Czechoslovakia National History

Formerly part of the Austro-Hungarian Empire, the independent state of Czechoslovakia was first established on 28 October 1918. Inheriting the major part of the industrial capacity of Austro-Hungary, the new nation became the only state in the region in which parliamentary democracy flourished.

However, from 1933 the minority ‘Sudeten’ German population increasingly agitated for incorporation into Hitler’s Reich. The Munich Crisis of September 1938 resulted in Britain and France weakly acquiesing to the German occupation of the ‘Sudetenland’. This area comprised one third of all Czechoslovak territory and much of it’s strong border defences. [In fact a British-French-Soviet League of Nations Coalition mooted at the time could have easily faced down the German threat and possibly delayed the start of World War II by up to 2 years. The extra 2 years would have been sufficient for the European nations racing to re-arm to finally catch up with Germany and offer a robust defence to any Nazi attack. No small part in that defence would have been played the impressively strong Czechoslovak armed forces.] In March 1939 the rest of Czechoslovakia was also annexed by Germany, with Slovakia becoming a pro-German independent state and the Czech portion becoming the German protectorate of Bohemia-Moravia.

The German occupation was overthrown by a national uprising and Allied troops in the Spring of 1945. Immediately, over three million Germans were expelled as collaborators. The new middle-of-the-road socialist goverment was replaced by a rigorous and intimidating Communist regime following ‘elections’ in May 1948. In May 1958 Czechoslovakia signed the Warsaw Pact defence treaty. In January 1968 the liberal Slovak Alexander Dubcek took over as Communist Party leader and set about rejuvenating the stagnating Czech economy and society. A federal constitution was introduced in 1968. On 20-21 August 1968, Czechoslovakia was invaded by almost a quarter of a million Warsaw Pact troops and Dubcek was later replaced by a Soviet-style hardliner.

In late November 1989, the Communist regime was suddenly brought down by mass demonstrations and strikes, after similar events in East Germany earlier that month. Following free elections, a federal coalition government was elected. The country was renamed the Czech and Slovak Federal Republic (CSFR). The Warsaw Pact organisation was dissolved in March 1991. The new government chose to pursue a ‘fast’ conversion to a market economy. During the transition period, the Slovaks appeared to suffer more than the Czechs, and this resulted in divergent political and economic policies. A hastily negotiated ‘velvet divorce’ was arranged between the two republics, with effect from 1 January 1993, whereby Slovakia and the Czech Republic became independent states.

Venezuela National History

Christopher Columbus first sighted Venezuela during his third voyage to the New World, when he saw the Península de Paria from his ship at anchor off the coast of the island of Trinidad. Three days later, on August 1, 1498, Columbus became the first European to set foot on the South American mainland. Unaware of the significance of his discovery and of the vastness of the continent, he christened the territory Isla de García. He spent the next two weeks exploring the Río Orinoco delta. Fascinated with the vast source of fresh water and the pearl ornaments of the native population, Columbus believed that he had discovered the Garden of Eden.

A second Spanish expedition, just one year later, was led by Alfonso de Ojeda and the Florentine, Amerigo Vespucci. They sailed westward along the coast of Tierra Firme (as South America was then known) as far as Lago de Maracaibo.
There, native huts built on piles above the lake reminded Vespucci of Venice, thus leading him to name the discovery Venezuela, or Little Venice. Subsequent expeditions along the north coast of South America were driven largely by a lust for adventure, power, and, especially, wealth.

Pearls and rumors of precious metals were the initial attraction of Venezuela. By the 1520s, however, the oyster beds between Cumaná and the Isla de Margarita–at the western end of the Península de Paria–had been played out. The next of Venezuela’s native riches to be extracted by the Spanish was its people. Slave raiding, which began in the Península de Paria and gradually moved inland, helped supply the vast labor needs in Panama and the Caribbean islands, where gold and silver bullion from Mexico and Peru were transshipped. These slave raids engendered intense hatred and resentment among Venezuela’s native population, emotions that fueled more than a century of continual low-intensity warfare. Partly as a result of this warfare, the conquest of Venezuela took far longer than the rapid subjugations of Mexico and Peru.

The prolonged nature of the conquest of Venezuela was also attributable to the area’s lack of precious metals and the absence of a unified native population. Venezuela had low priority compared with regions of Spanish America containing vast ore deposits. Moreover, the territory that comprises present-day Venezuela contained no major political force, such as the Inca or Aztec leadership, whose conquest would bring vast resources and populations under Spanish domain. Rather, the conquerors found a large number of relatively small and unrelated tribes of widely varying degrees of cultural sophistication. Some were nomadic hunters and gatherers; others built cities and practiced advanced agricultural techniques, including irrigation and terracing. A number of coastal communities were reputed to be cannibalistic. One of the more advanced tribes, the Timoto-Cuica, was from the Andean region. The Timoto-Cuica (who apparently were not united, but rather comprised a series of "chiefdoms") built roads and traded with the populations of the llanos, or plains, to the southeast, and the Maracaibo Basin, to the northwest.

Spanish slavers established bases at Coro and El Tocuyo, south of Barquisimeto, in the western part of present-day Venezuela. In 1528, however, they were dislodged by a most unlikely competitor; a consortium of German bankers led by the House of Welser, a german banking firm, had been granted a concession by the deeply indebted Spanish crown to exploit the area’s resources. For the next twenty-eight years, a series of German governors administered western Venezuela and engaged in a futile search for the fabled riches of El Dorado. The Germans showed no interest in settling the territory. Rather, they tried to extract from it the maximum amount of human and material wealth as rapidly as possible. In 1556, the House of Welser’s contract was terminated. The group had grown tired of its vain search for a mountain of gold to match what the Spanish had discovered in Peru and Mexico and the Spanish had become equally weary of the behavior of their German concessionaires, which was ruthless even by the ignoble standards of the conquerors.

Spanish explorers, in the meantime, pushed eastward from El Tocuyo, founding Valencia in 1555. After more than a decade of fierce fighting with the recalcitrant native population, forces under Diego de Losada established the settlement of Santiago de León de Caracas in 1567. The value of Caracas lay not only in the fertile agricultural lands in its vicinity, but also in its accessibility, through the coastal range, to the seaport that would later become La Guaira. The vast majority of what is today the territory of Venezuela was left untouched by the Spanish conquistadors. Instead, tireless Franciscan and Capuchin missionaries explored and Hispanicized the Río Unare Basin to the east of Caracas, the Río Orinoco, and much of the Maracaibo Basin during the seventeenth and eighteenth centuries. Much of the western llanos and the south bank of the Orinoco remained unknown territory to the Spanish even at the close of the colonial period.

Colonial Venezuela’s primary value to Spain was geographic: its long Caribbean coastline provided security from foreign enemies and pirates for the Spanish bullion fleet during its annual journey between Portobelo, in present-day Panama, and Cuba. Venezuela’s own form of mineral wealth, petroleum, was noticed as early as 1500, but after being hastily scrutinized, its vast deposits were ignored for nearly four centuries. Venezuela lacked political unity for the first two and a half centuries of
colonial rule, in part because it was of no economic importance to the Spanish officials. Before 1777, what we today label Venezuela consisted of a varying number of provinces that were governed quite independently of one another. These provinces were administered from neighboring colonies that the Spanish considered more important. Beginning in 1526, they were under the jurisdiction of the Audiencia de Santo Domingo. Then in 1550 their colonial administrative seat moved to the Audiencia de Santa Fé de Bogotá, which in 1718 was upgraded to become the Viceroyalty of New Granada. During most of the remainder of the eighteenth century, what is today Venezuela consisted of five provinces: Caracas, Cumaná, Mérida de Maracaibo, Barinas, and Guyana. Because these provinces were far from each other and from the centers of Spanish colonial rule, their municipal officials enjoyed a degree of local autonomy unknown in most of Spanish America.

By the late sixteenth century, agriculture had become Venezuela’s chief economic activity. The rich farmlands of the Andean region, the western llanos, and especially the fertile valleys surrounding Caracas made Venezuela agriculturally selfsufficient , and also provided a surplus of a number of products for exportation. Wheat, tobacco, and leather were among the early products exported from colonial Venezuela. The Spanish crown, however, showed little interest in Venezuela’s agriculture. Spain was obsessed with extracting precious metals from its other territories to finance a seemingly endless series of foreign wars. As a result, as late as the early eighteenth century, Venezuela sold the bulk of its considerable surplus of agricultural goods to British, French, or Dutch traders who, under the Spanish crown’s medieval notions of commerce based on bureaucratic control and mercantilism, were labeled as smugglers.

Starting in the 1620s, cocoa became Venezuela’s principal export for the next two centuries. Cocoa was a quasi-narcotic bean used in the processing of chocolate, a native product of Venezuela’s coastal valleys. Its impact on colonial Venezuelan society was immense. Its sizable profits attracted, for the first time, significant immigration of Spaniards, including relatively poor Canary Islanders, and its plantation culture created a great demand for African slaves during the seventeenth and early eighteenth centuries. These two population groups would complete a social hierarchy that became virtually a caste system. On top was a small elite of white peninsulares (those born in Spain) and criollos (those born in America of Spanish parentage); they were followed by the white Canary Islanders, who typically worked as wage laborers; then came a large group of racially mixed pardos, who by the late eighteenth century made up more than half the total; they were followed by African slaves, who constituted about 20 percent of the population; and, lastly, by the Indians. The native population, decimated by slavery and disease throughout the colonial period, constituted less than 10 percent of the total at independence.

Enormous profits obtained from the triangular trade of African slaves for Venezuelan cocoa, which was then shipped across the Caribbean and sold in Veracruz for consumption in New Spain (Mexico), made the Venezuelan coast a regular port of call for Dutch and British merchants. In an effort to eliminate this illegal intercolonial trade and capture these profits for itself, the Spanish crown in 1728 granted exclusive trading rights in Venezuela to a Basque corporation called the Real Compaña Guipuzcoana de Caracas, or simply the Caracas Company.

The Caracas Company proved quite successful, initially at least, in achieving the crown’s goal of ending the contraband trade. Venezuela’s cocoa growers, however, became increasingly dissatisfied. The Basque monopoly not only paid them significantly lower prices but received favored treatment from the province’s Basque governors. This discontent was evidenced in the growing number of disputes between the company and the growers and other Venezuelans of more humble status. In 1749 the discontent erupted into a first insurrectionary effort, a rebellion led by a poor immigrant cocoa grower from the Canary Islands
named Juan Francisco de León. The rebellion was openly joined by the Venezuelan lower classes and quietly encouraged by the elite in Caracas. Troops from Santo Domingo and from Spain quickly crushed the revolt, and its leadership was severely repressed by forces headed by Brigadier General Felipe Ricardos, who was named governor of Caracas in 1751.

The growth of the cocoa trade, the success of the Caracas Company, and the assertion of the royal will manifested by the suppression of the 1749 revolt all helped to centralize the Venezuelan economy around the city of Caracas. In recognition of this growth, Caracas was given political-military authority as the seat of the Captaincy General of Venezuela in 1777, marking the first instance of recognition of Venezuela as a political entity. Nine years later, its designation was changed to the Audiencia de Venezuela, thus granting Venezuela judicialadministrative authority as well.

Barely three decades later, however, Venezuela would suddenly–after almost three centuries on the periphery of the Spanish American empire–find itself at the hub of the independence movement sweeping Latin America. Present-day Venezuelans continue to take pride in having produced not only Francisco de Miranda, the best known of the precursors of the Spanish American revolution, but also the first successful revolt against Spanish rule in America and, of course, the leading hero of the entire epic of Latin America’s struggle for independence, Simón Bolívar Palacios.

Miranda was born in Caracas of wealthy criollo parents in 1750. Following a checkered career in the Spanish Army, Miranda spent virtually the rest of his life living in nations that were at odds with Spain, seeking support for the cause of the independence of his native Spanish America. Although he was a professed admirer of the newly independent United States, Miranda’s political vision of Latin America, beyond independence, remained equivocal. In 1806 he led an expedition that sailed from New York and landed at Coro, in western Venezuela. Expecting a popular uprising, he encountered instead hostility and resistance. Miranda returned to Britain, where in 1810 Bolívar persuaded him to return to Venezuela at the head of a second insurrectionary effort.

Events in Europe were perhaps even more crucial to the movement for Latin American independence than Miranda’s efforts. In 1808 French emperor Napoleon Bonaparte’s troops invaded Spain amidst a family dispute in which the Spanish king Charles IV had been forced to abdicate the throne in favor of his son, Ferdinand VII. The fearful Bourbon royal family soon became Napoleon’s captives, and in 1810 the conquering French emperor granted his brother, Joseph, the Spanish throne, precipitating a four-year- long guerrilla war in Spain.

These events had important repercussions in the Caracas cabildo (city council). Composed of a criollo elite whose allegiance to the crown had already been stretched thin by the gross incompetence of Charles and his feud with his son, the cabildo refused to recognize the French usurper. Meeting as a cabildo abierto (town meeting) on April 19, 1810, the Caracas cabildo ousted Governor Vicente Emparán and, shortly thereafter, declared itself to be a junta governing in the name of the deposed Ferdinand VII. On July 5, 1811, a congress convoked by the junta declared Venezuelan independence from Spain. Miranda assumed command of the army and leadership of the junta.

A constitution, dated December 21, 1811, marked the official beginning of Venezuela’s First Republic. Known commonly by Venezuelan historians as La Patria Boba, the Silly Republic, Venezuela’s first experiment at independence suffered from myriad difficulties from the outset. The cabildos of three major cities–Coro, Maracaibo, and Guayana–preferring to be governed by Joseph Bonaparte rather than by the Caracas cabildo, never accepted independence from Spain. The First Republic’s leadership, furthermore, distrusted Miranda and deprived him of the powers necessary to govern effectively until it was too late. Most damaging, however, was the initial failure of the Caracas criollo elite insurgents to recognize the need for popular support for the cause of independence. Venezuela’s popular masses, particularly the pardos, did not relish being governed by the white elite of Caracas and therefore remained loyal to the crown. Thus, a racially defined civil war underlay the early years of the long independence struggle in Venezuela.

When a major earthquake in March 1812 devastated proindependence strongholds while sparing virtually every locale commanded by royalist forces, it seemed that the very forces of nature were conspiring against La Patria Boba. Despite the gravity of the circumstances, Miranda’s July 25, 1812, surrender of his troops to the Spanish commander, General Domingo Monteverde, provoked a great deal of resentment among Bolívar and his other subordinates. Miranda died in a Spanish prison in 1816; Bolívar managed to escape to New Granada (present-day Colombia), where he assumed the leadership of Venezuela’s independence struggle.

Bolívar was born in 1783 into one of Caracas’s most aristocratic criollo families. Orphaned at age nine, he was educated in Europe, where he became intrigued by the intellectual revolution called the Enlightenment and the political revolution in France. As a young man, Bolívar pledged himself to see a united Latin America, not simply his native Venezuela, liberated from Spanish rule. His brilliant career as a field general began in 1813 with the famous cry of "war to the death" against Venezuela’s Spanish rulers that was followed by a lightning campaign through the Andes to capture Caracas. There he was proclaimed
"The Liberator" and, following the establishment of the Second Republic, was given dictatorial powers. Once again, however, Bolívar overlooked the aspirations of common, nonwhite Venezuelans. The llaneros (plainsmen), who were excellent horsemen, fought under the leadership of the royalist caudillo, José Tomás Boves, for what they saw as social equality against a
revolutionary army that represented the white, criollo elite. By September 1814, having won a series of victories, Boves’s troops forced Bolívar and his army out of Caracas, bringing an end to the Second Republic.

After Ferdinand VII regained the Spanish throne in late 1814, he sent reinforcements to the American colonies that crushed most remaining pockets of resistance to royal control. Bolívar was forced to flee to Jamaica, where he issued an eloquent letter that established his intellectual leadership of the Spanish American independence movement. A number of local caudillos kept the movement alive in Venezuela. One, José Antonio Páez, a mestizo, was able to convince his fellow llaneros along the Río Apure that Boves (who had been killed in battle in late 1814) had been mistaken: that the Spanish, not the criollo patriots, were the true enemies of social equality. The alliance of his fierce cavalrymen with Bolívar proved indispensable during the critical 1816-20 stage of the independence struggle. Another caudillo chief named Manuel Piar, after outspokenly encouraging his black and pardo troops to assert their claims for social change, however, was promptly captured, tried, and executed under Bolívar’s direction. This ruthless disposition of Piar as an enemy of the cause of independence enhanced Bolívar’s stature and military leadership as the "maximum caudillo."

Based near the mouth of the Río Orinoco, Bolívar defeated the royalist forces in the east with the help of several thousand volunteer European recruits, veterans of the Napoleonic Wars. Although Caracas remained in royalist hands, the 1819 Congress at Angostura (present-day Ciudad Bolívar) established the Third Republic and named Simón Bolívar as its first president. Bolívar then quickly marched his troops across the llanos and into the Andes, where a surprise attack on the Spanish garrison at Boyacá, near Bogotá, routed the royalist forces and liberated New Granada. Nearly two years later, in June 1821, Bolívar’s troops fought the decisive Battle of Carabobo that liberated Caracas from Spanish rule. In August delegates from Venezuela and Colombia met at the border town of Cúcuta to formally sign the Constitution of the Republic of Gran Colombia, with its capital in Bogotá. Bolívar was named president and Francisco de Paula Santander, a Colombian, was named vice president.

Bolívar, however, continued the fight for the liberation of Spanish America, leading his forces against the royalist troops remaining in Ecuador, Bolivia, and Peru. In the meantime, the Bolivarian dream of Gran Colombia was proving to be politically unworkable. Bolívar’s fellow Venezuelans became his enemies. King Ferdinand, after an 1820 revolt by liberals in Spain, had lost the political will to recover the rebellious American colonies. But the Venezuelans themselves expressed resentment at being governed once again from far-off Bogotá.

Venezuelan nationalism, politically and economically centered in Caracas, had been an ever-increasing force for over a century. During the 1820s, Venezuelan nationalism was embodied in the figure of General Páez. Even the tremendous prestige of Bolívar could not overcome the historical reality of nationalism, and in 1829 Páez led Venezuela in its separation from Gran
Colombia. Páez ordered the ailing and friendless Bolívar into exile. Shortly before his death in December 1830, the liberator of northern South America likened his efforts at Latin American unity to having "plowed the sea".

