The progress that Peru has experienced since Alan García regained the presidency is obvious: to the latest economic results (production growth, low inflation rate and proper fiscal discipline) we must add the FTA with the United States and the election of Lima as the host of the Fifth European Union–Latin America and Caribbean (EU–LAC) Summit, as well as the APEC summit. Even with all of this, the recent cases of corruption indicate that there is still a lot left to do, beginning with reform of the public, education, and health sectors, which is a major pending task.

(From Madrid) IN ORDER TO ACHIEVE SUSTAINED GROWTH, developing countries need long-term foreign investment to generate employment and modernize and make the productive sector competitive. It is for this reason that said countries, among which Latin America can be found, are looking to create confident climates that would conducive to foreign investment.

The Peruvian President, Alan García Pérez, has clearly internalized this message, as could be observed during his latest visit to Madrid, when he clearly showed the distance (political and economical) between him and his counterparts in countries such as Ecuador, Bolivia and Venezuela. “With respect to trade liberalization, Peru’s position is very close to Colombia’s, but very far from countries like Ecuador and Bolivia, whose policies are in accordance with Chávez’s discourse”

The latest results that Peru’s economy has been giving, which are principally characterized by a high production growth, a low inflation rate and proper fiscal discipline, could make the country a potential recipient of regional investments.

In the same manner, the present year’s international agenda, which has Lima slated to be the host of the APEC Summit and the Fifth European Union-Latin America and Caribbean (EU-LAC) Summit, and includes the recent ratification of the Free Trade Agreement with the United States, acts as a showcase for the country.

GUARANTEE OF INVESTMENT PROTECTION

Alan García, taking advantage of this situation, is learning how to project to the outside world a coherent policy of economic liberalization, promotion and respect of private investment and fiscal discipline. In his visit to Madrid, he made it clear how the Peruvian economic model is different from the nationalistic models to which presidents such as Chávez, Morales and Ortega profess.

And the fact is that Peru is one of the countries in the region that can guarantee both a framework for the protection of private investment and one of the most modern models in defense of fair competition.

“It is necessary that the change reflected in García’s second government not only be discourse for the public, but that it become a reality in everyday politics” Moreover, García has suggested the idea of negotiating a Free Trade Agreement between Peru and the European Union. As it is known, the EU has decided to negotiate with the Andean Community as one entity, and not engage in negotiations with the member countries separately; but will the countries in the community be able to reach an agreement amongst themselves? With respect to trade liberalization, Peru’s position is very close to Colombia’s, but very far from those of countries like Ecuador and Bolivia, whose policies are in accordance with Chávez’s discourse.

It is unlikely that the EU will change the way in which it negotiates with the Andean countries, but it is important to differentiate that fact from this one: the Peruvian president’s request is a clear signal, to the markets, of the country’s commercial objectives.

A LOT TO DO

The change in García’s politics with respect to his first government is obvious, and beneficial for the country. He has even received praise from some of his former political enemies, such as Vargas Llos, with whom he had a clear confrontation during the end of the Eighties. It is important and necessary that this change not only be discourse for the public, but that it become a reality in everyday politics. “Public spending in accordance with necessities and possibilities, and not the initiation of disproportionate and inefficient spending growth, must be demanded” Despite the economic achievements, popular support for Alan García has waned considerably since he first took office, perhaps because of the reservoir of the population’s demands and the grave (and clumsy) cases of corruption involving his party members. In other words, there is still a lot left for the government to do.

On another note, it is important that Alan García maintain independent expert panels in the principal ministries and strengthen the institutions, and not again make the mistake of increasing bureaucracy with party members. Finally, it must be demanded of the Peruvian leader that he carry out public spending in accordance with necessities and possibilities, and not (now that there is money in the bank) initiate disproportionate and inefficient spending growth. Reform of the public, education, and health sectors is also a pending task, and it should remain on the list of the government’s priorities.

With regards to the maritime dispute with Chile, Alan García should capitalize on the strong backing and a (rarely seen) political consensus that he has on this issue, in order to promote reforms to make our economy more competitive, and that benefit more Peruvians.