A man of humble origins, the Peruvian army officer General Juan Velasco Alvarado (1910-1977) seized power in 1968 and launched a sweeping but ill-fated reform program.
Juan Velasco Alvarado was born at Piura, on Peru's north coast, on June 16, 1910. Among 11 children of a minor civil servant, he described his youth as one of "dignified poverty." After attending public schools in his hometown, Velasco stowed away on a coastal steamer that took him to Lima in 1929. He joined the army as a common soldier and the next year won admission to the military academy. He graduated at the head of his class four years later. Velasco advanced steadily through the ranks, becoming a division general, the highest regular grade, in 1965. During his career he represented Peru on the Interamerican Defense Board in Washington, served as superintendent of the military academy, became commanding general of the army and, finally, was made chief of the Armed Forces Joint Command, the nation's top military post.
Velasco believed that Peru required fundamental reforms. He feared that if these could not be achieved by peaceful means the impoverished, frustrated masses might support a violent, Marxist revolution—a prospect dreaded by the armed forces. When the congress blocked a moderate reform program proposed by President Fernando Belaúnde Terry, Velasco lost all respect for Peru's civilian politicians. A controversial agreement between Belaúnde and the International Petroleum Company (IPC), a Standard Oil Company subsidiary, in August 1968 gravely weakened the president and provided an opportunity for Velasco to strike. With eight like-minded generals and colonels, he ousted Belaúnde on October 3, 1968. Within a few days Velasco gained the cooperation of Peru's other military leaders, who staffed all important posts in the government. The "Revolutionary Government of the Armed Forces, " as it was designated officially, would rule by decree for a dozen years.
Velasco quickly gained broad popular support by seizing the properties of the hated IPC. This action, along with the nationalization of other North American businesses and Velasco's enforcement of Peru's 200-mile fishing limit, badly strained relations between Washington and Lima. When the United States blocked loans to Peru and banned arms sales to that country, Velasco responded by obtaining money in Europe and weapons from the former Soviet Union, all to the delight of Peruvian nationalists.
In 1969 Velasco began a series of major reforms which he declared would create a society that was "neither capitalist nor communist." An agrarian reform, announced that June, eliminated the large private estates that for centuries had dominated the countryside. The government transferred these properties to cooperatives of plantation workers, peasant communities, and individual land-poor farmers. In rapid succession the regime nationalized the banking system, railroads, public utilities, the important fishmeal industry, and Peru's giant copper and iron mines. The government closely regulated foreign investors and declared a state monopoly in certain basic industries. The state assumed control over Peru's international trade and financed most new enterprises.
In the social realm, the Velasco regime reformed the school system, expanded the national pension program, provided low-cost medicines to the poor, and brought water and electricity into the squatter shantytowns surrounding Lima. It promoted equality for women and proclaimed the Quechua tongue of Peru's Indians a co-equal national language with Spanish. The administration instituted profit-sharing in all major industries and experimented with worker-managed enterprises.
The Velasco regime was a dictatorship, but quite a mild one during its early years. There were no elections, and civilian politicians had little influence. But the government respected most personal liberties, the press continued to function, and Velasco promised to establish a system of "broad, full, popular participation."
The military government was remarkably successful at first. Peru's economy performed well, and the reforms seemed to be working. After 1973, however, Velasco encountered severe problems. The mixed economy he created lacked the efficiency of capitalism and the discipline of communism. Waste and mismanagement in often ill-conceived programs, poor export prices, and a series of natural disasters brought a deepening economic recession. Austerity measures eroded the government's popular support. It responded to public protest with brutal force and silenced peaceful criticism by seizing the nation's newspapers. Under the stress of adversity, the unity of the military coalition began to crack. Velasco's health failed, and he behaved erratically.
Peru's military commanders removed Velasco from the presidency in a bloodless coup on August 29, 1975. General Francisco Morales Bermúdez, who replaced him, unsuccessfully attempted to restore Peru's economic health and popular support for the military government. In 1980 he transferred power to a newly elected civilian president— Fernando Belaúnde Terry, the man Velasco had ousted a dozen years earlier. General Velasco, meanwhile, had died on December 24, 1977. An emotional man of mixed Spanish and Indian ancestry, he had been a leader with whom the Peruvian masses could identify. A throng of 200, 000 persons accompanied his funeral procession through the streets of Lima.
A narrative account of the Velasco administration is provided in David P. Werlich, Peru (1978). His programs are discussed in Abraham F. Lowenthal (editor), The Peruvian Experiment (1975) and are reassessed in Cynthia McClintock and Abraham F. Lowenthal (editors), The Peruvian Experiment Reconsidered (1983).