In Peru, hard-won economic and political freedom is in jeopardy
from foreign interests bankrolled by Venezuela. Although
Venezuela's immense oil wealth should belong to all Venezuelans,
their far left, neo-populist, and authoritarian President Hugo
Chavez is siphoning off much of it to enhance his own political
power and spread his toxic "21st Century Bolivarian Socialism"
throughout the Andean region. Chavez has been aided in this
effort by Bolivian president and populist soul mate Evo Morales.
Together, they are busy establishing "ALBA houses" (Casas de
ALBA) in the poorest areas of rural Peru in an attempt to chip
away at market-based democracy and destabilize the center-left
government of Peruvian president Alan Garcia. The Chavistas
hope to set the stage for a far-left victory in Peru in the 2011
ALBA is the Spanish acronym for Chavez's vaguely defined
"Bolivarian Alternative for the Americas" customs union
scheme. It is the vehicle Chavez is using to try to undermine the
globalized trading system that would be enhanced by the U.S.-led
efforts to create a Free Trade Area of the Americas (FTAA). The
ALBA houses are the Peruvian version of Chavez's "Bolivarian
Circles" in Venezuela and Morales's "Militias" in Bolivia, both
of which were established to create potential parallel
government-like structures that could be used to destabilize
existing decentralized democratic mechanisms and construct new
hierarchic and autocratic political regimes. Sandinista president
Daniel Ortega, who returned to power in Nicaragua in 2006 with
financial help from Chavez, is following suit in Nicaragua.
Alba means "dawn" in Spanish, but the people of rural
Peru are learning that, for them, it might mean a return to the
dark nights of tyranny they experienced in the 1980s when
guerilla groups such as the Maoist Sendero Luminoso (Shining
Path) and the Communist Tupac Amaru Revolutionary Movement (MRTA)
terrorized the Peruvian countryside. The Bolivarians intend for
ALBA houses to be the next generation of engines for revolutionary
change in the 21st century. Unlike the FARC (Revolutionary Armed
Forces of Colombia) guerillas of the 20th century, who have
attacked the institutions of Colombia's democracy from their bases
in the mountains for the last 40 years, the ALBA houses are right
in the middle of cities and towns. Their activists undermine
democracy from within (as Chavez and Morales have already
demonstrated) by taking power through democratic elections and then
methodically changing laws to subvert it. ALBA houses are
potentially even more destructive and dangerous than the FARC.
Attack of the Carnivores
In their recent book, The Return of the Idiot, Plinio
Apuleyo Mendoza, Carlos Alberto Montaner, and Alvaro Vargas Llosa
describe the backward slide to socialism in Venezuela, Bolivia, and
other Latin American countries. They divide the new wave of
leftists into two camps: "vegetarians" and "carnivores." The
vegetarians are democratic socialists such as Presidents Garcia,
Michele Bachelet of Chile, and Luiz Inacio Lula da Silva of Brazil.
These leaders have demonstrated through their policies and actions
that they see the many benefits of capitalism and know that
the best way to develop their countries economically is to take
advantage of the global market system to create good and
sustainable private-sector jobs for their citizens. Although the
vegetarians lean toward excessive regulation, rigid labor markets,
and bloated bureaucracies, they do not pose a fundamental threat to
market-based democracy or to the United States and its allies.
On the other hand, some Latin countries are now ruled (yet
again) by despotic leftist and populist caudillos
(strongmen). Totalitarian dictators Fidel and Raul Castro of Cuba
and the resurgent Daniel Ortega have been joined by younger
"carnivores," such as Chavez and Morales, as well as former
President Néstor Kirchner and his wife, current
President Cristina Fernandez de Kirchner, of Argentina. All of
these leaders (to varying degrees) oppose the "hegemonic" United
States and appear determined to tear apart market-based democratic
capitalism and anyone who stands in their way. In place of the
"neo-liberalism" they despise, the carnivores would substitute
"neo-communism" or "authoritarian fascism."
