maoist people’s war and its socio-economic impacts in peru

8/14/2019 MAOIST PEOPLES WAR AND ITS SOCIO-ECONOMIC IMPACTS IN PERU

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MAOIST PEOPLES WAR AND ITS SOCIO-ECONOMIC IMPACTS IN PERU

Mani Nepal1Forthcoming: Economic Journal of Development Issues, 2009

Abstract

This paper analyzes a period of significant violence in Peru, from 1980 to 2000. Historical data

suggest that the roots of the armed struggle lie in poverty, inequality, and ethnic grievances.

During this period, over 69,000 people died or disappeared, the economy stagnated, and per

capita income growth was negative. In the public sector, education and health suffered the

largest declines in spending. Inflation surged out of control during 1989-1992. After the

capture of the Shining Path leader in 1992, the intensity of armed conflict declined. The

Peruvian economy regained its momentum, and inflation was brought under control. On the

political front, greater stability was attained. However, lawlessness continued to be the major

problem in post-conflict Peru and the underlying causes that prompted the civil war have not been fully addressed. This raises the possibility that violent conflict could return anytime in

future.

Key words: Maoist Peoples war, violent conflict, Peru, armed struggle, Revolutionary Left

Movements

I. Introduction

Peru experienced a violent conflict and longer term insurgency, a form of civil war

during 1980s and 1990s. Civil war generally tends to destabilize the society, dampens

economic growth, destroys physical infrastructures, diverts social spending towards

war related spending, and brings overall frustration to the general public if lasted for a

longer period of time along with loss of lives, displacement of people, loss of social

capital, and so on. In the first place, one tends to argue that civil war is the outcome of

the ethnic grievances, cultural differences and discriminations to minorities by

majorities. When the causes of civil wars are tested empirically, Fearon and Laitin

(2003) found that civil war is the outcome of presence of favorable conditions in

particular countries, not the outcome of ethnic grievances or cultural differences. They

argued that there are major three factors that favor insurgency: 1) poverty and slowgrowth; 2) rural inaccessible terrain; and 3) weak central government. They supported

these hypotheses with empirical findings using cross county data.

1Dr. Nepal is an associate professor at the Central Department of Economics, Tribhuvan University,

Kirtipur. The author wishes to thank Don Coes (University of New Mexico) and Ken Roberts (Cornell

University) for their comments and suggestions in various stages of this research.


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Quinn et al. (2003) challenge the rejection of cultural variable as a cause of civil war.

Using the same cross-country data set that Fearon and Laitin used, they demonstrate

that once the measurement error is taken into consideration, effect of ethnic diversity on

civil war turns out to be significant. Both of these researches are based on the cross-

country data, which lacks the lower level of disaggregation. The problem of

disaggregating data into the lower units than state level has been addressed in the

subsequent researches. Using sub-national civil war data from Nepal for eight years

(1996-2004), Bohara et al. (2006) find significant support for the above listed hypothesis

including the cultural factors.

The main objective of this paper is to analyze Perus Civil war (1980-2000) and its socio-

economic effects in the Peruvian society. We first briefly take a closer look into the

Perus historical background in section 2 that helps to explain the occurrence of the civil

war. Perus civil war is basically related to the Communist Party of Peru (PCP) often

called the Shining Path or Sendero Luminoso (SL). Section 3 describes the brief historyof PCP. Section 4 describes the data sources. Section 5 deals with the actual deaths

during the civil war, and its socio-economic consequences. In Section 6, some relevant

and contemporary issues have been discussed.

II. Historical Background

Peru, home of over 27 million people, has been struggling towards modernization since

its independence from Spanish colony (independence was declared in 1821, and

colonial power was defeated in 1824). Despite a respectable GDP growth rate of 9%(2007) and modest per capita income ($7200 in PPP), the country has been suffering

from the long-standing problems of inequality where the lowest 10% population had

just 1.6% of the national income but the highest 10 % shared 35.4% of national income

before 1960 (Klaren, 2000). The historical pattern of inequality has not been changed

much by the end of 1990s (Gini index was still 46.2 in 1996) and the problem has been

compounded by high mass poverty (over 52 % people are below poverty line) (World

Bank, 2008), and ethno-racial discriminations (TRC, 2003). The country has a long and

very complex history. On the eyes of the westerners, the countys history can be viewed

as (described by a historian):

a country of fabulous legendry wealth (El Dorado), of bloody conquest (Pizarro versusAtahualpa); of lost Inca cities (Machu Pichu); of a seigniorial Spanish, catholic nobility (colonial

