Countries at the Crossroads 2005 - Peru

(Scores are based on a scale of 0 to 7, with 0 representing weakest and 7 representing strongest performance.)

Introduction

Author

Martin Edwin "Mick" Andersen has served as Director of Latin American and Caribbean programs for the National Democratic Institute for International Affairs (NDI), as a member of the professional staff of the U.S. Senate Foreign Relations Committee, and as a Senior Advisor for Policy Planning at the U.S. Department of Justice. As a Newsweek special correspondent, in 1981 Andersen was one of the first non-Peruvian journalists to cover the Shining Path guerrillas from their mountain stronghold in Ayacucho.

After more than 10 years of harsh authoritarian rule and guerrilla violence that had undermined Peru's civilian democratic institutions and the rule of law, the 2001 election of Alejandro Toledo raised the bar of public expectations for political, economic, and social reform. When Toledo took office, the resistance from the Shining Path guerrillas – who led an ultra-left campaign of terror centered in the Indian highlands during the 1980s and part of the 1990s – had been decisively beaten.¹ Still, the iron-clad control that Toledo's predecessor, Alberto Fujimori, had maintained on the press, courts, congress, military, and police left serious challenges for the president.

Toledo – who received a Ph.D. from Stanford and is the Americas' first Native American chief executive since colonial times – has presided over an enviable period of economic growth, and his government is credited with great strides in rebuilding Peru's tattered democratic institutions. Reforms, some initiated by a caretaker government before he took office, have produced important although largely incomplete changes: greater independence for the press and the judiciary, new congressional checks on the executive, greater accountability by the military and security services to independent public bodies, and deepening policies aimed at consolidating a market economy.

The Toledo government, together with opposition parties and independent civil society leaders, also created an Acuerdo Nacional (National Agreement) designed to promote a consensus agenda for additional far-reaching reform. The proposed changes included constitutional reform, improvements in public services, the overhaul of the country's tax system, and the modernization of its judicial sector. In 2002, much-heralded decentralization of political power, and with it the promise of far greater accountability from officials, occurred when elections took place for 25 newly created regional presidencies. Most of those elected, however, had little or no administrative experience; their limited real powers and resources confounded local expectations even further. In 2004, congress debated plans for a new constitution.

Continuing governance challenges, weak and still over-centralized institutions, and growing public skepticism about the country's political elite, together with popular disenchantment with Toledo's erratic and unchaste governing style, including allegations of corruption reaching into the heart of his family circle,² have all contributed to political disputes that brought the groundswell for reform to a standstill. The weakness of Toledo's ruling coalition, together with his shaky leadership skills, were exacerbated when his Peru Posible party lost control of the presidency of the congress in July 2004 and two of its founding members resigned from the party, reducing its congressional representation to 36, 9 fewer than in 2001.

A country of largely of peasant farmers and underemployed shantytown dwellers, Peru has a relatively modern sector on the coastal plains and a mostly subsistence sector in the mountains of the interior and in the jungle region made more remote by poor transportation and communications linkages. The largely dual nature of the economy, and its political consequences, are reflected in the facts that traditionally economic power has been in the hands of a European-descended elite centered in Lima and that income distribution is highly unequal.

Public corruption remains endemic; the many reforms have been juxtaposed with a string of scandals that have shaken Toledo's government at the highest levels. Questions persist about the government's ability to address problems of social and economic inequality. A general strike called in July 2004, although only partially successful, had a marked anti-free enterprise bias. It was supported by what public opinion surveys say is one of the strongest candidates to succeed Toledo in 2006 – former president Alan Garcia, whose failed term in office (1985-1990) was marked by economic collapse, hyperinflation, social unrest, and an upswing in the guerrilla insurgency.

By late 2004, it seemed likely that the country had, at least for the medium term, escaped the specter of a constitutional challenge to Toledo's government resulting from its declining legitimacy. This was due largely to Peru's strong economic performance – July 2004 marked the economy's 37th month of expansion – and the fact that the political opposition was not much more popular than Toledo. Because anti-Toledo forces are in effective control of congress, they have been at pains to show the electorate their own institutional responsibility in preparation for the 2006 national elections.³

Accountability and Public Voice – 4.65

Peruvians can change their government through free and fair elections. Elections since 2001 have been characterized by universal and equal suffrage, conducted by secret ballot and monitored by independent electoral authorities.

In preparation for the 2001 vote, congress reformed the constitution, replacing a single nationwide district for congressional elections with a system of multiple districts. This provided fair representation for the almost 50 percent of the population who live outside the four largest cities and guaranteed them some attention from the state and from political parties, which traditionally had ignored them. Still, Peru's large indigenous population remains reluctant to participate in the political process as Native Americans representing their own communities' rights to land, resources, and respect for their culture, in large degree due to long-standing patterns of social and economic marginalization, as well as the effects of the Shining Path insurgency and the military's brutal counterinsurgency campaign.