Bolivarians of the World, Unite!
With the support of his Bolivarian network and flush with oil
cash, Hugo Chavez aims to extend his influence in the Andean
region. The main obstacles he faces are the democratic governments
in Peru and Colombia, and it is upon them that he has targeted his
rhetorical fire and propaganda efforts. Chavez is recruiting the
most dangerous activists and fighters he can find in southern Peru
and aims to use them and the ALBA houses to sabotage democratic
institutions so that he can advance the idea that democracy in
Peru is not working. Once this is accomplished, Chavez and his
Bolivarians will try to bring the extremists to power through the
Unlike his economic model, which has been a disaster for
Venezuela, Chavez's political strategy is already a proven winner.
It is how the Chavistas succeeded in engineering the
fall (through the "Gas Wars") of the democratically elected
governments of former Bolivian Presidents Gonzalo Sánchez de
Lozada and Carlos Mesa after inciting violent protests in what
amounted to two coups d'état in 2003 and 2005 that
paved the way for Evo Morales to win the election as president of
Bolivia in December 2005.
Chavez's "Bolivarian" movement has followed a well-planned
strategy with simple objectives. "PetroCaribe" was the first
Bolivarian project, using official Venezuelan government "oil
diplomacy" through discounted oil shipments to Caribbean and
Central American countries to win friends and influence people. Then
he began a series of bond purchases (more than $7 billion to date)
to bail out his fellow populists--Peronist Presidents Nestor and
Cristina Kirchner--as they face growing problems stemming from
their mismanagement of the heavily indebted economy of Argentina. Chavez
has also supplied financial aid for energy projects in Ecuador and
Chavez enjoyed a quick political payoff from these "investments"
(at least initially) during the March 2008 Colombia-Ecuador border
crisis. The Colombian military attacked a FARC guerilla base just
across Colombia's border with Ecuador, resulting in the
killing of the FARC's No. 2 leader Raul Reyes and the seizure of
valuable intelligence on three FARC laptops. They showed
significant and ongoing connections and funding between the FARC
and Hugo Chavez. At an emergency meeting of the Organization of
American States (OAS) to resolve the crisis, however, the vast
majority of democratically elected Latin American governments
remained disappointingly silent rather than condemning Hugo
Chavez's support for the FARC's efforts to defeat President Alvaro
Uribe's democratic government in Colombia.
The Peruvian Economy is Strong----at
the Macro Level
President Alan Garcia's first term as president in the 1980s
ended in disaster for Peru's economy when he pursued leftist and
statist policies. Although the trade liberalization begun under
President Alberto Fujimori (1990-2000) helped to reduce poverty, as
of 2004, the World Bank estimated that half of all Peruvians
remained poor and "20 percent were extremely poor." The "poorest departments
[provinces] in Peru are [in the south]: Huancavelica (88.7 percent
poverty rate), Ayacucho (78.4 percent), Puno (76.3 percent),
Apurímac (74.8 percent), Huánuco (74.6 percent),
Pasco (71.2 percent), Loreto (66.3 percent), and Cajamarca (63.8
Sound economic management under former Peruvian President
Alejandro Toledo (2001-2006) resulted in annual real economic
growth of nearly 5 percent from 2002 to 2004. Garcia later saw the
error of his ways, committed himself to market-based policies, and
narrowly defeated Chavista Ollanta Humala to win a second
five-year term in 2006. He has continued most of Toledo's
economic policies but, facing a congress dominated by the
opposition populist party, has not deepened the reforms.
Nevertheless, economic growth has been impressive in recent years,
aided by the huge increase in commodity prices for Peru's rich
Peru's economy received a score of 63.5 in the 2008 Index of
Economic Freedom, published by The Heritage Foundation and
The Wall Street Journal, which ranks it the 55th freest
economy out of 162 countries surveyed. Peru's score reflects
improvements in 2007 under the Garcia administration in five
of the 10 economic freedoms. Peru is ranked 13th out of 29
countries in the Americas, and its overall score is higher than the
regional average. Inflation is also low, and prices are not
significantly influenced by the state. Privatization is moving
forward, particularly in infrastructure.
