THE ECONOMY: LESS GROWTH, MORE DEATH.

The regime's economic policy is oriented toward paying the foreign debt, the "stabilization," and principally increasing the military expenditures to combat the People's War. Stabilization is nothing else than to wrest away more surplus value at the expense of a greater exploitation of labor power, and the resulting shrinking of salaries.

As a result, it generates widespread hunger, unemployment and underemployment among the Peruvian people. While the national budget for 1998 provides a meager 5.38% and 8.03% for public health care and education respectively, the allocated amounts for military and/or counterinsurgency expenditures i.e. ( ministries of the presidency, defense, and interior) have reached 39.46% of the national budget (Table 1).

An analysis of the budget proves beyond doubt that, rather than social considerations or the needs of the masses, the major concern of the regime is the defense and preservation of its obsolete State, the strengthening of its repressive apparatus, and enhance their privileges. The entire budget aims at financing the three tasks of reaction in Peru: to reinvigorate bureaucratic capitalism, restructure the old State, and to annihilate the People's War. These three tasks constitute in percentages 42, 40 and 18 of the national budget respectively (Table 2).

According to government figures, the number of jobs generated in 1997 was much less than the number of people becoming unemployed during the same period of time. This situation pushes the working people more and more into the informal sector (e.g., street vendors), who are already both heavily taxed and brutally repressed in the streets of major cities, mainly in Lima. The situation in Peru's heartland (interior), especially among the peasantry, is even worse. This is because the liberal approach of "free market" and "micro-credits" have benefitted solely the big landowners and bankers tied to imperialist interests. The peasants are in risk of losing their lands to pay debts, high interest rates and taxes imposed by the regime, which they reject and crush with their militant struggle.

The foreign competition have benefitted big imperialist corporations that have crippled the national industry. In order to compensate their loss in profits, and stay in business in the face of tough foreign competition, the industrial sector (private and public) has slashed the workers' wages to the levels of 1961. According to the regime's statistics (INEP, 1993) by the end of 1992, 77% were earning incomes below the poverty level (working occasionally) and 9.6 lacked any kind of employment. The total number of Peruvians living in poverty was 87.2% by the end of 1993 (Source: Julio Cotler, 1994). Four years later (1998), it is estimated to be 93%.

In terms of loss of income taking as a basis the year 1960, until 1990 under Belaunde and Garcia, workers in both private and state sectors lost 50% of their income, and only in two years under Fujimori (1990-1992) the other 50% of losses occurred. The income in 1993 was similar to the one in 1961 and only 70% of the income earned in 1975 (Cotler, 1994). What is interesting is that during these periods of brutal and radical capitalist reforms in its two forms (state capitalism and liberalism), the income of workers, including professionals and peasants have worsened.

The dictatorship periodically increases taxes and energy costs and also sacks the pension funds of employees and workers. To this end, it is manipulating the Housing Fund (FONAVI), which is a mandatory deduction of 5% of the gross monthly salary that is equivalent to approximately 6.2% of the GNP.

Thus, the salaries for teachers, health workers, and other public employees, including the retirees, have not been only sliced but frozen for years. This situation is because most of the large unions in key sectors of the economy are still controlled by revisionist leaders who are in complicity with the regime and sell out the worker's struggles. Within this framework, lies the significance of the hard work that the PCP carries out within the proletariat to take control of these unions and remove revisionism from its roots.

By paying low wages to workers the dictatorship tries to control inflation, but this policy has its contradiction. It's causing recession and limiting the market to those who can afford narco- dollars in circulation, and the purchasing power of bourgeois sectors of society.

While imports continue to increase, during the month of April 1998 the national deficit increased to 200 million dollars with relation to the previous year (this is an increase of 131%). The projection for the 1998 budget deficit is no less than three billion dollars, and at a total growth from zero to negative. Peru's GNP is 50 billion dollars. The decline of productivity is not only due to the bankruptcy of the privatized fishing industry and the low prices of some minerals, El Nino, the Asian Crisis, etc. but is due primarily to the success of one of the objectives of the People's War: sabotage and the destruction of bureaucratic capitalism.

