Vargas Llosa Gives Peru a Dangerous Plot for Democracy

Not often do the internal and sometimes Byzantine debates of Latin American politics acquire an international dimension. It is all the more surprising, then, to see how the political dispute over President Alan Garcia’s nationalization of the banking system in Peru has extended well beyond that country’s borders.

Lengthy interviews with Garcia and Mario Vargas Llosa, the novelist who is leading the opposition to the bank takeover, have appeared on Mexican TV and in the pages of El Pais, the Madrid daily, the world’s leading Spanish-language newspaper. President Francois Mitterrand of France has announced a visit to Lima next month in a gesture of solidarity with the beleaguered Garcia, and Octavio Paz, the Mexican poet and elder statesman of the Latin American intelligentsia, has publicly expressed his support for Vargas Llosa.

In a nutshell, this is the issue: Garcia was elected in 1985 with a populist appeal in a country reeling with economic problems. In late June he proposed government control of Peru’s banks and other financial institutions to “democratize” access to credit and discourage capital flight. The opposition is made up of the financiers themselves, the more reactionary elements of the armed forces and large sectors of Peru’s middle classes. This coalition, largely as a result of Vargas Llosa’s leadership, has united beneath the banner of fighting the “totalitarian drift” of Garcia’s policies that would accelerate toward totalitarian rule if the bank nationalization wwent forward.

The claim that nationalizing a country’s banks automatically threatens democracy is neither new nor accurate. The French right brought up the charge for the first time in 1944, when Charles de Gaulle expropriated that nation’s largest financial institutions, and again when Mitterrand took over the rest in 1981. French democracy has not suffered, nor did Costa Rica’s after Jose Figueres’ takeover of his country’s banks in 1948. Indeed, even in the case of Mexico’s bank nationalization in 1982, if anything there has been a slight broadening of the clearly too restricted boundaries of Mexican democracy.

The fascination that Peru’s debate has engendered overseas stems more from the characteristics of its participants than from the nature of the disagreement itself.

Alan Garcia is the latest in a Latin breed, dating back to the 1930s, of nonaligned, democratically elected reformers who rapidly run up against the uncompromising resistance of the economic, political, military and international Establishments. They then either forsake their reformist creed or push ahead, generally ending in tragedy, defeat or both.

Mario Vargas Llosa belongs to a relatively new but highly fashionable current of thought: a sort of Latin neoconservative movement. It is mainly made up of intellectuals who rarely venture beyond ideological matters on which they agree--defending human rights and democracy, denouncing dictatorships, and so forth. But now, in the case of Peru, through Vargas Llosa it has descended from the heights of intellectual abstraction and emerged in the streets and plazas of the Latin American political scene. Unfortunately, it has come down on the wrong side.

One can take issue with the economic reasoning behind Garcia’s decision, and believe that perhaps he should have done more to sustain his policy of peaceful coexistence with the Peruvian business community. But that ignores the larger political problem: Garcia is an authentically reformist democrat caught in the cross fire of a terrifying guerrilla group, the Shining Path, which thrives on the poverty and injustice endemic in the Peruvian Altiplano, and a right wing that is rearing its ugly head for reasons that go far beyond bank nationalization.

In Latin America, whenever a technical or an economic dispute is couched in the deeply ideological terms of a struggle between “freedom” and “communism,” “liberty” and “totalitarianism,” there is trouble ahead. And when the middle classes are aroused and pitted against a government under those very banners, the threat is compounded. Too many times this fatal combination has swept away everything in its path--including intellectuals with democratic intentions who play with fire.