The Lima Consensus are
neoliberal
Neoliberalism (also neo-liberalism) is a term used to signify the late 20th century political reappearance of 19th-century ideas associated with free-market capitalism after it fell into decline following the Second World War. A prominent fa ...
,
deregulatory,
free market
In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any o ...
and
far-right
Far-right politics, also referred to as the extreme right or right-wing extremism, are political beliefs and actions further to the right of the left–right political spectrum than the standard political right, particularly in terms of being ...
policies
Peru
, image_flag = Flag of Peru.svg
, image_coat = Escudo nacional del Perú.svg
, other_symbol = Great Seal of the State
, other_symbol_type = Seal (emblem), National seal
, national_motto = "Fi ...
adopted since the presidency of
Alberto Fujimori
Alberto Kenya Fujimori Inomoto ( or ; born 28 July 1938) is a Peruvian politician, professor and former engineer who was President of Peru from 28 July 1990 until 22 November 2000. Frequently described as a dictator,
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he remains a ...
that are supported by the nation's economic elite. The description of such policies as the "Lima Consensus" was credited to
Harvard University
Harvard University is a private Ivy League research university in Cambridge, Massachusetts. Founded in 1636 as Harvard College and named for its first benefactor, the Puritan clergyman John Harvard, it is the oldest institution of higher le ...
government professor
Steven Levitsky
Steven Levitsky (born January 17, 1968) is an American political scientist and Professor of Government at Harvard University. A comparative political scientist, his research interests focus on Latin America and include political parties and pa ...
.
Such policies have made Peru attractive for
foreign portfolio investment
A foreign portfolio investment is a grouping of assets such as stocks, bonds, and cash equivalents. Portfolio investments are held directly by an investor or managed by financial professionals. In economics, foreign portfolio investment is the entr ...
,
though has resulted with increased
economic inequality
There are wide varieties of economic inequality, most notably income inequality measured using the distribution of income (the amount of money people are paid) and wealth inequality measured using the distribution of wealth (the amount of we ...
,
crime
In ordinary language, a crime is an unlawful act punishable by a State (polity), state or other authority. The term ''crime'' does not, in modern criminal law, have any simple and universally accepted definition,Farmer, Lindsay: "Crime, definit ...
,
corruption
Corruption is a form of dishonesty or a criminal offense which is undertaken by a person or an organization which is entrusted in a position of authority, in order to acquire illicit benefits or abuse power for one's personal gain. Corruption m ...
and poor
labor rights
Labor rights or workers' rights are both legal rights and human rights relating to labor relations between workers and employers. These rights are codified in national and international labor and employment law. In general, these rights influen ...
.
Those who support the Consensus are often
free-market fundamentalists and view any
economic interventionism
Economic interventionism, sometimes also called state interventionism, is an economic policy position favouring government intervention in the market process with the intention of correcting market failures and promoting the general welfare of ...
as
socialism
Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the e ...
or
communism
Communism (from Latin la, communis, lit=common, universal, label=none) is a far-left sociopolitical, philosophical, and economic ideology and current within the socialist movement whose goal is the establishment of a communist society, a s ...
.
Background
According to José Carlos Orihuela, the belief of limited state intervention held by the elite is due to frequent commodity booms, the weakness of the government, social disparities and the lack of national economists.
The Government of Peru displayed little interference in the
public sector
The public sector, also called the state sector, is the part of the economy composed of both public services and public enterprises. Public sectors include the public goods and governmental services such as the military, law enforcement, infra ...
throughout the nation's history since Peru frequently experienced commodities booms that benefitted white elites on the coast instead of the indigenous majority in rural areas, with businesses focusing on bringing commodities from inland Peru to export on the coast.
The persistence of this model prevented development in Peru, hampered
progressivism
Progressivism holds that it is possible to improve human societies through political action. As a political movement, progressivism seeks to advance the human condition through social reform based on purported advancements in science, tec ...
movements and made the establishment of a national economy impossible.
Peru experienced limited government interaction in the public sector until 1968 when the
military junta
A military junta () is a government led by a committee of military leaders. The term ''junta'' means "meeting" or "committee" and originated in the national and local junta organized by the Spanish resistance to Napoleon's invasion of Spain in ...
leadership of General
Juan Velasco Alvarado
Juan Francisco Velasco Alvarado (June 16, 1910 – December 24, 1977) was a Peruvian general who served as the President of Peru after a successful coup d'état against Fernando Belaúnde's presidency in 1968. Under his presidency, nationalism ...
began, with
state capitalism
State capitalism is an economic system in which the state undertakes business and commercial (i.e. for-profit) economic activity and where the means of production are nationalized as state-owned enterprises (including the processes of capital a ...
and heavy spending instituted that resulted in large national debt.