A law approved in October 2002 was designed to promote transparent political party financing by requiring candidates to provide within 60 days of an election the sources and amount of financing they received during a campaign. The law's a posteriori character, vague requirements on the disclosure of financing sources, and lack of real sanctions mean it has little genuine impact. No regulations control Peruvian or foreign expenditures effectively in political campaigns. For example, in 2001, the international financier George Soros donated $1 million to the Toledo campaign.⁴ A political party law passed by the Peruvian congress in late 2003 sought to enhance the parties' internal transparency and democracy. During 2004, the parties assessed their statutes and implemented financial controls in order to comply with the new law.

The executive, legislative, and judicial branches of government, which are independent of each other according to the constitution, can oversee one another's actions and on occasion have held each other accountable for excessive exercise of power. The president's cabinet is composed of 15 ministers under the functional direction of a premier. The finance minister controls the budgets of all other ministries, thus exercising important oversight functions on the operations of the executive branch.

Political interference in public administration, patronage, and nepotism continue to be serious problems; the example of Toledo's immediate family raises questions about his government's commitment to merit-based principles. Allegations include his wife's failure to declare significant income by using foreign bank accounts; a brother's involvement in influence trafficking in the case of a contract awarded to a telephone company; and Toledo's sister's masterminding of the mass forgery of petition signatures for his 2000 presidential campaign for election as head of Peru Posible.⁵ Transparency International has pointed out that, because many public entities are bound by more flexible private sector labor laws, "many job vacancies are filled and contracts awarded without public advertisement. The beneficiaries are often government officials, legislators or their relations." Such official steering of jobs had been reported at the ministry for women, the national food distribution agency, the airport administration, and the state-owned oil company, among others.⁶

A large gap remains between government rhetoric and actual performance with respect to the ability of civic groups to testify about, comment on, and influence pending government legislation. While opportunities to comment have been expanded, civic leaders say the practical effect of their input is often vitiated by official inertia and inter-party gridlock. Nongovernmental organizations (NGOs), including human rights monitors, operate freely in Peru and are not subject to either legal impediments or onerous registration requirements.

The government protects individuals from imprisonment for the free expression of their views. Under Fujimori, both state-run and private media that had received secret payments were unrelentingly pro-government, with little coverage given to opposition views. Independent journalists were harassed and subject to detention, death threats, and serious physical mistreatment. Under Toledo and his interim-president predecessor, Valentine Paniagua, the climate of press freedom has improved significantly. The primarily privately owned press offers a wide spectrum of political and social views. In 2004, the Supreme Court's judicial oversight office began internal investigations to ascertain if any court rulings infringed upon the right to freedom of speech. There are both public and private radio – still the most important source of news and information in many rural areas – and television stations. The government does not limit access to the Internet, and the state provides broad freedom for cultural expression.

However, some problems persist. Libel is considered a criminal offense, and charges are often brought against journalists seeking to expose official corruption, particularly when it concerns illegal narcotics. Although the number of threats against journalists has fallen from their epidemic level under Fujimori, the practice still persists, particularly in the provinces, including death threats. There have been allegations that the government has played too intrusive a role in steering the outcomes of legal proceedings concerning control of media outlets. Officials have also been accused of trying to induce favorable coverage by inviting media owners to social events or by taking them on all-expenses-paid business trips; by giving them tax breaks for the import of necessary equipment; and by subsidizing certain publications through official advertisements.⁷ Peru's judicial branch appears unable to provide the guarantees necessary for full press freedom, in part because of high levels of public and private corruption.⁸

The anticorruption court handed down its first sentences in 2004 against reporters, publishers, and media outlets charged with accepting government bribes in return for their support for the Fujimori regime. Three television executives went into hiding in Argentina rather than appear at their final hearing on a Peruvian extradition request.⁹ Somewhat paradoxically, the jailing of a handful of media executives on bribery charges contributed to an even further decline in the public's trust of the media.

Recommendations

• Political party financing laws and regulations should be strengthened, including the establishment of enforceable penalties for their violation and the transparent expenditure of foreign money in campaigns.
• A civil service system that is effectively based on merit principles should be implemented for the public sector. Stricter laws on nepotism and patronage, including meaningful penalties for those who violate them, should be enacted.
• Greater opportunity should be afforded to civic groups to testify about, comment on, and influence pending government legislation by holding greater numbers of publicized hearings and other official meetings outside the capital.
• Libel should be restricted to civil law, and penalties should be balanced between the need to maintain protections for individuals' honor and the requirements of a free press in an open society.