Two decades of warfare had cost the lives of between one-fourth and one-third of Venezuela’s population, which by 1830 was estimated at about 800,000. Furthermore, the cocoa-based export economy lay in ruins, a victim of physical destruction, neglect, and the disruption of trade. As a result, it was relatively simple for the young nation to shift its agricultural export activity to the production of coffee, a commodity whose price was booming in the North Atlantic nations with which Venezuela was now free to trade. The production of coffee for export would, along with subsistence agriculture, dominate Venezuela’s economic life until the initiation of the petroleum boom well into the twentieth century. Venezuela’s century-long post-independence era of
caudillismo is perhaps best understood as a competition among various social and regional factions for the control of the Caracas-based bureaucracy that served the trade with the North Atlantic nations.

The century of the caudillo started auspiciously, with sixteen relatively peaceful and prosperous years under the authority of General Páez. Twice elected president under the 1830 constitution, Páez, on the one hand, consolidated the young republic by putting down a number of armed challenges by regional chieftains. On the other hand, Páez usually respected the civil rights of his legitimate political opponents. Using funds earned during the coffee-induced economic boom, he oversaw the building of fledgling social and economic infrastructures. Generally considered second only to Bolívar as a national hero, Páez ruled in conjunction with the criollo elite, which maintained its unity around the mestizo caudillo as long as coffee prices remained high.

In the 1840s, however, coffee prices plunged, and the elite divided into two factions: those who remained with Páez called themselves Conservatives, while his rivals called themselves Liberals. The Liberals first came to prominence in 1846 with Páez’s surprising selection of General José Tadeo Monagas as his successor. Two years later, Monagas ousted all the Conservatives from his government and sent Páez into exile, precipitating a decade of dictatorial rule shared with his brother, José Gregorio. The abolition of slavery in 1854 was the only noteworthy act by the Monagas brothers. In 1857 they introduced a new
constitution in an obvious attempt to install a Monagas family dynasty. The regime was ousted the following year in a revolt that included elite members of both parties.

The elite factions failed to agree on a replacement for Monagas, however, precipitating twelve years of intermittent civil war so chaotic that few history texts bother to chronicle the details. Between 1858 and 1863, local caudillos ngaged in a chaotic power struggle known as the Federal War, because the Liberals favored federalism. In the end, the Liberals triumphed and General Juan C. Falcón was named president. In practice, federalism was a disaster. Falcón’s general lack of interest in ruling and his failure to exert strong leadership allowed local caudillos to exert oppressive authoritarian control over their
fiefdoms even while they continued to pay lip service to the concept of federalism. Central government authority was finally restored in 1870 by Falcón’s chief aide, Antonio Guzmán Blanco, who established a dictatorship that endured for eighteen years.

Unlike his former boss, Guzmán understood the politics of federalism. After removing disloyal Conservative regional caudillos by force, he installed a loyal group of Liberal caudillos in their place. Thanks to a rapid expansion of both
coffee production and foreign loans, Guzmán had access to considerable resources to maintain his supporters with generous subventions, backed up, if necessary, by federal troops. This formula brought nearly two decades of much-welcomed peace to the Venezuelan countryside. Guzmán used the increased revenue for additional activities that contributed to Venezuela’s national development. Education advanced notably, while the development of a modern governmental bureaucracy, and infrastructures for
communications and transportation–roads, railroads, port facilities, and telegraph lines–provided vital support for expanding export agriculture. Caracas especially benefited from public works and grew into one of South America’s premier cities. The vainglorious Guzmán, who liked to be referred to as the "Illustrious American," dedicated as many of these projects to himself as possible.

Although Guzmán demanded honesty from his subordinates, he amassed a personal fortune that allowed him to live in the kingly luxury he felt he deserved, both in Caracas and in Paris during the intervals when he deemed it prudent to leave
the presidency in the hands of a puppet. During one such period in 1888, civil unrest marked by anti-Guzmán rioting by university students in Caracas convinced the "Illustrious American" to remain in Paris on a permanent basis.

The four chaotic years that followed Guzmán’s rule were marked by several failed attempts to consolidate a civilian government. A colorless military regime, led by General Joaquín Crespo, spent most of its energies between 1892 and 1898 fighting to remain in power. Crespo was killed in 1898; in 1899 General Cipriano Castro, the first of four military rulers from the Andean state of Táchira, marched on Caracas with a private army that became a strong naitonal army and assumed the vacant presidency. Castro was characterized as "a crazy brute" by United States secretary of state Elihu Root and as "probably the worst of [Venezuela’s] many dictators" by historian Edwin Lieuwen. His nine years of despotic and dissolute rule are best known for having provoked numerous foreign interventions, including blockades and bombardments by British, German, and Italian naval units seeking to enforce the claims of their citizens against Castro’s government. The subsequent appearance of United States warships in 1902 convinced Castro to acquiesce to a financial settlement. Five years later, however, he again incited foreign naval intervention, this time by the Dutch, who seized a port and destroyed part of Venezuela’s tiny navy. In 1908 Castro
traveled to Europe for medical treatment; his chief military aide and fellow tachirense (native of the state of Táchira), Juan Vicente Gómez, took this opportunity to overthrow the dictator and assume power.

Gómez was the consummate Venezuelan caudillo. He retained absolute power from 1908 to 1935, alternating between the posts of president and minister of war. A series of puppet legislatures drafted and promulgated six new constitutions at the bidding of the dictator, while the judiciary enforced the will of the "Tyrant of the Andes" within the courts.

The dictator’s principal power base was the army. Disproportionately staffed with tachirense personnel, the army was used to destroy all of Gómez’s regional foes. This "national" army was prudently provided with high salaries
and generous benefits, the most modern weapons, and instruction from the Prussian-trained Chilean military. But Gómez’s most important means of eliminating political foes was his ubiquitous secret police force. Although some opponents escaped with a simple reprimand, many thousands of others, those who did not manage to escape into exile, were locked up–rarely with the benefit of a trial–in prisons where death by starvation or at the hands of torturers was commonplace.

Gómez justified his harsh dictatorship as the form of government preferred by the primitive, mixed-race Venezuelans. He based his theories in part on the racist notions of the book Democratic Caesarism by Gómez supporter Laureano Vallenilla Lanz that became official regime doctrine. In accord with these theories, Gómez believed that national development could be undertaken successfully only by foreigners who enjoyed technological superiority to Venezuelans. Moreover, the climate of stability required for this externally directed development process could only be provided–according to Gómez’s doctrine–by strong authoritarian rule.

The Gómez regime coincided with a protracted period favorable to Venezuelan exports. Coffee exports boomed, both in volume and price, during the early years of his rule. Most important, however, the foreign exploitation of Venezuela’s petroleum reserves began in 1918, augmenting government revenues to a degree previously unknown and allowing Gómez to pay off the nation’s entire foreign debt and to institute a public works program. The beginnings of an urban middle class were also evident in the bureaucracy that grew up around the nascent Venezuelan oil industry. The provision of required local services to the oil industry further expanded this new middle class.

The true beneficiaries of the petroleum boom, however, were Gómez, the army, and the dictator’s associates from Táchira. For the vast majority of Venezuelans, the petroleum era brought reduced employment (oil being a capital-intensive industry) and high food prices stemming from a decline in domestic agricultural activity and an increase in imports. Inflation increased and real wages declined. Little improvement took place in public education and health care, and although the capital-intensive petroleum industry grew impressively, oil-derived revenue was not applied to labor-intensive efforts such as agricultural diversification or the promotion of small-scale industry.

Subsequent events recast the students at the Central University of Venezuela, in Caracas, into the most significant opposition to the Gómez regime. Having closely observed the Mexican Revolution of 1910 and the Russian Revolution of 1917, the students launched a struggle in 1928 to liberate Venezuela from Gómez’s grip. The revolt began in February, when Jóvito Villalba and two other students were arrested for making antigovernment speeches. In protest, other students then challenged the dictator to jail them as well, and Gómez complied by arresting 200 student activists. A popular demonstration followed. Police
dispersed the demonstrators with firearms, killing and wounding many participants. With the assistance of a few young military officers, the rebels then stormed the presidential palace, which they managed to occupy briefly before being overwhelmed by Gómez’s troops. Gómez then closed the university and rounded up the students, many of whom ended up laboring on road gangs. Some of the movement’s leadership languished or died in prison; those of "the generation of 1928" who managed to escape into exile, like Rómulo Betancourt, Rafael Caldena Rodríguez, and Raúl Leoni, were later to become the nation’s principal political leaders.

Two subsequent efforts to overthrow Gómez–executed by long-exiled caudillo rivals who believed that their landings on the Venezuelan coast would trigger popular insurrections–ended in failure. The "Tyrant of the Andes" ruled until his death, by natural causes, in December 1935 at age seventy-nine. The event precipitated widespread looting, property destruction, and the slaughter of Gómez family members and collaborators by angry mobs in Caracas and Maracaibo. Gómez’s twenty-seven years in power brought to a close Venezuela’s century of caudillismo and, according to many historical accounts, his demise marked the beginning of Venezuela’s modern period.

Although he was not the last of Venezuela’s dictators, analysts of contemporary Venezuelan society commonly cite Gómez’s lengthy rule as the true line of demarcation between Venezuela’s democratic present and its authoritarian past. Although the nation’s post-1958 democratic leaders received their political baptism of fire in Venezuela in 1928, their principal political,
social, and economic perceptions were formed in exile in Europe, Mexico, or the United States. During the transition years from 1935 to 1958, the outlines of a national democratic political culture, including the configuration of Venezuela’s modern political party system, at last began to take shape.

During the twenty-three years of transition to democratic rule, institutions developed as the military transferred political power to civilians. However, the military was still very dominant, and the death of Gómez left a leadership vacuum that could only be filled by the old dictator’s tachirense minister of war, General Eleazar López Contreras. After he finished Gómez’s term of office in 1936, the Congress, all the members of which had been appointed by Gómez, selected López to serve his own five-year term in office.

When the riots following Gómez’s death precipitated demands for liberalizing the dictatorship, López quickly realized that his survival depended on his allowing some civilian political expression. Accordingly, he freed long-time political prisoners and dismantled the worst part of Gómez’s repressive apparatus. Exiles returned to establish the first mass political organizations in the nation’s history, the most important of which was the Venezuelan Organization (Organización Venezolana– Orve) led by the populist Betancourt. Another surviving leader of the Generation of 1928, Jóvito Villalba, revived the Marxist-oriented Venezuelan Student Federation (Federación Estudiantil de Venezuela–FEV); the Venezuelan Communist Party (Partido Comunista Venezolano–PCV) was also reorganized, although it remained banned from political activities in the revised constitution of 1936. In a related area, liberalized labor legislation encouraged the organization of the nation’s first modern labor syndicates.

A highly effective general strike in June 1936, however, led the López regime to the conclusion that the proper boundaries of reform had been crossed. Accordingly, the López government rejected a November application by Orve and other leftist opposition elements for legal recognition of a united National Democratic Party (Partido Democrático Nacional–PDN) and brutally suppressed a strike by oil workers the following month. The regime justified the outlawing of the nascent labor unions in 1937 by claiming that they had engaged in illegal political activities. Soon thereafter, the regime proscribed virtually all organized political opposition.

López decided instead to concentrate his reform efforts in the relatively noncontroversial sphere of economic modernization. The government established a central bank, along with state-controlled industrial and agricultural development banks, opened new oil fields to exploitation and, employing the slogan of sembrar el petróleo ("sowing the oil"), launched a program for developing the national economic and social infrastructural, although at a lackluster pace that led critics to question the program’s efficacy.

In 1941 López’s Congress selected yet another tachirense, minister of war Isaías Medina Angarita, to replace López. In this respect, it appeared to be politics as usual. A more ambitious economic development plan, announced by Medina in 1942, was interrupted during World War II when German submarines played havoc with tankers transporting Venezuela’s oil. New laws governing the state’s relationship with foreign oil companies in 1943 resulted in substantially increased revenues, spurring renewed development efforts in 1944. Construction activity boomed during the waning years of the war, a period that also saw the passage of Venezuela’s first income tax and social security laws.

Perhaps more consequential, however, was Medina’s expansion of the political opening begun by López. The PDN was legalized and promptly changed its name to Democratic Action (Acción Democrática–AD). Its members soon constituted a vociferous minority in local governments and, after the January 1943 elections, in the lower house of Congress known as the Chamber of Deputies (the upper house was the Senate). The president responded by organizing his own political party, the Venezuelan Democratic Party (Partido Democrático Venezolano–PDV), which waged a vigorous campaign and gained a legitimate victory in the crucial 1944
congressional elections. With his party thus assured of control of the 1945 Congress, which would hold indirect elections for president, Medina appeared poised to designate his successor.

To the surprise of many, he chose Diógenes Escalante, a liberal civilian serving as ambassador in Washington. A delighted AD agreed to support Escalante’s candidacy. Medina’s opposition on the right, however, which had expected former President López to receive the nomination, was incensed by the choice. Fear was in the air during the summer of 1945, as rumors circulated that the forty-six-year-long rule by tachirenses was about to be ruptured by a civil war between the lopecistas and medinistas (followers of López and Medina). Escalante soon became too ill to pursue the presidency, however, and his announced replacement was a colorless figure widely regarded as a puppet of Medina. Ironically, it was not the lopecista right that brought the era of tachirense rule to a close. Instead, on October 18, 1945, the AD in conjunction with junior military officers suddenly overthrew Medina.

The conspiracy to overthrow Medina had been hatched inside the Patriotic Military Union (Unión Patriótica Militar–UPM), a secret lodge of junior officers who were disgruntled over the persistence of cronyism and the lack of professionalism within the tachirense senior ranks. These officers had invited AD to join their plot in June and asked Betancourt to serve as the president of the new government. AD did not agree to cooperate with the UPM, however, until after the October 1 announcement of Medina’s replacement for Escalante.

After the coup, Betancourt named a seven-man governing junta consisting of four adecos (members of AD), two military officers, and one independent. AD thus controlled the government, and the UPM controlled the military. All officers who had attained ranks above major before the 1945 rebellions–Carlos Delgado Chalbaud, Julio Vargas, and Marcos Pérez Jiménez–were hence promptly sent into retirement. Political reform was the first item on the junta’s agenda, and in March 1946, it decreed a sweeping new electoral law. Universal suffrage for all citizens over eighteen, including women, at last became law. All political parties were legalized, and the number of congressional seats was to be apportioned according to each party’s percentage of the total vote.

AD’s principal competitor in the October 1946 Constituent Assembly elections, held to elect a body that would draft a new constitution, was the Christian Democratic Party (Comité de Organización Política Electoral Independiente–COPEI), recently founded by Rafael Caldera Rodríguez. COPEI appealed mainly to conservative Roman Catholics. Other parties of less conservative leanings but narrower electoral appeal included the Democratic Republican Union (Unión Republicana Democrática–URD), a personal vehicle for Villalba, and the communists, whose various factions united in 1947 under the banner of the PCV, which had been legalized in 1942. Although competition among the parties was intense, AD won overwhelming majorities in the Constituent Assembly elections as well as in the presidential and congressional elections of December 1947 and the municipal elections of May 1948.

AD’s wide margin of victory (in 1946 it drew 79 percent of the vote); in 1947, 73 percent) led its leaders to believe that they could push through a highly progressive program without considering the conservative political opposition. A new constitution was promulgated in 1947. The party’s vigorous pursuit of "social justice and better conditions for the workers" (as stated in a decree by the 1945 junta that established a separate ministry of labor) engendered widespread hostility within the business community, both foreign and local. The overhaul of the 1943 petroleum law to assure the government a 50 percent tax on the oil industry’s profits intensified the foreign oil companies’ antagonism. The junta’s aggressive campaign to expand public education and its regulation of both public and private education incensed the Roman Catholic Church. The church, whose dominant role in education had heretofore gone unchallenged, now enlisted COPEI in a strident antigovernment campaign.

The political polarization intensified following the inauguration of Rómulo Gallegos as president on February 15, 1948. At that time, Venezuela’s most renowned author, Gallegos proved less than adroit as a politician. His signing of AD’s wide-ranging land reform bill in October pitted the nation’s powerful landowners against him, and his reduction of the military personnel in his cabinet and advocacy of a reduced military budget alienated the armed forces. In mid-November, the UPM issued an ultimatum to the president demanding that COPEI share political authority with AD and that Betancourt, still AD leader, be sent
into exile. Gallegos refused, and on November 24, after barely ten months in office, the military overthrew him in a nearly bloodless coup and exiled him along with Betancourt and the rest of the AD leadership.

The three-man provisional military junta that assumed control of the government was headed by Colonel Delgado. Delgado had joined the anti-AD conspiracy only after Gallegos had rejected the UPM ultimatum and it was clear that his fall was inevitable. Delgado had been a UPM coconspirator in 1945, and had served as a member of the AD junta and as minister of defense under Gallegos. The military junta’s other two members, UPM conspirator Pérez Jiménez and Luis Felipe Llovera Páez, were tachirenses who also held the rank of colonel. The junta quickly set about undoing the reforms of the AD trienio. It voided the 1947 constitution and restored the traditionalist 1936 constitution. The new military government outlawed AD and persecuted its militants.

Delgado took a more moderate position than his fellow junta members on such issues as the persecution of AD and the potential transition from a military to a civilian government. His disagreements with Pérez and Llovera, who advocated overt military rule in the Venezuelan tradition, became increasingly public. In November 1950, Delgado was assassinated. Germán Suárez Flanerich served as a figurehead for Pérez, who assumed leadership of the junta. Under pressure from non-AD political parties, the junta reluctantly convoked long-deferred presidential elections for November 1952.

AD continued to be proscribed but was extremely active underground. Pérez organized a progovernment party, the Independent Electoral Front (Frente Electoral Independiente– FEI), which he mistakenly believed would be victorious and thus legitimize his rule. Caldera ran a conservative campaign as the presidential candidate of COPEI, and the URD’s Villalba ran a fiery
antigovernment campaign. When the early election results made it clear that the URD (supported clandestinely by AD), was far ahead of the government party, Pérez ordered the count halted and declared himself president. The other junta members were sent abroad "on vacation," and the leaders of the URD and COPEI joined their AD colleagues in exile.

The next five years saw a brutal dictatorship in a country that by now was notorious as the almost archetypical home of Latin American dictators. A regressive new constitution reverted to indirect elections for president by a puppet legislature. Pedro Estrada, described by historian Hubert Herring as "as vicious a man hunter as Hitler ever employed," headed the vast National Security Police (Seguridad Nacional–SN) network that rounded up any opposition, including military officers, unable to escape. Hundreds, if not thousands, were brutally tortured or simply murdered at the notorious Guasina Island
concentration camp in the Orinoco jungle region. Labor unions were harassed, and the Venezuelan Confederation of Labor was abolished and replaced by a confederation under the control of the FEI. When the Central University of Venezuela became a center of opposition to the regime, it was simply shut down. Strict controls over the press recalled the worst days of the Gómez regime. Political power concentrated around Pérez and an inner circle of six tachirense colonels who held key cabinet positions. Pérez revived Gómez’s old "Democratic Caesarism" doctrine and gave it a new name, the "New National Ideal," under which politics would be deemphasized in favor of material progress (dubbed the "conquest of the physical environment" by apologists for the dictatorship).

