A COMPARATIVE STUDY OF CIVILIAN AND MILITARY RULE IN PERU, 1963-197^« IMPLICATIONS FOR ECONOMIC DEVELOPMENT Karen A. Laidlaw A Dissertation Submitted to the Graduate School of Bowling Green State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY June, 1976 Approved by Doctoral Committee 11 ABSTRACT The purpose of the research was to investigate the two most recent periods in Peruvian political life and assess the effect that two different forms of government had on the country’s industrial and economic development. The two governments investigated were (1) the civilian reformist regime of Fernando Belaunde Terry, who was presi­ dent from 1963 to 1968, and (2) the revolutionary military government led by General Juan Velasco Alvarado which has held power since 1968. This case study of development trends in Peru since 1963 was based primarily on the study, analysis and evalua­ tion of secondary source material, supplemented by first­ hand knowledge and experience gained from time spent in Peru. The evidence compiled clearly indicates the more recent military government has been more successful than its predecessor in promoting national development. By 1972, after four years in power, the current "revolutionary government" had completed the expropriation and nationaliza­ tion of several multinational corporations} it had passed a new agrarian reform law which had redistributed some 2| mil­ lion acres: and under a new industrial law it had set up numerous "worker communities" with a system of profit shar­ ing and reinvestment designed to enhance worker control over industry. In addition it had undertaken numerous bank­ ing reforms, established new trade alliances and created legislation to end foreign domination of Peruvian industry. A good deal of the success of the present military government rests with the nature of the role it assumed when it came to power. By concentrating power in the hands of a governing .junta composed of highly motivated officers who have come to see themselves as prime agents of moderni­ zation, the present military government has played an active role in promoting the reform programs that were blocked by an opposition congress during the preceding regime. Given the seriousness and complexity of the development problem, not only in Peru but throughout the Third World, our analysis suggested that the only government likely to succeed in pro­ moting national development will be one that exercises strong, perhaps even dictatorial control over the economic and poli­ tical life of a nation} and such a government will have to have the support if not the actual participation of a strong military establishment. Ill ACKNOWLEDGMENTS As is true with all studies of this kind, the present research could not have been completed without the help of many others. I would like especially to thank the several members of the Departments of Sociology, History, and Poli­ tical Science for the help and encouragement given during the course of my study at Bowling Green State University. I am particularly grateful to Professor Edward G. Stockwell who was my advisor throughout the research, and who directed the preparation of the dissertation from beginning to end. Without his helpful comments and criticism my task would have been much more arduous. I am also indebted to Pro­ fessors Joseph Kivlin and Donald McQuarie of Sociology, Roger Anderson of Political Science and Jack Ray Thomas of History for reading the manuscript and offering many useful ideas for improvement. Of course, responsibility for any errors in the text rests solely with the author. Acknowledgments are also due to all the people I met in Peru who for personal reasons wish to remain anonymous, but without whose help and interest X could not have com­ piled much of the material necessary to complete the study. A very special note of gratitude is due to my parents for the opportunity to live in Peru, but especially for their encouragement and loving support throughout my graduate career iv The conclusions of my study may be debatable to many Peruvians and to multinationals residing in Peru. However, I have the greatest respect and affection for the people of Peru, and whatever course they may take I wish the best for their country in its difficult transition from a state of underdevelopment to one of national development and inde­ pendence. V TABLE OF CONTENTS Page ABSTRACT.................................................................................................. ii ACKNOWLEDGMENTS..................................................................................... iii LIST OF TABLES......................................................................................... vii INTRODUCTION ......................................................................................... 1 Research problem................................... 7 THE ROLE OF THE MILITARY IN UNDERDEVELOPED COUNTRIES . 10 Types of roles ....................................................................... 11 The causes ofm ilitary intervention........................... 24 Summary......................................................................................... 32 THE ROLE OF THE MILITARY IN THE POLITICAL HISTORY OF PERU.................................................................................................. 35 The beginning of military rule............................... 38 The emergence of stability............................................. 41 Initial attempts at civilian rule...................... 43 The return to military rule............................................. 45 The Leguia dictatorship..................................................... 48 The Aprista/military feud ................................................. 52 THE BELAUNDE GOVERNMENT« I963-I968 58 The assumption of power..................................................... 60 Reform programs ....................................................................... 62 The changing character of the military.................. 71 The IPC negotiations.......................................................... 79 Summary.......................... 82 vx Page THE "REVOLUTIONARY GOVERNMENT" OP GENERAL JUAN VELASCO» 1968-1974 ............................................................................ 84 Economic development differentials. ....... 84 The military takeover...................................... .............. 8? Development programs of them ilitary government . 92 Summary........................................................................................ 114 SUMMARY AND CONCLUSIONS.............................................................. 117 General implications for military rule and modernization .................. ...... ........................... 125 Contributions and limitations of the present research.........................................................................................127 BIBLIOGRAPHY 132 vii LIST OF TABLES TABLE Page 1. Composition of total public expenditures by- sector« Peru, I963-I966 (Percentage) ....................... 67 2. Percentage distribution of central government income« Peru, 1963-1967 ................................................. 69 3. Central government current income and expendi­ tures« Peru, I963-I967 (Million Soles) ..... 71 4. Average annual rate of increase in per capita gross domestic product at constant prices« selected Latin American countries, 1965-1970 and 1970-1972/73 ................................................................... 86 5. Value of exports to centrally planned economies as a percentage of total exports« Peru, 1965- 1972 ............................................................................................. 94 CHAPTER I INTRODUCTION Peru, the fourth largest nation in South America, is located on the western side of the continent. Its land area of 1.3 million square kilometers is roughly equal to the combined land area of Spain, France, and West Germany (United Nations, 1974). The country is divided into three major geographical areas: (1) the coastal area, a narrow strip of land extending from Ecuador in the north to Chile in the south, in which the largest share of the population (4? percent) resides (Cotier, 1970-71)» (2) the sierra, or highland areas, where most of the remaining population lives; and (3) the Amazon jungle area which is inhabited by small bands of hunting/gathering Indians. The population of Peru, exclusive of the jungle Indians, was enumerated at 13.6 million by the most recent census (United Nations, 1974, Table 2). Although Indians comprise about one-half of the population, the inhabitants of Peru, like those of other new world nations, are a heter­ ogeneous group. Recent estimates (Kantor, 1969:464) give the following ethnic breakdown of the Peruvian population: Indians.............................................................49% Mestizos.........................................................37% Whites............................................................. 13% Other (e.g., orientals, blacks) . 1% 1 2 In many respects, Peru can be said to fit the "text­ book definition" of what constitutes an underdeveloped coun­ try (Stockwell, 1974). Its per capita income, circa 1970» of $246 was one of the lowest in South America (United Nations, 1970)j nearly half of its active adult population is engaged in agriculture and related activities, much of which consists of subsistence farming (United Nations, 1965)» the relatively low income-producing