Civil Liberties – 4.64

Since the fall of the Fujimori government, Peruvians have been protected from state terror and unjustified imprisonment. Although under Toledo many abuses of civil liberties still occur in a variety of forms, few are of the kind of politically motivated acts that characterized the Fujimori government or the rule of Alan Garcia. A series of laws passed in early 2003 addressed the problem of arbitrary detention, and the practice has notably diminished. However, although the constitution and the law prohibit torture and inhumane or humiliating treatment, security forces continue to torture and abuse both individuals in police custody and inmates in prison, as well as military recruits. In response to torture complaints, security force actions have been increasingly addressed through the civilian court system.

Following nationwide road blockages by striking teachers and agricultural workers in May 2003, Toledo declared a state of emergency that suspended some civil liberties and empowered the military to enforce order in 12 departments. In 2004, the state of emergency was reduced to only areas where Shining Path guerrillas were known to be operating. That year, human rights groups criticized the Toledo government for failing to implement the recommendations of the truth and reconciliation commission concerning reparations for victims of the violence and the prosecution of those guilty of human rights crimes. On August 24, the Constitutional Tribunal ruled that during states of emergency military authorities could not assume political functions and that military violations of human rights must be tried in civilian courts rather than by military tribunals.

The office of the human rights ombudsman in Peru, funded by the Peruvian and foreign governments, has both investigative independence and the ability to report its conclusions and recommendations to the public without interference. Human rights activists say the office has actively and effectively investigated cases of alleged government abuse. However, the ombudsman, who is chosen by at least a two-thirds majority of votes in congress and serves a five-year term, lacks a mechanism to enforce the office's findings.¹⁰

The 2002 reform of Peru's highly centralized political structure, designed to improve government accountability, was intended in part to address complaints that the hyper-concentration of decision making in Lima resulted in the inability of citizens living outside the capital to receive effective petition and redress rights. However, the government has been slow to devolve power and financial resources to the regions, citing a lack of local administrative and technical experience and capabilities. This, in turn, has meant that the ability of people in the regions to petition and redress rights effectively remains hampered.

The national prison institute controls most of Peru's penal facilities, where conditions range from poor to extremely harsh, the latter in particular in maximum-security facilities in the highlands; the largest facilities are run by the national police. In addition to meager budgets, lack of sanitation, poor nutrition and health care, and severe overcrowding, prisoners are victimized routinely by prison guards and by their fellow inmates.

In August 2003, a truth and reconciliation commission reported on the scope and origins of the political violence that had wracked Peru from 1980 to 2000. It found that the Maoist Shining Path guerrilla group was the "principal perpetrator of the human rights violations," which included 69,000 people killed – double the previously accepted figure. The commission also accused the military and security forces of serial gross atrocities. Nearly three-fourths of the victims in the conflict were Indian peasants living in rural areas, long the object of neglect at the hand of the central government.¹¹

To the extent that it can, the government protects citizens from abuse by private and non-state actors. However, the poorly paid Peruvian national police are not effective in general; with the exception of a few special units, their professionalism is substandard, sometimes egregiously so. Since Toledo assumed power, no politically motivated killings by government agents have been reported, although allegations persist about unlawful or unwarranted killings by police, often focused on the excessive use of force against protesters.

A 2000 law allows suspects in corruption investigations to be detained for up to 15 days without arraignment and permits authorities to impede suspects from traveling abroad. Terrorist suspects may be detained for a maximum of 15 days and held incommunicado for the first 10 days. Although the prison system continues to be plagued by sentencing delays, the government has sought to remedy these by streamlining court procedures and providing more public defenders. Prisoners continue to wait excessively long times between the end of their trial and their sentencing.

The constitution, the Employment Promotion Law, and other laws concerning marriage, divorce, and property rights prohibit discrimination against women, but racial and sexual discrimination in employment and education continues. Spousal abuse is perhaps the greatest problem facing women in Peru today, although recently the government has taken some steps to address the issue. For example, the ministry of women and social development's Women's Emergency Program addressed the legal, psychological, and medical problems facing women and children who were victims of domestic violence, with greater public education efforts. Forced labor, including child labor, exists in the gold-mining region of the Amazon. Cases of international trafficking in persons are rare, but domestic trafficking is common, particularly to bring young women from the Amazon region or the highlands into the cities or mining areas to work as prostitutes. The problem of trafficking, particularly that of minors, has received increasing government attention. In an effort to combat the domestic sex trafficking of adolescent girls, in 2003 the ministry of the interior signed an agreement with the Foundation for Missing Peruvians, a nongovernmental group, making that organization the official registry for missing persons in the country. A 2000 law stipulates that at least 30 percent of each party's congressional candidates, and at least 25 percent of those for municipal elections, be women, and women constitute about one-sixth of the members of congress. Women have also served as cabinet ministers and in the Supreme Court.