Under Pérez, much of the nation’s ever-increasing petroleum revenues were used for ostentatious construction projects. These included a replica of New York’s Rockefeller Center, a luxurious mountaintop hotel, and the world’s most expensive officers’ club, all of which served more as monuments to the dictator than as contributions to national development. An even larger share of the state treasury, fully 50 percent according to one estimate, was squandered or simply stolen. By the time Pérez was forced to flee to Miami, he alone had accumulated a fortune estimated at US$250 million. Meanwhile, government expenditures on such human resources as health and education stagnated.

Pérez’s staunch anticommunism and his more liberal policies toward the foreign oil companies–compared with the nationalistic stance of AD–won him the open support of the United States government; President Dwight D. Eisenhower awarded him the Legion of Merit in 1954. His seemingly insatiable greed for wealth and power, however, as well as the widespread reports of his debauchery, made him a growing object of scorn among his countrymen. In mid-1957 the united civilian opposition organized an underground movement called the Patriotic Junta dedicated to overthrowing the dictatorship. Opposition to Pérez also flourished
within the military, especially among junior officers tired of the corruption and monopoly on power of the ruling generals. Pére’s favoritism to the army alienated air force and naval officers.

A shameless electoral farce in 1957, obvious to all as a bald maneuver designed to perpetuate Pérez in power, proved decisive in the downfall of the dictator. Fearful of an embarrassment similar to that of 1952, Pérez cancelled planned elections and then scheduled a plebescite. Only two hours after the polls had closed on December 15, the government announced an incredible 85 percent vote in favor of Pérez continuing in office. Outrage at this obviously fraudulent result was universal among both the civilian and military opposition.

Air force planes dropped bombs on the capital on January 1, 1958, to signal the start of a military insurrection. The anticipated coup d’état failed to materialize, however, because of the lack of coordination among the conspirators. Nonetheless, the bombing did give heart to the civilian opposition to Pérez by signaling that they were not without allies within the military. On January 10, the Patriotic Junta convoked a massive demonstration of civilian opposition in downtown Caracas; on the twenty-first, it called for a general strike that proved immediately effective. Street demonstrations as well as
fighting erupted and quickly spread outside Caracas. When the navy revolted on January 22, a group of army officers, fearful for their own lives, forced Pérez to resign. The following day, Venezuela’s last dictator fled the country, carrying most of what remained of the national treasury. In addition, his ouster cost the nation some 300 dead and more than 1,000 wounded.

The five-man provisional military junta at first tried to rule without civilian participation. The Patriotic Junta, however, called for the rebellion to continue until civilians were included. Two businessmen were promptly added to the junta, which ruled during the year required to dismantle the institutions associated with the dictatorship and transfer power to a popularly elected civilian government. The junta contained personnel from all three military services, led by Admiral Wolfgang Larrazábal, who headed the crucial January 22 naval rebellion. The junta also began a valiant effort to deal with the grim realities of an empty treasury and some US$500 million in foreign debt. It immediately stopped work on most of the dictator’s public works projects, and later decreed a sharp increase in income taxes. Most important, the junta increased the government’s
share of the profits on petroleum extraction from 50 percent to 60 percent.

Under a new electoral law decreed in May, the junta convoked elections for December 1958. The political parties that had participated in the Patriotic Junta found themselves unable to reach a consensus on a single candidate. In the Pact of Punto Fijo, drawn up in October, the top party leaders did agree to resume their cooperation after the elections. They drew up a common policy agenda and agreed to divide cabinet posts and other governmental positions among the three major parties, regardless of whose candidate proved victorious in December. AD then nominated Betancourt, the URD tapped the popular Larrazábal as its candidate, and COPEI again ran Caldera as its candidate. After a hard-fought campaign, Betancourt came out the victor with 49 percent of the total; Larrazábal, who also had the support of the communists, received 35 percent; Caldera garnered 16 percent. AD also gained a majority in both congressional bodies. Although few anticipated it at the time, Betancourt’s inauguration as
president on February 13, 1959, initiated a period of democratic, civilian rule of unprecedented length in the nation’s history.

Historians invariably point to Betancourt’s inauguration as the pivotal point in four centuries of Venezuelan history. Not since its discovery by Spanish explorers in the late fifteenth century had an event so clearly marked a new era for the country. After nearly a century and a half as perhaps the most extreme example of Latin America’s postindependence affliction of caudillismo and military rule, Venezuela’s political life after 1959 was defined by uninterrupted civilian constitutional rule.

This stark break with the past has been attributed most often to the government’s petroleum-based wealth, which gave it the material resources to win a vast portion of the population over to the democratic consensus, and to the spirit of cooperation among the nation’s various political entities (commonly known as the "Spirit of the 23rd of January," after the date of Pérez’s fall from power) as embodied in the Pact of Punto Fijo. Betancourt and his AD colleagues had apparently learned from the disastrous consequences of their strident posture during their previous stint at governing. They now reversed themselves by granting concessions to a broad range of political forces that included many of their most bitter enemies during the trienio. They guaranteed, for example, the continuation of obligatory military service; improved salaries, housing, and equipment for the military; and, most important, amnesty from prosecution for crimes committed during the dictatorship. The Roman Catholic Church, whose active opposition to Pérez had impressed many doctrinally anticlerical AD militants, somewhat enhanced its political image and expanded its influence within the government.

In another pact written up during the weeks before the 1958 elections, known as the "Declaration of Principles and Governing Program," AD, COPEI, and the URD agreed on a broad range of matters with respect to the economy. In what amounted to guarantees to the foreign and local business communities, the parties agreed to respect the principles of capital accumulation and the sanctity of private property. Local industry, furthermore, was guaranteed government measures to protect it from foreign competition as well as subsidies through the state- run Venezuelan Development Corporation (Corporación Venezolana de Fomento–CVF). With respect to agrarian properties, any expropriation or transfer of title would provide for compensation to the original owner.

Betancourt made other conciliatory moves as well. A new labor code granted unprecedented government guarantees of the right to association and collective bargaining. Vastly enlarged state subsidies benefited the poor in such areas as food, housing, and health care. The objective was to institutionalize a "prolonged political truce" by including as many citizens as possible within a popular consensus in favor of the civilian, democratic project. The "Spirit of the 23rd of January" informed the 1961 constitution, which guaranteed a wide range of civil liberties and created a weak bicameral legislature, where partisan political conflict could be aired but would cause a minimum of damage. The president was given considerable power, although he was allowed to run for reelection only after sitting out two five-year terms.

The major group excluded from the political pacts of 1958 was the extreme left. This exclusion was the result, initially, of the doctrinal anticommunism of AD–and of Betancourt in particular. The exclusion was subsequently perpetuated by the triumph of the Cuban Revolution in 1959 and the revolution’s precipitous radicalization during the early 1960s. The Cuban Revolution had a profound impact on the Venezuelan left, particularly among student groups, who saw it as a model for a successful revolutionary effort in Venezuela. In November 1960, the URD dropped out of the governing coalition with AD in protest over Betancourt’s firm stance against Cuban leader Fidel Castro Ruz. AD also suffered the loss of most of its student wing, which in April of that year split from the party to form the Movement of the Revolutionary Left (Movimiento de la Izquierda Revolucionaria–MIR), supposedly to protest delays in the implementation of the government’s agrarian reform program.

In 1961 these groups, together with the PCV, consolidated their advocacy of antigovernment guerrilla warfare. The Betancourt government supported Cuba’s expulsion from the Organization of American States (OAS), then broke diplomatic relations with the Castro government in December. In May and June of the following year, military officers sympathetic to the left instigated two bloody uprisings, first at Carúpano on the Península de Paria, then at Puerto Cabello. These provoked Betancourt into legally proscribing the PCV and the MIR, which promptly went underground and formed the Armed Forces of National Liberation
(Fuerzas Armadas de Liberación Nacional–FALN). The FALN engaged in rural and urban guerrilla activities throughout the remainder of the 1960s. The activity reached its height in 1962 and 1963, when the FALN sabotaged oil pipelines and bombed a Sears Roebuck warehouse and the United States Embassy in Caracas.

The FALN failed, however, to attract adherents among the poor, whether rural campesinos or the residents of the makeshift shacks, known as ranchos, that made up Caracas’s mushrooming slum areas. The guerrillas also proved unable to achieve their secondary goal of provoking a coup d’état that would lead to a repressive military regime and, hence, increase popular support for the insurgents. As political scientist Daniel H. Levine points out, the FALN’s effect proved to be quite the contrary of what it intended: it actually consolidated the democratic regime by making AD look–to its many former enemies on the right–like the better of two alternatives. At the same time, the insurgency provided a vital military mission to the armed forces, one that removed them still further from direct participation in politics. Ultimately, the FALN’s efforts to disrupt the December 1963 elections also proved futile. In the midst of this guerrilla campaign, the government arrested all PCV and MIR congressmen in September, and in November military forces discovered a three-ton cache of small arms–with clear links back to the Castro regime–on a deserted stretch of beach.

Castro was not Betancourt’s only enemy in the Caribbean, however. Rafael Leónidas Trujillo Molina, the dictatorial ruler of the Dominican Republic, was implicated in a number of antigovernment conspiracies uncovered within the Venezuelan military, as well as in the bombing of Betancourt’s car in June 1960, in which a military aide was killed and the president badly burned. The Venezuelan president’s strong-willed antipathy for nondemocratic rule was reflected in the so-called Betancourt Doctrine, which denied Venezuelan diplomatic recognition to any regime, right or left, that came to power by military force.

Highly unfavorable circumstances in the external sector of the economy handicapped the Betancourt administration. Having inherited an empty treasury and enormous unpaid foreign debts from the spendthrift Pérez, Betancourt nevertheless managed to return the state to fiscal solvency despite the persistence of rock-bottom petroleum prices throughout his presidency. He also managed to continue the effort, begun during the 1930s by President López, of "sowing the oil" by initiating a variety of reform programs, the most important of which was agrarian reform. Aimed not at addressing social grievances but rather at reversing Venezuela’s protracted decline in agricultural production, AD’s land reform distributed only unproductive private properties and public lands. Landowners who had their properties confiscated received generous compensation. By the end of the 1960s, an estimated 166,000 heads of household had received provisional titles to their new properties.

During 1960 two institutions were founded that made important contributions toward the development of a national petroleum policy: the Venezuelan Petroleum Corporation (Corporación Venezolana de Petróleos–CVP), conceived to oversee the national petroleum industry, and the Organization of the Petroleum Exporting Countries (OPEC), the international oil cartel that Venezuela established in partnership with Kuwait, Saudi Arabia, Iraq, and Iran. Both organizations were the creations of Juan Pablo Pérez Alfonso, who, for the second time, served as Betancourt’s minister of energy. During the trienio, Pérez Alfonso had
earned the wrath of the foreign oil firms with his proposition that the state should gradually assume control of the petroleum industry; this idea now once again became government policy.

Perhaps the greatest of all Betancourt’s accomplishments, however, were the successful 1963 elections. Despite myriad threats to disrupt the process, nearly 90 percent of the electorate participated on December 1 in what was probably the most honest election in Venezuela to that date. AD standard-bearer Raúl Leoni proved victorious, gaining 33 percent of the total vote in a field of seven presidential candidates. On March 11, 1964, for the first time in the nation’s history, the presidential sash passed from one constitutionally elected chief executive to another. It was a day of immense pride for the people of Venezuela.

Leoni, a hard-working but less colorful figure than Betancourt, differed little from his reformist predecessor from an ideological standpoint. Nevertheless, unlike Betancourt, Leoni proved unable to agree to COPEI’s conditions for forming a governing coalition and instead made an alliance with the URD and the National Democratic Front (Frente Nacional Democrática–FND), a probusiness party created around Arturo Uslar Pietri, a noted writer and public affairs activist.

Subversive activities quieted considerably during the Leoni administration. By no means were they ended, however. Rumors of military plots were rife throughout the five-year term; the most dangerous military rebellion, an attempted coup d’état in October 1966, was swiftly put down and its leaders court-martialed. The threat from the revolutionary left also persisted, leading Leoni in December 1966 to order an army search of Caracas’s Central University for revolutionaries. By 1965, however, the PCV had begun to harbor doubts about violence as a road to power, and over the course of the following two years, it
gradually abandoned the revolutionary path. Splinter groups with Cuban ties persisted in their violent activities, however, and in May 1967, a small landing party headed by a Cuban army officer was captured at Machurucuto in the state of Miranda. This would prove to be the pinnacle of Castro’s crusade to export his revolution to Venezuela. Insurgent activity subsequently subsided, and bilateral relations with Cuba eventually improved.

Economic growth averaged a healthy 5.5 percent annually during the Leoni years, aided by a recovery in petroleum prices and the relative political tranquility as the AD program attained legitimacy. Leoni kept the Betancourt reform programs on course and also introduced a number of impressive infrastructure projects designed to open up the nation’s interior to agricultural and industrial development. Regional integration efforts advanced, albeit slowly, although Venezuela remained outside the newly created Andean Common Market (Ancom) in response to objections from the local business community, which feared competition from lower-priced goods manufactured in neighboring countries.

The governing party split in 1967 over the choice of the party’s presidential candidate for the 1968 elections. Stemming in part from a long-simmering rivalry between former president Betancourt and AD secretary general Jesús Angel Paz Galarraga, a highly damaging split led Paz to launch the People’s Electoral Movement (Movimiento Electoral del Pueblo–MEP). The MEP tendered Luis B. Prieto as its candidate, while Gonzalo Barrios headed the AD ticket. The URD joined forces with the FND and the party of former presidential candidate Larrazábal to promote the candidacy of Miguel Angel Burelli Rivas under the banner of a
coalition dubbed the Victorious Front. COPEI once again ran Caldera, who proved victorious in this fourth attempt to capture the presidency. His victory resulted both from the split in AD and from COPEI’s liberalization of its image away from that of a strictly conservative Roman Catholic party. All four candidates finished strongly at the end of a hard-fought campaign, however, and Caldera eked out a victory over Barrios by a margin of merely 31,000 votes. The passing of the presidential sash from Leoni to AD’s principal opposition leader in March 1969 marked yet another first in Venezuela’s rapidly maturing democracy.

President Caldera never made an earnest effort to form a governing coalition. Throughout his five-year term, his cabinet consisted exclusively of copeyanos (COPEI party members) and independents. In Congress, however, the governing party was forced to form a working alliance with AD in 1970 because mounting student demonstrations and growing partisan intransigence made unilateral rule impossible. The major concerns of Caldera’s government were not unlike those of his two predecessors: agrarian reform and increased farm production, the improvement of educational and social welfare benefits, the expansion and diversification of industrial development, and progress toward local control of the petroleum industry. With respect to the latter, the government’s tax rate on the petroleum companies rose to 70 percent by 1971. In the same year, the Hydrocarbons
Reversion Law–stipulating that all of the oil companies’ Venezuelan assets would revert to the state when their concessions expired–went into effect.

The key policy distinction between Caldera’s government and those of his AD predecessors lay in the area of foreign policy. President Caldera rejected the Betancourt Doctrine, which he considered restrictive and divisive, and which he
thought had served to isolate Venezuela in the world. Bilateral relations were soon restored with the Soviet Union and the socialist nations of Eastern Europe, as well as with a number of South American nations that had fallen under military rule. By dividing Latin American nations from one another, the Betancourt Doctrine, Caldera believed, had served to promote United States
hegemony in the region. Seeking points of unity instead, Caldera established "pluralistic solidarity" as the guiding principle of Venezuelan foreign policy. Among its positive results was Venezuela’s entrance into Ancom upon signing the 1973 Consensus of Lima, which assuaged the fears of the business community by allowing Venezuela to attach a number of special conditions to its membership.

On the one hand, by joining Ancom, Venezuela emphasized its Andean identity. On the other hand, the striking expansion of its investment in the Caribbean Development Bank emphasized the nation’s Caribbean character. Caldera thus began to provide oil-based financial aid to the nations of Central America and the Caribbean, an effort that would be greatly expanded in subsequent years. Although the internal security situation had improved, Caldera adopted a policy of "pacification" toward the remaining armed opposition. The pacification program legalized the PCV and other leftist parties and granted amnesty to
revolutionary activists. The government credited the program for the dramatic decline in guerrilla activity. Its opponents, however, pointed out that the most conspicuous decrease in Venezuela’s revolutionary violence came under Leoni, when Cuba and the Soviet Union changed their policies in the wake of the 1967 death of Ernesto "Che" Guevara in Bolivia and the 1968 Soviet invasion of Czechoslovakia.

The December 1973 election was a truly pluralistic affair. The twelve presidential candidates ranged from three aspirants of the parties on the left to an even larger number of self-declared representatives of former president Pérez on the right. The MEP, which had moved steadily leftward since 1968, allied itself with the PCV and nominated Paz under the banner of Popular Unity (Unidad Popular), modeled after the Chilean left-wing coalition of the same name that had elected Salvador Allende Gossens in 1970. The URD initially joined the coalition, but the aging Jóvito Villalba later withdrew his party to launch his
own candidacy. The other candidate on the left was José Vicente Rangel of the Movement Toward Socialism (Movimiento al Socialismo–MAS), a party that had been founded in 1971 by a group of PCV dissidents with liberal, "Eurocommunist" notions of a modern, election-oriented party. Unlike the Moscow-line PCV, the MAS had little bond to the Soviet Union.

Although the 1973 election was notable for the ideological pluralism represented in the competing political parties, its most important distinction was the primacy achieved by the two principal parties, AD and COPEI. In contrast to 1968, AD converged around the figure of Betancourt’s long-time protégé and minister of interior, Carlos Andrés Pérez, thus passing party leadership to its second generation. Campaigning deep into the rural Venezuelan heartland as well as in the ranchos of all major cities, Pérez managed to recapture much of the populist appeal acquired by Betancourt thirty years previously. The campaign of his opponent, Lorenzo Fernández (also a former minister of interior) was, by comparison, a low-key affair.

On election day an astounding 97 percent of the registered voters went to the polls. Pérez, with 48.8 percent of the valid vote, prevailed against Fernández’s 36.7 percent. Between them, then, AD and COPEI captured nearly 86 percent of the valid presidential vote; the two parties also garnered 43 of the 49 Senate seats and 166 of 200 seats in the Chamber of Deputies. AD attained absolute majorities in both congressional houses as well as in 157 of the nation’s 181 municipal councils. The showing of leftist parties, in contrast, was unimpressive: the Popular Unity coalition gained 5.1 percent; MAS, 4.2 percent; and the URD, a
mere 3.1 percent. "Polarization" was the term used locally to describe the apparent transition of Venezuela’s electoral contests into two-party affairs. It was yet another promising sign in the evolution of a stable system of democracy.

