and members of the indigenous and native populations remain the most excluded. Racism, sexism, and
other forms of discrimination are still pervasive at the societal level and in the labor market, and incipient
efforts to defend civil rights have been thwarted in the judicial arena.
A principal criticism of the political parties of the 1980s was that they were elitist and lacked ethnic and
cultural diversity among their leadership. Fujimori, a university professor of humble origins and Asian
descent, initially used this criticism to his advantage. Although the party system is more diverse today, it
is also weaker. The linkages between elected representatives and their would be constituencies are more
diluted, making it difficult to advocate effectively for broader inclusion at the national policy level.
Good Governance
In a democracy, good governance includes transparency, efficiency, accountability, and respect for the
rule of law. During its first term in office, the Fujimori administration made substantial gains in
efficiency, privatizing state firms, reforming the tax administration, and establishing new and efficient
administrative agencies. State capacity to enforce order was improved, as the military, police and civil
society organizations all contributed to the defeat of the Shining Path and MRTA. Many of these gains
were explicitly made at the expense of democratic process and the rule of law. From the outset, Fujimori
offered a sort of trade off between efficiency and competition, touting his  direct democracy  and strict
majority rule as an antidote to the party infighting that was blamed for most of the country's ills.
Although Fujimori s reelection in 1995 suggested a high level of support for this trade off, in recent
years there has been increasing public fatigue with this model.  Even highly regarded state institutions
such as the tax authority (SUNAT) and the National Social Compensation Fund (FONCODES), have
been charged with political bias and misuse of state resources in relation to the 2000 reelection
campaign.  In response to the OAS mission, the government has acknowledged the need to restore
credibility to public agencies and strengthen democratic institutions.  It remains to be seen whether this
will be translated into concrete reforms.
In summary, today Peru is far from having a stable democracy, and has been backsliding in serious ways
since 1995.  This is most notable in the sphere of free and fair competition and balance of power, which
in turn have had negative consequences for the rule of law, good governance and the effective inclusion
of disadvantaged groups.  The reelection of President Fujimori to a third term in May 2000 was highly
irregular and the new government is widely perceived to be weak and lacking in legitimacy.
H:\INCOMING\July24\MSI Submission\Fn Email.doc

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