Racism against Peru's large Indian population has been prevalent among the middle and upper classes, although the Fujimori government made some effort to combat it. Indigenous people living in the Andean highlands speak Quechua and Aymara, which are recognized as official languages. Between 200,000 and 300,000 indigenous persons live on the eastern side of the Andes and in the tropical lowlands that feed into the Amazon basin. Afro-Peruvians, who live in communities concentrated mostly along the Pacific coast, are among the poorest groups in Peru and, like their Indian counterparts, face strong discrimination and social prejudice. The election of Toledo, who boasted of his indigenous heritage, initially gave hope to Peru's indigenous and other minority communities. However, the discontent with his government characteristic of all strata of Peruvian society includes the country's Native American and Afro-Peruvian groups. Indigenous representation in congress remains extremely low, as does that of Afro-Peruvians, who at senior levels of the executive branch are virtually nonexistent.

The constitution prohibits discrimination against persons with disabilities. In addition, a 1998 law establishing the National Council for the Integration of People with Disabilities set down rights, allowances, programs, and services; prohibited discrimination; and provided for the appointment of a disability rights specialist in the human rights ombudsman's office.¹² A 1998 law also mandates that public spaces be barrier-free and that buildings be architecturally accessible to people with disabilities. In 2003 the Toledo government kicked off a campaign in which people with disabilities could register themselves and receive benefits. A national Equal Opportunity Plan for Persons with Disabilities approved that same year focused on improving the quality of life of disabled persons by targeting antidiscrimination measures, priority care, prevention, and the strengthening of existing services. However, in practice the government has dedicated few resources to persons with disabilities.¹³ Little has been done to implement the regulations, and accommodations such as interpreters for the deaf in government service offices and Braille or recorded versions of the constitution do not exist.¹⁴

Peru's constitutional provisions for freedom of religion and the separation of church and state are generally respected in practice. The Roman Catholic Church is acknowledged as "an important element in the historical, cultural, and moral development of the nation" and receives preferential treatment, including state benefits and beneficial tax laws. Roman Catholicism is a mandatory subject in primary and secondary schools, but all faiths may establish places of worship, train clergy, and proselytize. Official registration of religious denominations or churches is not required.

The constitution provides for the right of peaceful assembly, and the authorities generally respect this right in practice. The government permits numerous NGOs dedicated to monitoring and advancing human rights to operate freely. In contrast to previous years, these groups reported no harassment or other attempts by the authorities to hinder their operations in 2003. Citizens are not required, either directly or indirectly, to belong to state-sanctioned associations in order to receive indispensable benefits.

In 2003, a bill was presented in congress that would establish, in accordance with the constitution, the right of everyone to ask for and receive complete and truthful information from all NGOs. Under its provisions, all NGOs would be required to create a Web page, which would contain a transparency portal.¹⁵

Only about 5 percent of the formal sector workforce belongs to organized labor unions. The Fujimori era exacerbated an already steep decline in labor's fortunes, which also suffered from cuts in the public sector labor force, more flexible labor laws, and other free market policies. In July 2004, national labor unions called the first general strike in Peru since 1999, in part to demand an investigation of alleged public corruption. The strike received the support of the country's largest opposition party. In response, the government called out several hundred troops that it said were needed to guard key government buildings. Critics charged that the involvement of the army increased the chances for confrontation; the strike itself received only partial support in major cities around the country.

Recommendations

• The decentralization of power should receive priority status from the central government, at the Council of Ministers level, so that greater accountability and the effective redress of grievances can be made available to the greatest number of Peruvians.
• The recommendations of the truth and reconciliation commission concerning reparations for victims of the 1980-2000 violence and the prosecution of those guilty of human rights crimes should be enacted. The government should also extend full protection to witnesses in human rights prosecutions.
• Greater efforts, including devotion of a larger share of public resources and greater engagement by the executive branch, should be made to enforce laws and regulations concerning gender equity issues and the rights of ethnic, religious, and other distinct groups.
• Civilian police forces should receive modern training, equipment, and pay adequate to fulfill their duties in a professional manner.

Rule of Law – 3.84

Although the constitution provides for an independent judiciary, in fact the legal system enjoys the smallest degree of public confidence of any government institution. The judiciary is corrupt, inefficient, and subject to political and economic influences, although some improvements have been made since Fujimori left the presidency. After Toledo assumed office, the ministry of justice began to put into place a broad anticorruption effort. The number of provisional judges, whose positions were dependent on the executive and therefore were unduly susceptible to pressure, decreased markedly. However, popular perceptions remain that the justice system is an inefficient, overloaded bureaucracy riddled with political influence and greed.

