Strikes plague Peru's President Toledo

Reuters, 05.27.03, 3:13 PM ET By Missy Ryan

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.

Copyright 2003, Reuters News Service