Lost Decade (Peru)
[1] Foreign debt accumulation throughout Latin America, a series of natural disasters, mass public expenditures, nationalizations of banks and financial institutions, and the shutting of Peru out of international credit markets led to a decade of macroeconomic decline.
The financial crisis soon became adopted into the public sphere through hyperinflation in commodities, food shortages, and mass unemployment.
As a result of the crisis, large waves of Peruvians immigrated to countries such as the United States, Spain, Italy, Chile, Venezuela and Argentina.
[7] Additionally, El Niño devastated Peru's fishing economy and led to destructive flooding and droughts in the region of Lima.
[8] Belaúnde was faced by a series of strict austerity measures recommended by the International Monetary Fund (IMF) after the buildup of foreign debt in Peru and throughout South America.
Facing growing pressure, Belaúnde visited Washington, D.C. in 1984 in a last effort to beg President Ronald Reagan for help in his bankrupt administration.
A White House aide commented that 'President Reagan only gave him half an hour,'' and suggested Belaúnde follow austerity programs outlined by banks and the IMF.
[9][10][11] A surge in populism due to the crisis favored presidential candidate Alan García's economic proposals that would cut Peru's lines with international investors and banks.
Viewed as a virtual default, investors soon pulled completely out of Peru and the Lima Stock Exchange suffered a significant drop.
Peru experienced a shortage of raw materials and food, and long strikes in the mining industry led to falling exports, leading the trade deficit even further and increased unemployment.
[18] Groups throughout the rural areas of Peru viewed the economic crisis as evidence of the failure of a capitalist free-market economy.
Data has shown that from 1986 to 1991, under both the Garcia and Fujimori presidencies, there was a significant rise in major social protests compared to the years before and after, including general strikes and riots and demonstrations.
[22] The Shining Path, in particular, also became widely popular among indigenous people, as the leader, Abimael Guzman, lectured philosophy and ideologies to communities and gained their support and dedication.
[23] After seeing the living conditions and injustices towards lower social classes, he decided to form his group and left the Communist Party of Peru.
He organized many of his young and low-income community members to protest the government, taught them about the ideas of communism, and worked to get them admitted to an educational institution.
With the organization explicitly focused on indigenous people (who make up the majority of Peru and also has the largest population of any Latin American State),[19] it also embraced its distaste for elitism and white-washing Peruvian culture.
A sudden rise in the use of torture towards civilians was also prevalent under the Garcia presidency; however, it did not start until 1985, 5 years after the Shining Path became violent.
Though the original intention of this “Anti-Terrorism Division” was to seek justice for those affected by terror groups, it became evident that the government also played part in violence.
[24] The evident long-term effects of the financial crisis in the general public is accredited to starting a large wave of outwards migration from Peru.
After showcasing footage of the imprisoned Guzman and calling him a “monster” on live national television, public opinion polls showed his popularity from 85% to a drastic 60%.