President Garcia advocated successfully for ratification of
the U.S.-Peru Free Trade Agreement (FTA) by both the Peruvian and
U.S. congresses and has painted himself as the market-friendly
alternative to Chavez in the Andes. Eric Farnsworth of the
Council of the Americas has reported that, thanks to Peru's FTA
with the United States, its sovereign debt has recently been
upgraded to investment grade. This will make it easier
and less expensive for Peru to borrow from lenders in developed
countries and invest to upgrade its infrastructure. Foreign direct
investment in Peru also rose with the FTA.
Massive Improvements in Rural Peru's
Peru continues to face significant economic challenges,
particularly in labor freedom, property rights, and freedom from
corruption. The Peruvian judicial system is slow, unpredictable,
and vulnerable to fraud. Economic development is impeded by a
restrictive labor market that regulates costly employee dismissal
procedures and inflexible working hours.
These problems are magnified in the less densely populated,
poorer regions of Peru, mainly in the high Andes and the southeast,
where the majority of people (if employed at all) work in the
informal sector. The structural flaws in the Peruvian economy
are especially aggravated by the need for extensive development in
rural areas. Some facts about current infrastructure needs in Peru
illustrate this point:
- 78 percent of cities, towns, and villages in Peru currently
have at least some electricity. That figure includes the 208 rural
towns that have been electrified since President Garcia took
office in 2006. Garcia's goal is to deliver electricity to 6,000
more rural towns and villages by the end of his term in 2011, thus
providing access to electricity to more than 90 percent of
- Across Peru, 68 percent of children from ages three to five are
in school, and nearly all children are in primary school. However,
by the time they reach secondary school age the rate drops to 72
percent. The literacy rate of the whole
population is 87.7 percent; among youth it is 97.8
percent. Girls are educated at the same rate as
boys, but female literacy trails behind.
Historically, decisions by the government on where to
construct new education facilities have been strongly skewed toward
Lima and a few other large cities, so it is likely that literacy
statistics for rural Peru are far lower than the national
- According to U.N. and World Bank statistics, in 2004 only 13
percent of Peru's roads were paved. President Garcia is
devoting 90 percent of the budget of the Ministry of Transport and
Communication in 2008 to road construction. Every day, an
additional 2.8 kilometers are paved.
- Among Peru's population of 28.2 million people, about 70
percent live in urban areas and 30 percent in rural areas.
Nationwide, 83 percent of the population has access to potable
water; sewerage coverage is 63 percent. In the rural areas,
however, potable water coverage is only about 62 percent and less
than one in three rural Peruvians has access to sewerage.
According to the World Bank, "Peru's famously high levels of infant
mortality are concentrated among the poor...two-thirds of infant
deaths occur in the 40 percent poorest households."
- In Peru there is approximately one doctor for every 1,200
people and there are just 5,768 obstetricians in the entire country
to serve more than 11 million women. The United States has 2.4
doctors per 1,000 persons and the training U.S. health
professionals receive is significantly more extensive.
There is only one dentist for every 10,000 Peruvians versus 16 per
10,000 in the U.S.
- Peru has 1.8 hospital beds per 1,000 citizens (3.6 per 1,000
people in the U.S.), 1,448 health care centers, and 5,548
smaller health care clinics. Availability of health care
professionals and health care facilities is strongly skewed
toward Lima and a few other large cities, indicating that
statistics for rural Peru are far worse. Annual spending in Peru on
health care equals 4.4 percent of gross domestic product
(GDP) (15.3 percent of GDP in the U.S.).
Unless these problems are addressed, and quickly, poorer
Peruvians (particularly in the south) may be tempted by the
false promises of 21st-century Bolivarian Socialism.