Venezuela had still another reason to be euphoric at the dawn of 1974. The October 1973 Arab-Israeli War had triggered a quadrupling of crude oil prices in a period of only two months. When Pérez assumed the presidency in February 1974, he was immediately faced with the seemingly enviable task of managing a windfall of unprecedented proportions. To combat the inflationary pressures that would result from the sudden addition of some US$6 billion in annual government revenues, Pérez set up the Venezuelan Investment Fund (Fondo de Inversiones de Venezuela–FIV), with the objective of exporting 35 percent of this unexpected income as loans to Caribbean, Central American, and Andean neighbors. The greatest portion of this aid money went to the oil-importing nations of Central America in the form of long- term loans to pay for half of their oil-import bills. Venezuela also loaned out its "excess capital" through various multilateral lending institutions, including the Inter-American Development Bank (IDB).

The FIV loan program engendered considerable international goodwill on behalf of Venezuela, particularly among the recipient countries. Building on that prestige, Pérez and Mexican president Luis Echeverría Alvarez (1970-76) founded the Latin American Economic System (Sistema Económico Latinoamericano–SELA). SELA, with headquarters in Caracas, had twenty-three Latin American nations as its initial members in 1975. It was formed to promote Latin American cooperation in international economic matters such as commodity prices, scientific and technological exchange, and multinational enterprises and development projects.
SELA, it was hoped, would help create the building blocks of a "new international economic order," in which the developing nations of the southern hemisphere would challenge the economic hegemony of the developed nations of the north.

Pérez’s aggressive stance on behalf of the Third World helped to cool Venezuela’s traditionally warm relations with the United States. Other contributing factors to this change included Venezuela’s displeasure with both the revelations of extensive covert intervention by the United States against the Allende government in Chile and the reluctance of the United States to begin negotiations with Panama over future control of the Panama Canal. The major irritant, however, was OPEC’s petroleum policy, marked by OPEC’s 1973 price increases, and the embargo on oil shipments to the United States instigated by the Arab members of OPEC during the October War. Despite the fact that Venezuela had increased its oil shipments at that time in order to meet United States needs, the United States retaliated against the embargo by excluding Venezuela, along with the other OPEC-member nations, from the 1974 Trade Act, which created the Generalized System of Trade Preferences to lower tariffs on designated imports from developing nations. Proud of never having denied the nation’s oil to the United States, even during periods of war and political tensions, Venezuelans took offense at what they saw as unwarranted punitive action by the United States.

At home, President Pérez put aside his promised intention to "manage abundance with the mentality of scarcity," and embarked on a spending spree designed to distribute Venezuela’s oil wealth among the citizenry. Price controls that subsidized the public consumption of food and other commodities were introduced. Government-authorized wage increases, combined with foreign exchange controls that subsidized imports, led to periodic buying binges of Japanese stereos and televisions, German automobiles and cameras, and clothing and processed foods from the United States. Per capita consumption of Scotch whiskey soared to a level among the world’s highest. Government subsidies assumed a variety of other forms as well: in 1974, US$350 million in debts owed to state agencies by the Venezuelan farming community were simply cancelled.

The Pérez administration initiated various other programs to spur employment. The 1974 Law of Unjustified Dismissals made it very difficult for employers to fire workers and mandated ample severance payments to those who did lose their
jobs. Public employment doubled in five years, reaching 750,000 by 1978. Although unemployment levels thus dropped precipitously, Venezuelans’ traditional disdain for hard work increased, leaving many necessary jobs either unfilled or filled by a growing number of indocumentadosas (undocumented or illegal aliens) from Colombia and Brazil.

Although these subsidy and employment programs theoretically sought to improve the lot of the poor, in fact, the actual outcome was that a significant portion of the population continued to live in a state of misery. Income distribution was less equitable in 1976 than it had been in 1960, and one study found that fully 40 percent of the population nationwide were ill fed and undernourished. This contrast of widespread poverty amidst urban development and the conspicuous consumption of the middle and upper classes was particularly damaging to Pérez, who had been elected with a public image as a "friend of the people." AD’s failure to address adequately the needs of the poor would plague the party during the 1978 electoral contest.

The government continued, as it had been doing for nearly four decades, to put a large portion of its petroleum revenues into building an industrial base, with the objective of generating future income after the nation’s oil reserves had been depleted. With massive amounts of money to spend, emphasis was now placed on large-scale, high-technology infrastructure and industrial development projects. The Pérez administration’s Fifth National Plan, conceived during the mid-1970s and scheduled to become operative in 1977, accordingly called for some US$52.5 billion in investments over a five-year period.

In an effort to minimize the bureaucratic entanglements entailed by such a major increase in the fiscal responsibilities of the central government, funding was instead vested in autonomous and semi-autonomous entities. The four years following the 1973-74 oil boom saw the creation of no less than 163 such entities, including textile and lumber companies, a hydroelectric consortium, shipbuilding firms, and a national steamship company and airline. By 1978 the budget outlay for state-owned enterprises and decentralized agencies was 50 percent higher than the federal budget.

The centerpiece of this state-directed program of industrial development was the massive industrial complex at Ciudad Guayana. Located near major deposits of iron and other raw materials in the vast Guiana highlands, the complex was placed under the supervision of the Venezuelan Corporation of Guayana (Corporación Venezolana de Guayana–CVG). Ciudad Guayana was developed during the early 1960s as an effort to decentralize industrial development away from Caracas. It attracted considerable private as well as public investment–most notably the Orinoco Steelworks (Siderúrgica del Orinoco–Sidor), a CVG subsidiary–and grew quickly; by 1979 its population reached 300,000. During the Pérez administration, Sidor benefited from massive new investments, including a US$4 billion project designed to increase its refining capacity five-fold. The government erected modern, large-scale aluminum and bauxite refineries and massive hydroelectric projects with a vision of converting the Orinoco Basin into a Venezuelan Rhineland.

In January 1975, the government cancelled the iron ore concessions of subsidiaries of two United States-owned firms (United States Steel Corporation and Bethlehem Steel) operating in the Guayana highlands. It was not an unexpected move, as local ownership of raw-material extraction had been frequently addressed during the 1973 presidential campaign. The nationalization process took place smoothly: the two companies accepted US$101 million in compensation and agreed to sign one-year management contracts to provide continuity in the operation of the mines during the transition.

Congressional approval, the following August, of a bill nationalizing the petroleum industry had also been anticipated. The fourteen foreign oil companies involved did not object vigorously to the move; the Venezuelan government had granted them no new concessions since 1960, and their share of the profits from the petroleum they extracted had dropped to 30 percent. The US$1 billion they received, though only a fraction of the replacement cost of the assets they surrendered (including 12 oil refineries with an aggregate capacity of 1.5 million barrels of oil per day, along with some 12,500 oil wells), was generally believed to be as fair and generous a compensation as possible under the circumstances. The fourteen foreign firms were consolidated into four autonomous entities, modeled after the four largest of the foreign enterprises, and placed under the administrative supervision of the Venezuelan Petroleum Corporation (Petróleos de Venezuela, S.A.–PDVSA), a holding company fashioned out of the CVP. General Rafael Alfonso Ravard, who had managed the CVG in a highly efficient, technocratic manner quite atypical of most government ventures, was chosen to head PDVSA.

The Pérez administration had devised its grandiose Fifth National Plan under the assumption that rising oil prices would boost government revenue throughout the 1970s. Instead, Venezuela’s oil income leveled off in 1976, then began to decline in 1978. Foreign commercial banks, awash with petrodollars deposited by other OPEC nations, provided loans to make up the shortfall so that Venezuela’s development program could proceed on schedule. On the one hand, the banks saw oil-rich Venezuela as an excellent credit risk, while on the other hand, the autonomy of Venezuela’s state firms allowed them to borrow excessively, independent of central government accounting. To expedite their receipt of this external financing, the autonomous entities opted for mainly short-term loans, which carried higher rates of interest. As a result, by 1978 the public-sector foreign debt had grown to nearly US$12 billion, a five-fold increase in only four years. An estimated 70 to 80 percent of this new debt had been contracted by the decentralized public administration.

Between the vast increase in oil revenues before 1976 and the immense foreign debt incurred by the government, the Pérez administration spent more money (in absolute terms) in 5 years than had all other governments during the previous 143 years combined. Perhaps inevitably, a lot of money was squandered in mismanagement and corruption. Despite expansive overseas programs to train managers of the new public entities, the lack of competent personnel to execute the government’s many sophisticated endeavors became painfully evident. The delays and myriad cost overruns that ensued formed the backdrop of frequent malfeasance by public officials. Overpayment of contractors, with kickbacks to the contracting officers, was perhaps the most rampant form of graft. Featherbedding and the padding of payrolls with nonworking or nonexistent employees also became common practices.

By the time of the December 1978 elections, these issues had brought serious doubts to the voters as to the competence and the probity of the AD government. AD’s candidate Luis Piñerua Ordaz lost to COPEI’s Luis Herrera Campins by a little over 3 percentage points. The loss had less to do with the program presented by either candidate than with the public’s rejection of the free-spending, populist style of President Pérez. Otherwise, the 1978 campaign was most notable for the vast sums spent by the two major candidates on North American media consultants. More than any previous electoral contest, this campaign was conducted on television, increasing the relative importance of image over substance. The two major parties captured almost 90 percent of the
total vote; a divided left shared 8.5 percent of the total among four candidates. In the subsequent June 1979 municipal council elections, however, the MAS, MEP, PCV, and MIR presented a united slate that captured a more impressive 18.5 percent of the vote.

Announcing during his March 1979 inaugural address that Venezuela could not continue as a "nation that consumes rivers of whiskey and oil," President Herrera promised to assume an austere posture toward government fiscal concerns. Public spending, including consumer subsidies, was ordered cut, and interest rates were increased to encourage savings. When the Iranian Revolution and the outbreak of the Iran-Iraq War caused oil prices to jump from US$17 per barrel in 1979 to US$28 in 1980, however, Herrera abandoned his austerity measures before they had had a chance to yield results.

Early on in his term of office, President Herrera also pledged to pursue policies aimed at reviving the moribund private sector. The first of these measures, however, the elimination of price controls, only contributed further to rising inflation. As with his commitment to austerity, the president failed to persist in his pledge to business; yielding to political pressures from the AD-dominated Confederation of Venezuelan Workers (Confederación de Trabajadores de Venezuela–CTV), in October 1979 the administration approved sizable wage increases. Meanwhile, the number of those employed by state-owned enterprises and autonomic agencies, which Herrera had promised to streamline and make more efficient, proliferated instead. The administration initiated, among other projects, a huge coal and steel complex in the state of Zulia, a new natural gas plant with 1,000 kilometers of pipeline, a new railroad from Caracas to the coast, and a bridge linking the Caribbean Isla de Margarita with the mainland, running in the process a deficit of some US$8 billion between 1979 and 1982. A retired Venezuelan diplomat, writing in The Miami Herald in 1983, noted that, "There must be examples of worse fiscal management than that of Venezuela in the last eight or nine years, but I am not aware of them."

The lack of confidence in President Herrera’s economic management by the local business community contributed significantly to a precipitous decline in the growth of real gross domestic product from an annual average of 6.1 percent between 1974 and 1978 to a sickly -1.2 percent between 1979 and 1983. Unemployment hovered around 20 percent throughout the early 1980s.

An unexpected softening of oil prices during late 1981 triggered further fiscal problems. World demand for oil–on which the Venezuelan government depended for some two-thirds of its revenues–continued to decline as the market became glutted with oil from newly exploited deposits in Mexico and the North Sea. The resumption of large-scale independent borrowing by the decentralized public administration came amidst publicly aired disagreements among various officials as to the magnitude of the foreign debt. Not until 1983 did outside analysts agree on an approximate figure of US$32 billion.

Compounding growing balance of payments difficulties, rumors of an impending monetary devaluation precipitated a wave of private capital flight overseas in early 1983. While the Central Bank of Venezuela (Banco Central de Venezuela–BCV) president argued with the finance and planning ministers over what measures to adopt to meet the growing crisis, some US$2 billion left the country during January and February alone. At the end of February, the government at last announced a system of foreign exchange controls and a complicated three-tier exchange system. Under this system, the public sector retained the existing rate of US$1=B4.3, selling bolívars to the private sector at a higher rate of US$1=B6.0 or more, while a free-floating rate was established for tourism, "nonessential" imports (luxury items), and other purposes. At the same time, price controls were reinstated to control inflation. The annual increase in consumer prices, which had hit a peak of 21.6 percent in 1980, fell to 6.3 percent for 1983.

Seeking a way out of the dismal economic situation, the Herrera administration decided to transfer a greater share of ever-growing government expenses to PDVSA. The Central Bank of Venezuela appropriated some US$4.5 billion of PDVSA’s reserves to pay the foreign debt, thereby throwing the petroleum corporation’s autonomy to the wind. Partisan politics began to play a larger role in the selection of members of PDVSA’s board of directors. In September 1983, Ravard was forced out as head of PDVSA and replaced by Humberto Calderón Berti, who as minister of energy had spearheaded the effort to bind the oil giant closer to the central government. The rapid politicization of PDVSA drew criticism both at home and abroad and cost the government credibility as well as its good credit rating with foreign banks. The unceremonious firing of the highly respected Ravard was condemned by both candidates for the December presidential election and was reversed by the new administration the following February.

By historical standards, the 1983 electoral campaign was a dull affair. Enjoying a substantial lead in opinion polls from the start, AD’s Jaime Lusinchi coasted to an easy victory over former president Caldera, who was burdened with both the miserable record of the outgoing COPEI administration and the undisguised hostility of his fellow copeyano, President Herrera. Lusinchi, a physician with no previous administrative experience, ran a campaign that focused on the failings of the Herrera administration, and won the contest on December 4 with 56.8 percent of the valid vote, the highest percentage gained by a candidate since the dawn of the democratic era in 1958. Caldera gained 34.9 percent, while the combined vote of the two candidates on the left totaled 7.4 percent.

Although the 1983 elections again demonstrated the predominance of the two major parties, the record of ineffective government (known locally as desgobierno), corruption, an increasing foreign debt, and a growing list of unaddressed socioeconomic problems all contributed to a widespread disillusionment with the political process among the electorate. After twenty-five years of gradual consolidation of democracy in Venezuela, doubts had emerged as to the future stability of the much-cherished democratic political process that had proven so elusive before 1958.

Pérez was reelected to a nonconsecutive term in 1988 and launched an unpopular austerity program. Military officers staged two unsuccessful coup attempts in 1992, while the following year Congress impeached Pérez on corruption charges. President Rafael Caldera Rodríguez was elected in December 1993 to face the 1994 collapse of half of the country’s banking sector, falling oil prices, foreign debt repayment, and inflation. In 1997, the government announced an expansion of gold and diamond mining to reduce reliance on oil.

Leftist president Hugo Rafael Chávez Frías took office in 1999, pledging political and economic reforms to give the poor a greater share of the country’s oil wealth. A constituent assembly was formed to rewrite the constitution in July 1999, followed by the creation of a constitutional assembly made up of Chavez’s allies that replaced the democratically elected Congress. Chavez’s assumption of greater power prompted charges that he is establishing a left-wing dictatorship. Chavez was reelected to a six-year term in July 2000. Troops were called in to quell serious protests over the election in several cities. In 2000 Chavez visited other OPEC countries, becoming the first foreign head of state to visit Iraq since the 1991 Gulf War. He is close to President Fidel Castro of Cuba, which receives Venezuelan oil at reduced prices.

In December 2001, business and labor organizations held a work stoppage to protest Chavez’s increasingly authoritarian government. In April 2002, tensions reached a boiling point as workers reduced oil production to protest Chavez’s
policies. Following a massive anti-Chavez demonstration during which 12 people were killed, a coalition of business and military leaders forced Chavez from power. But international criticism of the coup, especially in Latin America, and an outpouring of support from the president’s followers returned Chavez to power just two days later. After the coup, Chavez remained highly popular among the poor, despite the desperate state of the economy. Venezuelan labor unions, business organizations, the media, and a good part of the military remained substantially less enchanted.

Beginning in early December 2002, a general strike was called by business and labor leaders. By January 2003 it had virtually brought the economy, including the oil industry, to a halt. Strike leaders pledged to continue until Chavez resigned or agreed to early elections. But in February 2003, after nine weeks, the strikers conceded defeat. In August 2003, a petition with 3.2 million signatures was delivered to the country’s election commission, demanding a recall referendum on Chavez. The Chavez government challenged the referendum process rigorously, and petitions submitted in September 2003 and February 2004 were rejected as invalid. The electoral board finally accepted a petition in June 2004 and scheduled the referendum for August 15. Chavez, who had been shoring up his standing with the Venezuelan poor during the delays, won the referendum with an overwhelming 58% of the vote. The opposition alleged fraud, but international observers confirmed that there had been no irregularities. Chavez’s hand was
clearly strengthened, and by the spring of 2005, his popularity rating reached 70%, due in large part to his social spending programs. In December 2005 parliamentary elections, Chávez’s Fifth Republic Movement won 114 of 167 seats, and the remaining seats were won by his allies. The opposition boycotted the election, maintaining they could not trust the pro-Chavez National Electoral
Council. President Chávez won reelection in December 2006 with 63% of the vote.


Uruguay National History

In contrast to most Latin American countries, no significant vestiges of civilizations existing prior to the arrival of European settlers were found in the territory of present-day Uruguay. Lithic remains dating back 10,000 years have been found in the north of the country. They belonged to the Catalan and Cuareim cultures, whose members were presumably hunters and gatherers.

Other peoples arrived in the region 4,000 years ago. They belonged to two groups, the Charrúa and the Tupí-Guaraní, classified according to the linguistic family to which they belonged. Neither group evolved past the middle or upper
Paleolithic level, which is characterized by an economy based on hunting, fishing, and gathering. Other, lesser indigenous groups in Uruguay included the Yaro, Chaná, and Bohane. Presumably, the Chaná reached lower Neolithic levels with agriculture and ceramics.

In the early sixteenth century, Spanish seamen searched for the strait linking the Atlantic and the Pacific oceans. Juan Díaz de Solís entered the Río de la Plata by mistake in 1516 and thus discovered the region. Charrúa Indians allegedly attacked the ship as soon as it arrived and killed everyone in the party except for one boy (who was rescued a dozen years later by Sebastian Cabot, an Englishman in the service of Spain). Although historians currently believe that Díaz de Solís was actually killed by the Guaraní, the "Charrúa legend" has survived, and Uruguay has found in it a mythical past of bravery and
rebellion in the face of oppression. The fierce Charrúa would plague the Spanish settlers for the next 300 years.

