The New Conquest

(See Cover)

A small group of men carefully made their way through the steel and concrete skeletons of one of Latin America's biggest housing projects--52 apartment towers, each twelve stories high, rising over 30 acres on the outskirts of Lima to provide government housing for 10,000 people. Stepping lightly across an open trench, a well-dressed visitor fell into step beside the chief engineer and started firing intense questions. "Is it going fast enough?" he demanded. "What are your problems?" "Are you getting all the help you need?" Everything was on schedule, replied the engineer. As the two circled the project, workers on the scaffolding overhead clapped wildly and commenced the chant heard around Peru: "Belaunde! Belaunde! Be-la-un-de!"

Straightening up, the visitor cupped his hand slightly and delivered the forward chop of his arm that is his symbol. "Adelante," he said. Forward.

Forward is the course of Fernando Belaunde Terry, 52, President of Peru and the man who in the past 19 months has captured the imagination of his people as no one before. He is an aristocrat, a member of one of Peru's older and wealthier families. Were it not for the force of circumstance, he would probably still be just a successful Lima architect. His political enemies call him an adventurer, a buccaneer, a demagogue. In his messianic public oratory, he has at times approached the emotional level of a Fidel Castro. But the revolution that Belaunde carries forward is peaceful, democratic, and made in Latin America. As far as the U.S. is concerned, he is the very model of an Alianza President.

Lighting a Path. Other Latin American Presidents get more of the world's attention. Mexico's Diaz Ordaz administers a prosperous, rapidly industrializing nation. Venezuela's Raul Leoni is pumping his country's vast oil wealth into impressive reforms; Argentina's Arturo Illia is struggling with inflationary troubles in the best-fed nation in Latin America; and Brazil's Humberto Castello Branco seems to be starting his gigantic country back toward order after toppling a ruinous leftist regime. But there is genuine excitement in Peru. What is going on there under Belaunde lights a path ahead for the entire spiny west coast of South America from Colombia to Chile.

This is Indian South America, land of the ancient Incas and Spanish conquistadores, whose 45 million descendants have always lived in mutually exclusive societies: the white Spanish minority that owns the wealth and the hopeless, anonymous Indian and half-breed majority that exists in squalid slums or labors on Andean haciendas. "In the sweep of all its history," says Belaunde, "our land has been the theater of endless bloody struggles. And always there remained great gulfs between the conquerors and the conquered."

Belaunde intends to bridge the gulfs not so much by taking from the rich but by giving the peasant masses a stake in their country through massive social reforms and self-help development programs. He offers more food, better jobs, new roads, schools, hospitals, industries. He reminds the Indians of the Inca civilization that once flourished in Peru, talks of "a new renaissance," and challenges them to enlist in what he calls "the conquest of Peru by Peruvians."

Some of his schemes to water Peru's deserts, tame its Andean mountains and populate its Amazonian jungles sound visionary to an extreme. Peruvians are at least willing to let him try. "We must not be afraid of greatness," he says. "We have lost the habit of thinking on a grand scale, of conceiving works that, like the Panama Canal, change the geography of a continent. The hour of the pioneer, the founder of new cities, must be sounded. Nature is our enemy, and nature can be overcome."

Time of Transition. Belaunde's message has a variety of implications up and down the forbidding, 4,000-mile chain of Andes. In some countries the call for reform and development comes through loud and clear. In others, the attitudes of centuries are hard to change. Everywhere, it will be nip and tuck to meet the suddenly rising expectations. As one hacienda owner says: "We have held our Indians in bondage and misery since the Conquest. Now our day is passing, their day is dawning. The transition could be a nightmare."

sbCOLOMBIA was once regarded as a showcase of the Alliance for Progress. With massive infusions of U.S. aid ($230 million since 1961), and under the steady hand of former President Alberto Lleras Camargo, the country's Liberal and Conservative parties called a truce in their senseless civil war and pushed through an impressive series of reforms. Under the current President, Guillermo Leon Valencia, army civic action programs and anti-guerrilla campaigns have sharply reduced poverty-fed banditry in the backlands. That is Valencia's major success. During his 31 months in office, the cost of living has risen 45% , unemployment is up to 10%, and foreign investment to diversify the coffee and mining economy has trickled off. Agrarian reform is at a standstill, with 3% of the people still owning 55% of the land, and the average worker's wage in the cities is only 25-c- per hour.