In January 2003 the government had to restart the judicial restructuring process in response to several scandals in which the executive itself was accused of exerting undue influence over a number of judges, including through bribes. Toledo publicly expressed his concern about judicial decisions that exonerated Fujimori-era officials of charges of rights violations and corruption.¹⁶ Most of Peru's judges are overworked and underpaid as a result of scant resources. In 2004, the judicial branch petitioned the Constitutional Court for operational budgetary autonomy equal to that enjoyed by the executive and legislative branches.

Prosecutors generally follow orders from the government, which names them and pays their salaries. Those who show real independence rarely survive in office; despite the Toledo government's pledges to reform the system, the political subordination of the judiciary remains a problem. In general, legislative, executive, and other governmental authorities do comply with judicial decisions. Through the middle of 2004, the vast majority of public officials prosecuted for wrongdoing had served in the Fujimori regime, despite apparently well-founded charges of increasing corruption within the Toledo government.¹⁷

Citizens are afforded public trials in Peru, but the timeliness of their hearings, as well as the competency, impartiality, and independence of the tribunals in which they are held, is frequently in doubt. The backlog of cases is a particular impediment, with more than 1 million cases recorded in 2003. The judicial system is rife with instances of class-based and political favoritism, as well as discrimination against the country's indigenous population. Moreover, fully one-third of the population – those who are most marginalized from the dominant society – are outside the effective reach of the courts. This has led to isolated incidents of vigilante justice.¹⁸

Judicial training continues to be a problem and, in the case of military judges, a significant number are active-duty officers with little or no professional legal training. Although defendants have the right to counsel, the public defender system often fails to provide indigent defendants, including those accused of serious crimes, with qualified attorneys.

In general, the country's military and security forces are considered to be under effective civilian control. However, Peru lacks the codified distinction between national defense and internal security that is characteristic of more modern democratic states; responsibility for internal security is shared between the military and the Peruvian national police. Both Toledo and his interim-president predecessor successfully cashiered numerous high-ranking military and police officials associated with the Fujimori regime, and military judges no longer try civilians. However, many complaints arise about police abuse, mostly centered on acts of corruption.

In August 2002, the Supreme Court decided that the military court system should have jurisdiction in the trial, on charges of extrajudicial killings, of 120 military commandos who had rescued 74 hostages held by members of the Tupac Amaru Revolutionary Movement (MRTA) at the residence of the Japanese ambassador in April 1997. The court also found that four others, including former Intelligence Service Director Vladimiro Montesinos, were subject to civilian criminal court. This case helped to fortify civilian oversight in internal security.

In September 2003, Toledo fired the head of the national intelligence service, a retired admiral, after it was discovered the spy agency had tapped the president's phone line and leaked the tape to a scandal-driven television program.¹⁹ In March 2004, the government announced that it was dissolving the national intelligence service after the seventh head of the National Intelligence Council under Toledo resigned because he was under investigation for alleged corruption.²⁰

In general, the state does attempt to enforce property rights and contracts and protect citizens from both arbitrary and unjust deprivation of their property. Still, problems exist. In the Peruvian countryside, there are few formal property rights, as much of the land has not been surveyed and thus technically does not belong to anyone. Traditionally, an important deterrent to economic development in both rural and urban areas has been the lack of land titles for impoverished families – which keeps them from using the land as collateral for loans to start businesses or improve their homes. In 1996, the Fujimori government initiated an innovative program that awarded land titles to mostly urban people living in shantytowns. As a result, the government's Commission to Formalize Informal Property handed out more than 1.4 million urban property titles. Because of commercial bank reluctance to finance home improvements made by the new owners, since 2000 the government commission has established a private partnership that has lent a total of $728 million to 296,000 new titleholders at low rates.²¹ However, the improper registry of land titles continues to be a major problem, due to a lack of administrative resources, poor survey work, conflicting claims, and the absence of title insurance.²²

The 1993 constitution and subsequent laws offer less protection for native lands than earlier legislation, which had more explicit guarantees about the inalienability and non-marketability of native lands for the peoples of the Amazon region. Current laws only preserve the concept that the land is "unassignable," meaning that the title to such lands cannot be reassigned to a non-indigenous tenant by right of tenure. However, the land can be bought and sold.²³

Recommendations

• The judicial branch should have operational budgetary autonomy comparable with that enjoyed by the executive and legislative branches.
• Efforts at judicial training should be accelerated, with a thorough vetting that includes the elimination of all trainees who do not meet minimum standards.
• A distinction should be made in law between national defense and internal security, with exclusive jurisdiction for law enforcement assigned to civilian police forces in all cases save grave national disorders.
• Traditional law should be codified for use in indigenous communities in all cases not typified as major crimes, so that native peoples have greater access to the justice system while preserving elements of their heritage and cultures.
• The authorities should take steps to promote the proper registry of land titles, and more explicit guarantees about the inalienability and non-marketability of native lands should be given the force of law.

