American Popular Revolutionary Alliance (APRA) leader Alan García Pérez is elected president. The charismatic García enjoys popularity until he bows to APRA pressure to implement radical changes. When his rival Luís Alva Castro is elected president of the chamber of deputies, García announces a surprise plan to nationalize banks in a move to retake political power. Politics become polarized.
Already weak private-sector support for President García dwindles, as it does for his APRA party, which is constitutionally banned from reelection. Author Mario Vargas Llosa leads a Liberty Movement to protest the proposed bank nationalization. García's administration is beset by economic crisis, scandal, and failure to confront the political violence caused by guerilla groups and drug traffickers.
Leader of the new "Change 90" party Alberto Fujimori runs for president against Vargas Llosa. Appealing to small entrepreneurial groups and the middle class with a promise not to implement a "shock" economic adjustment, Fujimori wins a run-off election. Politically inexperienced, he comes to power without a coherent team of advisors and immediately goes back on his promise.
Facing mounting opposition and fearing a military coup, President Fujimori suspends the constitution and allies himself with the army, much to the world's consternation. In response to a government crackdown, Shining Path guerillas step up their campaign of terror. APRA drops its support of Fujimori and boycotts elections for a new congress.
A new constitution provides for a president elected by universal suffrage and a single-chamber congress. President Fujimori appoints a prime minister and a council of ministers. The government, however, remains highly centralized. Fujimori, allowed to run again, is reelected thanks to having tamed inflation and orchestrated the arrest of the Shining Path leadership.
During his second term, President Fujimori has a series of prime ministers, each of whom resigns in opposition to either his economic or political agenda. A border dispute with Ecuador is resolved by treaty in 1998. Fujimori makes the constitutionally questionable decision to seek a third term, but bribery charges taint his victory in 2000. He flees the country and resigns.
Valentín Paniagua Corazao presides over a caretaker government after President Fujimori's resignation. Elections in 2001 see the consolidation of a new party, Peru's Potential, led by centrist Alejandro Toledo, whose rags-to-riches story and part-Indian background appeal to low-income voters. Toledo narrowly defeats former President García and begins dismantling the apparatus of repression.
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