Minister's resignation tightens Fujimori's grip

(First Edition)

PRESIDENT Alberto Fujimori moved this week to consolidate further his personal power by easing out his Economy Minister, Carlos Bolona, the only member of his cabinet who was well known outside Peru.

Mr Bolona, a successful businessman and respected free-market economist who has staked his reputation on restoring Peru's battered relations with the international financial community, said he was going because of policy disagreements with the President.

His departure should be seen in the context of the municipal elections scheduled for the end of this month. Peru is deep in recession, and pressure on the President to act to reactivate the economy, which contracted by 2.7 per cent last year, has become intense.

Mr Bolona brought inflation down from 7,600 per cent when he took office in 1990 to 56.7 per cent last year, but at the cost of widespread unemployment and growing impoverishment. This has made him extremely unpopular at home, whatever his international reputation, and his firm opposition to any attempt by the President to relax austerity measures and thereby win some political popularity finally sealed his fate.

Mr Bolona had wanted to resign in April, after Mr Fujimori's coup, but he was persuaded to stay on and complete his work on 'reinsertion' of Peru in the international financial community.

The outgoing economy minister gave absolute priority to following an austerity programme agreed with the International Monetary Fund, but Mr Fujimori is anxious to increase public spending ahead of the polls. As things stand at the moment, these will be won comfortably by the traditional parties, Popular Action and Apra, which he dislodged in a 'palace coup' last April. Such a result would inevitably be seen as a plebiscite on Mr Fujimori's performance since then, and would wreck his plans for a 'new republic' in which party politics is a thing of the past.

The departure of Mr Bolona will be greeted with dismay by Peru's creditors, who were already concerned at Mr Fujimori's increasingly authoritarian rule. There has been some scepticism about his control over the Constituent Congress elected in November, which has the task of rewriting the constitution, and probably of prolonging Mr Fujimori's occupation of the presidential palace. The chairman of Congress, Jaime Yoshiyama, is a political protege of the President.

In another move to stifle possible centres of opposition, or even criticism, Mr Fujimori has ordered the prosecution of prominent retired army officers who spoke out against the treatment of colleagues involved in an unsuccessful coup d'etat against the President last November.

Yesterday, retired General Alberto Arciniega, who made his name as a successful counter-insurgency commander, took refuge in the Argentine embassy to escape prosecution for 'insulting the armed forces'.

Critics point out that this comes down to criticising Vladimiro Montesinos, a retired army officer who is one of the President's most trusted advisers. He is believed to have been instrumental in placing unconditional supporters of the President in the most senior military posts, and forcing dissidents, such as General Arciniega, into retirement.

President Fujimori has also acted in the past few days to undermine the political independence of the diplomatic service, one of the very few in Latin America with a proper career structure, and to stifle the opposition press. More than 100 career diplomats have been abruptly retired, including several senior ambassadors, and the secretary-general of the ministry has been replaced as head of the service by the foreign minister, an executive appointee.

At the same time, independent magazines are being subjected to a barrage of lawsuits; publications that have been outspoken in their criticism of the influence of Captain Montesinos, such as Caretas and Si, have been the main targets.