Anticorruption and Transparency – 3.21

Although independent observers consider corruption under Fujimori – which included bribery, extortion, and racketeering – to have been systemic and many magnitudes greater than that under Toledo – whose government's main problem in this area appears to be nepotism – in 2004 the country seemed to be returning to a prior state of generalized institutional corruption. By mid-2004 one public opinion poll showed that 70 percent of those surveyed felt the president himself was corrupt.²⁴ At the same time, Peru's score in Transparency International's Corruption Perceptions Index dropped from 3.7 to 3.5 (on a scale of 1 to 10, with 10 being the most favorable ranking possible). The 2004 score put the country just half a point above the level Transparency International considers to indicate grave and uncontrollable corruption problems. By 2004, popular concerns about resurgent official corruption involved both the president and his family. Toledo was accused of taking a bribe from a Colombian brewing company, a charge he denied, while his wife, sister, and several political associates were also linked to unsavory financial and political deals.²⁵

Toledo has suggested that media accusations of corruption against his government are the handiwork of Fujimori aide Montesinos, who continues to influence the media even though he is in jail.²⁶ Some observers, including Peruvian media watchdogs, also point out that part of the problem was not of Toledo's making: The press, newly liberated from the controls and corruption of the Fujimori era, has engaged in denuncialogia – an obsession with denunciations – that trivializes investigative journalism and helps to poison both political debate and public confidence.²⁷ Throughout 2004 a debate took place about the degree to which the press covered alleged government corruption; whether the coverage was appropriate for the seriousness of the misconduct uncovered; and whether the government might be pressuring journalists in order to influence their coverage.

An inefficient bureaucracy, characterized by excessive red tape, remains a major stumbling block in Peru, adding to the costs of doing business in the country and providing numerous opportunities for official corruption. For example, entrepreneurs still face considerable difficulties when trying to start a business or register a company in Peru.²⁸ The American Chamber of Commerce in Peru has reported that the "biggest obstacles" arising from government intervention come from regional and municipal governments, which are farther from the reach of the central government's efforts to promote market reforms. It has also complained that the National Institute for the Defense of Competition and Intellectual Property and other regulatory bodies, "which long ago used to enjoy greater independence, now are subject to strong political pressures."²⁹

The Peruvian civil code prohibits family members of the president from participating in negotiations in which the interests of the state are at stake. In general, however, the state does not adequately enforce the separation of public office from the personal interests of public officeholders. In many cases, the purchase of goods or the execution of works is done with officials who disguise their personal stake by using either family members or testaferros (third parties).³⁰

Senior public officials are normally required to file financial disclosure forms designed to prevent conflicts of interest. In practice, these are frequently fraudulent or distorted. In August 2004, 12 of 15 cabinet ministers decided to follow Toledo's personal example and exempted themselves from banking secrecy laws in what they said was an effort to improve public transparency. Opposition leaders Alan Garcia and Lourdes Flores took similar actions.³¹ But critics called the move irrelevant under Peruvian law; personal accounts cannot be reviewed without the opening of a formal investigation, which had not taken place in the cases of any of those who exempted themselves from the banking secrecy shield. In 2003, a law regulating lobbying was approved, establishing that all activity meant to influence the decisions of public officials and members of congress must be made publicly available. The state does exercise some control over conflicts of interest in the private sector.

The Peruvian state is the primary victim of corruption; its still weak regulatory and enforcement framework leaves it vulnerable and unable to protect its interests. According to the Coordinadora Nacional de Derechos Humanos, a notable lack of progress in public corruption investigations, including the small number of convictions, is in part due to the need to create a subsystem of police, prosecutors, judges, and special anticorruption courts untainted by the mafia-like corruption of the judicial branch under Fujimori. The slowness of the judicial process, strikes by judicial personnel, political instability, threats, and lack of support are other factors. By September 2004, 143 public corruption cases had been pursued against 1,453 people; yet, despite the repatriation of some $151 million in funds stashed by the Montesinos network in U.S. and Swiss banks, only 14 cases had been concluded.³²

Prosecutions continue to be hindered by a lack of effective anticorruption statutes that allow for timely resolution of cases and swift punishment.³³ Public corruption commonly receives light sanction, usually limited to house detention or restrictions on foreign travel. Jail terms are rare.³⁴ In the fall of 2004, it was reported that 27.5 percent of the members of Peru's unicameral congress had had formal complaints lodged against them before that body's ethics commission. Of the 41 cases, however, only one resulted in an effective sanction.³⁵ In a positive development, the congressional ethics committee has drafted a new ethics code and procedures manual designed to ensure effective handling of complaints and multiparty representation.³⁶ Peruvian institutions of higher learning are less susceptible to corruption and graft than other institutions, but favoritism is common and sometimes "grease payments" are necessary to gain admission.