Lima); of violent fanatical revolutionaries (the Shining Path guerrillas); and of drug traffickers

pursuing the white gold of the international cocaine trade. (Klaren, 2000: xii)

Although all of these historical aspects have long lasting impact in present day

Peruvian society, the objective of this paper is to analyze the socio-economic impacts of


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the civil war in Peru that started in 1980. Basically, our attempt is to analyze the

fundamental causes of the Maoist Peoples War in Peru, and its effects in Peruvian

economy and society.

Historically, inequality and social discrimination have been the two most dominating

problems of Peruvian society. At the beginning of the 1960s, Peru had one of the worst

concentrations of wealth in South America. It was observed that 1 percent of the

population controlled 19 percent of the national income; whereas bottom 20 percent of

population received only 2.5 percent of the national income. The inequality was more

persistent in the rural agrarian sector, where over 30 percent of farm families were

landless while 700 or so called hacendados (big land-lords) controlled one-third of

countrys productive land and majority of the agricultural income (Klaren, 2000: 324).

In the political front, the chronic inequality has its root in the emergence of Oligarchy

rule in the late nineteenth century and lasted till the first quarter of the twentiethcentury. The core of the elite, often called the Twenty-Four Friends, literally managed

the daily affairs of the country till early 1920s, who were not loyal to the nation (Ibid:

214). This episode basically had been linked to the export-led growth in Peru that

lasted till the outbreak of World War I. The export-led growth was in favor of the

ruling elites and pro-urban at the cost of social welfare of the majority of rural poor.

Klaren (2000) describes the fundamental problem of Peru as: Its disunity and underdevelopment whose causes were external dependence to foreign

capital and internal domination by a powerful oligarchy (Klaren, 2000: 341).

The persistent inequality and urban centric growth patterns paved the way for

migration to cities,2 frequent workers unrest, and rural uprising. The 1930s great

depression contributed to slow down the exports lead growth, currency devaluation,

and workers layoffs. Unskilled migrated workers remained as much as 70 percent

unemployed in the construction sectors. Political instability continued amidst a race

between democracy and the dictatorships. In the recent past, militaryjuntas had ruled

the country in 1930-39, 1962-63, and 1968-80. The last one had radical socialist reform

programs, which inspired the peasant movements and forced big landholders for

private land reform (fearing that they would lose their land anyway) in which tenant

farmers could purchase the parcel from the landlords if they do so voluntarily.

The long periods of oligarchy rule followed by the military rule and repression

interrupted or drove underground the radical social and political organizations. Those

2In 1960, urban population was 46 % of total population and it went up to 65 % by 1980, and 73 % by 2000 (World

Bank, 2003)


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political parties and leaders who remained active in open politics retreated from their

earlier populist and radical stances, and opted survival strategy. They had basically

opted an implicit pact not to press the question of agrarian reform, not to talk about the

concentrated land tenure system, and not to talk about existing exclusionary social and

ethnic relations that structured life in many rural highlands provinces. The political

concerns were limited to the needs of urban groups, factory workers, and laborers of

coastal provinces, the vote banks of the parties. That drove the existing political parties

towards the ineffective groups of people creating wider space for new radical political

forces (Stern, 1998).

Another remarkable episode in the Peruvian history is the expansion of the higher

education since 1960s in terms of number of universities, 3 students participation, and

overall spending. This proliferation of universities drew significant number of students

not only form well-to-do families but also from low-income families. Some researchers

and writers are in the view that the expansion of the higher education provided thebreeding ground for the Revolutionary Left Movement in Peru (Klaren, 2000; Palmer,

1992; Stern, 1998; Gorriti, 1999). However, this claim does not tell the whole story.

Available data shows that during 1960s Peruvian economy got stagnated4 and the

economy could not provide the jobs for the growing number of college graduates.

Revolutionary Left Movements taped the growing frustration of the educated youths.