In 1520 the Portuguese captain Ferdinand Magellan cast anchor in a bay of the Río de la Plata at the site that would become Montevideo. Other expeditions reconnoitered the territory and its rivers. It was not until 1603 that Hernando Arias de Saavedra, the first Spanish governor of the Río de la Plata region, discovered the rich pastures and introduced the first cattle and horses. Early colonizers were disappointed to find no gold or silver, but well-irrigated pastures in the area contributed to the quick reproduction of cattle–a different kind of wealth. English and Portuguese inhabitants of the region, however, initiated an indiscriminate slaughter of cattle to obtain leather.

During the sixteenth and early seventeenth centuries, the Charrúas learned the art of horsemanship from the Spaniards in adjacent areas, strengthening their ability to resist subjugation. The Indians were eventually subdued by the large influx of Argentines and Brazilians pursuing the herds of cattle and horses. Never exceeding 10,000 in number in eighteenth century Uruguay, the Indians also lacked any economic significance to the Europeans because they usually did not produce for trade. As a result of genocide, imported disease, and even intermarriage, the number of Indians rapidly diminished, and by 1850 the pureblooded Indian had virtually ceased to exist.

In 1680 the Portuguese, seeking to expand Brazil’s frontier, founded Colonia del Sacramento on the Río de la Plata, across from Buenos Aires. Forty years later, the Spanish monarch ordered the construction of Fuerte de San José, a military fort at present-day Montevideo, to resist this expansion. With the founding of San Felipe de Montevideo at this site in 1726, Montevideo became the port and station of the Spanish fleet in the South Atlantic. The new settlement included families from Buenos Aires and the Canary Islands to whom the Spanish crown distributed plots and farms and subsequently large haciendas in the interior. Authorities were appointed, and a cabildo (town council) was formed.

Montevideo was on a bay with a natural harbor suitable for large oceangoing vessels, and this geographic advantage over Buenos Aires was at the base of the future rivalry between the two cities. The establishment of the Viceroyalty of the Río de la Plata in 1776, with Buenos Aires as its capital, aggravated this rivalry.  Montevideo was authorized to trade directly with Spain instead of through Buenos Aires.

Montevideo’s role as a commercial center was bolstered when salted beef began to be used to feed ship crews and later slaves in Cuba. The city’s commercial activity was expanded by the introduction of the slave trade to the southern part of the continent because Montevideo was a major port of entry for slaves. Thousands of slaves were brought into Uruguay between the mid-eighteenth and the early nineteenth century, but the number was relatively low because the major economic activity–livestock raising–was not labor intensive and because labor requirements were met by increasing immigration from Europe.

Throughout the eighteenth century, new settlements were established to consolidate the occupation of the territory, which constituted a natural buffer region separating Spanish from Portuguese possessions. To combat smuggling, protect ranchers, and contain Indians, the Spanish formed a rural patrol force called the Blandengues Corps.

In late 1806, Britain, at war with Spain, invaded the Río de la Plata Estuary to avenge Spain’s recapture of Buenos Aires from the British. The 10,000-member British force captured Montevideo in early 1807 and occupied it until that July,
when it left and moved against Buenos Aires, where it was soundly defeated.

In 1808 Spanish prestige was weakened when Napoleon invaded Spain and installed his brother Joseph on the throne. The cabildo of Montevideo, however, created an autonomous junta that remained nominally loyal to Ferdinand VII as the king of Spain. Montevideo’s military commander, Javier Elío, eventually persuaded the Spanish central junta to accept his control at Montevideo as independent of Buenos Aires. In 1810 criollos (those born in America of Spanish parents) from Buenos Aires took the reins of government in that city and unseated the Spanish viceroy. The population of the Banda Oriental was politically divided. The countryside favored recognizing Elío’s junta in Buenos Aires; the authorities in Montevideo wanted to retain a nominal
allegiance to the Spanish king.

In February 1811, when Elío prepared to take the offensive against Buenos Aires, the interior of the Banda Oriental, led by José Gervasio Artigas, captain of the Blandengues Corps, rose in opposition to Elío, and Artigas offered his services to Buenos Aires. Artigas, then forty-six years old, was the scion of a family that had settled in Montevideo in 1726. Influenced by federalism, Artigas had been dissatisfied with the administration of the former colonial government in Buenos Aires, particularly with its discrimination against Montevideo in commercial affairs. Artigas’s army won its most important victory against the Spaniards in the Battle of Las Piedras on May 18, 1811. He then besieged Montevideo from May to October 1811. Elío saved Montevideo only by inviting in the Portuguese forces from Brazil, which poured into Uruguay and dominated most of the country by July 1811. That October Elío concluded a peace treaty with Buenos Aires that provided for the lifting of the siege of Montevideo and the withdrawal of all the troops of Artigas, Portugal, and Spain from Uruguay. Artigas, his 3,000 troops, and 13,000 civilians evacuated Salto, on the Río Uruguay, and crossed the river to the Argentine town of Ayuí, where they camped for several months. This trek is considered the first step in the formation of the Uruguayan nation. The Portuguese and Spanish troops did not withdraw until 1812.

At the beginning of 1813, after Artigas had returned to the Banda Oriental, having emerged as a champion of federalism against the unitary centralism of Buenos Aires, the new government in Buenos Aires convened a constituent assembly. The Banda Oriental’s delegates to elect assembly representatives gathered and, under instructions issued by Artigas, proposed a series of political directives. Later known as the "Instructions of the Year Thirteen," these directives included the declaration of the colonies’ independence and the formation of a confederation of the provinces (the United Provinces of the Río de a Plata) from the former Viceroyalty of the Río de la Plata (dissolved in 1810 when independence was declared). This formula, inspired by the Constitution of the United States, would have guaranteed political and economic autonomy for each area, particularly that of the Banda Oriental with respect to Buenos Aires. However, the assembly refused to seat the delegates from the Banda Oriental, and Buenos Aires pursued a system based on unitary centralism. Consequently, Artigas broke with Buenos Aires and again besieged Montevideo.

Artigas lifted his siege of Montevideo at the beginning of 1814, but warfare continued among the Uruguayans, Spaniards, and Argentines. In June 1814, Montevideo surrendered to the troops of Buenos Aires. Artigas controlled the countryside, however, and his army retook the city in early 1815. Once the troops from Buenos Aires had withdrawn, the Banda Oriental appointed its first autonomous government. Artigas established the administrative center in the northwest of the country, where in 1815 he organized the Federal League under his protection. It consisted of six provinces–including four present-day Argentine provinces–demarcated by the Río Paraná, Río Uruguay, and Río de la Plata–with Montevideo as the overseas port. The basis for political union was customs unification and free internal trade. To regulate external trade, the protectionist Customs Regulations Act (1815) was adopted. That same year, Artigas also attempted to implement agrarian reform in the Banda Oriental by distributing land confiscated from his enemies to supporters of the revolution, including Indians and mestizos (people of mixed Indian and European ancestry).

In 1816 a force of 10,000 Portuguese troops invaded the Banda Oriental from Brazil and took Montevideo in January 1817. After nearly four more years of struggle, a defeated Artigas fled into exile in Paraguay in September 1820 and remained there until his death in 1850. After routing Artigas, Portuguese Brazil annexed the Banda Oriental as its southernmost Cisplatine Province.

Following its independence from Portugal in 1822, Brazil was confronted by unrest in the Banda Oriental. On April 19, 1825, a group of Uruguayan revolutionaries (the famous Thirty-Three Heroes) led by Juan Antonio Lavalleja, reinforced by Argentine troops, crossed the Río de la Plata from Buenos Aires and organized an insurrection that succeeded in gaining control over the countryside. On August 25, 1825, in a town in the liberated area, representatives from the Banda Oriental declared the territory’s independence from Brazil and its incorporation into the United Provinces of Río de la Plata. Brazil declared war on them. The ensuing conflict lasted from December 1825 to August 1828.

In 1828 Lord John Ponsonby, envoy of the British Foreign Office, proposed making the Banda Oriental an independent state. Britain was anxious to create a buffer state between Argentina and Brazil to ensure its trade interests in the
region. With British mediation, Brazil and Argentina signed the Treaty of Montevideo at Rio de Janeiro on August 27, 1828, whereby Argentina and Brazil renounced their claims to the territories that would become integral parts of the newly independent state on October 4. However, Argentina and Brazil retained the right to intervene in the event of a civil war and to approve the constitution of the new nation.

Argentine and Brazilian troops began their withdrawal, while a constituent assembly drew up the constitution of the new country, created its flag and coat of arms, and enacted legislation. The constitution was approved officially on July 18, 1830, after having been ratified by Argentina and Brazil. It established a representative unitary republic–the República Oriental del Uruguay (Oriental Republic of Uruguay), the word oriental (eastern) representing the legacy of the original designation of the territory as the Banda Oriental. The constitution restricted voting, made Roman Catholicism the official religion, and divided the territory into nine administrative jurisdictions known as departments.

At the time of independence, Uruguay had an estimated population of just under 75,000, of which less than 20 percent resided in Montevideo, the capital. Indeed, the new nation was born with most of its population scattered throughout the countryside. Political power centered on local leaders, or caudillos, who attracted followers because of their power, bravery, or wealth. There were three major caudillos at the time of independence: Rivera, Oribe, and Lavalleja. The first two were later elected presidents, Rivera from 1830 to 1835 and from 1838 to 1843 and Oribe from 1835 to 1838. Their rivalry, which turned violent in 1836, led to the formation of the first political groups, known as Colorados and Blancos because of the red and white hatbands, respectively, worn during armed clashes beginning in 1836. The groups would subsequently become the Colorado Party and the National Party (the Blancos).

During this period, the economy came to depend increasingly on cattle, on the proliferation of saladeros (meat-salting establishments), and on the export of salted beef and leather. But political instability was the most significant feature of this period. Caudillos and their followers were mobilized because of disputes arising from deficient land demarcation between absentee landowners and squatters and between rightful owners and Artigas’s followers who were granted land seized by Artigas. Rivera remained in the countryside for most of his presidency, during which Lavalleja organized three unsuccessful rebellions. Rivera was followed as president by Oribe, one of the ThirtyThree Heroes, but they began to quarrel after Oribe permitted Lavalleja and his followers to return from Brazil. In 1836 Rivera initiated a revolutionary movement against President Oribe, but Oribe, aided by Argentine troops, defeated Rivera’s forces at the Battle of Carpintería on September 19, 1836. In June 1838, however, the Colorados, led by Rivera, defeated Oribe’s Blanco forces; Oribe then went into exile in Buenos Aires.

Internationally, the new territory was at the mercy of the influence of its neighbors. This resulted from its lack of clearly defined borders, as well as from Rivera’s ties with Brazil and Oribe’s with Argentina.

Rivera again became the elected president in March 1838. In 1839 President Rivera, with the support of the French and of Argentine émigrés, issued a declaration of war against Argentina’s dictator, Juan Manuel de Rosas, and drove Rosas’s forces from Uruguay. The French, however, reached an agreement with Rosas and withdrew their troops from the Río de la Plata region in 1840, leaving Montevideo vulnerable to the forces of Oribe and his Argentina. For three years, the locus of the struggle was on Argentine territory. Oribe and the Blancos allied themselves with Argentina’s federalists, while Rivera and the Colorados sided with Argentina’s rival unitary forces, who favored the centralization of the Argentine state. In 1842 Oribe defeated Rivera and later, on February 16, 1843, laid siege to Montevideo, then governed by the Colorados.

Oribe’s siege of Montevideo marked the beginning of the Great War (Guerra Grande, 1843-52). The Great War centered on the nineyear-long siege of Montevideo, described by Alexandre Dumas as a "new Troy," although the city
itself suffered relatively little from the war. Britain had saved Montevideo at the outset by allowing the city to receive supplies. During the Great War, there were two governments in Uruguay: the Colorados at Montevideo (the so-called government of the "defense") and the Blancos at Cerrito (Little Hill), a promontory near Montevideo.

The intervention first of France (1838-42) and then of Britain and France (1843-50) transformed the conflict into an international war. First, British and French naval forces temporarily blockaded the port of Buenos Aires in December 1845. Then, the British and French fleets protected Montevideo at sea. French and Italian legionnaires (the latter led by Giuseppe Garibaldi) participated, along with the Colorados, in the defense of the city.

Historians believe that the reason for the French and British intervention in the conflict was to restore normalcy to commerce in the region and to ensure free navigation along the Río Paraná and Río Uruguay, thus guaranteeing access
to provincial markets without Buenos Aires’s interference. Their efforts were ineffective, however, and by 1849 the two European powers had tired of the war. In 1850 both withdrew after signing a treaty that represented a triumph for Rosas of Argentina.

It appeared that Montevideo would finally fall. But an uprising against Rosas led by Justo José de Urquiza, governor of Argentina’s Entre Ríos Province, with the assistance of a small Uruguayan force, changed the situation. They defeated
Oribe in 1851, thereby ending the armed conflict in Uruguayan territory and leaving the Colorados in full control of the country. Brazil then intervened in Uruguay in May 1851 on behalf of the besieged Colorados, supporting them with money and naval forces. With Rosas’s fall from power in Argentina in February 1852, the siege of Montevideo was lifted by Urquiza’s pro-Colorado forces.

Montevideo rewarded Brazil’s vital financial and military support by signing five treaties in 1851 that provided for perpetual alliance between the two countries, confirming Brazil’s right to intervene in Uruguay’s internal affairs; extradition of runaway slaves and criminals from Uruguay (during the war, both the Blancos and the Colorados had abolished slavery in Uruguay in order to mobilize the former slaves to reinforce their respective military forces); joint navigation on the Río Uruguay and its tributaries; tax exemption on cattle and salted meat exports (the cattle industry was devastated by the war); acknowledgment of debt to Brazil for aid against the Blancos; and Brazil’s commitment for granting an additional loan. Borders were also recognized,
whereby Uruguay renounced its territorial claims north of the Río Cuareim (thereby reducing its boundaries to about 176,000 kilometers) and recognized Brazil’s exclusive right of navigation in the Laguna Merín and the Río Yaguarón, the natural border between the countries.

After Rosas went into exile in Britain in 1852, internal strife in Argentina continued until 1861, when the country was finally unified. Uruguay was affected because each Uruguayan faction expressed solidarity with various contenders in
Argentina or was, in turn, supported by them.

Brazil’s intervention in Uruguay was intensified both because of Argentina’s temporary weakness and because of Brazil’s desire to expand its frontiers to the Río de la Plata. Brazil intervened militarily in Uruguay as often as it deemed necessary, in accordance with the 1851 treaties. In 1865 the Triple Alliance — formed by the emperor of Brazil, the president of Argentina, and General Venancio Flores (1854-55, 1865-66), the Uruguayan head of government whom they both had helped to gain power — declared war on Paraguay. Francisco Solano López, Paraguay’s megalomaniac dictator, had been verbally rattling his saber against
Argentina and Brazil. The conflict lasted five years (1865-70) and ended with the invasion of Paraguay and its defeat by the armies of the three countries. Montevideo, which was used as a supply station by the Brazilian navy, experienced a period of prosperity and relative calm during the war.

After the war with Paraguay, the balance of power was restored between Argentina and Brazil, the guarantors of Uruguayan independence. Thus, Uruguay was able to internalize its political struggles, an indispensable condition for consolidation of its independence.

After the Great War, immigration increased, primarily from Spain and Italy. Brazilians and Britons also flocked to Uruguay to snap up hundreds of estancias (ranches). The proportion of the immigrant population in Uruguay rose from 48 percent in 1860 to 68 percent in 1868. Many were Basques of Spanish or French nationality. In the 1870s, another 100,000 Europeans settled in Uruguay. By 1879 the total population of the country was over 438,000. Montevideo, where approximately one-fourth of the population lived, expanded and improved its services. Gas services were initiated in 1853, the first bank in 1857, sewage works in 1860, a telegraph in 1866, railroads to the interior in 1869, and running water in 1871. The creation in 1870 of the typographers’
union, the first permanent workers’ organization, was soon followed by the establishment of other unions. Montevideo remained mainly a commercial center. Thanks to its natural harbor, it was able to serve as a trade center for goods moving to and from Argentina, Brazil, and Paraguay. The cities of Paysandú and Salto, on the Río Uruguay, complemented this role.

After the Great War, livestock raising recovered and prospered. Improvements in breeding techniques and fencing were introduced, and between 1860 and 1868 sheep breeding, stimulated by European demand, expanded from 3 million head to 17 million head. A group of modernizing hacendados (landowners), a large number of whom were foreigners, was responsible for this change. In 1871 they established the Rural Association (Asociación Rural) to improve livestock-raising techniques. The association developed a reputation for defending rural traditions and exerting considerable influence on policy makers.

Meat-salting enterprises were the main stimulus for the industrialization of livestock products. In 1865 the Liebig Meat Extract Company of London opened a meat-extract factory at Fray Bentos on the Río Uruguay to supply the European
armies, thus initiating diversification in the sector. This type of meat processing, however, was dependent on cheap cattle. As the price of cattle increased, the meat-extract industry declined, along with the saladeros, which prepared salted and sun-dried meat. Cuba and Brazil were the main purchasers of salted meat; Europe, of meat extract; and the United States and Europe, of leather and wool.

Until 1865 the prevailing political idea was fusion (fusión), meaning unity among Uruguayans, the putting aside of the colors and banners that divided them in the past. This idea inspired the administrations of Juan Francisco Giró (1852-53), Gabriel Pereira (1856-60), and Bernardo Berro (1860-64). Hatred and rivalry flared up, however, preventing harmony. Giró was forced to resign. Pereira suppressed almost six coup attempts, and Berro, the last Blanco president until 1958, confronted a revolution led by Colorado Venancio Flores, who took power with the support of Brazil and Buenos Aires. However, General Flores, who had been commanding the armed forces instead of governing the country since that March, was assassinated in Montevideo in 1868,
on the same day that Berro was assassinated.

During the period preceding the Great War, the long conflict between church and state also began. It involved Freemasons in government circles and resulted in the expulsion of the Jesuits in 1859 (they were allowed to return in 1865) and the secularization of cemeteries in 1861. Until then the church had almost exclusive control over the cemeteries.

The constitutional government of General Lorenzo Batlle y Grau (1868-72) was forced to suppress an insurrection led by the National Party. After two years of struggle, a peace agreement was signed in 1872 that gave the Blancos a share in the emoluments and functions of government, through control of four of the country’s departments. This establishment of the policy of coparticipation (coparticipación) represented the search for a new formula of compromise, based on the coexistence of the party in power and the party in opposition.