The national superintendency of tax administration (SUNAT) is effective in tax collection among medium- and lower-income people, but it has the reputation of being complacent with the rich and powerful, allowing tax delinquency among the upper-income brackets to be treated with leniency. Because the SUNAT's investigations are conducted in secrecy, it is difficult to establish whether it acts correctly in enforcing tax laws.

The independent special anticorruption prosecutors' investigations of former officials of the Fujimori government were carried out following the same rules used in other cases, with defendants having full access to attorneys and all the norms of due process followed. By the beginning of 2004 allegations were increasing that the cases against official corruption centered almost exclusively on deeds committed by members of the Fujimori regime, with little attention given to alleged misdeeds conducted during the Toledo period. That changed significantly when the lead special prosecutor announced early in 2004 that his unit would also investigate alleged corruption within the Toledo government, including members of Toledo's own family. However, although Toledo pledged publicly that even his own family was not exempt from examination, senior government officials routinely began to question the work done by the prosecutors, saying it would evaluate the work of the independent special unit, and floated the names of possible replacements.³⁷

Official hostility to the independent special anticorruption prosecutors increased as probes into the current government progressed. The lead anticorruption prosecutor reported: "There is a sector in this regime that is very uncomfortable with the independence that we demonstrate each time we talk in favor of ending the corruption in this government, which is doing very little to promote the combat against it." He added that he had evidence that his e-mail and telephone communications were being monitored. The conflict between the government and the anticorruption office worsened in September, when a special prosecutor charged that Toledo's brother was involved in corrupting public officials. Nevertheless, in late September 2004 it was announced that the contracts of the special prosecutors' office's 3 assistant prosecutors, 18 lawyers, and their support staff had been extended.³⁸ In the summer of 2004, the parliamentary anticorruption commission committed to extending whistle-blower protection to persons appearing before it; however that promise has not yet been formalized, thus reducing the willingness of many Peruvians to come forward.

The 1993 constitution set out extensive freedom of information rights, and in August 2002 the Law on Transparency and Access to Public Information went into effect, giving every individual the right to request information in any form from any government body or private entity that offers public services or executes administrative functions without having to explain why. The law establishes procedures for disciplining government employees who do not release public information, although there are not yet any known cases of any public official being sanctioned.³⁹ The government has had difficulty in implementation because of the complexity of the system and the cost of monitoring, particularly at the regional and local levels.⁴⁰

The law requires government departments to establish Web sites and to regularly publish information on their activities, budget, costs of the acquisition of goods and services, official activities of high-ranking officials, regulations, and salaries. Detailed public finance information must be published on the Web site of the ministry of economics and finance every four months.⁴¹ In practice, however, compliance with these requirements varies according to agency, and the effectiveness of the measure is often determined by the amount of public and media interest in the particular information.

A local group, Transparencia, maintains a useful Web site, Datos del Congreso, tracking various congressional topics relating to good government issues. The government puts little or no restriction on the administration and distribution of foreign assistance.

Recommendations

• The independence of the special anticorruption court should be reinforced by the issuance of stable work contracts to its employees and the opening of additional tribunals, as needed, to facilitate the timely consideration of cases.
• New whistle-blower protection laws should be enacted to protect both public and private employees from reprisal for bearing witness against waste, fraud, and other abuses of power.
• Effective anticorruption statutes allowing for quicker resolution of cases and swift punishment should be enacted.
• Serious efforts should be made to improve the dissemination of government information at the regional and municipal levels; consideration should be given to tying those efforts to the provision of greater resources in the decentralization process.

Notes

1 According to former law enforcement minister Fernando Rospigliosi, "the enormous weakness of the state – political discontinuity, frequent changes in ministers and the lack of interest on the part of Peruvian society" – is the biggest problem preventing the formation of long-term plans to eliminate the remnants of the guerrillas. Latin America Weekly Report, 27 July 2004.

2 Among the allegations of corruption or misconduct against members of Toledo's inner circle are claims that members of his family falsified signatures to register his Peru Posible party for the 2000 elections; ironically,election fraud was one of the major charges candidate Toledo made against Fujimori.

3 "Peru: Country Profile 2004" (London: Economist Intelligence Unit [EIU], 2004).

4 "Global Corruption Report, 2004" (Berlin: Transparency International [TI], 2004), 232; "Few Count Out Contender for Peruvian Presidency," Miami Herald, 6 May 2001; "Peru: Rising Uncertainty Ahead of Elections," LatinFocus, May 2001; for a slightly different take on Soros's involvement in Peru, see Adrian Karatnycky, "Messianic Billionaire: Soros Funded Freedom Where It Was Lacking," Philanthropy Roundtable, September/October 2002.

