Strikes underscore Toledo's challenge

Despite having South America's best economy, most Peruvians still hurting.

Peruvian President Alejandro Toledo should be riding high, basking in the best economic numbers in South America for the second consecutive year.

Peru's economy grew by 5.2 percent last year and inflation was a mere 1.5 percent. This year, the economy is growing at the same pace, inflation is negligible, tax collection is up, and international reserves have increased a whopping $915 million between January and April.

But the positive indicators have not translated into a groundswell of support for Mr. Toledo or an improvement in the living standards of the majority of Peruvians. Instead of enjoying widespread adulation, Toledo is one of South America's most embattled leaders, limping toward the end of his second year in office with roughly 14 percent support in public-opinion polls.

"The government talks about success, but average Peruvians are seeing no improvement in their pocketbooks," says Alfredo Torres, head of the Peru's Apoyo polling firm.

A wave of strikes since early May by public workers demanding higher wages forced Toledo Tuesday to declare a state of emergency. He instructed the armed forces to restore order and open highways blocked by striking teachers, farmers, healthcare workers, and judiciary employees.

"We are not going to risk the efforts and achievements of all Peruvians over the past two years, because this would only create more unemployment and poverty," the president said in his address. The government claims the country was losing $100 million a day because of the disruptions.

Peru's economy has been growing at a steady clip thanks to massive government projects, mainly in the mining and gas sector. Production at the Antamina copper and zinc mine and the Camisea gas fields has added a full 2 points to gross domestic product. While good for macroeconomic statistics and government coffers, it has not created a significant number of new jobs, and revenue generated by the projects has not been distributed to the people.

That's because the government is constrained on what it can spend by agreements with the International Monetary Fund, which calls for the budget deficit to be no higher than 1.9 percent of gross domestic product.

Also, Toledo's own fears as an economist have kept him from implementing spending measures. He does not want to repeat the mistakes of former President Alan Garcia, who spent freely but ended his five-year term in 1990 with an accumulated inflation rate topping 2 million percent.

In its mid-May poll, Apoyo found that more Peruvians see their family economic situation deteriorating in the coming year. In the poll, 46 percent said their economic situation would be worse or much worse in 12 months time. Only 17 percent thought things would be better. The remaining people expect no change for better or worse.

Job creation is one of the key issues. While Toledo pledged during his campaign to create 1 million jobs a year, unemployment has held steady at 10 percent since he took office.

"There are no jobs. That is the major problem," says Juan Loza, an unemployed chemist getting by doing odd jobs as a handyman. "Toledo wants to restore order, but there can't be order when no one is working."

Toledo continues to make difficult promises, raising expectations and adding to the already unattainable campaign pledges promises. Teachers have been on strike since May 12, demanding a $70 monthly raise. The government is offering $30, but Toledo had promised to double teachers' pay by the end of his five-year term in 2006. Teachers currently earn $200 a month.

OF the four sectors on strike when Toledo declared the state of emergency, only teachers and judiciary workers are staying off the job. Healthcare professionals and farmers returned to work, at least until the emergency period is over. Military and police riot units arrested more than 100 people in violent clashes on the first day of the crackdown.

The fiercest criticism of Toledo's actions are coming from his political nemesis, Mr. Garcia, who left Peru bankrupt during his five-year rule, but made a comeback in his race against Toledo in the 2001 contest, capturing 48 percent of the vote.

During a press conference on Wednesday, Garcia questioned Toledo's harsh measures, saying it would not solve the country's problems.

"The state of emergency will last 30 days, but the situation that millions of teachers and farmers have suffered will not change. They will remain in misery," he said.

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