In the wake of the structural-adjustment program implemented by President Alberto Fujimori in August, 1990, the number of Peruvians living below the poverty line jumped from six million to eleven million virtually overnight. The adjustment measures were implemented "without anesthesiaw-without, that is, any government social programs or emer- gency measures. While less severe austerity measures sparked intense protest elsewhere in the region, there was little popular protest in Peru. Instead, Peruvians turned to their own self-help capacities- honed over more than a decade of economic crisis and government neglect-to meet their basic nutri- tional needs. For example, the number of communal soup kitchens doubled to nearly 3,000 in Lima alone. The Inter-American Development Bank, concerned about the viability of the economic reforms, finally convinced the Peruvian government to establish a social-investment fund (SIF) in mid-1991-a full year after the Fujishock. Social policy was not the govern- ment's major concern, however, and it wasn't until early 1993 that Foncodes funding really picked up. Between January and May, 1993, Foncodes spent $125 million on 7,100 projects-$38 million more than it had spent in all of 1992. This increased funding was due less to a new- found concern for the poor than to the upcoming November, 1993 referendum on Fujimori's new con- stitution, which enshrined neoliberal reforms and permited Fujimori to run for reelection. Suddenly, Fujimori appeared almost nightly on the evening news inaugurating public-works projects in shanty- towns and rural Andean villages, such as schools, water and sewerage systems, and irrigation canals. Foncodes, which by 1994 consumed 50% of the gov- ernment's social budget, became a direct tool of the Fujimori regime to sway voters. In Puno, for exam- ple, where Fujimori's 1993 referendum won only Jo-Maw Burt 1s assoc~atp editor of th~s maganne and a Ph D cand~date In pol~t~cal sc~ence at Columl>m Un~vemty She 1s cur- rently part~c~oat~ng m a research project at Colurnhra on NGOs m Latm Amenca soonsor~d hy the North-Sorrth Center inncodes offkials hand our si;:iobs at a pcih'ic school. Sign reads: "foncodes Comes Tl~roucl~. " 20% of the vote, massive Foncodes spending helped boost Fujimori's credibility: in the April, 1995 presi- dential elections, he walked away with 6796 of the Puneiio vote. Alarmed at the political manipulation of Foncodes, a handful of European governments that provided bilateral assistance to Peru urged the Fujimori administration to adopt a different social- compensation model. The Special Program of Social Development (Predes), designed by non-governmen- tal organizations (NGOs) in Cusco, sought to avoid the trappings of the traditional SIF model by focus- ing not on poverty alleviation but on local institu- tional development. After months of pressure, the Peruvian govern- ment reluctantly agreed in late 1992 to cosponsor Predes as a pilot project in the south-central depart- ments of Cusco, Apurimac and Madre de Dios. For over a year, however, Foncodes functionaries blocked the implementation of Predes, which they saw as dangerously pro-NGO. The Fujimori govern- ment saw NGOs as a potential source of opposition, and was openly hostile to the idea of collaborating '- with them. "It isn't that Predes is pro-NGO," says Amalia Cuba, who was named as independent manager of Predes in mid-1994, and who successfully got the program off the ground. "Predes is interested in collaborating with NGOs because they are the main institutions operating in the region." Predes relied heavily on local NGOs for their experience in local rural devel- opment and their close links to the population. Foncodes, which operated on the demand-driven model of traditional SIFs, funded thousands of unre- lated projects-an archipelago of public works that lacked unity or planning. In the Predes model, fund- ing decisions would be based on local demands, but projects wouldn't be devised by isolated groups. Rather, permanent forums established at the local level would regularly meet to discuss the communi- ty's needs and to prioritize development and infra- structure projects to be funded. These forums, known as district development committees (CDDs), would ideally be led by the mayor of a given district, and would unite local institutions and organizations, including peasant communities, grassroots organiza- tions, private-sector interests, and government agen- cies. In about half the 50 districts where Predes con- centrated its efforts, the CDDs began to function reg- ularly. The CDD model permitted greater local oversight of project funding and implementation than Foncodes had. This helped avoid a pervasive prob- lem in Foncodes: the funding of projects designed by individual professionals out to make a profit or newly formed NGOs-popularly called the "Foncodista NGOs"-that have little or no link to the larger community. Predes sought to devolve not only resources but also decision-making capacity to the local level. By con- trast, Foncodes is tightly controlled by the central gov- ernment-and hence easily manipulated. "Foncodes is a new version of the clientelistic state," says Josefina Huam6n, director of Alternativa, a Lima- based NGO. "It reinforcesthe extreme personalism of this government, the idea that Fujimori is the state." Predes faced intense institutional rivalry from Foncodes. "They were two competing models," says sociologist Gonzalo Garcia, who evaluated Predes as it neared completion. "Foncodes tried to demon- strate that it was more efficient and that its funds went directly to the population. Predes, on the other hand, tried to strengthen local organizations and municipal governments through a complex process of consultation and consensus-building. Foncodes approved projects more rapidly but they were often of poor quality. Predes is a slower process, but the projects are more likely to be sustainable." Predes was not a panacea, however. Its model of local management and decision-making worked best in communities with existing organizations and strong local leadership. In the poorest regions, com- munity organizations are often weak or non-exis- tent, and years of political violence have left many districts without leadership even at the municipal level. The CDDs rarely took root in these areas. Predes had minimal resources to deal with massive social problems. Moreover, it ended up funding pro- jects very similar to those funded by Foncodes- social and economic infrastructure projects that had little redistributive effect aside from the few, short- term jobs they generated. Similar to traditional SIFs, Predes' limited operative capacity forced it to rely on NGOs for logistical resources, personnel and pro- gram implementation. This put a further burden on NGOs, whose resources are already stretched to the maximum. With all its flaws, however, Predes remains a better option than Foncodes. As the Predes pilot project drew to a close in mid- 1995, Foncodes functionaries seemed glad to see it go. "Why is the state afraid of the Predes model?" asks Rosario Valdevelleano, president of the Cusco- based NGO Arariwa that helped devise Predes. "It is a model of local management, and it promotes par- ticipation and decision-making at the same time that it strengthens municipal leadership. The problem is that democracy and decentralization are anathema to this government."
