LIMA, Peru, May 27 (Forbes.com-Reuters) - Just three years ago Peru's President Alejandro Toledo won fame when he led bloody street marches protesting a hard-line regime he pledged to tear down.
Now the one-time opposition leader faces the biggest challenge of his two years as president from those same kind of marches and strikes as unhappy Peruvians take to the street, demanding the government scrap its market-friendly economic plan and do more to help the poor.
But analysts point to impressive macroeconomic figures -- in 2002 Peru topped Latin America with 5.2 percent growth -- and say they are unfazed by unrest as long as they know Peru will not abandon the economic plan strikers want to see trashed.
"Foreign investors are not worried about politics or social pressure because they are totally convinced Peru is strongly tied to the (International Monetary Fund) IMF," Bear Stearns analyst Jose Cerritelli said from New York.
"For them, Peru ... is the least worrying country in Latin America," he said, adding that unrest in Peru seems mild in comparison to the rebel violence in Colombia, the leftist designs of President Hugo Chavez in Venezuela, or even Brazil's president, former metalworker Luiz Inacio Lula de Silva.
But with teachers, health workers, court workers, and some farmers striking, blocking highways and angrily shouting out demands in the streets, analysts say Peru has its hands tied.
"This government recognizes people's rights, but unfortunately the fiscal situation doesn't permit them to satisfy demands," said Peruvian commentator Ernest Velit.
Even officials admit that despite strong headline figures including low inflation, people have yet to feel it where it counts -- in their wallets.
"If we can't significantly reduce poverty, the turmoil in the streets, the banging of pots and pans will get louder," Toledo said in a speech in the government palace on Tuesday.
DIFFERENT STRIKERS COULD UNITE
Outside Congress this week, hundreds of teachers from across Peru banged on pots and waved banners in the third week of a strike seeking a hike of 210 soles ($60) to their average monthly wage of 700 soles ($200).
The government -- elected on pledges of not only jobs but fiscal discipline -- is offering them just 100 soles ($29), arguing it cannot stretch a tight budget any further.
"If the government doesn't change its policy of kneeling down before the IMF ... if it does not look the Peruvian people in the face and make its policies more sensitive, it's going to have to go," said Jorge Vargas, a high school teacher from the northern city of Chimbote.
Vargas said Toledo -- who grew up dirt-poor in a mountain village before he won a scholarship to study in the United States -- was out of touch with real Peruvians, proposing that the government fork over money retrieved from the corrupt regime of ex-President Alberto Fujimori to strapped teachers.
Officials have recovered some of the cash skimmed off state coffers under Fujimori, who fled in 2000 in a giant corruption scandal and who now lives sheltered by Tokyo.
"With that money, each teacher could get a 230-sol pay rise. Or they could stop debt payments for five days, and each teacher would get 240 soles more," Vargas said.
<a href=news.ft.com>Finalcial times
By Francisco Toro in Caracas
Published: May 27 2003 19:53 | Last Updated: May 27 2003 19:53
Weekend violence in Caracas has prompted Venezuela's interior minister to consider new regulations that would restrict opposition protest activities in certain neighbourhoods.
The possible clampdown coincides with the proposal of a new law that critics say would place significant restrictions on media broadcasts.
The debates on the right to protest throughout the city and the media contents bill come as concern mounts that Hugo Chávez, Venezuela's president, is becoming more authoritarian.
Lucas Rincón, Venezuela's interior minister, spoke of prohibiting political demonstrations after a shootout erupted during a Caracas rally at the weekend, killing one and injuring at least 17.
The government said it had urged rally organisers to change the location from Caracas' west side. Radical paramilitary supporters of Mr Chávez had warned they would attack opposition marchers in their west side neighbourhood.
But opposition leaders insisted they had a constitutional right to march anywhere and accused the government of trying to turn parts of Caracas into de facto no-opposition areas.
