Peru's battle with drugs and debt

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WITH the arrest of 37 senior police officers, new Peruvian President Alan Garc'ia P'erez has made a good start toward dealing with the corruption in his nation's law enforcment agencies which has permitted Peru's cocaine trade to flourish. Two weeks ago his government broke up a 19-man drug ring. Widespread official corruption and cocaine trafficking are two of several pressing problems the enthusiastic Mr. Garc'ia must confront.

He has also taken a firm stand on a third problem, repayment of foreign debt; his response has potentially serious ramifications for all international creditors, and it bears watching. Garc'ia says Peru would probably pay only $350 million of the $5.1 billion due this year to foreign creditors, in line with his insistence that the repayment be 10 percent of his nation's annual export revenue, so that funds are available for economic development.

If Garc'ia persists in this policy, nations with much larger foreign debt -- particularly Mexico and Brazil -- may be tempted to do likewise.

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Garc'ia finds himself in the position that Colombian President Belisario Betancur occupied a year ago: If he is to lead his nation, he must first establish that he, not the illegal drug industry, is in charge.

Illegal drugs are big business in both counties, with the United States the main market. An estimated 45 percent of cocaine in the US derives from coca plants grown in Peru. And clandestine laboratories in Colombia process into final form three-fourths of the cocaine Americans use.

Mr. Betancur has had mixed success. In a series of well-publicized raids last year, many drug labs were put out of business and processors arrested. Most people arrested, however, have been released by the court system, which has said insufficient evidence exists to hold them.

Garc'ia -- like Betancur -- will have to be more successful than that to control his nation's affairs. Clamping down on entrenched corruption and the drug trade will not be easy. Drugs are one of the few thriving industries in Peru, where unemployment is high, the economy flat, and annual inflation at 100 percent.

But Garc'ia may have a new ally -- growing public outrage over the corruption of government officials who have protected drug traffickers. Colombia's Betancur has noted that when the illegal drug trade becomes deeply entrenched in a nation, the government must fight for the country's existence. In that struggle the biggest ally is the people. If sizable numbers of Peruvians became concerned about the degree to which the corrupting influence of drug traffickers affects their nation, it would be of major aid to Garc'ia. The first signs of such a stirring are now visible.

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