Traditionally, Peru was an active and initiating member of regional multilateral organizations, such as the Andean Pact (see Glossary). Yet, the nation's economic crisis and García's loss of prestige, both within and outside Peru, forced the country to turn inward and abandon its high-profile stance. Peru's stance on the international front was influenced to a great extent by the rise and fall of García's anti-imperialist strategy. His antiimperialist and anti-IMF rhetoric, as well as his unilateral limitation of debt payments, placed a major strain on relations with the international financial community and the United States in particular.
Under Belaúnde, a de facto moratorium on debt service already had existed. By 1985 it was clear that no new capital was headed in Peru's direction, and that the country could not afford to pay its debt. García took an openly confrontational approach, with the hope that the rest of Latin America would follow. At the time, there were speculations that the threat posed by García was one reason the Ronald Reagan administration (1981-89) presented the Baker debt-reduction plan (see Glossary) in October 1985.
Although García's debt policy limited payments to 10 percent of export earnings, in reality the government paid approximately 20 percent for the first few years, but then stopped making any payments at all. García's insistence on maintaining a confrontational stance, even after its political utility was exhausted, was counterproductive. On several occasions, accords in principle with the IMF were prepared with representatives of the APRA government and the IMF, and then cancelled at the last minute by García. García's stance initially had some appeal among Third World debtor countries, and a few even followed his example. As the limits to Peru's economic strategy became evident both at home and abroad, however, his stubborn adherence to the policy became the subject of ridicule rather than respect. Peru was declared ineligible for IMF funds in August 1986, and was threatened with expulsion from the organization in October 1989.
García also made heightening Peru's visibility in the Nonaligned Movement and in the Socialist International a priority. Ties were expanded with a number of Third World socialist nations, including Angola, Mozambique, and Zimbabwe; and García took a staunchly pro-Sandinista position in the Central American conflict. Improving Peru's relations with its neighbors, particularly Ecuador and Chile, was also a priority early on. Although some productive discussions were held with Ecuador, including a historic visit by Peru's minister of finance to Quito in October 1985, progress was limited by competition with both the Ecuadorian and Chilean military establishments. García's attempts to curb military expenditures were not reciprocated by Chile, for example.
As the economic crisis in Peru deepened, meanwhile, García took a lower profile stance on the foreign policy front. Relations with the United States remained remarkably good despite García's stances on debt and on Central America. This was in part owing to Washington's desire to maintain good bilateral relations because of the threat of instability caused by the SL. Thus, foreign aid flows were maintained despite Peru's violation of the Brooke Alexander Amendment, which makes a country ineligible for United States aid if it is over a year late in repaying military assistance. García's willingness to collaborate, at least rhetorically, on the drug issue, in sharp contrast to his stance on debt, helped ameliorate relations. Finally, relations were maintained owing to a good working relationship between United States ambassador Alexander Watson and President García.
Peru's relations with its neighbors were strained also by the extent of the economic crisis and the cholera epidemic. In late 1989, over 6,000 Peruvians crossed the border to Chile in order to buy bread, which was scarce and expensive in Peru. Chile's dictator Augusto Pinochet Ugarte (1973-90), when campaigning prior to the 1988 plebiscite, warned of the dangers of populist democracy by pointing out neighboring Peru. Contraband trade along the Chilean and Ecuadorian borders at times has been a contentious issue. Another concern were the thousands of Peruvians emigrating to neighboring countries seeking employment. The fear of the spread of subversion over neighboring borders also worried Peru's neighbors, a concern heightened by events such as the SL's assassination of a Peruvian military attaché in La Paz, and by the MRTA's support of the 19th of April Movement (Movimiento 19 de Abril--M-19), a Colombian guerrilla group.
Data as of September 1992