III. The Shining Path Movement

The history of the Shining Path Movement (SL) in Peru goes back to the establishmentof the Communist Party of Peru (PCP) in October 7, 1928 by Mariategui. Before 1960s,

the PCP was not so active in the Peruvian politics. Starting from 1960, a fraction of PCP

called the RED Fraction based in Ayacucho, emitted the Maoists style revolution as

their guiding principle to establish communism in Peru. A university professor named

Rubn Abimael Guzman Reynoso, alias president Gonzalo, led the Maoist movement in

Peru.5

The SL was born in Ayacucho, the poorest department of Peru. Most of the analysts

and researchers argued that the reopening of the San Cristobal de Humanga University

of Ayacucho in 1959 was the starting point of the SL movement in Peru where youngphilosophy professor, Guzman, was the committee chair. Throughout 1960s and 1970s,

3In 1955, there were only six universities, and the number rose to 30 by 1968 (Klaren, 2000:328)

4For example, investment as a share of GDP declined from over 35% in early 1960s to just above 10% by 1970.

5The PCP vehemently opposes the name Shining Path or Sendoro Luminoso to Maoist movement in Peru. The

PCPs online documents has the following comments about it: The demeaning term "Shining Path" is used by the

mainstream communications media owned by the big capitalists, bankers and landlords to defame and ridicule the

PCP. http://www.blythe.org/peru-pcp/pcp_faq.htm#faq19.


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SL devoted itself to build very disciplined and devoted party cadres; most of them were

university students. During the second half of 1970s, SL concentrated its works in rural

areas through the formal education system.6 Based on PCPs documentation, the Party

Reconstitution process was completed in 1979.7 Chinese Cultural Revolution heavily

influenced Perus SL movement. This is mainly because its leader, Mr. Guzman, was a

believer of the Chinese style revolution and he spent time traveling China twice during

the cultural evolution and got chance to observe Chinese Cultural revolution very

closely (Klaren, 2000: 373).

After the two decades of preparatory works, the Peoples War in Peru, waged by PCP,

was begun on May 17, 1980 when a group of Maoist workers burned the ballot boxes

and voters list during the first ever presidential election after 17 years of juntas rule, in

the Andean town of Chuschi (Degregori, 1992). That event went unnoticed in the

beginning as is the case in other revolutionary movements.8 It is argued that this event

did not get much attention as most of the Left oriented political parties in Peru optedelectoral politics, and SL was a very small fraction at that time (Stern, 1998). By the end

6 The educated party cadres worked as school teachers to raise the class-consciousness. These teachers

worked to fill the power vacuum in the remote area (Gianotten, 1992).7http://www.blythe.org/peru-pcp/pcp_faq.htm#faq19 .8 The Maoist movement in Nepal resembles that of Perus case. In Nepal, the Maoist Peoples war began

on February 13, 1996. The Peoples War began with a simultaneous attack on three remotely stationed

police outposts, a bank branch, a soft-drink bottling plant (owned by an American Company), a liquor

factory and a private house. This event went unnoticed in the beginning. Their strategy was of a guerillanature establishing bases in the rural and remote areas with the objective of surrounding urban centers

in order to seize state power. In their base areas, the Maoist redistributed the captured land from the

absentee landlords and feudal interests to the locals to farm and use as cooperatives. What started as an

insignificant and isolated incident in 1996 has transformed into a devastating conflict claiming more than

13,000 lives and displacing over 200,000 people in the next ten years. In November 21, 2006 the Maoist

Peoples War was formally ended with signing of historic peace deal with Nepal government. Nepal,

Bohara and Gawande (2006) provide a detail analysis of the causes of Nepals Maoist movements. In the

mean time, in the southern plains of Nepal, several break-away fractions of the Maoist organization have

been actively using the same old tactics of abductions, killings, intimidations, and all sorts of violent

activities that they have inherited from the Maoist. They put forth various demands including an

independent state for the people of Terai origin (a flat belt of fertile plain that runs east to west along theIndian border). In the hilly area, several ethnic groups are also raising their voices demanding federal

structure and rights to self-determination. What was started as an ideology based political movement a

decade ago might well be headed towards a separatist movement. Whether the peace deal translates into

a lasting peace remains to be seen in the light of increasing frustration among the masses about the slow

socio-economic transformation of the country and how the government and responsible political parties

will handle the issues raised by the different political groups, and several other indigenous and ethnic

groups who are now looking for their identity in the new constitution of the republic.


