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In their own words. (Alberto Fujimori)

Jul 1, 1998

Alberto Fujimori, President of Peru
In 1990, a little-known agronomist and university rector with no prior political experience, Alberto Fujimori, surprised observers and was elected to the presidency of Peru. Since then, he has guided his country through eight years of economic reforms and not a little political controversy. Chosen as LatinFinance's "Man of the Year" in 1994 for his role in turning around Peru's economy, President Fujimori recently sat down with LatinFinance in Lima's downtown Palacio de Gobierno to discuss a decade of transformations in Peru and the region.
What was it that made you go into politics?
Ten years ago, I saw economic instability, the lack of a future for Peru, uncertainty everywhere. At one point, the situation was so bad that we even thought of the possibility of emigrating. I also had a construction business at that time and while the business had been doing well at one point, inflation was very bad and we had to close it down. You could see that the country was on the verge of collapse.During 1988, I hosted a television program in which guests debated various issues-national politics, economic questions, social issues, etc. And it was at that point I began considering going into politics. That decision came later, but when I did decide I opted not just to get into politics but to go after the presidency of the country.
Your election came just as real change was happening in Latin America's economies. What do you see as the key points in the region's transformation?
First, the speed of the reforms and the opening in Argentina were remarkable. The rest of us looked at the privatizations there at the time and thought the speed at which it was done was just crazy. And then there have been all the economic successes that Chile has had. Clearly, they had to surmount obstacles and it may have been easier to do that because of the size of the economy, but it was really amazing what they managed to do.I think that here in Latin America, Chile gave the example, Argentina laid out the guidelines and then Peru was able to begin opening its economy-it's been a series of successive stages that have caught on throughout the region.
That progression also corresponds precisely to the spread of the private pensions model throughout the region.
First it was adopted in Chile, then later Argentina and it spread to Colombia and Venezuela and Peru. The pension systems have provided a considerable boost to our economies. Here in Peru, it now accounts for nearly $1.8 billion. That was inconceivable when it was first talked about, and as a result has overshadowed all the original cynicism and criticism.In addition, privatization has generated an impressive amount of resources which have gone to strengthening the reserves held by the central bank. And it has also allowed us to channel nearly $1 billion to the private pension system.Our banking system has begun to improve, to become more transparent and be managed by those who have proven capable of properly managing it. Everything was privatized-the entire financial system. It is still not as competitive as it could be, but there have been important advances throughout the financial sector.
And the keys to Peru's transformation?
First, I think that the orientation we have given our handling of the economy has been key. There isn't a single moment, unless one would want to single out August 1990, when we decided to lift price controls. But from that point on, we began to stabilize the economy, to work closely with the multilateral agencies and to follow a strategic economic program.It wasn't just the economic aspect, or the financial aspect where we had problems that were inhibiting our advance. A second problem was terrorism. In order to deal with the terrorism, we first had to develop our military and police intelligence services. Then there was a third event, which was my re-election in June 1995, and that allowed us to continue the stabilization and reform process.
Any regrets about the amount of force you have used to combat terrorism?
If I have any self-criticism in this regard, I think it is that I did not use enough force. Rather, we used the force of society and the intelligence services of the state apparatus in order to capture the terrorists. In those places where we were required to use force in order to confront the terrorists, we used force. But it was always a well thought-out strategy.There were isolated cases of violent clashes. But previously that had been the main strategy of the armed forces for an entire decade. During the 1980s, the armed forces were accustomed to entering villages, closing the place off and wiping out the entire population. That's how they did it. When I took office, things changed. My government knew that in order to fight against terrorism it was necessary to win the confidence of the population.A lot of people thought this country couldn't be saved from terrorism. Let me tell you something that I discussed once with Enrique Iglesias. At a meeting of heads of state, I told him, "I am going to end terrorism in Peru." And he replied, "Very good. I wish you the greatest success." A few years later I saw him after the capture of (Sendero Luminoso leader) Abimael Guzman, and he said to me, "Well done, well done. You know, I told you that I wished you all the best in your fight against terrorism...but I never really thought you'd be able to do it!"
Who do you see as the individuals most responsible for the region's transformation?
At a regional level, it would have to be Michel Camdessus. The International Monetary Fund has given our economies a certification as a kind of "guarantee" that permitted us to have access to other financial markets. To ask for financing, one had to go with a letter in hand from the IMF, and if you didn't have it, you simply didn't bother going. They wouldn't even open the door to you, that's how important the IMF certification was.Enrique Iglesias has really helped the region a lot through the Inter-American Development Bank, first in the form of credits for economic restructuring and later with credit for social programs and infrastructure.
How important was the Brady debt restructuring for Peru?
Debt has been one of the biggest problems facing Peru. It was really a burden. One wouldn't have known where to begin if the country's debt problems had been spread out atop a table. You were completely surrounded, outflanked everywhere you turned. We had to work on it like ants, little by little. I remember we started with the World Bank and the Inter-American Development Bank to straighten out our situation with them. Then we struck our first deal with the Paris Club, followed by our agreement with the International Monetary Fund. We left the Brady Plan to the end. We were the last country to sign.
Because of the size of Peru's debt problem?
Because of the size and because we were dealing with so many other problems, too. In the end, I think we negotiated very good, very satisfactory conditions under the Brady Plan both for Peru and for the bankers. I believe the reason Peru's economy did not simply collapse is due to the success of the Brady Plan.Were there any moments in the renegotiation of Peru's debt that were particularly tense?I remember during the Brady negotiations there was one meeting with Citibank and John Reed was there. They were in the middle of talks and Finance Minister Jorge Camet said that no, it just wasn't possible to reach an agreement yet. And Reed got very upset and stormed away and Camet stayed on talking with the other bank officials. But eventually, Reed had to return to the table, and ended up understanding the Peruvian position.
Why was your re-election really necessary to continue Peru's economic reforms?
Well, the re-election was a decision taken by the citizenry. The idea at that point was that if the people wanted continuity they would have to vote for it. And really, it was the people who said, "Yes."Let me say that back in 1992, democracy in Peru was at serious risk because of terrorism. Peruvian democracy was nearly unsustainable at the time and if drastic measures would not have been taken, the government might well have fallen. It was said at the time that democracy was being destroyed, but measures were taken in order to maintain the state and get the country back on the track toward democracy.In the march toward democracy there is always a lot of controversy, and if there is controversy it is proof that there is democracy. We have advanced and nobody doubts today that our institutions are more solid. We don't deny that there is room for improvement, but in general the institutions of government are moving forward.
There is currently some controversy about your running for a third term, isn't there?
There is a lot of talk about changing election laws. But all that is up to the legislative branch of government. There is also a lot of criticism that I am trying to run for a third term as president. First of all, I would have to be a candidate, which I am not yet; then, the laws being proposed in Congress would have to allow me to run; and in the last instance, if I do prove to be a candidate, the people will decide what happens in an election.
When will we know if you're going to be a candidate?
I am a very unpredictable man. I think that's a personal characteristic of mine. Although there are some areas in which my work is very strategically planned, in other areas that's not so. When I presented myself to run for the presidency in 1990, I did it with only a few months to go before the elections, very little time. Nevertheless, the operation of the rescue of the hostages at the Japanese embassy was a long time in planning.
Does Peru need a three-term president in order to continue with its economic transformation?
The reforms can be deepened with the continuity of one government or of more than one government. I think what is necessary is the concept of continuity in politics, rather than uncertainty in politics.

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