Peru’s Cycle of Violence, Poverty Discourages Help : Latin America: World Vision is the latest to pull out in a blow to an already suffering country.

World Vision International was trying to help 23,000 Peruvian children whose lives are steeped in poverty. But terrorists killed two officials of the Christian charity agency, and three of its employees disappeared in a guerrilla war zone.

So World Vision is pulling out. This month, the organization, based in Monrovia, Calif., will end its main Peruvian aid program, aimed at easing the poverty of the children’s families and communities.

“Peru needs support, but as an institution we cannot risk more of our people’s lives,” says Corina Villacorta, the agency’s national director for Peru.

World Vision’s experience illustrates the dismal depths this country has reached in a downward spiral of poverty, mismanagement and violence. A nation of 22 million people, Peru has set a frightening example of how a poor but resource-rich country can sink ever deeper into underdevelopment, making it increasingly hard to help relieve the suffering, let alone reverse the downward trend.

Social scientist Fernando Rospigliosi says that Peruvian per capita income, calculated at realistic exchange rates, dropped to $747 a year in 1990 from $1,228 in 1988, making Peru the poorest country in South America. “We are in the cellar,” Rospigliosi wrote in a recent magazine column.

While a vicious guerrilla war has burdened the nation for 11 years, ineffectual and underfinanced government has made matters worse, and economic remedies have brought more pain than relief so far. Since he took office last year, President Alberto Fujimori’s austerity measures have sharply reduced living standards that are already desperately low.

In this dark hour, some analysts see a glimmer of new hope as once-rampant inflation comes under control and modest economic growth appears possible next year. But that brings little solace to Villacorta, 34, a social worker with the sad job of dismantling one of the largest private aid agencies in Peru, one that helped support 136 impoverished rural and urban communities.

World Vision’s main program in Peru linked individual sponsors in the United States, Canada and Europe with poor children up to age 6. Regular donations from the sponsors helped pay for programs to develop agriculture and small business in the children’s communities, as well as provide aid in health and nutrition. The agency had an annual budget of $2.7 million and a staff of 100.

The families of 23,000 children in the program have been notified that they must do without the sponsors and the aid after December, Villacorta said.

Wearing a blue-striped seersucker suit, she spoke at the agency’s Lima headquarters, a pink stucco building of four stories. World Vision’s worst troubles began just outside these offices on the morning of May 17.

Canadian Norman Tattersall, World Vision acting director for Peru, and Jose Chuquin, the director for Colombia, were arriving at the headquarters when terrorists sprayed their car with machine-gun fire. Tattersall died with nine bullet wounds, Chuquin with 22.

On July 17, three World Vision employees and one Peruvian disappeared with their vehicle en route to Lima from Andahuaylas, in the war-torn Andes Mountains southeast of the capital. After that, World Vision officials began receiving threatening telephone calls and letters. The warnings said that World Vision worked as an opiate of the people, did not contribute to the revolution and must leave Peru. Some of the messages said they were from Shining Path, the fanatical Maoist rebel army that has been waging a guerrilla war in Peru since 1980.

World Vision decided to close its five “regional development centers” in Peru and reduce its operations to one small Lima office with a skeleton staff of six or seven. It will collaborate on a few projects with other aid agencies, trying to keep a low profile, Villacorta said.

Thus ends one ambitious effort to help pull Peru out of its deepening hole. Another example: Because Shining Path killed three Japanese agricultural technicians in July, Japan has pulled 50 other aid workers out of the country.

The violence that stopped both programs certainly will translate into harder times for thousands of Peruvians. “It’s a vicious circle,” Villacorta said. “I believe poverty and injustice bring violence.”

Bernardo Wagner, a former Peruvian navy officer and now general manager of the Lima subsidiary of the U.S. chemical firm H.B. Fuller Co., contends that the only way to pacify Shining Path is to fight the poverty that the guerrillas exploit. And Wagner, 44, is doing his part.

Last year, after President Fujimori’s economic austerity measures slashed the purchasing power of poor Peruvians, Wagner put back in operation an idle caldron at his factory, which makes industrial adhesives, to cook massive batches of a nourishing gruel made of soy meal, corn flour, milk and sugar.

For five months, the factory cooked up the gruel and delivered it to 20,000 children a day through community groups in surrounding slums. Early this year, with contributions from Fuller and other companies, Wagner began building a new plant in the dusty slum of Chorrillos to cook enough gruel to feed 400,000 children a day.