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of 2000, the estimated deaths and disappearances from the conflict rose to 69,000,9 not to

mention the damage of infrastructure, family disintegration, displacement of people,

deteriorating social fabrics and social order, reduction of social and human capital,

economic hardships to common people, and over all, the lawlessness.10

In 1992, Mr. Guzman was arrested with the help of classic police intelligence. After

the capture of the SL leader, the Repentance Law had been introduced in which

captured or surrendered SL workers or supporters were promised rewards, protection,

secrecy, and if they wished, a new identity in exchange for the cooperation in the war

against the SL (Clutterbuck, 1995). Furthermore, Mr. Guzman made series of televised

statements declaring the suspension of the armed revolution. The arrest of Mr.

Guzman, combined with his television statements, and the provision of incentives

under the Repentance Law, Shining Path movement has been declined dramatically

during the second half of the 1990s.

IV. Data Sources

The civil war related data for the period 1980-2000 are extracted from the report of the

Truth and Reconciliation Commission (TRC) of Peru. The economic data came from the

following different sources: World Banks world development indicators (CDROM-

WDI) and financial indicators; and Penn World Table (table 6.1). Some other data are

from different publications.

V. Effects of Armed Conflicts in Peruvian SocietyV.1 Costs of Human Lives

Since the civil war started in Peru, an astonishing number of people have been killed.

Before the report of the Truth and Reconciliation Commission (TRC) came out in late

October 2003, the estimated figure of deaths and disappearances was below 30,000. The

TRC report estimates about 69,000 deaths and disappearances during 20 years conflicts.

That amounts to 3500 people per year (10 people each day approximately) for 20 years.

However, the TRC was unable to document all the deaths. The total numbers

documented deaths and disappearances in the TRC report are 22,507, well below the

estimated number of 69,000. Still this number is very high by any standards. Table 1

9 Truth and Reconcialtion Commission. 2003. Final Report: General Conclusions.

http://www.cverdad.org.pe/ingles/ifinal/conclusiones.hph (access date: 2/20/2004).10 Here in Nepal, we are experiencing similar episodes of violence and lawlessness after the

Comprehensive Peace Agreement between Nepal government and the rebel Maoist.


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exhibits the total number of deaths and disappearances during the period of 1980-2000

by the government and the rebels.

Table 1: Total Recorded Deaths in Perus Armed Conflict (1980-2000)

Year SL State Other Total

1980 13 6 4 23

1981 34 9 6 49

1982 379 148 49 576

1983 1107 990 159 2256

1984 2053 1728 305 4086

1985 700 585 112 1397

1986 488 344 88 920

1987 737 274 124 1135

1988 929 400 141 1470

1989 1413 663 324 24001990 1371 602 354 2327

1991 1051 483 303 1837

1992 928 574 269 1771

1993 721 174 121 1016

1994 225 109 77 411

1995 166 50 74 290

1996 93 50 34 177

1997 78 26 36 140

1998 57 23 25 1051999 38 17 31 86

2000 19 5 11 35

Total 12600 7260 2647 22507Source: Truth and Reconciliation Commission Report, 2003.

Table 1 shows that SL was responsible over 55% of the total deaths. In terms of the

death toll, 1984 was the worst year; in which over 18% of total recorded deaths

occurred, followed by 1989 (figure 1). Out of reported deaths, over 76% were occurred

in rural Peru. This figure indicates the intensity of the war and its severe effects in rural

Peru where less than 36% of total population were residing during 1980s.11 The TRC

report indicates that three out of every four people who died or disappeared were

Quechua-speaking rural Indians, the largest indigenous group in Peru, and 68 percent

had only primary school education. Furthermore, out of recorded deaths, about 3

11 World Bank (2003): World Development Indicators, The World Bank, 2003.


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percent were children below 9 years of age, and over 47% of all deaths were occurred in

rural Ayacucho, one of the poorest departments (out of 25 departments) of Peru.