ALBA Houses: Breeding Ground for
The latest front opened in Chavez's Bolivarian struggle against
democratic capitalism is the establishment of the ALBA houses.
On the surface, they appear to be simply benevolent local
associations offering literacy programs and delivering health
care with Chavez-paid, Castro-supplied Cuban doctors. Local
Peruvian Chavistas who operate the ALBA houses claim that
they are merely engaged in charity work and point to the 5,000
impoverished Peruvians they have sent to Venezuela for eye
What the ALBA house landlords fail to mention is that, at the
same time, they are indoctrinating poor, mostly young Peruvians in
the ideology of the extreme left and terrorism. The Cuban doctors
frequently operate as Cuban intelligence officers. Although
the Chavez government insists that it is not supporting the ALBA
houses, Peruvian officials have said that Chavez's financial
support for the houses is being funneled through Bolivia. In the
Bolivian capital of La Paz, Chavistas are building a large
"Bolivarian Common Embassy." There they have assembled a group of
young Peruvians from the main cities in the south (Cuzco, Puno, and
Tacna) to receive indoctrination and military training. They
have made no secret of it: Its address is 107-109 Costanerita
Avenue in the Obraje neighborhood of La Paz.
The unimaginative and retrograde collectivist socialist models
aggressively peddled by Chavez, Morales, and others are proven
failures, but getting the positive message of prosperity through
market-based democracy to the poor in rural Peru is
increasingly difficult when that message is drowned out by the
well-funded ALBA houses. In order to counter ALBA propaganda, the
question is: How can the gains that Peru has realized (mainly in
Lima and the other large cities) be translated into better living
standards and infrastructure improvements that poor people in
rural Peru can see and experience?
President Garcia says that there are 200 ALBA houses operating
in Peru, most of which are located in the mountainous southern
highlands region where the majority of the population is
indigenous. The Peruvian congress is currently
conducting an investigation to determine the extent of political
interference coming from ALBA, but personnel at Andes Libres
(a conservative think tank based in the highland town of Cuzco near
Machu Pichu) do not need the congress to tell them how much trouble
ALBA is causing; they live with it every day.
The View from Cuzco
There are numerous ALBA houses operating in Cuzco. Mimicking the
modus operandi of the FARC's "boy soldiers" in Colombia,
ALBA houses recruit and subsequently exploit "poor, uneducated
children and young adults," recruiting them for
ideological indoctrination. To offset the inroads being made among
these poor citizens, the Peruvian government and supporters of
market-based democracy must take the ideological fight to the
same people being recruited by ALBA. This is a war of ideas,
and groups such as Andes Libres are engaged in the battle on the
ground every day--promoting free trade and free market principles
among the rural population.
To reach the young people targeted by ALBA, Andes Libres
and other conservative groups in Peru conduct programs to offset
leftist indoctrination and teach local high school and university
students through courses in economics, political science, law,
health care systems, education policy, and environmental issues
from a pro-democracy and free-market viewpoint. They also
organize workshops, seminars, and forums to develop future leaders
who are already in the workforce. The groups also seek to
strengthen the financial systems of the local governments by
advocating for more local control of tax revenues and they track
the positions taken by local officials and politicians on local
issues so that they can inform the citizenry to widen the public
Political Opponents on the Ground
With their free-market, pro-democracy message, Andes Libres
and the other center-right groups in Peru encounter strong
opposition from the Chavistas, particularly when they have
an especially popular program. The ALBA houses are just one of
the very visible parts of the international leftist network,
known as the "Sao Paulo Forum," that opposes market-based
development in Peru and the entire Andean region. These leftist
groups are supported not only by the Venezuelan government,
but also by powerful international non-governmental
organizations (NGOs), a fact that was underscored by the recent
rescue of FARC hostages in Colombia. As Mary Anastasia O'Grady of
The Wall Street Journal has noted, when
Colombian military personnel posed as representatives of a
fictitious leftist NGO in order to trick the FARC into
releasing their hostages, FARC guerillas had not been the least bit
suspicious. That indicates that the FARC has had friendly dealings
with international leftist NGOs in the past.