Tall and lanky, with graying hair and a worried smile, Wagner led two reporters through his construction site: a roofless brick warehouse without a finished floor, a steel vat to mix the gruel, two 15-ton caldrons to cook it, an oven for baking bread. Construction was stalled.

Guerrillas have not bothered Wagner. His problem is money.

The project, including two trucks to deliver the hot gruel in insulated cylinders, is budgeted at $700,000. But donations have stopped at $350,000. Neither the government nor other private companies seem interested in helping, he said.

“They think that the problem is going to be solved by economic development, by foreign investment, etc.,” he said. “Well, that’s absurd. All that is going to take a long time.”

Meanwhile, babies and small children die from diseases brought on by malnutrition. Peru’s infant mortality rate is at least 80 per 1,000 live births, eight times the U.S. rate. And Wagner worries that a majority of Peruvian children live without enough nourishment for proper development.

“It is possible that we will have a generation of mentally retarded children,” he said.

In the current economic depression, Wagner said, the H.B. Fuller factory is operating in the red at 30% to 40% of capacity. “It’s the general situation in the country,” he said. “All factories have idle capacity.”

Jobs are so scarce and real wages so low that at least 70% of all Peruvian workers are classified as underemployed, including most government workers. Low wages have sparked strikes, which have driven production down. Demand for manufactured products has been minimal.

In the mining industry, Peru’s No. 1 earner of export revenue, 41 out of 78 private companies have stopped production. Augusto Baertl, president of the national mining association, said the main problem is that Peru’s unit of currency, the sol, is overvalued by 65%, which means that dollars earned from exports do not exchange for enough sols to meet costs.

If the government devalues the sol, it will risk increased inflation, and controlling inflation has been Fujimori’s No. 1 goal. He has cut it from a disastrous level of nearly 400% a month in August, 1990, to about 4%.

Fujimori has reduced official interference in the market economy, streamlining cumbersome regulations and cutting costly subsidies while working to put government finances in order with strict controls and increased tax collections. His goal is to restructure the economy for sustained growth.

Despite the mining industry’s problems, Baertl said he is pleased with Fujimori’s policies, which he said reverse decades of economic mismanagement.

One industry that had prospered in spite of earlier hard times was tourism, which in 1988 was Peru’s No. 2 revenue earner, after copper. But even tourism could not escape the country’s downward cycle.

First, news reports of terrorism and violence in Peru began stemming the flow of foreign visitors. Then came cholera.

Deepening poverty worsened already abysmal sanitary conditions in many parts of Peru, making the nation vulnerable to a disease that thrives on squalor. The cholera epidemic broke out in January, the height of summer south of the Equator, and more than 270,000 Peruvians have come down with severe diarrhea caused by the intestinal bacteria. More than 2,500 have died.

The double whammy of cholera and terrorism in headlines from Peru has slashed the number of foreign tourists entering the country from 130,000 in 1988 to 36,000 this year, said Eduardo Arrarte, president of the national tourism association.

“I think we have touched bottom,” he said, speaking more of his country than of his family tourist agency’s listless business. “I can’t imagine anything worse than the way we are now.”

Another problem is that hundreds of thousands of Peruvians, including professionals and executives whose services are needed for economic development, have left. Billions of dollars in Peruvian flight capital also has gone, leaving the country short of funds for growth.

Because Peru lags far behind in payments on its $20-billion foreign debt, foreign banks won’t lend it a cent. Foreign investors are also staying out.

As the world’s leading producer of coca leaves, the raw material of cocaine, Peru brings in hundreds of millions of dollars in clandestine cash. But the “narcodollars” disrupt the economy by helping to keep the sol overvalued. They also help finance Shining Path, which collects “taxes” from traffickers.

Eleven years of guerrilla war has caused an estimated $17 billion to $18 billion in economic damage and 23,000 deaths. The economy shrank by 11% in 1990 and by 5% more in the first half of 1991, but now there are some good signs, said Miguel Palomino, 32, an economist with the consulting firm Apoyo. He said that with inflation under control, money is returning to the economy and businesses are beginning to replace depleted stocks.

Many problems remain unsolved, including the guerrilla war, but Palomino said he believes Peru has reached the bottom of its downward spiral.

“This government has changed the landscape, radically and profoundly, for the better,” he said. “It still isn’t clear, but my impression is that this spiral has started to turn upward lately. I think it is happening and will continue.”