Political scandals resulted in the end of the junta and the
Lost Decade of the 1980s began, with President
Fernando Belaúnde Terry
Fernando is a Spanish and Portuguese given name and a surname common in Spain, Portugal, Italy, France, Switzerland, former Spanish or Portuguese colonies in Latin America, Africa, the Philippines, India, and Sri Lanka. It is equivalent to the G ...
failing to develop an effective economic policy and his successor
Alan García
Alan Gabriel Ludwig García Pérez (; 23 May 1949 – 17 April 2019) was a Peruvian politician who served as President of Peru
The president of Peru ( es, link=no, presidente del Perú), officially called the president of the Republic of ...
experienced the complete deterioration of the state due to corruption,
hyperinflation
In economics, hyperinflation is a very high and typically accelerating inflation. It quickly erodes the real value of the local currency, as the prices of all goods increase. This causes people to minimize their holdings in that currency as t ...
and the
internal conflict in Peru
The internal conflict in Peru is an ongoing armed conflict between the Government of Peru and the Marxism–Leninism–Maoism, Maoist guerilla group Shining Path. The conflict began on 17 May 1980, and from 1982 to 1997 the Túpac Amaru Revolu ...
.
Plan Verde
The Peruvian armed forces grew frustrated with the inability of the García administration to handle the nation's crises and began to draft a plan to overthrow his government.
According to Peruvian sociologist and political analyst Fernando Rospigliosi, Peru's business elites held relationships with the military planners, with Rospigliosi writing that businesses "probably provided the economic ideas which
he military
He or HE may refer to:
Language
* He (pronoun), an English pronoun
* He (kana), the romanization of the Japanese kana へ
* He (letter), the fifth letter of many Semitic alphabets
* He (Cyrillic), a letter of the Cyrillic script called ''He'' in ...
agreed with, the necessity of a liberal economic program as well as the installment of an authoritarian government which would impose order".
Thus,
Plan Verde
Green Plan was a clandestine military operation developed by the armed forces of Peru during the internal conflict in Peru; it involved the genocide of impoverished and indigenous Peruvians, the control or censorship of media in the nation and the ...
was drafted at the end of the García presidency; the objectives evolved into establishing a civilian-military government with a
neoliberal
Neoliberalism (also neo-liberalism) is a term used to signify the late 20th century political reappearance of 19th-century ideas associated with free-market capitalism after it fell into decline following the Second World War. A prominent fa ...
economic policy, the
genocide
Genocide is the intentional destruction of a people—usually defined as an ethnic, national, racial, or religious group—in whole or in part. Raphael Lemkin coined the term in 1944, combining the Greek word (, "race, people") with the Latin ...
of impoverished and indigenous Peruvians in an effort to remove a drain on resources and the control or
censorship
Censorship is the suppression of speech, public communication, or other information. This may be done on the basis that such material is considered objectionable, harmful, sensitive, or "inconvenient". Censorship can be conducted by governments ...
of media.
During his campaigning for the
1990 Peruvian general election
General elections were held in Peru on 8 April 1990, with a second round of the presidential elections on 10 June.Dieter Nohlen (2005) ''Elections in the Americas: A data handbook, Volume II'', p454 The run-off was between favorite, novelist Mari ...
,
Alberto Fujimori
Alberto Kenya Fujimori Inomoto ( or ; born 28 July 1938) is a Peruvian politician, professor and former engineer who was President of Peru from 28 July 1990 until 22 November 2000. Frequently described as a dictator,
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he remains a ...
expressed concern against the proposed neoliberal policies of his opponent
Mario Vargas Llosa
Jorge Mario Pedro Vargas Llosa, 1st Marquess of Vargas Llosa (born 28 March 1936), more commonly known as Mario Vargas Llosa (, ), is a Peruvian novelist, journalist, essayist and former politician, who also holds Spanish citizenship. Vargas Ll ...
and promised not to use
shock therapy
Electroconvulsive therapy (ECT) is a psychiatric treatment where a generalized seizure (without muscular convulsions) is electrically induced to manage refractory mental disorders.Rudorfer, MV, Henry, ME, Sackeim, HA (2003)"Electroconvulsive the ...
on Peru's economy.
Peruvian magazine ''Oiga'' reported that following the election, the armed forces were unsure of Fujimori's willingness to fulfill their objectives outlined in Plan Verde and it was reported that they held a negotiatory meeting with him to ensure that Fujimori followed their direction.
Fujimori would go on to adopt many of the policies outlined in Plan Verde.
