Alejandro Toledo: The Legacy of the Peruvian President

Peruvian President Alejandro Toledo addressed a packed audience at the John F. Kennedy, Jr. Forum Wednesday in a speech titled, “Economic Growth and Democracies in Latin America: The Case of Peru.” The speech largely defended his record as president of Peru over the last five years as he prepares to step down July 28. Constitutionally barred from seeking re-election, Toledo nonetheless portrayed himself as a “fighter” for democracy in Peru, warning the yet-to-be-declared winner of the presidential elections that authoritarian rule will not be tolerated.

Toledo described his career as a “statistical anomaly,” and given his background, it is not difficult to see why. The child of a bricklayer and a fishmonger, Toledo shined shoes as a boy but later secured partial scholarships to attend the University of San Francisco and completed his PhD in economics and education at Stanford. From 1991 to 1994, he was a fellow at the Harvard Institute for International Development. Prior to entering the presidential elections in 2000 and 2001, Toledo was a professor of economics at the Universidad del Pacifico in Peru and acted as a consultant for international organizations such as the United Nations and the World Bank.

The Legacy
The robust Peruvian economy is probably the greatest legacy Toledo could leave behind. According to Toledo, the economy averaged 5 percent growth annually over the last five years, while trade in agricultural products has increased, further reducing the economy’s reliance on mining. The poverty rate has decreased from 54 to 48 percent, and Toledo said his election promises to double teachers’ salaries and increase compensation for doctors and nurses were fulfilled.

Toledo also announced that he and President Bush signed the United States-Peru Free Trade Agreement earlier the same day. The FTA would eliminate tariffs and trade barriers between the two countries, and according to Toledo, add 2 percent to Peru’s gross domestic product.

Yet these economic successes have been marred by ongoing civil unrest, negative press coverage and corruption charges. Peruvians were frustrated by the lack of progress reducing poverty, and Toledo’s approval rating plummeted from a high of 59 percent when he first took office, to single digits by 2005. In 2002 for instance, the privatization of two electricity plants led to strikes and protest riots in the city of Arequipa.

Peru is also locked in an ongoing battle with the guerilla group Shining Path. In 2005, Toledo declared a state of emergency in six jungle provinces in order to find the rebels who killed eight police officers in an ambush.

During his term, Toledo was also plagued by personal scandals relating to his salary, his illegitimate daughter, his sister (who is currently under house arrest for allegedly coordinating a voter-registration fraud scheme for his political party, Peru Possible) and his nephews (one of whom is awaiting trial for rape charges).

On the international front, Peru continues to face a sea border dispute with Chile, and a diplomatic war of words with Venezuela, whose President, Hugo Chavez, called Toledo’s management of Peru, “a resounding failure.” However, tensions within the region were tempered by successes such as the U.S.-Peru FTA and the negotiation of an FTA with Thailand.

The U.S.-Peru Trade Promotion Agreement (PTPA)
While hailed as a milestone on both sides, the PTPA now faces the challenge of being ratified by both governments. Two-way trade between the United States and Peru last year amounted to $7.6 billion, after tripling over the last three years. The free trade agreement renders 80 percent of U.S. exports of industrial goods and two-thirds of U.S. agricultural exports to Peru duty-free. It also strengthens the protection of U.S. investors, however, key Democrats on the Hill are withdrawing support on the grounds that the agreement lacks adequate worker protections. The Bush administration is likely to delay putting the pact before Congress until after the release of an International Trade Commission economic impact study, which is expected in May.

In Peru, the PTPA is also drawing mixed reactions, amidst concerns over the likely rise of medicine prices and the potential for an increase in drug trafficking. The agreement was strongly opposed by Ollanta Humala, the opposition presidential candidate who has received the most votes in the ongoing presidential election (about 92 percent of the votes had been counted as of April 19). He faces a runoff against either former Congresswoman Lourdes Flores, who supports the deal, or former President Alan Garcia, who believes the pact should be renegotiated.

Whatever the outcome of the PTPA, Toledo leaves behind a stronger Peruvian economy and a record of socio-economic changes in the country. The successful ratification of the free trade agreement will be the icing on the cake for him.