5 "Denuncian en Peru a un hermano de Toledo," La Opinion, 12 September 2004.

6 "Global Corruption Report, 2004" (TI), 235; personal communication (name withheld by request).

7 Personal communication with Peruvian journalist (name withheld by request).

8 "Peru" (Miami: Inter American Press Association [IAPA], October 2004).

9 Ibid.

10 For a list of the Ombudsman's powers and faculties, see the sections "Que es la Defensoria del Pueblo?" and "Nuestra competencia," on their Web site, http://www.ombudsman.gob.pe.

11 "Peru Truth Commission Says Battle with Insurgents Killed Nearly 70,000,' San Francisco Chronicle, August 28, 2003; "Peru: Country Profile 2004" (EIU).

12 "Americas 2004 Report – Peru," International Disability Rights Monitor, 24 August 2004, http://www.cirnetwork.org/idrm/reports/americas/countries/peru.html.

13 See Consejo nacional para la integracion de la persona con discapacidad (CONADIS), http://www.conadisperu.gob.pe; "Americas 2004 Report – Peru," International Disability Rights Monitor.

14 Ibid.

15 "Privacy and Human Rights 2003: Peru" (London: Privacy International [PI], November 2003), http://www.privacyinternational.org/survey/phr2003/countries/peru.htm.

16 "Global Corruption Report, 2004" (TI), 233.

17 "Informe Anual de Derechos Humanos 2003," (Lima: Coordinadora Nacional de Derechos Humanos del Peru, 2004), 60.

18 "Informe Anual" (Coordinadora Nacional), 65.

19 According to "Privacy and Human Rights 2003: Peru" (PI), http://www.privacyinternational.org/survey/phr2003/countries/peru.htm, in 2002 a new law was passed regulating the interception of communications and private documents.

20 "Peru spy body scrapped," BBC News World Edition, 23 March 2004.

21 Tyler Bridges, "Land titles give poor a chance to advance," Miami Herald, 4 April 2004.

22 Tyler Bridges, "Land records are a tangled web," Miami Herald, 4 April 2004.

23 "Peru: Property Issues; General; Displaced Indigenous Populations Deprived from Access to Their Traditional Lands" (Geneva: Global [Internally Displaced Persons] IDP Project Database, 2004), http://www.db.idpproject.org/Sites/idpSurvey.nsf/wViewCountries/E04AF659CE5A9D4EC12567D80059B0F0.

24 ViewsWire (EIU), 12 July 2004.

25 "Peru: Talk of Corruption Trails Toledo," Miami Herald, 27 July 2004; Proetica (Lima), January 2004, http://www.transparency.org/surveys/dnld/proetica_survey_peru.pdf.

26 Montesinos received at least $10 million from the CIA ostensibly for counter-narcotics purposes but diverted the money to other, illegal activities.

27 "Peru Politics: Troubled Toledo" (EIU, 12 July 2004); on "denuncialogia," see Jason Felch, "Have Peru's Press Heroes Gone Too Far?" Columbia Journalism Review (July/August 2004).

28 "Doing Business: Snapshot of Business Environment – Peru" (Washington, DC: World Bank, 2004).

29 "Benefitting from the FTA – The Urgency for Improving the Business Climate," Contact, June 2004. The business group attributed the regional and local problems in part to "the process of decentralization and the consequent transfer of responsibilities from the Central Government to the regions."

30 "Denuncian...," La Opinion, 12 September 2004.

31 "Ministros peruanos se autolevantan secretos bancarios," El Mercurio, 2 August 2004.

32 "Lucha anticorrupcion bajo la lupa en Peru," El Nuevo Herald, 10 September 2004.

33 "Informe Anual" (Coordinadora Nacional), 59-60.

34 "Informe Anual" (Coordinadora Nacional), 60, notes, for example, that of 1,326 people accused of corruption, only 15 percent were jailed.

35 "Global Corruption Report, 2004" (TI); "Transparencia," Datos del Congreso 27 (October 2004).

36 "Latin America and the Caribbean: Peru," (Washington, DC: National Democratic Institute for International Affairs, 2004).

37 "Denuncian ...," La Opinion; "Toledo won't end probe that may target him," Miami Herald, 1 October 2004; "Lucha ...," El Nuevo Herald.

38 "Informe Anual" (Coordinadora Nacional), 60; "Advierten peligro en la lucha anticorrupcion," El Comercio, 14 September 2004.

39 "Peru" (IAPA, 2004), http://www.sipiapa.org/pulications/report_peru2004o.cfm.

40 "Global Corruption Report, 2004" (TI), 232.

41 "Privacy and Human Rights 2003: Peru," (PI), http://www.privacyinternational.org/survey/phr2003/countries/peru.htm.