ALBA houses and leftist NGOs organize many protests against the
government, private corporations (especially international
mining companies hoping to extract Peru's rich mineral resources),
and other potential foreign investors. Their advertisements
for protests appear in local newspapers, TV and radio programs, and
through news reports of leftist politicians spreading outright lies
and exhorting people to oppose Peru's democratic system.
In many poor communities throughout rural Peru, the radio is the
only means of receiving information and is, therefore, an
important resource for reaching the poorest Peruvians in the battle
of ideas. Hernan Fuentes, the leftist governor of Puno province on
the border with Bolivia, "gained prominence locally...[through a
radio show where his] on-air perorations feature[d] anti-U.S.
tirades and bouquets for Chavez and Morales." To reach the
poor, the broadcasts must be presented in Quechua (the
indigenous language). Conservative think tanks and NGOs working in
those communities could do broadcasts in Quechua if they received
More Protests and Disruptions
In addition to local protests, the left also organizes
protests nationwide. The next big national protest is set for
November 2008 when the Peruvian government will host the annual
summit meeting of member nations of the Asia-Pacific Economic
Cooperation (APEC) Forum. To "staff-up" for the APEC
demonstrations and the planned national protests in 2009, the
Chavistas aim to establish additional ALBA houses. "They
[the ALBA houses] are beachheads for ideological indoctrination of
people of low incomes, driving the message that their situation has
not improved despite recent economic growth," says Peruvian Defense
Minister Antero Florez.
At least five of the principal Peruvian Chavista leaders
who are affiliated with leftist groups in Peru and are planning
future national protests traveled to Bolivia in 2007 and 2008.
Miguel Palacin, a top official at the Cordinadora Indigena de
Naciones Andinas (CAOI--a leftist group that purports to speak
for poor indigenous Peruvians) and former president of the
anti-mining NGO "Conacami," traveled to Bolivia three times in the
last 12 months. Mario Palacios, current president of Conacami, was
also in Bolivia three times in the first four months of 2008.
Antolin Huascar, president of the Agricultural National
Confederation, was in Bolivia in January 2008 and also visited
Venezuela (August 6, 2007) and Cuba (April 10, 2008). Alberto
Pizango, an official with the Interethnic Association of
Development of the Peruvian Jungle, arrived in Bolivia on
August 20, 2008, where he stayed three days. Melchor Lima, General
Secretary of the Peasant Confederation of Peru, also made the
pilgrimage to Bolivia. All of these leftist Peruvian officials
are closely identified with the ALBA houses network.
Neighboring Governments Should Support
While watching from the sidelines as the Venezuelan
government interferes in domestic Peruvian politics, Brazil and
Chile have inexcusably maintained impartiality to avoid
conflict with Chavez and to stay close to the principles of Chilean
and Brazilian leftist parties that see Hugo Chavez as a member of
their ideological family. These governments, however, have a
higher responsibility to promote democratic institutions and
should come to the aid of Peru.
In addition to the threat they pose to the stability of Peru and
the Andean region, the ALBA houses and the Bolivarian movements are
also, in the widest sense, part of a campaign by the
Chavistas to reduce U.S. influence in Latin America. In
Ayacucho--one of the poorest cities in Peru--the U.S.
government is helping to build health care facilities. But ALBA and
other leftist groups are spreading lies about the project, claiming
that the facilities are not really being built with U.S. funding,
but instead with ALBA money. They are also propagating other lies
(e.g., that the U.S. is trying to take the water from the poor "to
fight global warming"). This agitprop is reminiscent of the old
Soviet disinformation "baby parts" rumor-mongering
scare tactics that the international left has used in the past
against U.S. interests in Central America and other parts of the
world. The U.S. government should redouble its efforts to counter
these ongoing leftist propaganda attacks.