Source: Table 1

V.2. Per capita income effects

Though imperfect, per capita GDP is considered as the single most important indicator

of economic development. During 1961, the GDP per capita in Peru was around $1960

at constant (1995) price. It went up and peaked during 1981 (over $2685). When the

civil war was intensified, the GDP per capita declined significantly, and reached lowest

level during 1990 ($1904). This figure is the lowest since 1961 (World Bank 2003). Sucha massive reduction in GDP indicates the significant welfare loss of the Peruvians due

to the violent conflict.

V.3. Economic Growth Effect

Since the early sixties, Perus economic growth was not so strong. As mentioned earlier,

the expansion of higher education coupled with weak economic performance led the

frustration among the educated youths due to the lack of employment opportunities. It

provided a fertile ground for the revolutionary thinking among the educated youth.

Figure 2 exhibits the average per capita growth rate of income in Peru during 1961-2000.

The five-year average per capita growth was positive till the first-half of the seventies.

The average per capita income growth remained negative during 1976-80 to 1985-90.

As a result of the civil war, the average per capita income declined by over 13% during


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the years 1983, and 1989.12 These figures indicate the severe negative effects of the civil

war in the Peruvian economy.

Source: World Bank, 2003 (World Development Indicators)

The formal test of the effect of civil war on Peruvian GDP per capita growth rate is done

using the concept of Solows growth accounting framework (Solow, 1957). Due to the

lack of appropriate data, simple form of the Solow model has been estimated with

slightly different formulation. In the Solows augmented human capital model, the long

run steady state growth of income per capita (PCGDPGR) can be expressed as:13

1 2 3 4ln( ) ln( ) ln( ) ln (0)k hPCGDPGR s s g n d y (1)

Wherek

s andh

s are the share of savings devoted to physical and human capital

respectively; g, n , and d respectively are growth rate of human capital, growth rate of

labor force, and the depreciation rate of capital; y(0) is the initial per capita income.

The estimation of the augmented Solows model requires the data on human capital.

Due to the lack of the appropriate data, we estimate the following simple form of the

Solows model with some modifications. In the parameterized form the model is:

0 1 2ln( ) ln( )t t tPCGDPGR INVEST POPGR

3 4ln( ) lnt tCIVILWARDEATH Y t (2)

12 Diaz et al (2002) documented that real GDP fell by 20 percent during 1988-1990, quite severe than what

the World Bank data suggests.13 For detail explanation of the model, see Mankiw, Romer, and Weil (1992)


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Where, INVEST denotes the share of investment as percent of GDP, a proxy of capital

stock; POPGR denotes the annual population growth, a proxy of growth rate of labor

force; CIVILIWARDEATH denotes the number of deaths due to civil war in the given

year; and Y denotes domestic credits as percent of GDP provided by banking sector.

The argument for the this modification to basic Solow model is that the purpose of this

paper is not to test the Solow model as such, but to get inference how the civil war in

Peru had affected the economic growth during 1980-2000. As the objective of this paper

is to analyze the effect of the civil war on Peruvian economy, number of deaths during

1980-2000 is used as an explanatory variable along with share of investment as percent

of GDP and population growth rate, as a proxy to growth rate of labor force. We also

added one more control variable, the log of domestic credits as percent of GDP. This

variable is used as an explanatory variable assuming that it would help to facilitate the

trade and transaction and hence economic growth. The regression results are presented

in Table 2.

Table 2: Regression results (Dep Var: PCGDPGR)

Coefficient Std.Err. T-value P>|t|

INVEST 1.322 2.656 0.50 0.622

POPGR -1.425 5.496 -0.26 0.797

CIVILWARDEATH -0.818** 0.356 -2.29 0.028

Y -8.367*** 2.641 -3.17 0.003

CONSTANT 28.828* 14.683 1.96 0.058

No of observations (n) = 40, R2 = 0.36, F= 4.94, p-value = 0.0029Significant at 10%, ** significant at 5 %, and *** significant at 1% level

The regression coefficient of civil war variable (-0.818) shows the negative impact of the

civil war to the per capita growth rate of GDP. The estimate is significant at 5 percent

level. The coefficients of log of investment share and population growth rates have

expected sign. The coefficient of the log of domestic borrowing is negative, which is

unexpected. This negative sign can be explained by the fact that the domestic

borrowing was not channeled in the productive sectors. Two possible reasons are: war

related heavy expenditure and involvement of the corruption and financial

repressions.14 Both activities are unproductive; as a result growth rate was negatively

affected.