A permanent break in the cycle of near anarchy and repression was anticipated when José Ellauri (1872-75) was elected president. His administration was characterized by the predominance of university men over caudillos. A number of them, known as the "Girondists of 73" were sent to the General Assembly. Unfortunately, however, the ensuing economic crisis and the weakness of civil power paved the way for a period of militarism.

Between 1875 and 1886, political parties–as represented by the caudillo and the university sectors–were in decline, and the military became the center of power. A transition period (1886-90) followed, during which politicians began recovering lost ground, and there was some civilian participation in government. Nevertheless, political parties during this period were not parties in the modern sense of the term. Nor, however, was the army a professional institution despite its successful foreign and domestic campaigns.

Because of serious disturbances, Ellauri was forced to resign in 1875. His successor, José Pedro Varela (1875-76), curtailed liberties, arrested opposition leaders and deported the most notable among them to Cuba, and successfully
quelled an armed rebellion. At the beginning of 1876, Colonel Lorenzo Latorre (1876-80) assumed power; he was appointed constitutional president in 1879, but the following year he resigned, after declaring that Uruguayans were "ungovernable," and moved to Argentina.

Colonel General Máximo Santos (1882-86) was appointed president in 1882 by a General Assembly elected under his pressure, and his political entourage named him leader of the Colorado Party. In 1886 Santos suppressed an insurrection led by the opposition, but after an attempt against his life, he too resigned and went to live in Europe.

During this authoritarian period (1875-86), the government took steps toward the organization of the country as a modern state and encouraged its economic and social transformation. Pressure groups, particularly businessmen, hacendados, and industrialists, were organized and had a strong influence on government, as demonstrated by their support of numerous measures taken by the state.

In the international realm, the country improved its ties with Britain. Loans increased significantly after the 1870s, when the first one was granted. In 1876 British investors acquired the national railroad company, the North Tramway and
Railway Company. They later dominated construction of railroads and continued their policy of ensuring control over, and concessions to, some essential services in Montevideo, such as gas (1872) and running water (1879). Uruguay’s adoption of the gold standard facilitated commercial transactions between the two countries.

Under Latorre’s administration, order was restored in the countryside. His government vigorously repressed delinquency and unemployment (those without jobs were considered "vagrants") to protect farmers and ranchers. Fencing of the countryside stimulated modernization of the system. Barbed wired was such an indispensable element for livestock improvement and for the establishment of accurate property boundaries that an 1875 law exempted imports of barbed wire from customs duties. This measure was accompanied by the approval of the Rural Code (1875), drawn up with the participation of the Rural Association. The code ensured land and livestock ownership and thus social order.

The government adopted a number of measures to promote national industrial development. Most important was a series of customs laws in 1875, 1886, and 1888 raising import duties on products that could be manufactured in the country,
thus protecting indigenous industry. The Latorre government also improved the means of transportation and communications, giving tax and other concessions for the construction of railroads, whose network doubled in size in ten years. The state also reorganized and took over the postal service and connected all departmental capitals by telegraph.

Education reform authored by Varela and implemented in 1877 under the Latorre administration established free compulsory primary education. Reform also reached the University of the Republic (also known as the University of Montevideo–established in 1849 and the country’s only university until 1984), where the medical and the mathematics faculties were created in 1876 and 1877, respectively.

The secularization process also continued during this period. Under the pretext of needing to deal with the chaos in parochial archives, Latorre created the Civil Register (1876), which transferred to the state the registration of
births, deaths, and marriages. Under the Santos administration, the Law of Mandatory Civil Marriage (1885) established that only marriages performed in accordance with this law would be considered valid.

General Máximo Tajes (1886-90), who was appointed president by the General Assembly, tried to restore the constitution and remove the military chiefs who had supported Santos. During the Tajes administration, civilian political
activity resumed. At the end of the Tajes term, Julio Herrera y Obes was elected president (1890-94). Herrera y Obes belonged to the Colorado Party, had been an adviser to his predecessor, and was instrumental in the transition process that displaced the military from power. He selected his aides from among a small group of friends and was convinced that the executive had to play a leading role in elections and the makeup of the General Assembly. This policy, called the "directing influence," was resisted by a sector of the Colorado Party led by José Batlle y Ordóñez, son of the former president, Lorenzo Batlle y Grau.

In 1894, after much internal debate, the General Assembly appointed Juan Idiarte Borda (1894-97), a member of the inner circle of the departing administration, as the new president. But Herrera y Obes and Borda had succeeded in irritating the National Party, when the latter was granted control of only three of the four departments agreed on in the 1872 pact between the two rival parties.

In 1897 discontent led an armed uprising by Blanco forces. The insurrection was led by Aparicio Saravia, a caudillo from a ranching family originally from the Brazilian state of Rio Grande do Sul who was involved in military and political affairs on both sides of the border. The Saravia revolution raised the flag of electoral guarantees, the secret ballot, and proportional representation. Military action had not yet decided the situation when President Borda was assassinated. The president of the Senate (the upper house of the General Assembly), Juan Lindolfo Cuestas (1897-1903), served as provisional president until 1899, when he was elected constitutional president. Cuestas quickly signed a peace agreement with the National Party, giving it control over six of Uruguay’s departments and promising all citizens their political rights. An anticlericalist, Cuestas placed restrictions on the exercise of Roman Catholicism and tried to prevent admission to the country of friars and priests.

A majority of the members of the General Assembly, who had ties to the Herrera y Obes faction, submitted another presidential candidate in 1898 for the scheduled election. Cuestas, unwilling to give up power, led a coup d’état. He included members of the opposition in his government in a rudimentary attempt at proportional representation. Late that same year, the Cuestas regime promulgated the Permanent Civil Register Law, dealing with electoral matters, and the Elections Law, formally establishing the principle of minority representation. Through this legislation, the opposition gained access to one-third of the seats if it obtained one-fourth of the total votes.

The political consensus achieved by Cuestas resulted in the unanimous support by the General Assembly for his candidacy and appointment as constitutional president in 1899. In fact, however, political peace was an illusion. There were, in effect, two countries, one Blanco and one Colorado. President Cuestas had to send an envoy to caudillo Saravia, near the border with Brazil, in order to coordinate government action. This precarious balance would break down in 1903 when Batlle y Ordóñez took power.

In spite of political and economic fluctuations, the flow of immigrants continued. From the 1870s to the 1910s, Uruguay’s population doubled to just over 1 million inhabitants, 30 percent of whom lived in Montevideo. Montevideo also continued to experience modernization, including the installation of a telephone system (1878) and public lighting (1886). At the same time, the euphoria and speculation of the 1870s and 1880s saw a proliferation of banks and corporations and a stimulation of land sales, as well as the construction of multifamily dwellings. The economic crisis of 1890 was a traumatic event for Uruguayan society.
Bankruptcies followed one after another, and the banking system saw the collapse of a key banking institution, created by a Spanish financier, which had served the needs of the state and promoted production and construction.

The ruling elite felt the impact, and some of its more progressive sectors directed their efforts to the creation of a development model for the country. They were aware of both the need to encourage agricultural and industrial development and the need to redefine the limits of the state. The growing importance of British investment had stimulated the rise of economic nationalism and had, by 1898, provoked more active state intervention.

State intervention in the economy continued in 1896 when the electric utility company was transferred to the municipality of Montevideo and the Bank of Uruguay (Banco de la República Oriental del Uruguay–BROU) was created as an
autonomous entity. Moreover, under Cuestas’s administration, the state undertook construction of the modern harbor of Montevideo, in reaction to the new facility in Buenos Aires, which had absorbed part of the river traffic with Paraguay and the Argentine littoral. Nevertheless, the nationalization of economic activities and the creation of state enterprises did not fully gather momentum until the administration of Batlle y Ordóñez. The election of José Batlle y Ordóñez as the first Uruguayan president in the twentieth century (1903-07, 1911-15) marked the beginning of a period of extraordinary change in the country. The son of former President Lorenzo Batlle y Grau, Batlle y Ordóñez was a member of the Colorado Party, founder of the newspaper El Día (in 1886), and an active opponent of militarism.

The dominant political event during the first administration of Batlle y Ordóñez was another National Party insurrection in 1904, led by Saravia. After nine months of fierce fighting and Saravia’s death, it ended with the Treaty of
Aceguá (1904). The civil war triumph of Batlle y Ordóñez and the Colorados meant the end of the coparticipation politics that began in 1872, the political and administrative unification of the country, the consolidation of the state, and, most profoundly, the end of the cycle of civil wars that had persisted throughout the nineteenth century.

The period’s most significant economic change occurred in meat processing. In 1905 the first shipment of frozen beef, produced by a refrigeration plant (frigorífico) established by local investors two years before, was exported to London in a refrigerated ship. Uruguay now entered the age of refrigeration, making possible the diversification of one of its main export items and giving the country access to new markets. With the inauguration of the modernized port of Montevideo in 1909, Uruguay could compete with Buenos Aires as a regional trade center.

Claudio Williman (1907-11), the president’s handpicked candidate, succeeded Batlle y Ordóñez, who sailed for Europe, where he spent the next four years studying governmental systems. In some respects, Williman’s administration was considered more conservative than that of Batlle y Ordóñez, although Batllists maintained their political influence. Williman tried to ensure political peace by enacting electoral laws in 1907 and 1910 that increased political representation of minority opposition parties. Williman also ensured peace with Uruguay’s northern neighbor by signing a border treaty with Brazil, thereby putting an end to pending litigation and disputes dating back half a century.

The National Party, disappointed with Williman’s electoral laws and with the announcement that Batlle y Ordóñez would once again run for president, did not participate in the elections held in 1910. This helped foster the emergence of two new political parties: the Catholic-oriented Civic Union of Uruguay (Unión Cívica del Uruguay–UCU) and the Marxist-inspired Socialist Party of Uruguay (Partido Socialista del Uruguay–PSU). Church and state relations also underwent changes. The government passed a divorce law in 1907, and in 1909 it eliminated religious education in public schools.

In 1911 Batlle y Ordóñez was reelected to the presidency. A non-Marxist social democrat, he set about modernizing the country, taking into account the aspirations of emerging social groups, including industrialists, workers, and the middle class. Writing and promoting progressive social legislation, Batlle y Ordóñez fought for the eight-hour workday (enacted in 1915 under the administration of his successor), unemployment compensation (1914), and numerous pieces of social legislation. Some of these would be approved years later, such as retirement pensions (1919) and occupational safety (1920).

Batlle y Ordóñez firmly believed that the principal public services had to be in the hands of the state to avoid foreign remittances that weakened the balance of payments and to facilitate domestic capital accumulation. In a relatively short period of time, his administration established a significant number of autonomous entities. In 1911 it nationalized BROU, a savings and loan institution that monopolized the printing of money. In 1912 the government created the State Electric Power Company, monopolizing electric power generation and distribution in the country; it nationalized the Mortgage Bank of Uruguay; and it founded three industrial institutes for geology and drilling (coal and hydrocarbon explorations), industrial chemistry, and fisheries. In 1914 it purchased the North Tramway and Railway Company, later to become the State Railways Administration.

Attempts to change the agrarian productive structure were not as successful. Influenced by United States economist Henry George, Batlle y Ordóñez thought that he could combat extensive landholdings by applying a progressive tax on land use and a surcharge on inheritance taxes. The agrarian reform plan also contemplated promoting colonization and farming. Very little was accomplished in this regard, however, partly because of the opposition of large landowners who created a pressure group, the Rural Federation (Federación Rural), to fight Batlle y Ordóñez’s policies. The government did make one important accomplishment with regard to agriculture, namely, the creation of a series of government institutes dedicated to technological research and development in the fields of livestock raising, dairying, horticulture, forestation, seeds, and fodder.

The government adopted a protectionist policy for industry, imposing tariffs on foreign products, favoring machinery and raw materials imports, and granting exclusive licensing privileges to those who started a new industry. Indigenous companies sprang up, but foreign capital–especially from the United States and Britain–also took advantage of the legislation and came to control the meat industry. The growth of the frigorífico meat-processing industry also stimulated the interbreeding of livestock, Uruguay’s main source of wealth.

Education policy was designed to take into account the continuous inflow of European migrants. Although it fluctuated, immigration was significant until 1930. Furthermore, education was a key to mobility for the middle classes. The
state actively sought to expand education to the greatest number of people by approving free high school education in 1916 and creating departmental high schools throughout the country in 1912. A "feminine section" was created to foster mass attendance of women at the University of the Republic, where the number of departments continued to expand.

The secularization process, initiated during the second half of the nineteenth century, was accelerated by Batlle y Ordóñez’s anticlericalism. Uruguay banned crucifixes in state hospitals by 1906 and eliminated references to God and the Gospel in public oaths in 1907. Divorce laws caused a confrontation between church and state. In addition to the 1907 and 1910 laws
(divorce with cause and by mutual agreement), a law was passed in 1912 allowing women to file for divorce without a specific cause, simply because they wanted to.

Batlle y Ordóñez also proposed the institutional reorganization of government in 1913. Essentially, he wanted to replace the presidency with a nine-member collegial executive (colegiado) inspired by the Swiss model. This proposal caused an immediate split in the Colorado Party. One sector opposed the political reform and also feared some of Batlle y Ordóñez’s economic and social changes. Subsequently, these dissidents, led by Carlos Manini Ríos, founded a faction known as the Colorado Party-General Rivera (Riverism). The National Party, under Luis Alberto de Herrera, the leading opposition figure from 1920 to his death in 1959, did not back Batlle y Ordóñez’s proposal either.

Feliciano Viera (1915-19), a Colorado who was more conservative than Batlle y Ordóñez, became president at the time of the debate between "collegialists" and "anticollegialists." During his mandate, elections were held for a constituent assembly (July 30, 1916). The rules for this election enabled the National Party to ensure incorporation of many of the principles it advocated, such as the secret ballot, partial proportional representation, and universal male suffrage.

Batlle y Ordóñez and his political faction of the Colorados lost these first popular elections, but the Colorados continued to be the majority party, and the 1917 constitution, the country’s second, reflected many of the changes that had taken place under Batlle y Ordóñez. It separated church and state, expanded citizens’ rights, established the secret ballot and proportional representation, and banned the death penalty. It also created autonomous state enterprises in the areas of industry, education, and health. But in a bitter compromise for Batlle y Ordóñez, the executive was divided between the president, who appointed the ministers of foreign affairs, war, and interior, and the nine-member colegiado, the National Council of Administration (Consejo Nacional de Administración). The latter, which included representatives from the party that received the second highest number of votes, the Blancos, was placed in charge of the ministries dealing with economic, educational, and social policy.

President Viera, like many of Batlle y Ordóñez’s followers, interpreted the 1916 electoral defeat as a direct consequence of previous policy. He thus announced a halt to economic and social reforms. Some of the old projects as well as some new proposals were approved, however, such as restrictions on night work in 1918 and the creation in 1916 of a new autonomous entity, the Montevideo Port Authority, as known as the National Administration of Ports (Administración Nacional de Puertos– ANP). Workers’ strikes, however, were repressed severely. Finally, in 1919 Viera, in disagreement with Batlle y Ordóñez, founded a dissident Colorado Party faction known as Vierism.

The 1920s witnessed electoral struggles in which the various parties sought to consolidate the political peace achieved in 1904. The National Party participated actively in political life, and although the Colorado Party was dominant, its electoral advantage was slight. Relative electoral parity and the still recent memory of the last armed uprising compelled participants to preserve electoral purity and to improve the corresponding legislation. In 1924 the Electoral Court was created to prepare and control national elections. The 1917 constitution eliminated restrictions on male suffrage and required elections almost every year to renew the various governmental bodies.

Each political party was internally divided because of ideological, economic, and social differences. To the existing Colorado factions–Riverism and Vierism–were added the Colorado Party for Tradition (also known as Sosism), founded by Julio María Sosa in 1925, and the Advance Grouping (Agrupación Avanzar), founded by Julio César Grauert in 1929. Splinter groups of the National Party included the Radical Blanco Party, founded by Lorenzo Carnelli in 1924, and Social Democracy, founded by Carlos Quijano in 1928. The small PSU also split in 1920, and one of its factions formed the Communist Party of Uruguay (Partido Comunista del Uruguay–PCU). The parties were divided into "traditional" (Colorado Party and National Party) and "minor," or "ideological," parties (UCU, PSU, and PCU). The former, by means of a 1910 law that allowed a double simultaneous vote for a party and a faction of the party (sub-lema), became "federations" of parties with different agendas and were thus able to attract followers from all sectors of society.

These contradictions forced Batlle y Ordóñez to make electoral arrangements with his opponents within the Colorado Party to prevent the victory of the National Party. The resultant "politics of compromise" diluted his reformist
agenda. Baltasar Brum (1919-23), one of Batlle y Ordóñez’s followers and a former foreign minister, was succeeded as president by a "neutral" Colorado, José Serrato (1923-27), who turned over the office to a Riverist, Juan Campisteguy (1927-31).

It was difficult for adherents of Batllism to implement their agenda despite having the occasional support of other political sectors. Nevertheless, additional social reforms were enacted. In 1920 compensation for accidents in the workplace and a six-day work week were made law. In 1923 a minimum rural wage was passed, although it was never enforced. A social security system was created in 1919 for public sector employees, and the program was extended to the private sector in 1928. Despite the reforms, a union movement, weak in numbers, was organized in several umbrella organizations: the Uruguayan Syndicalist Union, encompassing anarcho-syndicalists and communists, in 1923; and the communist General Confederation of Uruguayan Workers, in 1929.

The only state enterprise created during these years reflected the difficulties in expanding state control over industry because of opposition from the conservatives. Ranchers complained that foreign refrigeration plants, which had established quotas for shipments and for access of meat to the London market, did not pay a fair price for cattle. In 1928 the government created National Refrigerating (Frigorífico Nacional– Frigonal) as a ranchers’ cooperative supported by the state and governed by a board made up of representatives from the government, the Rural Association, and the Rural Federation.

Although the country had suffered the immediate consequences of the post-World War I crisis, a period of recovery had quickly followed. It was characterized by growing prosperity sustained mainly by United States loans. A continued increase in population accompanied economic prosperity. The 1920s saw the arrival of the last great wave of immigrants, consisting mainly of Syrians, Lebanese, and eastern Europeans. Between 1908 and 1930, Montevideo’s population doubled.

In 1930 Uruguay celebrated the centennial of the promulgation of its first constitution and won its first World Cup in soccer. Elections were held that year, the results of which were to presage difficulties, however. Batlle y Ordóñez died in 1929, leaving no successor for his political group. The Blanco leader, Herrera, was defeated by a wide margin of votes for the first time. The electoral balance between the parties had been broken. By a few votes, the conservative Colorado Manini, a Riverist leader and newspaper publisher, failed to become president.

