sea. This
claim has resulted in the seizure and fining of several US tuna boats fishing
within the 200 miles. In February 1969 sales of US military equipment to
Peru were suspended in accordance with US law following the seizure and
fining of a US tuna boat. The Peruvian reaction was to eject the US Military
Advisory Group from the country. A compromise was reached and a small
US military mission was allowed to stay when the US agreed in July 1969 to
lift its suspension on military sales. In return, Peru agreed to join Chile and
Ecuador, which have similar territorial waters claims, for a conference with
the US on matters pertaining to fishing. Seeking international support for
this claim has become a major objective of Peru's diplomatic missions
abroad. In 1970 only one tuna boat was seized but the mandatory suspen-
sion of foreign military sales went into effect.
At the same time that Peru was experiencing its most serious difficulties
with the US, President Velasco was moving rapidly ahead with a policy of
establishing closer relations with the Soviet Union and the countries of
Eastern Europe. There are several interrelated motivations for this policy,
which actually began during the Belaunde administration. One is the
Peruvian desire to express independence of the US in foreign policy areas. In
addition, Peru, like many other Latin American countries, hopes to gain
access to what it sees as a large potential market for its goods. I n Peru's case
there apparently was also the hope that some of the lost US economic
assistance would be replaced by technical and economic assistance from the
Communist countries.
Diplomatic relations have been established with the USSR, Hungary,
Bulgaria, Poland, Czechoslovakia, Romania, and Yugoslavia, and Peru has
also sought closer trade relations with most of them. The USSR and some of
the East European countries have extended credits to Peru for the purchase
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of machinery but there has been no direct Communist economic assistance
to Peru. In August 1970 Peru announced its intention to establish diplomatic
relations with Communist China; there is some trade at present.
Peru does not have diplomatic relations with Cuba, although there is
some trade. The Prado government broke relations with the Castro govern-
ment in December 1960 prior to the US severance of relations, and called for
strong OAS counteraction to Castro. The Belaunde administration was not as
outspoken in general, although it remained willing to adhere to the anti-
Castro resolutions of the OAS majority. The Velasco government has stated
several times that it favors the reintegration of Cuba into the inter-American
system.
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In terms of size, population, strategic location, and US economic and
commercial interests, Peru ranks among the first five Latin American coun-
tries in importance to the US. Peru is the seventh largest export market in
Latin America for US products, and the fourth largest source of imports,
which consist primarily of important raw materials.
Peru has recently taken on an even greater significance for the US. Its
present attempts to bring about structural reforms and accelerated modern-
ization under an authoritarian military government that follows aggressive,
nationalistic policies have directly and adversely affected important private
US business interests.
The US traditionally has been Peru's major source of both private and
official foreign capital, although little foreign investment from any source
has gone into Peru since the IPC expropriation. The book value of US private
investment amounted to $692 million in 1968, an estimated three fourths of
total foreign investment. A large share of private foreign capital is invested in
mining and metal-processing.
Official economic and military assistance authorized by the US Govern-
ment during fiscal years 1946 to 1969 totaled some $764 million. More than
one third of this assistance was provided on a grant basis. Because of Peru's
purchase of supersonic jet aircraft from France in 1967 and its failure thus
far to compensate IPC for expropriating its properties in 1968, the US
Government has authorized no new development loans since 1967. Disburse-
ments on earlier loans and some grant assistance have continued, however.
As of mid-1968, Peru also had received a total of $358 million in economic
loans from international financial organizations, mainly the Bank for Recon-
struction and Development and the Inter-American Development Bank.
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IX. CHRONOLOGY AND TABULAR DATA
CHRONOLOGY
1879-1883 War of the Pacific; Peru and Bolivia allied against Chile; Peru
loses southern territory to Chile.
1924 Victor Raul Haya de la Torre founds the American Popular
Revolutionary Alliance (APRA).
1931 (October) APRA wins election but is prohibited from
assuming power; the party is outlawed.
1941 Peru defeats Ecuador in short boundary war and obtains
control over major portion of disputed territory under the
1942 Rio Protocol.
1945 First free elections, APRA-supported candidates win presi-
dency and control of Congress.
1948 (October) Armed Forces put down APRA revolt, establish a
military junta, Communist Party of Peru declared illegal.
1950 (2 July) General Manuel Odria elected president.
1956 (17 June) Former President Manuel Prado y Ugarteche re-
elected with APRA backing.
1960 (29 December) Peru severs relations with Cuba.
1962 (18 July) Military seizes power after indecisive election
1963 (9 June) Fernando Belaunde Terry, representing the Popular
Action Party (AP), elected president in free elections.
(15 December) First municipal elections in over 40 years
reaffirm popular support for Belaunde's AP.
1965 (June) Guerrilla activity breaks out.
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1966 (May) Guerrillas defeated.
1967 (September) The currency is drastically devalued.
(October) Peru signs contract with France for Mirage-5 super-
sonic jets.
1968 (13 August) The "Act of Talara" signed with the Interna-
tional Petroleum Company, setting off a nationalist contro-
versy.
(3 October) President Belaunde ousted in a military coup;
General Juan Velasco Alvarado assumes presidency of mili-
tary government.