14 Corruption related documents are found at Transparency Internationals web site:

http://www.transparency.org.


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V.4. Reduction in Investment and FDI

Another significant effect of the civil war in Peru was the reduction in the investment

and the inflow of foreign direct investment (FDI). In the beginning of the 1960s, the

share of investment in the GDP was about 33 percent. That figure went down

significantly, and reached below 12 percent during 1985, a drastic reduction (fig. 3). In

the FDI front, the net inflow was not very significant until 1992. After the capture of the

SL president in 1992, the FDI went up significantly (fig. 4), indicating the economic

confidence among the foreign investors and reduction in the perceived country risks.

Source: World Bank, 2003.



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V.5. Reduction in social expenditure

The impact of Perus civil war has been reflected in the drastic reduction of social

sectors expenditures. The most affected sector was education. During 1970, the

expenditures in terms of the percentage of the per capita income in the primary,

secondary, and tertiary education were 7.0 %, 15.5% and 7.4% respectively (fig. 5). By

the year 1985 that figure went down to 4.8%, 7.2%, and 3.0%, respectively in the

corresponding sectors. Such an across-the-board reduction in education related

expenditures provides an insight to what extent the education sector was suffered due

to the civil war affecting the formation of human capital in the long-run.


Another area that suffered much due to reduced spending was health sector. Explicit

data is not available, but the over all performance seems very bleak. Health sectors

situation can be proxied by the number of hospital beds available per 1000 people in the

given year. WDI (World Bank, 2003) shows that during 1975, the number of hospital

beds per 1000 people was 2.5. This number went down significantly during the war

period. By the year 1985, the number was reduced to 1.7 beds per 1000 people and just

1.3 beds per 1000 people by the year 1993. This is the lowest figure historically (fig. 6).


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Source: World Bank, 2003

V.6. Increase in the security related expendituresData are not available for the security related expenditures during the first-half of the

conflict period. In 1989, the share of arms imports was 7.3 % of total imports, and the

share of military expenditure was 15.05% of total government expenditure. These

figures do not include the expenditures related to police and other non-military defense

spending. After the captured of SL president in 1992, the conflict has been subsided, so

that the arms imports and military spending have gone down (table 3). As the conflict

was very intense during the 1984-85, inference can be drawn that the arms imports and

military related spending could be even higher than what was recorded in 1989.

Table 3: Arms Imports and Military Expenditure

Year

Arms imports

(% of total imports)

Military expenditure

(% of Gvt Exp)

1988 .. 15.05

1989 7.3 15.24

1990 1.4 11.57

1991 1.9 11.26

1992 1.4 11.94

1993 0.8 ..

1994 0.9 ..

1995 2.9 ..

1996 1.8 ..1997 3.1 11.63

1998 1.7 11.23

1999 0.4 9.93

2000 .. 10.22

2001 .. 9.25



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V.7. Inflation

Another remarkable effect of the civil war in Peru is the high inflation. Annual inflation

in 1961 was just below 6%. By Latin American standards, the general price level

remained more or less stable throughout the 1960s. In the 1970s, the annual inflation

started picking up, and remained double-digits throughout the decades. During 1983-

1991, the inflation was really high, to the extent that it exceeded 2400% in 1985-1990 (fig.

7). This sort of hyperinflation caused a drastic reduction of real income, and GDP fell

by over 20% in real term (Diaz et al, 2002: 390). Such an unstable situation contributed

to the greater uncertainty for investers, lenders, and general public alike.


V.8. Social disorder and LawlessnessOver two-decade long conflicts in Peru left the country in complete disorder and

lawlessness. Peruvian prosecutor Amadeo Cerron Uceda recently revealed that

annually there were 25,000 rape cases in a country of 25 million (i.e. 1 in every 1000),

and most victims were under the age of 14. The problem has been worse in Hunuco,

the poorest part of Peru where about 20 rapes have been reported weekly in the town of

70,000 people.15 The information indicates the high degree of severity of the problem of

lawlessness in post-civil war Peru.