Gabriel Terra (1931-38), a "heterodox" Batllist who had differed with Batlle y Ordóñez and who would soon distance himself from the latter’s sons and followers, became president in March 1931. For the first time, the Batllist wing
of the Colorados had a strong representation in the colegiado.

Terra’s inauguration coincided with the effects of the Great Depression and a worsening of Uruguay’s economic and social situation. Prices of agricultural products plunged. In 1932 Britain, traditionally the major purchaser of Uruguayan exports, began restricting purchases of meat. Uruguay’s currency was devalued, and unemployment grew rapidly.

Batllists tried to implement their program from the colegiado. In 1931 BROU was authorized to control purchases and sales of foreign exchange and to set exchange rates, a measure that initially jeopardized cattle ranchers, exporters, and private banks. In the face of foreign exchange scarcity, foreign companies were forced to suspend remittances abroad. Limits on imports were imposed to try to reduce the balance of payments deficit and to stimulate industrialization. Furthermore, attempts were made to reduce the fiscal deficit. At the same time, a political agreement known as the Pork Barrel Pact (Pacto del Chinchulín) between the Batllists and an emerging sector of the National Party opposing Herrera made possible the expansion of state control over industry. The pact resulted in the creation of the National Administration of Fuels, Alcohol, and Portland Cement (Administración Nacional de Combustibles, Alcohol, y Portland–ANCAP), a state enterprise with a monopoly over oil refining and alcohol production, and the power to begin producing portland cement. Unfortunately, it quickly became a source of patronage for the party faithful. The State Electric Power Company was granted a monopoly over the telephone system, becoming the State Electric Power and Telephone Company (Usinas Eléctricas y Teléfonos del Estado–UTE).

Social reform measures, such as the adoption of the forty-four-hour work week, and the growing economic crisis alarmed the most conservative sectors and affected the interests of large cattle ranchers, import merchants, foreign capital, and the population at large. The social climate became tense as a result of the lack of jobs. There were confrontations in which police and leftists died.

Terra distanced himself from his followers and began a campaign to reform the constitution and eliminate the colegiado, which was responsible for making economic and social policy and which Terra accused of inefficiency and lack of vision to overcome the crisis. He was supported by the National Economic Inspection Committee, which was created in 1929 and encompassed most business organizations. This committee proposed restricting statism, ending implementation of social legislation, and suspending the application of new taxes.

During the first months of 1933, when it became evident that Uruguay would have serious difficulties in paying the interest on its foreign debt, Terra obtained the support of Herrera and of Manini to organize a coup d’état. On March 31, 1933, Terra dissolved the General Assembly and the colegiado and governed by decree. Former President Brum (a Batllist) committed suicide one day after the fall of the liberal democratic regime. Another Batllist leader, Grauert, was assassinated. The Terra regime deported numerous opposition leaders and imposed press censorship.

In June 1933, elections were held for a constituent assembly that would be responsible for reforming the constitution. In 1934 the new constitution was submitted to a plebiscite, and although reelection of the president was unconstitutional, Terra was elected to a new term. More than half of the electorate participated in these elections, distributing their preferences between parties supporting the coup and those opposing it. The constitution promulgated in 1934 formally eliminated the colegiado and transferred its powers to the president. The new constitution restricted the creation of autonomous entities by requiring approval by a two-thirds majority in each chamber of the General Assembly. It banned usury, recognized certain social rights (e.g., housing and the right to work), and established women’s suffrage. The cabinet ministers and heads of autonomous enterprises were to be distributed between the two parties obtaining the most votes, in a two-thirds to one-third ratio. The Senate was to be divided in half between the two parties winning the most votes, thus ensuring control by the coup factions. The Chamber of Representatives was to be elected by proportional representation.

In the mid-1930s, the opposition tried, unsuccessfully, to organize itself and resist the regime in the face of persecution. Military and armed civil uprisings were suppressed. In 1935 a political opponent unsuccessfully tried to assassinate Terra. An attempt to form a "popular front," including the left and dissident Colorados and Blancos, was also unsuccessful. To prevent this coalition, as well as a coalition of sectors from the traditional parties, from opposing the regime’s social and economic policies, a series of electoral laws was promulgated beginning in 1934. The new Political Parties Law granted control of the Colorado and Blanco slogans, or party titles, to those who had participated in the elections and therefore supported the dictatorship.

Support from ranchers, one of the sectors most affected by the crisis, seemed to indicate a return to the traditional agro-exporting model. However, neither the "machete dictatorship" (an ironic name given to the regime by the socialist leader and writer Emilio Frugoni, referring to Terra’s use of the police during the coup) nor the "March Revolution" (as it was solemnly called by its organizers) stressed an agrarian alternative because unemployment seemed to call
for a diversification of the job market. Moreover, Uruguay was already an urban country with budding industrialization.

Terra’s economic policies supported both livestock raising and industry, if unevenly. Livestock had stagnated–the 1930 livestock census showed fewer animals than the 1908 census. The problem of increasing livestock productivity remained unsolved, despite advances in breeding. Cattle ranchers were granted premiums in order to improve the quality of herds. Other benefits accorded them included tax rebates, debt-servicing alternatives, preferential exchange privileges, and the effects of the 1935 devaluation. At the same time, import limitations adopted in 1931 continued in effect, and in 1935 an industrial
franchise law was passed. Industrial activities were further protected by currency depreciation and the fall in salaries caused by an abundance of labor.

The Terra government also attempted to regulate foreign trade. BROU maintained control over the price and sale of foreign currency. In 1934 the government created the Honorary Commission for Imports and Exchange to control the allotment of import quotas and foreign exchange. The government used pesos to pay the reduced interest rates on the foreign debt. It also carried out, in 1937, satisfactory negotiations for a new payment schedule with the United States and, in 1939, with Britain.

In general, the Terra government weakened or neutralized economic nationalism and social reform, the most controversial facets of the Batllist model. British public-service industries (railroads, water, gas, and tramways) and United
States industries (oil, cement, refrigeration plants, and automobiles) that were established in the early 1900s received additional concessions. The government did not privatize existing state enterprises, as would have been expected from the antistatism espoused by Herrerists and Riverists. State enterprises were, however, affected in 1936 by a law that eliminated provisions granting some
autonomous state enterprises the power to establish monopolies. ANCAP began constructing an oil refinery, and in 1938 it guaranteed private oil companies participation in Uruguay’s market.

Nevertheless, although the government abolished certain redistributive policies fostered by social legislation, it reinforced the public assistance role of the state. It created "emergency jobs" for the unemployed through the National Affordable Housing Institute (1937) and the Institute for the Scientific Nutrition of the People (1937). In 1934 legislation was passed that regulated child labor for minors over twelve years of age, allowed maternity leave, and extended pensions to all commercial and industrial sectors, including employers.

The government also revamped the education system. The University of the Republic, whose structure had been transformed by the creation of new faculties (for example, engineering and architecture in 1915, chemistry and dentistry in 1929, and economics in 1932), no longer administered secondary education, which in 1935 was handed over to an autonomous agency.

The foreign policy of the regime resulted in a substantial improvement of relations with the United States (Franklin D. Roosevelt visited Uruguay in 1936) and with Britain. Under a 1935 pact with Britain, Uruguay agreed to pay its foreign debt, to purchase British coal, and to treat British companies generously in exchange for ensuring placement of Uruguayan products. In 1935 Uruguay severed relations with the Soviet Union and in the next year, with Republican Spain. At the same time, however, it established closer relations with Benito Mussolini’s Italy and Adolf Hitler’s Germany. Construction of a hydroelectric dam at Paso de los Toros on the Río Negro was begun in 1937 with German capital, creating the Embalse del Río Negro, the largest artificial lake in South America.

In 1938 general elections were held–the first in which women were allowed to vote. Terra divided his support between his son-in-law’s father, Eduardo Blanco Acevedo, and his brother-in-law, General Alfredo Baldomir. These candidacies reflected a split in Terra’s political faction within the Colorado Party. The PSU and PCU joined forces to vote for a common candidate, but the Colorado Party won. Baldomir (1938-43) was elected president. Once again, Batllists, Independent Nationalists, and Radical Blancos abstained from voting.

After his inauguration, and after suppressing a coup attempt, Baldomir announced his intention to reform the 1934 constitution but then procrastinated on carrying out the project. Several months later, the opposition led one of the most important political demonstrations in the history of the country, demanding a new constitution and a return to democracy. Under pressure from organized labor and the National Party, Baldomir advocated free elections, freedom of the press, and a new constitution.

Baldomir’s administration could not avoid the consequences of World War II or the pressures and interests of the Allied forces. Although he declared Uruguay’s neutrality in 1939, that December the Battle of the Río de la Plata took place.
The badly damaged German battleship Graf Spee, cornered by a British naval force and required by the Uruguayan government to leave its refuge in the port of Montevideo, was blown up and scuttled by its own crew just outside the harbor. After this, Uruguay assumed a pro-Allied stance. In 1940 it began an investigation of Nazi sympathizers and finally, in 1942, broke relations with the Axis.

The Blancos persistently attempted to obstruct legislation introduced by Baldomir and criticized the Colorados’ policy of cooperation with the United States in hemispheric defense. Baldomir’s Blanco ally, Herrera, fought for neutrality, and in 1940 Herrera opposed the installation of United States bases in Uruguay. In 1941 Baldomir forced his three Herrerist ministers to resign; they had been appointed to his cabinet in accordance with provisions of the 1934 constitution. Baldomir subsequently appointed a board, without the participation of Herrerists, to study a constitutional reform. Finally, in February 1942 Baldomir dissolved the General Assembly and replaced it with the Council of State (Consejo de Estado), composed of Batllists and other Colorados. This quasi-coup was carried out without arrests, deportations, or the closing of newspapers. It was an in-house agreement to overcome the institutional crisis initiated on March 31, 1933, and to avoid enforcement of the existing constitution. Batllists and Communists welcomed the new situation, but the Socialists argued that Baldomir had been one of the protagonists of the 1933 coup. Independent Nationalists remained on the sidelines. Herrerism, freely accused of being pro-Nazi, pro-Franco and pro-Argentine, was the big loser.

In November 1942, national elections were held. Although an electoral law had been passed in 1939 to avoid the formation of coalitions that would endanger the two-party system (Blancos and Colorados), Independent Nationalists were allowed
to participate as a new political party, separate from Herrerism. Thus, the National Party divided into two splinter parties and continued as such until 1958. Socialists and Communists were also split, a situation that continued until 1971, when the Broad Front Coalition was created. Batllists supported the Colorado candidate, Juan José Amézaga (1943-47), who won the election.

At the same time, a new constitution was submitted to plebiscite and was approved by 77 percent of the electorate. As amended on November 19, 1942, the constitution retained the presidency, restored the General Assembly, implemented
strict proportional representation in the Senate, and abolished the mandatory coparticipation imposed by the 1934 constitution for ministries and boards of autonomous entities.

After Amégaza reinstitutionalized and restored civil liberties, Uruguay entered a new historical era, characterized by the increasing importance of industrialization and significant gains for virtually all sectors of society. No other phrase expresses as eloquently perceptions about this period by the average citizen as the slogan proclaimed by a politician: "Como el Uruguay no hay" (There’s no place like Uruguay). During the Amézaga administration, the state reorganized its interventionist and welfare role and strongly pushed social legislation. In 1943 the government implemented a system of wage councils (including representatives from the state, workers, and employers) to set salaries, and it established a family assistance program. In 1945 the General Assembly passed legislation requiring paid leave for all work activities, as well as other legislation that addressed the needs of rural workers, one of Uruguay’s poorest sectors. In 1943 the rural workers were incorporated into the pension system, and in 1946 the Rural Worker Statute set forth their rights and also put women’s civil rights on a par with men’s.

From the beginning of the 1940s, and especially after creation of the wage councils, real wages increased, which meant an improvement in the living standards of the working class and dynamism in the internal market. The period of increased industrial development lasted from 1945 to 1955; total production practically doubled during this time. Agriculture also experienced a boom. Social legislation was improved, the pension system was expanded, and the state bureaucracy grew. Resorts near Montevideo were developed through the sale of lots on the installment plan, and Punta del Este became an international tourist attraction. Gold reserves in BROU reached their highest level ever. In 1950, when Uruguay again won the World Cup in soccer, it was already known as the "Switzerland of South America."

Batllism returned to power with the victory of the presidential ticket of Tomás Berreta (1947) and Luis Batlle Berres (1947-51) in the 1946 elections. Berreta’s administration was brief–he died six months after taking office and was succeeded by his vice president, Batlle Berres.

Batlle Berres, a nephew of José Batlle y Ordóñez, represented the most popular faction of Batllism, later to be known as Unity and Reform (Unidad y Reforma), or List 15 because of the list number under which it would participate in successive elections. He gradually became estranged from his cousins–Lorenzo and César, Batlle y Ordóñez’s sons–who promoted a more conservative vision from their newspaper, El Día, and who would later form a new Colorado Party faction–List 14. Batlle Berres founded his own newspaper (Acción) in 1948, bought a radio station, and surrounded himself with young politicians. His ideological-political agenda, adapted to the changes in his country and the world, became known as neo-Batllism. He rejected the communist and populist-authoritarian experiences of other Latin American countries, especially that of Juan Domingo Perón in Argentina. Batlle Berres formed a multiclass movement that promoted compromise and conciliation. He believed the state’s role
was to safeguard social peace and to correct, through adequate measures, the "unfair differences" created by the socioeconomic structure. In contrast with Peronism, neo-Batllism respected the political autonomy of the workers’ movement, accepted social cooperation, and rejected the kind of corporative structure that characterized Mexico’s governing party.

Batlle Berres was an enthusiastic supporter of economic development based on import-substitution industrialization and agricultural expansion. He applied interventionist and statist economic measures to promote such development and did not abide by the IMF’s austerity recommendations. He supported agriculture and industry through credits and subsidies, as well as control over the nation’s currency, a fact that brought him into conflict with ranchers. BROU, which controlled sales of foreign currency, paid less for foreign currency earned from livestock raising to favor industrial requirements for raw materials and machinery. This differential exchange rate policy stimulated the development of light industry, more than 90 percent of which was directed toward the internal market. Nevertheless, the state guaranteed profitable prices for agriculture and stimulated imports of agricultural machinery. New crops were developed to supply industry with raw materials, and surpluses were exported. By contrast, livestock raising continued to stagnate.

An earlier agreement with Britain obliged the government to acquire some British enterprises to cancel its outstanding debt to Britain. The state’s economic role was thus increased through the creation of new public service enterprises, including Montevideo’s tramways, railroads, and water system.

Another potentially significant event in the socioeconomic realm was the creation of the National Land Settlement Institute in 1948. It was designed to stimulate land subdivision and agricultural and livestock settlements and was
authorized to purchase and expropriate land. But action was limited because of a lack of funds, and significant agrarian reform never took place. However, in order to favor lower-income groups, subsidies were set for various basic food items, and in 1947 the National Subsistence Council was created to control the price of basic items.

The traditional parties maintained their differences, which were reflected in the significant variations in their platforms. The Political Parties Law, which allowed party factions to accumulate votes, guaranteed the predominance of the
Colorado Party. Together, the Colorados and Blancos continued to capture almost 90 percent of the votes. But because of the splits in his own party, Batlle Berres was forced to seek political support from other factions. Paradoxically, he sought a "patriotic coincidence" with Herrera and gave cabinet posts to some leading figures of Terrism, past enemies within his own party.

Conservative sectors, particularly landowners, opposed or distrusted the growing bureaucracy, the expansion of social legislation, and the policy of income redistribution that favored the industrial sector to the detriment of the rural sector. In 1950 Benito Nardone–an anticommunist radio personality supported by Juan Domingo R. Bordaberry, one of the directors of the Rural Federation (and father of Juan María Bordaberry Arocena; president, 1972-76)–created the Federal League for Rural Action (Liga Federal de Acción Rural–LFAR). The Ruralist faction thus created attempted to unite the disenchanted rural middle-class constituencies, especially wool producers, from both traditional parties. He proposed a free-market economic model in contrast to Luis Batlle Berres’s statist model.

Unity and Reform won the 1950 elections. Its presidential candidate was a Batllist, Andrés Martínez Trueba (1951-55), who quickly put forward a new constitutional amendment, this time to make good on Batlle y Ordóñez’s dream of a purely plural executive, the colegiado. He was supported by Herrera, who was seeking to enhance both his personal power and Blanco political power and to recover the ground lost in the 1942 coup. He was also supported by conservative Colorado factions who feared Batlle Berres’s becoming president again.

The new constitution was approved by plebiscite in 1951 and went into effect in 1952. It reestablished the colegiado as the National Council of Government (Consejo Nacional de Gobierno). The council had nine members, six from the dominant faction of the majority party and three from the party receiving the second highest number of votes–two from its leading faction and one from it second-ranking faction. The presidency was to rotate each year among the six members of the majority party. The constitution mandated coparticipation in directing autonomous entities and ministries, using a three-and-two system (three members appointed by the majority party on the council and two by the minority party). Uruguay enjoyed unprecedented prosperity at this time, and the establishment of a purely collegial, Swissstyle executive reinforced the country’s title as the "Switzerland of South America."

The Martínez administration in the first half of the 1950s, however, was one of economic decline. At the end of the Korean War (1950-53), during which Uruguay had exported wool for coldweather uniforms, Uruguay experienced a reduction in exports, a drop in the price of agricultural and livestock products, labor unrest, and unemployment. Livestock production, which had basically stagnated since the 1920s, was not capable of providing the foreign exchange needed to further implement the import-substitution industrialization model. Starting in 1955, the industrial sector stagnated and inflation rose. At the same time, Uruguay had difficulties with the United States regarding wool exports and suffered the negative effects of both restrictive United States trade policies and competition from the foreign sales of United States agricultural surpluses.

In 1951 a faction opposing the more radical leadership of the General Union of Workers (Unión General de Trabajadores–UGT; established in 1942) founded the General Confederation of Labor. Nevertheless, strikes and stoppages continued.
In 1952, in the face of labor unrest, the National Council of Government invoked the emergency provision of the constitution known as the medidas prontas de seguridad (prompt security measures). From 1956 to 1972, the gross national product fell 12 percent, and in the decade from 1957 to 1967 real wages for public employees fell 40 percent. In 1958 the General Assembly approved strike insurance and maternity leave. In addition, worker and student mobilization pressured the General Assembly into approving the Organic University Law, whereby the government recognized the autonomy of the University of the Republic and the right of professors, alumni, and students to govern it. Nevertheless, labor unrest increased.