sbECUADOR is under military rule, and likely to stay that way for a while. "Power," says Rear Admiral Ramon Castro Jijon, chief of the junta, "does not lure us. Only the circumstances retain us." In the 19 months since the military toppled erratic, hard-drinking Carlos Julio Arosemena, Ecuador's progress-minded soldiers have ground out hundreds of decrees organizing a civil service, setting up a land reform, revising the tax system. New industry (paint, textiles, detergents) is flowing into Quito and Guayaquil. In the highlands, where half of Ecuador's 4,700,000 people (80% of them Indian-descended) still live, some hacienda workers are paid only 50 a day, are often treated with medieval cruelty. "On many haciendas," says a parish priest, "there is neither law nor God."

sbBOLIVIA has come a long way since 1948, when a La Paz newspaper carried an advertisement: "For sale--200 hectares of land, 47 hogs, 83 Indians." Since the 1952 revolution that toppled the country's feudal tin barons, the Spanish criollos, who make up a mere 15% of the country's 4,000,000 people, no longer traffic in serfs, and most Indians have their own plot of land. Yet, on the 12,000-ft. Andean plateau, where 75% of Bolivians live, the peasants still sleep on dried llama fetuses to cure what ails them, still subsist mainly on dried potatoes. The U.S. put great store in President Victor Paz Estenssoro, who made a start at bringing his country into the 20th century, but was so heavy-handed about it that he was overthrown by a military coup last November. Air Force General Rene Barrientos is now in command and promises new elections this September.

sbCHILE is the most European of the west-coast countries, honors--of all people--Bernardo O'Higgins as its first President, and has a long history of constitutional government. Nevertheless, the country's 8,200,000 people, 66% of them part Indian, have never been able to feed themselves; their country, for all the lush wheat-and wine-growing valleys, is still mostly desert and mountain that do not produce enough food for the soaring population. Like Peru's Belaunde, Chile's new President Eduardo Frei offers a vast reform program, including a landmark partnership with three U.S. companies to double copper production by 1970. Frei has suffered from a hostile lame-duck Congress in which his Christian Democrats controlled only 33 of 192 seats. "Chile," he says, "cannot wait indefinitely." And this week he went into crucial congressional elections, hoping for a more cooperative legislature.

Spanish or Quechua. Whatever the problems of the others, Peru has them all--and more. It is the biggest of the west-coast nations, the heart of the ancient Inca empire, and no place for the timid. "When you see no trees," said one 16th century Spanish navigator, "you have reached Peru." The seacoast capital, Lima, is bigger than Detroit, and sleek modern skyscrapers crowd in on some of the most magnificent Spanish architecture this side of Madrid. Yet 400,000 of its 2,000,000 citizens squat in festering slums, among them the infamous Planeta, built next to a centuries-old garbage dump, where stony-faced Indians scrabble in the smoldering refuse.

Beyond lies the desert, so parched that for miles on end not a living thing can be seen. A short distance inland, the Andean foothills rise to 13,000-ft. plateaus, inhabited by 53% of Peru's 11 million people, virtually all of them Indians. Some labor in the mines for $2 a day; others work the steeply terraced hillsides, chewing gummy wads of coca, a leafy narcotic, to ward off hunger and cold. In the village of Hualcan, 200 miles northwest of Lima, only eight of 900 people can even communicate in Spanish; the rest speak Quechua, the language of their Inca ancestors. After a visit to Hualcan, a U.S. anthropologist reported that the Indians at first thought him an evil spirit come to steal the fat from their bones.

These are the people Belaunde is talking about when he calls for a conquest of Peru by Peruvians. "No other government," says Lima Economist Francis Bregha, "has ever really cared about the Indians or the common man. Belaunde has managed to awaken the campesinos--the millions who live in apathy and misery."