(9 October) Major assets of the International Petroleum
Company are expropriated.
1969 (February) Relations are restored with the USSR.
(6 February) Velasco declares $690,524,283 debt is owed
Peru by International Petroleum Company for "unjust enrich-
ment."
(14 February) Peruvian Navy fires on one, seizes another US
tuna boat.
(9 April) US announced "deferral" of economic sanctions
against Peru under the Hickenlooper Amendment and the
Sugar Act.
(20 May) Reacting to publicity over suspension of US mili-
tary sales to Peru, Velasco calls for withdrawal of US military
mission and declares that Governor Rockefeller's scheduled
visit would be "inopportune."
(24 June) Sweeping agrarian reform law decreed.
(30 September) Peru and USSR announce ratification of
two-year trade agreement.
(19 December) Peru signs contract under which Southern
Peru Copper Company is to invest up to $500 million in its
rich Cuajone concession.
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(December) Supreme Court is purged and entire judiciary
reorganized.
1970 (6 April) Velasco unveils new plans for controlling foreign
investment.
(31 May) Disastrous earthquake devastates area north of
Lima; assistance pours in from all over the world, including
Cuba, Communist China and Soviet Union.
(28-30 June) Mrs. Nixon visits Peru to present personally US
aid to earthquake area.
1971 (January) Government recognizes Communist-controlled
labor federation, giving it certain legal rights.
(28 April) Trade agreement signed with Communist China.
(August) Peru announces its intention to open diplomatic
relations with Communist China.
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TABULAR DATA
Holidays and Significant Dates
New Year's Day
Epiphany
St. Joseph's
Holy Thursday
Good Friday
Labor Day
Ascension Day
Corpus Christi
Indian Day
SS Peter and Paul
Independence Day
Assumption
St. Rosa de Lima Day
Our Lady of Mercy
Day of National Dignity
Discovery of America
All Saints
Battle of Tarapaca Day
Immaculate Conception
Christmas
1 January
6 January
19 March
Movable
Movable
1 May
19 May
9 June
24 June
29 June
28 July
15 August
30 August
24 September
9 October
12 October
1 November
27 November
8 December
25 December
Selected Factual Data
LAND
496,000 sq. mi. (other estimates range as low as 482,000 sq. mi.); 2%
cropland; 14% meadows and pastures; 55% forested; 29% urban, waste, other
(1962)
PEOPILE
Population: 14,013,000 (excluding Indian jungle population which was
estimated at 100,830 in 1961); males 15-49, 3,180,000; 1,955,000 fit for
military service; average number currently reaching military age (20) annu-
ally, 125,000
Ethnic divisions: 46% Indian; 38% mestizo (white-Indian); 15% white;
1% Negro, Japanese, Chinese
Religion: predominantly Roman Catholic
Language: Spanish, Quechua, Aymara
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Literacy: 45% to 50%
Labor force: 3.5 million (1967); 46% agriculture, 17% services, 14%
manufacturing, 9% trade, 4% construction, 4% transportation, 2% mining,
4% other
Organized labor: 25% of labor force
Legal name: Republic of Peru
Capital: Lima
Pollitical subdivisions: 23 departments with limited autonomy plus
constitutional Province of Callao
Type: unitary constitutional republic
Legal system: based on civil law system; military government rules by
decree; legal education at the National Universities in Lima, in Trujillo, in
Arequipa, and in Cuzco; has not accepted compulsory ICJ jurisdiction
Branches: executive, legislative, judicial; congress disbanded after 3
October 1968 ouster of President Fernando Belaunde Terry
Government leader: President Juan Velasco Alvarado
Suffrage: literacy requirement
Elections: none scheduled
Political parties and leaders: Popular Action Party (AP), Fernando
Belaunde Terry in exile; Christian Democratic Party (PDC), Hector Cornejo
Chavez; American Popular Revolutionary Alliance (APRA), Victor Raul
Haya de la Torre; Popular Christian Party (PPC), Luis Bedoya Reyes
Communists: 5,000; Communist sympathizers 25,000
Member of: UN (IAEA), OAS, LAFTA, GATT, IADB
GNP: $7.3 billion (1969), $520 per capita; 72% private consumption,
10% public consumption, 13% gross investment; 5% net foreign balance; real
growth rate 1970, 7%
Agriculture: main crops-wheat, corn, potatoes, beans, barley, cotton,
sugarcane; imports wheat, meat, lard and oils, rice, corn; caloric intake,
2,300 calories per day per capita (1964)
Major industries: mining of metals, petroleum, fishing, textiles and
clothing, food processing, cement
Electric power: 2 million kw. capacity (1969 est.); 4.7 billion kw.-hr.