Implementation
The Lima Consensus as established by the Fujimori administration focused on
deregulation
Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a ...
and
privatization
Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
with the goal of establishing a
neoliberal
Neoliberalism (also neo-liberalism) is a term used to signify the late 20th century political reappearance of 19th-century ideas associated with free-market capitalism after it fell into decline following the Second World War. A prominent fa ...
economy.
Fujimori and the Consensus experienced support as the public began to distrust
left wing
Left-wing politics describes the range of political ideologies that support and seek to achieve social equality and egalitarianism, often in opposition to social hierarchy. Left-wing politics typically involve a concern for those in soci ...
groups following the Velasco dictatorship and due to actions of communist guerrillas during the internal conflict.
As the Fujimori government began to implement their economic policy, his administration attempted to rewrite Peru's economic history, with Minister of the Economy
Carlos Boloña
Carlos Boloña Behr (27 July 1950 – 17 October 2018) was a Peruvian economist and politician. He served as the Minister of Economy and Finance from 1991 to 1993, and again from July to November 2000 under the administration of President Albert ...
inaccurately stating "during the three decades that preceded to date, populist, socialist or mercantilist ideas and governments exercised almost absolute predominance in our country".
Fujimori then instituted economic shock therapy policies described as "Fujishock"; Peru experienced macroeconomic stability though millions of Peruvians were instantly sent into poverty.
The dismantling of political parties in the 1990s resulted with weaker newcoming politicians into the twenty first century since
technocrats
Technocracy is a form of government in which the decision-maker or makers are selected based on their expertise in a given area of responsibility, particularly with regard to scientific or technical knowledge. This system explicitly contrasts wi ...
that existed in Fujimori's government would go on to promote the Consensus and dominate politics in Peru.
As the
Washington Consensus
The Washington Consensus is a set of ten economic policy prescriptions considered to constitute the "standard" reform package promoted for crisis-wracked developing countries by Washington, D.C.-based institutions such as the International Monet ...
lost popularity in the 2000s, a more defined Lima Consensus began to emerge in Peru simultaneously as the economy improved during the
2000s commodities boom
The 2000s commodities boom or the commodities super cycle was the rise of many physical commodity prices (such as those of food, oil, metals, chemicals and fuels) during the early 21st century (2000–2014), following the Great Commodities Depress ...
.
The economic boom Peru experienced did not develop a stronger government however, with deregulation and privatization becoming more established due to the Consensus following the fall of the Fujimori government while elites supporting the Consensus gained veto power in the government.
Governments in the early twenty first century also prevented funding for
social programs
Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specificall ...
such as education, healthcare and poverty programs, with Peru spending much below the Latin American average.
Alejandro Toledo continued to promote the
decentralization
Decentralization or decentralisation is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group.
Conce ...
of Peru,
while the former
social democrat
Social democracy is a Political philosophy, political, Social philosophy, social, and economic philosophy within socialism that supports Democracy, political and economic democracy. As a policy regime, it is described by academics as advocati ...
Alan García
Alan Gabriel Ludwig García Pérez (; 23 May 1949 – 17 April 2019) was a Peruvian politician who served as President of Peru
The president of Peru ( es, link=no, presidente del Perú), officially called the president of the Republic of ...
took implementation of the consensus even further, adopting policies similar to
Augusto Pinochet
Augusto José Ramón Pinochet Ugarte (, , , ; 25 November 1915 – 10 December 2006) was a Chilean general who ruled Chile from 1973 to 1990, first as the leader of the Military Junta of Chile from 1973 to 1981, being declared President of ...
and combatting with indigenous groups opposed to mining in their communities, events culminating with the
2009 Peruvian political crisis
The 2009 Peruvian political crisis resulted from the ongoing opposition to oil development in the Peruvian Amazon by local Indigenous peoples; they protested Petroperú and confronted the National Police. At the forefront of the movement to re ...
that saw civilians against an oil development in the
Amazon rainforest
The Amazon rainforest, Amazon jungle or ; es, Selva amazónica, , or usually ; french: Forêt amazonienne; nl, Amazoneregenwoud. In English, the names are sometimes capitalized further, as Amazon Rainforest, Amazon Forest, or Amazon Jungle. ...
massacred.
The Consensus effectively paralyzed the government of
Ollanta Humala
Lieutenant colonel Ollanta Moisés Humala Tasso (; born 27 June 1962) is a Peruvian politician and former military officer who served as President of Peru from 2011 to 2016. Originally a socialist and left-wing nationalist, he is considered t ...
.
Keiko Fujimori
Keiko Sofía Fujimori Higuchi (; ja, 藤森 恵子, Fujimori Keiko; born 25 May 1975) is a Peruvian politician. Fujimori is the eldest daughter of former Peruvian president Alberto Fujimori and Susana Higuchi. From August 1994 to November 2000, ...