Gold in the Corn. As a model for development, Belaunde has taken the ancient Incas themselves. "The Inca society," he says, "had many defects, but they were not hungry. The Spaniards failed to conserve this high achievement. I will try to re-establish it."

At its peak in the early 16th century, the Inca empire embraced 6,000,000 people and extended from Colombia across 350,000 square miles to northern Argentina. Farmers and shepherds, the Incas organized a collective economy that guaranteed everyone enough to eat; if a man was forced to steal because he was hungry, the village officials were punished for poor administration. The Incas built 10,000 miles of all-weather roads that rivaled the Roman vias, dug elaborate irrigation canals, terraced hill sides for farming, built great stone cities such as Machu Picchu that rank in engineering brilliance with the pyramids, developed a mining industry centered on gold, the "sun metal." They covered their temples with plates of gold, decorated their gardens with stalks of solid-gold corn, gold llamas and gold shepherds.

Gold is what brought the Spaniards. In 1531 Francisco Pizarro led a party of 170 adventurers into Peru. At first, the Incas mistook the bearded, armored white men for gods; the Inca Emperor, Atahualpa, approached them with gifts. Pizarro put him to death at the stake. Then began the systematic sack of the Indian world. By the thousands, Spaniards sailed across to Peru, and the treasure they sent back was in the hundreds of millions. The terrified Indians were enslaved. All material manifesta tions, costumes, traditions, even their family names, were suppressed.

Between 1821 and 1824, Generals eose de San Martin and Simon Bolivar liberated Peru from absentee colonial rule. But the Indians merely exchanged one set of masters for another. Not un til a century later did Peru's masses finally seize on a champion -- of sorts --when a fiery, 29-year-old law student named Victor Raul Haya de la Torre formed his American Popular Revolutionary Alliance. APRA's flag was red, its ideology a weird blend of democratic reform, peasant virtue and Marxist discipline. APRA was outlawed almost as soon as it raised its head in Peru. Haya shuttled between prison and exile; his party was ruthlessly driven under ground. But not before staging a series of bloody demonstrations against the military-supported ruling class.

After one 1932 revolt in the coastal city of Trujillo, 26 soldiers were found slaughtered in their barracks. The enraged military rounded up more than 5,000 Apristas, marched them out to the ancient ruins of Chan Chan, ordered them to dig trenches, then mowed them down with machine guns. APRA and the military have remained uncompromising enemies ever since. And gradually, as the party grew older, it began to lose some of its appeal for Peru's impoverished masses. As it did, a new leader--Fernando Belaunde--presented himself.

Natural Mystique. The son of a diplomat, grandson of a former Minister of Finance and great-grandson of a former President, Belaunde went to school in Paris, got a master's degree in architecture from the University of Texas in 1935, then returned to Peru, where he designed private homes, started a magazine called El Arquitecto Peruano, and signed on as a government public-housing consultant. "I was interested in politics," he says, "but purely from the professional point of view." In 1945 he ran for the Chamber of Deputies, won a seat from Lima and quickly made a name for himself fighting for low-cost public housing.

Disgusted at the ever-expanding Lima slums and impatient for swifter reforms, Belaunde finally decided to form his own political party a few months before the 1956 presidential elections. He named it Accion Popular, a catch phrase suggesting that the best help is selfhelp. No one would help the peasants unless they awoke from their coca-chewing lethargy and helped themselves--in the same cooperative, community spirit of their Inca forefathers. Working together, they could build roads and schools and hospitals --Belaunde would see that they got the tools. "This was the philosophical idea," he says, "and the movement grew like a plant. We had created a natural mystique."