VI. Discussions and Conclusion

Perus civil war has been slowed down after the capture of SL president in 1992. The

recorded number of deaths and disappearances has been dropped significantly. By the

end of 2000, the recorded deaths were 35, indicating that the civil war has been almost

15Pioneer: http://www.pioneerlocal.com/cgi-bin/ppo-story/localnews/current/nb/04-22-04-277192.html

(April 22, 2004).


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over.16 In 1990, Peru started to implement the stabilization programs. So, starting in

1993, Peruvian economy recovered somewhat, and the per capita income grew by 10%

in 1994.17 However, that recovery became short-lived and it went down to negative

trend during 1998-99. By the end of 2001, the inflation went down below 2%. Despite

the relative stability in the political and economic fronts, the real per capita income in

2001 was still below the level of 1970.

Though Peru has overcome the 20-year long Civil war, and the economy has gained

stability, the fundamental question remains: Is the possibility of reoccurrence of a civil

war in Peru ended forever? Since the government has won the civil war, its past

actions have been justified, and the chance of addressing the fundamental causes that

prompted Perus civil war seems very little. Evidences have shown that the problem of

ethnic grievances, mass poverty, and the severe inequality have still been there in Peru.

Majority of people are still below poverty line, and underemployment is very high.

Diaz et al. (2002) found that in the urban Peru the labor income inequality has beenincreased during the post reform period. They concluded that the poverty and

underemployment during late 1990s were well above the levels observed in the first

quarter (1986) of the civil war. In the second half of the 1990s, the poverty and

underemployment both were over 50%, and the situation in the rural Peru was even

worse (65% people in rural Peru were below poverty line in 1997).18

Perus history shows that the county has been through several violent civil wars and

uprisings even before the 1980s civil war.19 The most recent one was the 1965 guerrilla

movement. After the successful Cuban Revolution in 1959 combined with theemergence of radicalized students groups, Peru had experienced first guerrilla

movement in 1965. The peasant uprising lasted over six months and over 8,000 Indian

peasants became the victims of the counter insurgency operation of the government

(Klaren, 2000:330).

In the recent years, Shining Path rebels have carried out sporadic attacks on security

forces. They also planted a car bomb in Lima few years ago that killed 10 people, and

briefly kidnapped 71 gas pipeline workers. Recently, one rebel leader gave a television

interview iterating that SL would resume the armed rebellion if the government were

failed to address their concern of political settlement by releasing jailed rebel leaders. 20

16 Still there are some violent activities in the Peru in the name of peoples war indicating the civil war

actually has not been over, but the intensity is very low at the moment.17 FDI was record high during that year in Peru.18 World Bank (2003): World Development Indicators.19 See the appendix for the listing of all such violent uprisings in Peru.20Reuters, http://www.reuters.com/newsArticle.jhtml?type=worldNews&storyID=4858228


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In the public-support front, the rebels are gaining some ground among the coca-

growing farmers in rural Peru. It is to be noted that sixty percent of the worlds coca is

grown in Peru (Clutterbuck, 1995). The country has been trying to eradicate the coca

production with the help of an international support.

The coca issue is becoming very important for both the government and the rebels. On

April 20, 2004 the coca growers called a general strike in Peru, and the rebels were

willing to engage in armed struggle to support the farmers.21 In particular, Colombian

efforts to cut the coca production funding for its own guerrilla groups have encouraged

increased output in Peru, allowing SL to profit from protection money. With the USA

pushing Lima to maintain eradication programs, there is a chance that the resulting

disruption to farmers' livelihood would provide further opportunities for SL to

revitalize its key support base within coca-growing areas.22

In the backdrop of those events, it is hard to conclude that the Perus civil war has beenover for good. The prime causes of the civil war, such as, the long-standing issues of

ethnic grievances, social and political exclusion, and mass poverty and extreme

inequality have not been addressed so far.23 It seems that the civil war is just subsided

due to the repressions by the army. The problems could not be solved permanently

until there was wider understandings and agreement among the people, policy makers,

political parties, and of course, the government, about the existence of the problems, the

mechanism that created those problems, and the most importantly pragmatic methods

of solving the problems. Comparative study of Maoist movements of Peru with Nepals

case is the future direction of this research where Nepals Maoist movement is oftenclaimed as similar to that of Peru.