What Should Be Done?
How can the poorest Peruvians recognize the benefits of
continued strong economic growth in Peru? How can they be taught to
appreciate the value of market-based democracy? How can they begin
to see it working for them?
In order to confront the challenges posed by the ALBA houses and
to reduce the appeal of Chavista demagoguery, the Peruvian
- Ramp up efforts to reach the rural poor in isolated
highland areas by focusing funding on road construction, health
care, and education facilities, as well as improving other
infrastructure in those areas to draw the people of southern
Peru into the formal economy and democratic systems.
- Unleash the entrepreneurial spirit in poor communities by
reforming and making transparent procedures to assure property
rights and land titling as well as reforming rigid labor laws in
order that small and medium-sized companies can become more
- Continue governmental public relations efforts to establish in
the public's mind the link between the ongoing anti-democratic
protests and the Chavista ALBA houses and leftist NGOs (as
President Uribe has carried out in Colombia). The Peruvian
foreign ministry should denounce the interventionism in domestic
Peruvian affairs by the governments of Bolivia and Venezuela.
- Prosecute offenders to the fullest extent of the law if the
current investigation by the Peruvian Congress proves a connection
between the Chavez/Morales-funded ALBA houses and potentially
violent protests in Peru.
The international community of pro-market democracies should
also come to the aid of Peru. Specifically,
The Chilean, Brazilian, and Colombian governments should
publicly and clearly affirm Peruvian democracy and expand
their countries' trade links with Peru.
The Bush Administration, through the U.S. embassy in Lima,
should aggressively counter ALBA propaganda and disinformation, as
well as expand other public diplomacy efforts to complement
ongoing U.S. development assistance projects in Peru.
To encourage continued economic progress and stability in
Colombia, which would directly benefit Peru, the U.S. Congress
must approve the U.S.-Colombia Free Trade Agreement (FTA).
James M. Roberts is
Research Fellow for Economic Freedom and Growth in the Center for
International Trade and Economics (CITE) at The Heritage
Foundation, and Edwar Enrique Escalante is the Executive
Director of ANDES LIBRES in Cuzco, Peru. CITE Research
Assistant Caroline Walsh and Intern Alexandra Canulli made valuable
contributions to this report.
Plinio Apuleyo Mendoza, Carlos Alberto
Montaner, and Álvaro Vargas Llosa, El Regreso del
Idiota (Buenos Aires, Argentina: Grijalbo, 2007).
Main Wire, "Argentina Sells $1 Bln in Bonds to Venezuela at
14.87%," Market News International, Inc., August 6, 2008 (by
online subscription only).
ANDINA News Service, "President Garcia
Reports That More Than 700 Towns Have Been Electrified, Benefitting
More Than 450,000 Peruvians" ("Mil 700 poblados han sido
electrificados en beneficio de más de 450 mil peruanos,
destaca presidente García") Andina: Agencia Peruana
de Noticias, June 11, 2008, at http://www.andina.com.pe/Espanol/Noticia.aspx?
id=T/LdgH97138= (August 11, 2008).
UNESCO Institute for Statistics, UIS
Statistics in Brief: Education in Peru.
Central Intelligence Agency, The World
OECD, "Health Data 2007: How Does the United
Andres Oppenheimer, "Alan García,
Chávez y las casas del ALBA," El Nuevo Herald,
Spanish version of The Miami Herald, March 16, 2008.
McDonnell, "In Peru's High Plains, Chavez Is
Arostegui, "Peru Fears Bolivian Camps
Bolivarian Alternative for the
Américas (ALBA), Peru: Pueblos Indígenas y
Comunidades Campesinas del Peru Rechazan Proyecto de Ley General de
Pueblos Originario, at http://www.alternativabolivariana.org (July
Juan Carlos Tafur, host of the television
program Prensa Libre, América Televisión (a
Peruvian television network), reported this story on the air on
June 10, 2008 (from author's notes).