Ranging through the slums and into the hills, Belaunde found himself attracting crowds in the thousands. "Following this winding road among the mountains," he cried, "I ask once more: Who made this road? And again, resounding in my ears like a triumphal march, I hear in these elegant words the history of all Peru's yesterdays, its present, the prophecy for its future: 'the people built it.' "

Army General Manuel Odria, then in power, scoffed at the upstart architect and declared Belaunde's candidacy illegal for lack of enough petition signatures. Belaunde called a protest demonstration in downtown Lima, raised high a Peruvian flag, and shouting "Adelante!", led a mob of 1,000 toward the President's palace. Waiting police hurled tear gas. His eyes streaming, Belaunde delivered an ultimatum: "I will wait half an hour. If by then I have not been inscribed, we will march." Odria grudgingly let him run. In the voting, Belaunde lost to Manuel Prado, an aristocrat who had made a deal with APRA: legality and an end to repression in return for APRA votes. Even so, Belaunde was defeated by only 110,000 out of 1,260,000 votes--and kept right on campaigning.

Sabers & Scandals. Traveling by plane, car, canoe, muleback and on foot, he visited every single one of Peru's 144 provinces, something no other politician could say. He promised lower food prices, farm machines, low-interest loans "for the welfare of the common man." His enemies tried to shout him down. One morning in 1957, he fought a clanging saber duel atop a Lima airport building with a Congressman who had called him a "demagogue and conscious liar" (both were slightly nicked). A year later, his wife left him for another man. and the scandal rocked Lima. Belaunde won a legal separation, was awarded custody of their three children--and plunged on with his Ace ion Popular. He published a book pleading for the integration of the highland Indian in the national economy. "This," he wrote, "is the great battle that still has not been fought in the conquest of Peru."

In 1959, the government hauled him off to an island prison for defying a presidential ban on political rallies. His followers rioted in Lima; in one violent demonstration 20 were injured, 100 arrested. After three days on the island, Belaunde decided to make a move. While guards were looking the other way during an exercise period, he raced down to the shore, tore off his shoes and plunged into the chill Pacific, crying dramatically: "I have chosen freedom!"--only to have a nearby yachtsman return him to prison. All through the next week, Accion Popular demonstrations continued, until the government let him go just to be rid of him. Returning to the mainland, Belaunde hugged his parents, then thundered: "Arequipa awaits me," and charged off to a tumultuous demonstration in his family home town down the coast.

Calling for Tanks. Campaigning against APRA's Haya de la Torre and ex-Dictator Odria in the 1962 elections, Belaunde promised land reform based on expropriation of the big estates, "worker-controlled industrial cooperatives, easy loans, housing and food." He sought support from anyone he thought would give it, cheered Peru's ultranationalists with an attack on U.S.-owned oil companies, then turned around and wooed businessmen with talk of foreign investment. Opposition goons in Cuzco turned one rally into a rock fight, bloodying Belaunde's head. When the ballots were counted, Belaunde had lost again--to APRA's Haya, by the paper-thin margin of 14,000 votes.

"Fraud," cried Belaunde, and demanded a "tribunal of honor" to re count the votes. "In case the government does not comply," Belaunde threatened, "we will be compelled to overthrow it." Watching from the wings, Peru's army regarded Belaunde with suspicion. But it hated APRA with an unyielding fury. The generals sent tanks crashing through the wrought-iron gates of Lima's presidential palace, deposed outgoing President Manuel Prado, nullified the election, and set up their own four-man junta to rule Peru.

A year later, the military called new elections. This time Belaunde won-with the help of the Christian Democrats, three small leftist parties, and moderates who saw him as the only saving compromise between APRA and the army. It was still close. Belaunde got 39% of the votes, just enough to satisfy the constitutional provision requiring at least one third of the total vote for election.

Belaunde inherited a country that for all its troubles, was beginning to show some economic strength. Under the sound, hard-money policies of Prado's Premier Pedro Beltran, policies that the military junta had the sense to continue, Peru's foreign reserves had climbed from almost nothing in 1959 to $106 million by 1963, old industries like iron and copper mining were expanding, new industries like fish meal were growing, and the sol had become one of Latin America's stronger currencies. Then here came Belaunde, inexperienced in government, unschooled in banking or economics. He came with a platform that seemed to promise all things to all men, a rare gift of phrase, and a tendency toward impulse.