, the daughter of Alberto Fujimori, has been a major proponent for the Lima Consensus, utilizing the support of neoliberal economist
Hernando de Soto
Hernando de Soto (; ; 1500 – 21 May, 1542) was a Spanish explorer and '' conquistador'' who was involved in expeditions in Nicaragua and the Yucatan Peninsula. He played an important role in Francisco Pizarro's conquest of the Inca Empire ...
to support her position during her elections.
In 2020, the Congress of Peru refused to ratify the
Escazú Agreement
The Regional Agreement on Access to Information, Public Participation and Justice in Environmental Matters in Latin America and the Caribbean, better known as the Escazú Agreement ( es, Acuerdo de Escazú), is an international treaty signed by 25 ...
regarding environmental rights due to the beliefs surrounding the Lima Consensus, arguing that it would violate the sovereignty of Peru.
Following the
2021 Peruvian general election
General elections were held in Peru on 11 April 2021. The presidential election, which determined the President of Peru, president and the Vice President of Peru, vice presidents, required a run-off between the two top candidates, which was held ...
that saw leftist candidate
Pedro Castillo
José Pedro Castillo Terrones (; born 19 October 1969) is a Peruvian politician, former elementary school teacher, and union leader who served as the president of Peru, President of Peru from 28 July 2021 to 7 December 2022. On 7 December 2022, ...
elected into the presidency,
Fitch Solutions
Fitch Ratings Inc. is an American credit rating agency and is one of the " Big Three credit rating agencies", the other two being Moody's and Standard & Poor's. It is one of the three nationally recognized statistical rating organizations (NRSRO) ...
warned that his election posed "substantial risks to the 'Lima Consensus', the investor-friendly economic policy framework that has persisted over the last 20 years".
Analysis
The majority of the growth that occurred following the Lima Consensus occurred due to commodity booms, not due to deregulation and free trade.
Consensus policies are supported by the economic elite and some of the middle class, with supporters advocating for deregulation, privatization and the removal of
social programs
Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specificall ...
.
Successful Peruvian politicians often espouse
center-left
Centre-left politics lean to the left on the left–right political spectrum but are closer to the centre than other left-wing politics. Those on the centre-left believe in working within the established systems to improve social justice. The c ...
ideas while campaigning to gain the electoral majority and later turn to support the powerful right-wing elites after taking office.
This lack of state intervention as promoted by the Consensus has resulted with a weak government with poor performance, with many Peruvians experiencing insufficient basic services such as education, justice and security.
The lack of state intervention has also resulted with the increase of corruption, crime,
crony capitalism
Crony capitalism, sometimes called cronyism, is an economic system in which businesses thrive not as a result of free enterprise, but rather as a return on money amassed through collusion between a business class and the political class. This is ...
and inequality, with many political officials frequently moving between business and government positions without oversight.
Regarding organization, Peru's weak government has also caused poor
urban planning
Urban planning, also known as town planning, city planning, regional planning, or rural planning, is a technical and political process that is focused on the development and design of land use and the built environment, including air, water, ...
throughout the nation.
The Consensus has also resulted with
environmental degradation
Environmental degradation is the deterioration of the environment (biophysical), environment through depletion of resources such as quality of air, water and soil; the destruction of ecosystems; habitat destruction; the extinction of wildlife; an ...
as businesses take advantage of deregulation in order to attain more growth.
Such shortcomings of the government – promoted by the economic elite – result in a cycle of citizen dissatisfaction with the weak government while the government remains weak due to poor political support.
References
{{reflist
See also
*
Lima Group
The Lima Group (GL; Spanish and pt, links=yes, Grupo de Lima, French: Groupe de Lima) is a multilateral body that was established following the Lima Declaration on 8 August 2017 in the Peruvian capital of Lima, where representatives of 12 cou ...
* ''
Madrid Charter
The ''Madrid Charter: In Defense of Freedom and Democracy in the Iberosphere'' (Spanish: ''Carta de Madrid: en defensa de la libertad y la democracia en la Iberosfera''), also known as the ''Letter from Madrid'', was a manifesto created on 26 Oc ...
''
*
Mercantilism
Mercantilism is an economic policy that is designed to maximize the exports and minimize the imports for an economy. It promotes imperialism, colonialism, tariffs and subsidies on traded goods to achieve that goal. The policy aims to reduce a ...
*
Washington Consensus
The Washington Consensus is a set of ten economic policy prescriptions considered to constitute the "standard" reform package promoted for crisis-wracked developing countries by Washington, D.C.-based institutions such as the International Monet ...
Latin America
Commercial policy
Economic globalization
Neoliberalism
Neocolonialism