ReferencesBooks and Articles

Bohara, Alok K, Mitchell, Neil J, and Nepal, Mani, Opportunity, Democracy and the Exchange of

Political Violence: A Subnational Analysis of Conflict in Nepal, Journal of Conflict Resolution 50

(2006), 108-128.

Clutterbuck, Richard. 1995. Peru: Cocaine, Terrorism, and Corruption. International Relations12, 77-91.

Diaz, Juan Jose, Saavedra, Jaime, and Torero, Maximo.2002. Peru: Stabilization, Liberalization and

Inequality. Economic liberalization, Distribution and Poverty. Edited by Rob Vos, Lance Taylor, and

Ricardo Paes de Barros. Edward Elgar: Cheltenham, UK.Fearon, James D., and Laitin, David D. 2003. Ethnicity, Insurgency, and Civil War. American Political

Science Review97: 75-90.

21http://www.janes.com/regional_news/americas/news/jir/jir040422_1_n.shtml (April 22, 2004).22http://www.janes.com/regional_news/americas/news/jir/jir040422_1_n.shtml (April 22, 2004).23 See section 2, paragraph 1 above.


17/17

Ghobarah, Hazem, Huth, Paul, and Russett, Bruce. 2003. Civil Wars Kill and Maim People- Long after the

shooting Stops. Working Paper (Feb 2004).

Grorriti, Gustavo. 1999. The Shining Path: A History of the Millenarian War in Peru, Chapel Hill: The

University of North Carolina Press.

Klaren, Peter Flindell. 2000. Peru: Society and Nationhood in the Andes, NY: Oxford University Press.

Mankiw, N. G., Romer, D., and Weil, D. 1992. A Contribution to the Empirics of Economic Growth,Quarterly Journal of Economics 107 (2): 407-37.

Murdoch, James C., Sandler, Todd. 2004. Civil Wars and Economic Growth: Spatial Dispersion,

American Journal of Political Science 48(1): 138-151.

Nepal, Mani, Bohara, Alok, and Gawande, Kishore. 2006. Inequality, Polarization and Violent Conflict:

The Maoist Insurgency in Nepal, Manuscript , Department of Economics, University of New

Mexico.

Palmer, David Scott (ed). 1992. The Shining Path of Peru. NY: St. Martins Press.

Quinn, Kevin; Hechter, Michael; Wibbels. 2003. Ethnicity, Insurgency, and Civil War Revisited,

Working Paper (May).

Roberts, Kenneth. 1998. Deepening Democracy? The Modern Left and Social Movements in Chile and Peru

California: Stanford University Press.

Ron, James. 2001. Ideology in Context: Explaining Sendero Luminosos Tactical Escalation. Journal ofPeace Research 38:569-92.

Solow, R.M. 1957. Technical Change and the Aggregate Production Function, Review of Economics and

Statistics 39 (3): 312-20.

Stern, Steve J (ed). 1998. Shining and Other Paths: War and Society in Peru, 1980-1995. Durham: Duke

University Press.

Websites

CIA Fact Book (2003). http://www.odci.gov/cia/publications/factbook/geos/pe.html.

Communist Party of Peru. http://www.blythe.org/peru_pcp/pcp_faq.htm#faq19 .

Truth and Reconcialtion Commission. 2003. Final Report: General Conclusions.

http://www.cverdad.org.pe/ingles/ifinal/conclusiones.hph .

AppendixChronology of Violent Domestic Conflicts in Peru

2500 BC Beginnings of Village farming and Fishing 1525 Inca Civil War 1780-82 Rebellion of Tupac Amaru II claims 100,000 lives 1870 Bloody Chinese uprising of coolies erupts on a north-coast plantation 1885 Massive Indian rebellion in the northern highlands of Ancash 1895 Bloody Civil war 1932 Popular uprising in Trujillo severely repressed by the army 1965 Highland Guerrilla movements violently suppressed by Army killing 8000

Indian peasants

1980 Peoples war led by SL kills 69,000 during 1980-2000.Source: Klaren, 2000.

maoist people’s war and its socio-economic impacts in peru

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