Changing the Face. The office has seemed to transform the man. He is calmer, more tolerant, less inclined to mike-shattering speeches. He has surrounded himself with young, energetic talent: a 29-year-old Agriculture Minister, a 34-year-old Director of Roads, a 34-year-old Director of Planning. The army seems satisfied, and Belaunde has proved a deft politician in dealing with the opposition that controls 110 of the 185 congressional seats. "Our position," says an APRA leader, "is one of critical cooperation."

By whatever name, it works. In the past 19 months, some 500 bills have skimmed through Congress to help Belaunde change the ancient face of Peru. He has extended universal free education from kindergarten through university, liberalized social security and retirement programs, set up a National Housing Board that hopes to finance 100,000 new homes by 1970. Five months after taking office, Belaunde held municipal elections in 1,400 cities, towns and villages throughout Peru. They were the first such elections in 45 years; other governments had merely appointed the mayors and civic officials.

Rivers of the Montana. One of Belaunde's major preoccupations is agriculture. He has pushed through the country's first major agrarian reform bill, and it is one of the most sensible in Latin America. Belaunde knows the les sons of Mexico's disastrous ejido system, does not intend to splinter the big. highly productive cotton and sugar estates into thousands of tiny plots, each barely able to support its owner. Instead he will break up only those that do not carry their weight, and satisfy the peasants' land hunger by opening vast new areas that have never seen a plow. "Right now," he says, "we have only one-half an acre of land under cultivation, per capita. We must double that to one acre."

The program involves a desert-irrigation network of heroic proportions. Patterned on the old Inca aqueducts of 500 years ago, it will shift water from the Atlantic side of the Andes to Peru's parched coastal lowlands by diverting the course of three rivers through mountain tunnels. Last week on the northern coast, engineers were at work on a project to channel water from the Chotano River through ten miles of tunnels down to a reservoir near Chiclayo, where 200,000 desert acres will go into production by 1970.

Belaunde has even bigger plans for the interior. At best, Peru's stony Andes can support only marginal farming. Across the peaks lies the great, green montana, Peru's eastern lowland that stretches out to the Amazon and Brazil. The montana represents 62% of Peru's land area, is rich in rubber, jute, fruits, coffee, timber and grass for ranching. Yet it is home to barely 14% of Peru's people. The problem is accessibility. There are few roads and no railroads across the mountains; transportation is by air, or up the rivers.

Belaunde's grand design is to colonize the montana by means of a 20th century version of the Inca highway network that interconnected the old empire. It will be a 3,500-mile span, hugging the eastern slopes of the Andes and connecting with access roads pushing up from Peru's west coast. Belaunde's engineers are already pushing penetration routes from the coastal town of Pisco to the mountain town of Ayacucho, from Nazca into Cuzco, from Puno down the rugged eastern slope of the Andes into the southern montana. Estimated cost: $400 million. Like Juscelino Kubitschek's Brasilia, the project will be years justifying itself. "But you know," ventures one Peruvian, "in a hundred years we might look awfully foolish if we don't do it."

The Coop-Pop Way. Still a third Belaunde program is cooperation popular, the great self-help effort that he has been urging on Peru's masses for years. The government supplies technical assistance, materials, some cash. The people do the work. Coop-Pop has already resulted in 3,300 new rural and slum classrooms, 600 miles of country roads, 21 football fields, 40 parks, 36 canals, 21 reservoirs, 65 community centers, 48 churches and chapels. With his flair for the dramatic, Belaunde gave the program a lift just before his 51st birthday in October 1963, asking Peruvians to forget about the birthday baubles. "Just send me shovels," he said. Shovels he got--plus machetes, picks and hoes by the thousands, all of which went to the highlands. A few weeks ago, Belaunde invited a group of Indians to Lima and awarded them a small golden shovel. In one year, they had built an airstrip, dozens of classrooms and 50 miles of road--$300,000 worth of construction. As a further token, he gave them a check for $37,000. "Next year," he says, "that $37,000 will be another $300,000."

Vivan los Beatles! The ideas cost money--and lots of it. But Peru's economy is coming on strong. Nurtured along by Belaunde's firm hand, the gross domestic product expanded 8% last year to a record $3.5 billion, exports vaulted 23% to another high of $667 million, and per-capita income rose to a record $250 (v. $225 overall for Latin America).