Another aspect of the economy is the foreign investment in industry. Despite all the draconian anti-labor laws to provide free hands to imperialist exploitation, it virtually halted. Even the gas project in Camisea-Cusco is now in doubt. This is being acknowledged by the same agents of foreign monopolies in Peru like Boloña Behr, who said:"The private sector does not have the physical and juridical security to invest" and "the public sector should sacrifice more today for a better tomorrow." In other words, the meager workers' salaries should be reduced more so that the profits of the exploiters can increase.

The regime is being pressured by the monopolies to defeat the People's War, but it can't. It makes "gestures" of loyalty to Yankee imperialism when it temporarily suspended its military thugs acting as hooded judges or when it released a handful of innocent people languishing in inhuman prisons. But it will never be able to reinvigorate bureaucratic under the "reinsertion" Fujimori claims to have achieved. Reinserting Peru in the international financial system means a greater subjection to the imperialist interests and needs in our country.

It is impossible to solve the economic crisis with mere "technical adjustments" or fruitless "economic recipes" developed by imperialism through its financial appendices IMF, BID, USAID, WB, etc. This is how depressing one of the latest recipe for Peru is: "In order to reduce 50 percent of unemployment in 12-24 years the conditions are 4-5% of annual growth, 2% increase of labor force per year, and 23% of investment and savings." (USAID, Shane Hunt. Gestion October 16, 1997). The meaningless growth in 1997 and the projected growth of zero or negative for 1998, show that the regime did not meet a single condition imposed by Yankee imperialism.

Considering the seriousness of the economic crisis faced by the old state, and above all, the blows the exploiting classes suffer at the hands of the People's War (the chief cause for the insecurity of investors Bolona talks about), then politically it becomes more evident that the backbone of the old State is the reactionary armed forces. So, it suffices to see the contradiction in the country is Armed Forces vs. Communist Party of Perú.

POLITICAL PROGRAM IN FINANCIAL TERMS

An analysis of the distribution of 1998 budget proves beyond any doubt that, rather addressing the social and economic needs of the masses, the main objective of the government is to preserve the obsolete State, the strengthening of its repressive apparatus and consolidating its privileges.

The concrete situation is that the old landlord-bureaucratic State has its very survival questioned by the revolution, which already develops a new State, a New Democracy. The entire budget aims at financing the three tasks of reaction in Peru: to reinvigorate bureaucratic capitalism, to restructure the old State, and to annihilate the People's War. The last one is its first priority.

In the regime's own words it is a budget aiming at "stabilization," "reinsertion," and "modernization," which is nothing more than to extract more surplus value at the expense of a greater exploitation of labor power, crippling taxes, and shrinking salaries. The "reinsertion" of Peru in the international financial system means a greater subjection to the imperialist interests and needs in our country, such as pushing the payment of the foreign debt and the greater mortgage of the nation. The genocidal dictatorship is delivering as payment warranty to meet the stringent conditions of lenders, the resources of the country, even the life itself of the Peruvian people by starving them in mass.

The regime allocates approximately 87% of the total budget to maintain its political plans, whereas the State's social and productive service only get about 12%. Even economists and spokesmen of political parties point out, that the way the budget was made, has to do more with confronting the People's War, than addressing the country's critical economic situation. Analyzing the government's figures is like listening a confession of its true character, a regime completely oriented to finance its counterrevolutionary plan, to fulfill the three tasks its Yankee master outlines and supervises for Peru. But such counter subversive expense is unrecoverable, because of a reality that cannot be hidden: The People's War advances unstoppable to conquer power in all the country.

On their turn, revisionism characterized the 1998 Budget as "pro-International Monetary Fund," something that even Fujimori recognizes. In reality the reason why organisms such as the IMF, World Bank, USAID, and others, interfere in the Peruvian economy, is precisely to overcome the present crisis of bureaucratic capitalism.

TABLE 1

TABLE 2