After the rally, Freddy Bernal, the pro-Chávez mayor of downtown Caracas, said he would no longer issue permits for opposition protests in his jurisdiction, citing the risk of violence. José Vicente Rangel, Venezuela's vice-president, accused the opposition of staging the shootings in order to blame the government.
Teodoro Petkoff, editor of an influential opposition tabloid, attacked Mr Rangel for "ignoring and even conniving with criminal actions announced ahead of time and performed in view of everyone, and on top of it, accusing the victims [of] the crimes".
The controversy comes as Venezuela's National Assembly is discussing a controversial media contents bill, which critics say would muzzle the overwhelmingly anti-Chávez private broadcasters. The bill would ban all violent material on television before 11pm - even in the context of live news broadcasts - ostensibly to protect child viewers.
During the Saturday rally, most broadcasters carried live images of the shootout, including images of wounded protesters.
"Under the pretext of protecting children from violent programing, the government wants to impose excessive restrictions," said José Miguel Vivanco, executive director of Human Rights Watch.
NEW YORK, May 27 (<a href=reuters.com>Reuters) - Moody's said Tuesday it revised the outlook for Venezuela's sovereign ratings to stable from developing, citing the recovery in oil production that was battered by a general strike earlier this year.
Moody's said in a statement it changed the outlook to stable for Venezuela's foreign currency country ceiling, which stands at Caa1, or deep into junk bond territory. It also revised the outlook to stable for the local currency rating.
"The end of the strike, when combined with the initiation of widespread capital controls, has meant that the central government is in a stronger political position than was true prior to the December strike," said Moody's. (Reporting by Susan Schneider, editing by J.S. Benkoe; Reuters Messaging: susan.schneider.reuters.com@reuters.net; email: susan.schneider@reuters.com; tel: +1 646 223 6319)
CARACAS (<a href=www.canada.com>AP) - Venezuela's government and the opposition will sign an agreement Thursday on a plan to hold a referendum on President Hugo Chavez's rule, the chief mediator of negotiations announced Tuesday.
The agreement, brokered by the Organization of American States, ends six months of formal talks between the two sides aimed at restoring stability to Venezuela. It also addresses possible votes on the terms of other elected officials. The accord prohibits any amendments to election laws while authorities prepare for balloting. It also urges Congress to swiftly name election authorities.
"I hope the agreement will create a better climate than the one we have in the country today," said OAS Secretary General Cesar Gaviria, the mediator. "I am convinced the agreement reached by the government and opposition is the solution we have been seeking."
Diplomats from six countries - the United States, Brazil, Chile, Mexico, Spain and Portugal - that helped in talks will be present at the signing ceremony, Gaviria said.
The negotiations began in November, seven months after a coup that briefly toppled Chavez and exposed Venezuela's deep divisions over the former paratrooper's leftist economic policies and irreverent rhetoric.
Chavez's first election in 1998 ended the 40-year stronghold of two traditional parties accused of squandering Venezuela's vast oil wealth and leaving 80 per cent of the population in poverty. He then pushed through a new constitution that paved the way for his own re-election in 2000 and elections that gave his allies control of Congress.
Chavez said he was leading "social revolution" against corruption and inequality. Adversaries - business leaders, labour unions and the two traditional parties - accused him of grabbing power and ruining the economy with leftist policies.
Months of unrest that followed the coup culminated in two-month strike to force Chavez's resignation. The strike collapsed in February, succeeding only in devastating the economy and costing Venezuela $6 billion US. The economy shrank 29 per cent in the first three months of 2003.
Venezuela's leaderless and demoralized opposition is now trying to organize a referendum to remove Chavez from office. The constitution would allow one in August, the midpoint in his six-year term. The next scheduled elections are in 2006.
Such referendums are also allowed for other elected officials. Chavez supporters are trying to organize votes against several legislators who defected from the ruling coalition, eroding the government's congressional majority to a handful.
Recent polls suggest Chavez's approval ratings range from 30 to 40 per cent. To remove Chavez, the opposition must garner more votes than Chavez did in the last election: more than 3.7 million, or almost 60 per cent.