Poor Man's Conservative

"I am the most hated man in Peru," says Premier Pedro Beltran, 63, and perhaps he is right. In an Andean country where the bulk of the people are impoverished Indians, Beltran is a rich capitalist, a conquistador-descended aristocrat.

He is also a conservative newspaper publisher, a budget balancer, and the most orthodox of economists; his idol is West Germany's Ludwig Erhard. Yet he is running, in economic policy at least, a government whose dominant political base is a mass leftist party called APRA. Their dislike is mutual.

Beltran got his job through a strange chain of circumstances that began with the election of President Manuel Prado in 1956. Like Beltran, Prado belongs to the aristocracy of 30 or 40 interlocking families that dominate Peru, yet he was elected by APRA on his promise, which he kept, of restoring the outlawed party's legality. APRA's advice to Prado was to develop Peru's backward land by deficit financing. Against his own preferences Prado acquiesced, and government presses cranked out endless paper sols to pay for the expansion. He was soon in deep economic trouble and under fire from Publisher Beltran. Prado's answer was direct and logical: in a phone conversation that began, "Look here, Pedro," he turned his troubles over to Beltran.

APRA was not pleased at the prospect, but it went along because Beltran has a well-calculated economic plan. Hoping for U.S. development loans and well aware that the U.S. requires prior approval of the conservative International Monetary Fund, Beltran (who knows and admires the U.S., is married to an American) imposed an iron austerity on Peru. When he gets Peru's economy in orthodox order, which will please him as much as Washington, Beltran plans to ask the U.S. for $100 million, figures that the U.S. can then hardly refuse.

Put Up or Shut Up. Beltran learned the rules of conservative economics at the London School of Economics in 1915-18 --long before that institution went for Keynes and Laski. With a somewhat jaundiced eye a contemporary remembers him there at 20 as "a student of economic sciences, a member of an exclusive club of whisky drinkers, a dancer of the tango, a playboy, a reader of Adam Smith, and a wearer of the arrogant colored vests introduced by Wilde and Disraeli." When he got home, he turned the family hacienda into a lucrative model of science and mechanization, went back to economics as a director of Peru's Reserve Bank, making it into a modern central bank. He dabbled in journalism as holder of controlling interest in a struggling little newspaper called La Prensa. World War II took him to the U.S.: Washington (as ambassador), Bretton Woods (to help organize the World Bank), San Francisco (to help set up the U.N.). Returning to Peru, he built La Prensa along U.S. newspaper lines into the most influential daily in Lima. He at first supported the army dictatorship headed by Manuel Odria, then helped persuade Odria to eliminate himself by holding the free election that Prado won.

When the beset Prado defied Publisher Beltran to do any better himself, the critic decided that he belonged onstage: "Like missionaries who go among the savages and must be prepared to face being eaten, we independent newspapermen and honest politicians should be prepared for the worst." Peru's economy was in such sorry shape that the sol had dropped from 19 to the dollar to 31.5. The simple act of making Beltran Premier checked the decline. Then Beltran stopped the currency printing presses that La Prensa had long cartooned as a loathsome, hairy-legged machine. He ended food subsidies, tightened tax collections, dropped surplus bureaucrats, sold off official automobiles, restricted credit,"cut imports.

Hardened Sol. By the end of 1959, after eight months in office, Beltran had written an impressive record. He repaid a Peruvian debt of $14.5 million to the International Monetary Fund. Foreign exchange reserves climbed to $11 million. Exports topped imports by nearly $25 million. The sol hardened at 27.6.

Stability is only the first step toward saving Peru, and Beltran knows it. Prices were rising at a yearly rate of 11% last July, but the rate dropped to 3% at year's end. But this achievement means little to the 50% of Peru's 10 million population who are outside the money economy or clinging to its fringes (average per capita income: $123 a year). Every second Peruvian is illiterate; 72% of the population is underfed. Tens of millions of acres of coastal desert could turn green under irrigation, but so far only 1.3 million acres are producing.

Beltraa hopes to attract foreign capital with one of the most favorable development laws in the hemisphere, but concedes that this is not enough. "Nobody is more opposed to government action than I. But there are certain things governments must do. I see no reason to balance the budget and stabilize the currency if that reason is not to help the poor people. We need $100 million," says Beltran.

What happens if he does not get help? Beltran has seen the pathetic silhouettes of the Incas' descendants in their ponchos, black pigtails and felt hats, herding Peru's 3,500,000 llamas, vicunas and alpacas. In the country the Indians are still content to dance hand in hand around trees to the sad sounds of stringed instruments plucked in a minor key. In Lima, they pile up in miserable shanties at the rate of 4,000 a year, jobless and hopeless. Says Beltran: "We are not immune to a Castro."

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