The hottest industry is fish meal, which earned a record $149 million in foreign exchange last year, and for the first time made Peru the world's No. 1 fishing nation. Some 155 fish-meal plants now operate along the coast. In the north-coast town of Chimbote, the population has exploded from 5,000 to 150,000 in the past 20 years. New taxis clog the city's streets, and neon signs wink brightly all night; hi-fi shops blare out cha chas; Indian mopsters sip beer and lethal-looking, yellow-green "Inca Kolas" and fill up vacant walls with "Vivan los Beatles!"

The Incas and conquistadores mined mainly gold and silver. Now Peru produces everything from antimony to zinc, and the U.S. companies that do the bulk of the mining are in the mood to expand. Marcona Mining Co. plans to triple the capacity of its $20 million iron-ore pelletizing plant on Peru's southern coast; Southern Peru Copper Corp. is investing $16 million for improvements; and the king of the mountain, Cerro de Pasco Corp., has just earmarked $18 million to expand its $270 million mining complex. Next month General Motors will open a $5,000,000 assembly plant outside Lima, the first of 15 automakers, including Chrysler and Ford, that intend to settle in Peru.

Aid & Inflation. The biggest foreign investment, however, is still in the form of U.S. aid. Last year the country was granted a record $86.8 million in Alianza help, four times the 1960 aid package. Belaunde still impatiently complains of all the delays and red tape in disbursing funds. "Peru is being studied to death," he recently told U.S. officials. "We have pre-surveys, pre-pre-surveys, pre-investment surveys, pre-pre-investment surveys. Committees of experts study us. Everybody studies us, and in spite of all these studies, Peru is moving ahead."

Belaunde sometimes suspects that the U.S. drags its feet just a little because of his bitter wrangle with International Petroleum Co., the Standard Oil of New Jersey affiliate that operates Peru's richest oilfield on the north coast near the Ecuadorian border. Shortly after his election in 1963, Belaunde yielded to nationalist demands and canceled I.P.C.'s 39-year-old concession. He has yet to reach a settlement. Peru's anti-Yanquis demand outright expropriation. Belaunde's better sense tells him that the government could not run the field profitably. "Around here," says one I.P.C. executive, "they still think we're bastards. But we're efficient, low-cost bastards." Last week, according to I.P.C., Belaunde was proposing what amounts to a 90-10 profit split, and that, says the company, is "just not worth the trouble."

Creeping inflation is a specter. Last year Peru's cost of living edged up 11 % --still small by Latin American standards, but considerably higher than the 1963 rate. This year, Belaunde's budget is set at $1.1 billion, 45% more than his budget in 1964. To help pay the freight, Belaunde has raised import and mining taxes, tightened collections and cracked down on tax dodgers. The result has been a 60% jump in tax revenues. Yet his budget deficit is projected at $80 million this year--up 10% from 1964--and brings dour predictions of sharper inflation and opposition howls that Belaunde will spend the country into bankruptcy.

Too Busy Building. While Belaunde builds, Communism tries to tear him clown. Each week, Moscow, Peking and Havana beam 110 hours of short-wave hate into Peru and the other west-coast nations. The broadcasts, in Spanish and Quechua, urge the Indians to take up their slingshots to "exterminate the capitalist wolves." From time to time, a few Red-led bands have invaded highland haciendas and stirred trouble in the mines. But the Communists are few and out of date in Peru. The country is too busy working on Fernando Belaunde's Peruvian architecture to pay much attention to foreign voices.

In his Lima presidential palace, Belaunde has turned the ornate, wood-paneled state dining room into a wall-to-wall showcase for his housing, road and irrigation projects. Huge maps cover the walls, and dozens of scale-model projects are lined up neatly on tables. "This one will open in July," he says, pointing to a housing project. "We've just broken ground on that one over there." He turns to the maps with their probing lines thrusting east from the Pacific. "You know," he mutters, putting his finger on a village deep in the towering Andes, "that used to be a ten-day trip on horseback--five days in and five days out. This June, I'm going there in a few hours by car."

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