Swirl of Trouble

uPERU

Peru seemed like a nation under siege last week. In Lima, gangs of young toughs roamed the streets, raiding small shops and overturning tables and racks; hundreds gathered nightly in the Plaza San Martin and staged noisy anti-government demonstrations. In Arequipa, university students threw up barricades and fought it out with police until the government finally suspended constitutional guarantees locally. In other cities and towns all over Latin America's fourth largest nation, strikes and violence threatened to flare out of control. Before long, rumors swirled through almost every Peruvian city and packing-crate slum that the army was about to overthrow the four-year-old government of President Fernando Belaunde Terry.

In the Wings. The trigger that set off last week's riots and rumors was Peru's steadily worsening fiscal troubles and Belaunde's inability or reluctance to do anything about them. Fired by his dreams of developing Peru's Andean interior and diversifying the country's economy, Belaunde has spread money around like confetti, pushing the government budget from $410 million a year to more than $1 billion, hiking the annual deficit to more than $90 million and feeding an inflationary spiral that is raising prices 15% a month. When Belaunde was finally forced to devalue the Peruvian sol by 45% two months ago, labor unions demanded a 40% raise; Belaunde offered only 10%.

Amid the inevitable union uproar and calls for strikes, Belaunde last month convened a rare "summit" meeting with the opposition coalition that controls Congress. He sat down to talk with conservative General Manuel Odria, 69, dictator-President from 1948 to 1956, and old liberal War Horse Victor Raul Haya de la Torre, 72, winner of the election that touched off Peru's 1962 military coup and led to another election that installed Belaunde. Odria and Haya stressed the need for a balanced budget, but in the end Belaunde refused to go along. The uproar and the strikes continued.

The army, meantime, stayed back in the wings; despite the rumors, it is anxious to avoid a coup unless it becomes absolutely necessary. For one thing, there is no single officer or group of officers well enough trained to take over the country; besides, no sensible officer really wants the responsibility of Peru's problems. But if public disorder gets dangerously out of hand, the army may have to move. To help keep the generals in the barracks, Belaunde bought them 12 fancy French Mirage jets last month (see preceding story) and reshuffled his Cabinet, naming a rear admiral as Minister of Interior and Police.

More to Hope For. At week's end, Belaunde insisted that everything would work out all right. "There is no country without problems or protests," he said as he opened the 33-nation Pacific International Fair in Lima. "No developing nation has more to hope for than this one, which is growing and building. A government that respects liberties and the rights of man is the one that offers the climate that leads to prosperity." Perhaps even more than to his fellow Peruvians, Belaunde was addressing his remarks to the stolid-looking man at his side: General Julio Doig, Peru's top military man.

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