producted (1969) 442 kw.-hr. per capita (1969)
Exports: $1,048 million (f.o.b. 1970); fish and fish products, copper,
silver, iron, cotton, sugar, lead, zinc, petroleum, coffee
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Imports: $618 million (f.o.b. 1970); foodstuffs, machinery, transport
equipment, iron and steel semi manufactures, chemicals, pharmaceuticals
Trade: exports US 33%, Western Europe 42%, Japan 14%, Latin
America 6%; imports US 32%, Western Europe 33%, Latin America 17%,
Japan No
Aid:
Economic-extensions from US (FY46-69), $456.6 million loans,
$164.0 million grants; from international organizations (FY46-67), $325.2
million; from other Western countries (1960-66), $43.4 million
Nlilitary-assistance from US (FY49-69), $143.7 million
Fiscal year: calendar year
Railroads: approx. 2,144 mi.; 1,800 mi. 4' 8 1/2" gage; 50 mi. 3' 6"
gage; 560 mi. 3' 0" gage; 40 mi. 2' 5 1/2" gage; 80 mi. 1' 1 5/8" gage; 9 mi.
double track; 3 mi. electrified (1965)
Highways: 31,100 mi.; 3,000 mi. paved, 5,400 mi. gravel or crushed
stone, 8,500 mi. improved earth, 14,200 mi. unimproved earth
Inland waterways: 5,400 mi. of navigable tributaries of Amazon River
system and 130 mi. Lake Titicaca
Pipelines: crude oil, 206 mi.; natural gas, 16 mi.
Ports: 1 principal (Callao/Lima), 4 secondary, 25 minor
Merchant marine: 37 ships (1,000 GRT or over) totaling 291,000 GRT,
407,0001 DWT; includes 25 cargo, 9 tanker, 1 specialized carrier and 3 naval
tankers sometimes used commercially
Civil air: 46 major transport aircraft
Airfields: 317 total, 271 usable; 15 with permanent-surface runways; 1
with runway over 12,000 ft.; 18 with runways 8,000-11,999 ft.; 50 with
runways 4,000-7,999 ft.; 3 seaplane stations
Telecommunications: fairly adequate for most public requirements;
new microwave relay system being improved; communications satellite
ground station; 192,600 telephones; est. 2 million radio and 395,000 TV
receivers; 217 AM, 7 FM, and 28 TV stations; 1 telegraph submarine cable
Personnel: army 35,000, navy 9,500, air force 5,300, Civil Guard
21,500 (plus 384 civilians), Republican Guard 4,500
Major ground units: 3 corps headquarters, 11 divisions (7 light infantry,
1 airborne, 1 armored, 1 jungle, 1 cavalry), 1 special forces command (1
commando battalion, 1 parachute battalion), 1 separate detachment (1
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armored cavalry regiment, 1 infantry battalion), 2 cavalry regiments and 9
battalions (2 field artillery, 1 antiaircraft artillery, 5 engineer, 1 infantry)
Ships: 2 cruisers, 2 destroyers, 3 destroyer escorts, 4 submarines, 12
patrol, 4 mine warfare, 5 amphibious warfare ships, 4 amphibious warfare
craft, 9 auxiliary, 25 service craft
Aircraft: 249 (99 jet), including 9 (nonjet) in naval air, 236 (99 jet) in
air force and 4 (nonjet) in army
Supply: produces some small arms ammunition; othewise relies prin-
cipally on US; has recently acquired jet fighters and tanks from France
Military budget: for fiscal year ending 31 December 1970,
$192,826,872; about 17.2% of proposed central government budget.
National Intelligence Survey (NIS) Material
The following sections of the NIS are relevant:
NIS Area 88 (Peru)
GENERAL SURVEY (May 1970)
Sec 21 Military Geographic Regions (Nov 64)
Sec 22 Coasts and Landing Beaches (Jun 63)
Sec 23 Weather and Climate (Jan 56)
Sec 24 Topography (Jul 64)
Sec 25 Urban Areas (Jan 61)
Sec 32 Highways (Dec 58)
Sec 35 Ports and Naval Facilities (Feb 56)
Sec 36 Merchant Marine (Nov 55)
Sec 38 Telecommunications (Mar 67)
Sec 41 Population (Nov 65)
Sec 42 Characteristics of the People (Nov 65)
Sec 43 Religion, Education, and Public Information (Jul 63)
Sec 44 Manpower (Nov 64)
Sec 45 Health and Sanitation (Dec 62)
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Sec 46 Welfare (May 65)
Sec 51 The Constitutional System (Jun 58)
Sec 52 Structure of the Government (Jan 59)
Sec 53 Political Dynamics (Oct 59)
Sec 54 Public Order and Safety (Oct 63)
Sec u version (Apr bl)
Sec 58 Propaganda (May 62)
Sec 61 Agriculture, Fisheries, and Forestry (Oct 62)
Sec 62F Fuels (Apr 68)
Sec 62P Electric Power (Apr 67)
Sec 63 Minerals and Metals (Oct 68)
Sec 64 Manufacturing and Construction (Oct 63)
Sec 65 Trade and Finance (Aug 68)
Sec 82 Naval Forces (Feb 57)
Sec 83 Air Forces (Aug 60)
Gazetteer (Feb 55)
Map
The best available general reference maps are: Instituto Geografico
Militar; Republica del Peru; 1 :1,000,000, 1963; and International Petroleum
Co., Alapa de Carreteras de la Republica del Peru, 1:2,570,000, 1958
(available also as CIA Map No. 39224 with some rail and road revisions).
No Fore* n Di
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