At first, dramatic political events masked the economic crisis. In the 1958 elections, the Independent Nationalists, who had joined the Democratic Blanco Union (Unión Blanca Democrática- -UBD), agreed to include their votes under the
traditional National Party of the Herrerists. Thus, for the first time in decades, the National Party voted as one party. In addition, Herrera joined forces with Nardone and his LFAR, transforming it from a union into a political movement. Aided by the LFAR and a weakening economy, the National Party won, and the Colorado Party lost control of the executive for the first time in
ninety-four years.

From March 1959 to February 1967, eight National Party governments ruled Uruguay. The death of Herrera (1959) aggravated divisions in the National Party and demonstrated the fragility of the electoral accords that had led to its victory. The economic crisis and social unrest that had beset Uruguay from the mid1950s continued, and the 1960s opened with gloom and sadness for the country. At the time of the 1962 elections, inflation was running at a historically high 35 percent. The Colorado Party was defeated once again, although by a much smaller margin of votes (24,000 as compared with 120,000 in 1958). The National Party split. The UBD joined a splinter faction of Herrerism, the Orthodox faction, led by Eduardo Víctor Haedo. Another faction of Herrerism, led by Martín R. Echegoyen (1959-60), kept its alliance with Nardone’s Ruralists. At the same time, divisions between the List 14 faction and Unity and Reform were intensified in the Colorado Party.

Important changes also took place in the minor parties. Catholics formed the Christian Democratic Party (Partido Demócrata Cristiano–PDC). Communists formed a coalition with other minor parties, the Leftist Liberty Front (Frente Izquierda de Liberdad–Fidel). The PSU joined with intellectuals and dissidents from traditional parties and formed the Popular Union (Unión Popular).

The thin majority of the governing party, as well as its internal divisions, hindered the administration of the National Council of Government during the 1963-67 period. In 1964 the political scene was further affected by the death of two important leaders: Batlle Berres and Nardone. That same year, the workers movement formed a single centralized union, the National Convention of Workers (Convención Nacional de Trabajadores–CNT). In addition, a new political protagonist appeared. In 1962 Raúl Antonaccio Sendic, head of the sugarcane workers from the north of the country, formed, together with other leftist leaders, the National Liberation Movement-Tupamaros (Movimiento de Liberación Nacional-Tupamaros–MLN-T), a clandestine urban guerrilla movement.

Economically, the 1958 Blanco victory brought ranching and agricultural forces to power. This led to the implementation of liberal (free-market) economic policies aimed at eliminating the protectionist-interventionist model that had fostered industrial development. In 1960 Uruguay agreed to sign its first letter of intent with the IMF. The Blanco government devalued the currency and established a single, free monetary exchange market (while maintaining the interventionist role of BROU), as well as the free import and export of goods and services. The reorientation of economic policy tended to favor the agro-exporting sector. However, the model could not be applied fully, nor in an orthodox manner. Inflation increased to more than 50 percent per year between 1963 and 1967, and in 1965 an overstretched financial system and massive speculation produced a banking crisis. Labor and social conflict increased as well, and a state of siege was imposed in 1965.

To try to solve the problem of economic stagnation, the government complied with one of the principal recommendations of the Alliance for Progress (a United States program to help develop and modernize Latin American states) by preparing a tenyear development plan. However, virtually none of the plan’s recommendations were ever put into practice.

During the Blanco era, sectors from both traditional parties had begun blaming the country’s difficulties on the collegial constitutional arrangement of executive power. In the 1966 elections, three constitutional amendments were submitted. The approved changes, supported by Blancos and Colorados, were incorporated in the 1967 constitution, which put an end to the collegial
executive, thereby returning the country to a presidential regime; granted increased powers to the executive; and extended the presidential term to five years. They also eliminated the three-and-two (coparticipation) system for appointing heads of autonomous entities and ministries and created new state agencies to modernize government: the Office of Planning and Budget; the Social Welfare Bank; and the Central Bank of Uruguay. High school education became compulsory.

Given the growing economic and social crisis, it was not surprising that the Colorado Party won the November 1966 elections. In March 1967, General Oscar Gestido (1967), a retired army general who had earned a reputation as an able and honest administrator when he ran the State Railways Administration, became president. He was supported by the Colorado and Batllist Union (Unión Colorada y Batllista–UCB), comprising List 14 and other conservative Colorados.

Between June and November of 1967, the government, with the influence of some Batllists, attempted to reverse economic and social policies implemented since 1959 and to return to the old developmentalist model. But in November, César Charlone, responsible for economic policies under Terra, became head of the Ministry of Economy and Finance. He agreed to the IMF’s suggestions, again establishing a unified exchange market and drastically devaluing the currency. Inflation exceeded 100 percent in 1967, the highest in the country’s history.

In December President Gestido died and was succeeded by his vice president, Jorge Pacheco Areco (1967-72). A little-known politician and former director of the newspaper El Día, Pacheco would leave an indelible mark on Uruguay.
Within one week of taking office, Pacheco issued a decree banning the PSU and other leftist groups and their press, which he accused of subverting the constitutional order and advocating armed struggle. To implement the new monetarist policy adopted in 1968, Pacheco appointed Alejandro Végh Villegas as director of the Office of Planning and Budget. In a sharp policy change, Pacheco
decreed a wage and price freeze in June 1968 to try to control inflation. He also created the Productivity, Prices, and Income Commission (Comisión de Productividad, Precios, e Ingresos– Coprin) to control the price of basic food items. In 1968 real wages were the lowest in the decade, and inflation reached a maximum annual rate of 183 percent that June.

The newly created umbrella labor organization, the CNT, resisted these economic policies, and student and other social conflict intensified. The government responded by repressing strikes, work stoppages, and student demonstrations. The death of a student, Líber Arce, during a protest paralyzed Montevideo, and relations between the University of the Republic and the government further deteriorated. The prompt security measures, a limited form of a state of siege, which had been included in the constitution to deal with extraordinary disturbances of domestic order and applied in 1952 and 1965, were enforced during almost all of Pacheco’s time in office. He justified his actions, which included drafting striking bank and government employees to active military service, on the basis of the growing urban guerrilla threat from the Tupamaros.

During this period, the Tupamaros had grown in strength, and their actions–robberies, denunciations, kidnappings, and, eventually, killings–shook the country and became known worldwide. The General Assembly acquiesced twice in the suspension of all civil liberties, once for twenty days following the assassination in August 1970 of Dan A. Mitrione, a United States security official, and then for forty days following the kidnapping of British ambassador Geoffrey Jackson in January 1971–both by the Tupamaros. On September 9, 1971, after the escape from prison of more than 100 Tupamaros, Pacheco put the army in
charge of all counterguerrilla activity.

The November 1971 national elections were held in a relatively quiet atmosphere because of a truce declared by the Tupamaros. Uruguayan society had become polarized. Political sectors supporting Pacheco promoted his reelection to a new presidential term, as well as the corresponding constitutional amendment to legitimize it. The left was able to unite and draw supporters from traditional parties, such as the Colorado Party’s List 99. The new coalition was named the Broad Front (Frente Amplio). In the National Party, a faction of Herrerists chose General Mario Aguerrondo, considered a hard-liner, as its presidential candidate. Liberal Blancos supported the reformist program of a new movement, For the Fatherland (Por la Patria– PLP), led by Senator Wilson Ferreira Aldunate.

The constitutional amendment did not succeed, but Pacheco’s handpicked successor, Juan María Bordaberry Arocena of the Colorado Party, won the controversial elections by some 10,000 votes, after a mysterious halt in the vote count. It was noteworthy, however, that Ferreira obtained a large number of votes (he was actually the candidate receiving the most votes–26 percent of the total to Bordaberry’s 24 percent), and the left increased its following, receiving about 18 percent of the votes. Bipartisan politics had come to an end, replaced by a multiparty system bitterly divided by political, social, economic, and ideological differences. In economic terms, the stabilization measures taken between 1969 and 1971 by the Pacheco administration to increase wages and reduce inflation had been moderately successful. But by 1972, the situation was out of control again. Another free market, monetarist experiment would have to await the imposition of an authoritarian regime.

In March 1972, Bordaberry was sworn in as president (1972-76). He ran as a Colorado, but he had been active in Nardone’s Ruralist movement and had been elected to the Senate as a representative of the National Party. Bordaberry’s narrow victory forced him to seek the support of other political parties. He found it in Mario Aguerrondo’s Herrerist faction of the National Party and in the Colorado Party’s Unity and Reform, led by Jorge Batlle Ibáñez, a son of Luis Batlle Berres, who had founded the faction.

Bordaberry appointed Julio María Sanguinetti Cairolo, who headed a faction of Unity and Reform, as minister of education and culture. Sanguinetti promoted education reform that brought together primary, secondary, and vocational
education under the National Council for Education (Consejo Nacional de Educación– Conae) and established secret and mandatory voting for the election of university authorities. Unity and Reform also took charge of economic policy by implementing a five-year development plan inspired by neoliberal (free market) and monetarist principles, which would slowly open the economy to greater influence from financial and commercial groups, as well as to foreign investment.

The Bordaberry administration, however, continued its predecessor’s policies, giving greater budgetary priority to the military than to education and other social areas. Bordaberry also proposed legislation to eliminate university autonomy and enhance the powers of the army and police.

When the Tupamaros finally renewed their armed activities following their six-month electoral truce from October 1971 to April 1972, they faced a firmly entrenched administration backed by an increasingly well-equipped and adequately prepared military, which had a blank check to defeat them. In April 1972, after a bloody shoot-out with the Tupamaros, Bordaberry declared a state of "internal war." All civil liberties were suspended, initially for thirty days but later extended by the General Assembly until 1973. On July 10, 1972, the government enacted the draconian State Security Law. By the end of the year, the army had decisively defeated the Tupamaros, whose surviving members either were imprisoned or fled into exile. Despite their victory over the Tupamaros, the military had grown impatient with civilian rule. It was now time for the armed forces’ final assault on the Uruguayan polity.

In February 1973, a deep conflict emerged among the president, the General Assembly, and the armed forces. The army and air force rebelled against Bordaberry’s selection of a civilian as minister of national defense. On February 9 and 10, the army issued two communiqués proposing a series of political, social, and economic measures. Initially, the navy maintained its loyalty to the president but subsequently joined the other military services. Bordaberry made an agreement with the military, known as the Boisso Lanza Pact, that guaranteed their advisory role and their participation in political decision making. In effect, the pact constituted a quasi-coup. The National Security Council (Consejo de Seguridad Nacional–Cosena) was created as an advisory body to the executive. Its members included the commanders of the army, navy, and air force, plus an additional senior military officer, and the ministers of national defense, interior, and foreign affairs.

The military then pushed for the final approval and implementation of the State Security Law. However, differences with the General Assembly, which was investigating charges of torture committed by the military and felt that the
military had exceeded its powers, continued until June 27, 1973. On that date, with the backing of the armed forces, Bordaberry dissolved the General Assembly and replaced it with the Council of State, and he empowered the armed forces and police to take whatever measures were necessary to ensure normal public services. In essence, a de facto dictatorship had been announced. The new
situation was supported by some Colorados (the Pachequist faction) and some Blancos (Aguerrondo’s Herrerists). But the CNT called for the occupation of factories and a general strike that lasted almost two weeks. When the civil-military dictatorship was consolidated, it banned the CNT, the PCU, and other existing and alleged Marxist-Leninist organizations, and it intervened in the university to quell dissident activities by the students.

The military’s "Doctrine of National Security" was a pseudoscientific analysis of society grounded in geopolitics. It posited that sovereignty no longer resided in the people but derived instead from the requirements of state survival. This was basically the same ideology made famous by the Brazilian generals after their takeover in 1964. The core of the doctrine was articulated by Brazil’s General Artur Golbery do Couto e Silva in his book Geopolítica do Brasil. Essentially, the book described a world divided into two opposing blocs–the capitalist and Christian West and the communist and
"atheistic" East–each with its own values that were considered irreconcilable. The Brazilian and Uruguayan generals saw themselves as part of the Western bloc and were therefore engaged in an unrelenting global struggle with the opposition. This struggle called for a war in which there was no room for hesitation or uncertainty against a cunning and ruthless enemy. Thus, it was necessary to sacrifice some secular freedoms in order to protect and preserve the state.

"Preventive" repression by the Uruguayan military regime was intense. To the dead and disappeared were added thousands of persons who went to jail because they were accused of politically motivated crimes. Many were tortured. Others
were fired from their government jobs for political reasons. The regime restricted freedom of the press and association, as well as party political activity. Amnesty International calculated that in 1976 Uruguay had more political prisoners per capita than any other nation on earth. During these years, approximately 10 percent of Uruguay’s population emigrated for political or economic reasons.

In June 1976, Bordaberry was forced to resign after submitting a proposal to the military calling for the elimination of political parties and the creation of a permanent dictatorship with himself as president. National elections were to be held that year, although politicians could hardly be sanguine after the assassinations in Argentina of Uruguayan political leaders Héctor Gutiérrez Ruiz (National Party) and Zelmar Michelini (Broad Front). Bordaberry was replaced by Alberto Demichelli Lizaso, president of the Council of State, who, through Institutional Act No. 1, decreed the suspension of elections. Three months
later, Demichelli was succeeded by Aparicio Méndez (1976-81), who essentially decreed the political prohibition of all individuals who had participated in the 1966 and 1971 elections. Political life thus came to a halt.

In 1977 the military government made public its political plans. Over the next few years, the National Party and the Colorado Party would be purged, a new constitution would be submitted to a plebiscite, and national elections would be held with a single candidate agreed on by both parties. A charter that gave the military virtual veto power over all government policy was drawn up. In 1980 the armed forces decided to legitimize themselves by submitting this constitution to a plebiscite.

Opposing the constitutional project were Batlle Ibáñez, Ferreira, Carlos Julio Pereyra, a Herrerist faction led by Luis Alberto Lacalle de Herrera, Pachequist dissidents, and the Broad Front, who considered it authoritarian and in conflict with Uruguay’s democratic tradition. When Uruguay’s citizens went to the polls, they dealt the military regime a tremendous blow and rejected the proposed new constitution by 57 to 43 percent.

When the military took power in 1973, they did so in the face of a decade and a half of economic stagnation, high inflation, and increased social unrest. Massive repression brought the social unrest under control and eliminated the urban guerrilla threat. Economic policy and performance soon became the regime’s ultimate claim to legitimacy and justification for its harsh rule. The military and their civilian technocrats hoped to reverse Uruguay’s economic stagnation, which had led to an absence of capital accumulation and investment, as well as to capital flight. The dissolution of the General Assembly and the banning of
union organizations eliminated any possibilities for action by the opposition and thus made possible a new economic model. The long-term model sought by the military involved a profound change in the traditional roles of the public and private sectors and the response of the public sector to the influence of the external market.

The military’s economic program sought to transform Uruguay into an international financial center by lifting restrictions on the exchange rate; ensuring the free convertibility of the peso and foreign remittances, thus further "dollarizing" the economy; facilitating the opening of branches of foreign banks; and enacting a law to promote foreign investment. More attention was paid to the international market. The reduction of import duties, promotion of nontraditional exports, integration of trade with Argentina and Brazil, and liberalization of the agricultural and livestock markets were key goals. Although proposals were made to reduce state interventionism, the state participated actively in the preparation of the new program.

The principal architect of the program was Harvard-trained Alejandro Végh Villegas, who had served as minister of economy and finance from 1974 to 1976. Végh hoped to dismantle the protectionist structure of the economy; free the banking and financial communities from the restraints under which they operated; cut the budget, especially social spending; reduce state employment; and sell off most of the state enterprises. However, some of the nationalist and populist military leaders opposed his plan for mass reductions in government employment and divestiture of such state enterprises as ANCAP. Végh succeeded somewhat in his budgetary and monetary objectives and managed to reduce some tariffs. Between 1975 and 1980, his strict monetary policy reduced inflation from 100 percent in 1972 to 40 to 67 percent in 1980, and by 1982 it was only 20 percent. He managed this by strict control of the social service side of the budget and by a policy of depressed real wages, which fell by 50 percent during the 1970s.

Between 1974 and 1980, the gross domestic product grew, although unevenly. Beginning in 1980, however, the
situation changed as the military’s economic program began to unravel. High interest rates and recession in the United States did not help matters. Between 1981 and 1983, GDP fell some 20 percent, and unemployment rose to 17 percent. The foreign debt burden, exacerbated by the quadrupling of oil prices in 1974, grew exponentially and stood at about US$3 billion by 1984.

Industry and agriculture, whose accumulation of debt in dollars had been encouraged by official policies, were adversely affected by the government’s elimination in November 1982 of its "crawling peg" system (a minidevaluation monetary policy) in effect since 1978. The progressively overvalued currency had limited the ability of domestic producers to raise prices to compete with cheaper imports. The resulting collapse of the Uruguayan new peso (for value of the Uruguayan new peso) bankrupted thousands of individuals and businesses. Industry was in better shape, although it had unused capacity and no substantial diversification had taken place. The financial sector, which was largely foreign owned, was consolidated and expanded at the same time. As the situation deteriorated, the state, in order to save the banking system, purchased noncollectible debt portfolios of ranchers, industrialists, and importers, which were held by private banks. This adversely affected the fiscal deficit and increased the foreign debt, which grew sevenfold between 1973 and 1984.

The failure of the regime’s economic model, combined with its stifling of political opposition, prompted thousands of Uruguay’s best professionals to go into exile. By late 1983, Végh returned from an ambassadorship in the United
States to once again become minister of economy and finance. As the most important technocrat to serve the military regime, he had returned to help smooth out the expected transition to civilian rule. He failed, however, to turn over a revived economy to a democratic government. The lack of success of the military’s economic policies and their failure to achieve legitimacy or consensus led to a watering down of their own plan to reinstitute a civilian government under military tutelage.

After the electoral defeat of the military’s constitution, retired Lieutenant General Gregorio Alvarez Armelino (1981-85), one of the leaders of the coup, became president, and political dialogue was slowly restored. The 1982 Political Parties Law was enacted to regulate the election of political leaders, the functioning of political conventions, and the preparation of political platforms. Its aim was the controlled regeneration and democratization of the political system, but it excluded the left to avoid a return to the situation prior to 1973. In 1982 the officials of the National Party, the Colorado Party, and the Civic Union (Unión Cívica–UC; created in 1971), a small conservative Catholic party, were elected. Once again, election results were a blow to the military. Sectors opposing the dictatorship won overwhelmingly in both traditional parties. A divided left, although officially banned, also participated: some cast blank ballots, while others believed it would be more useful to back the democratic sectors of traditional parties.

The dialogue between politicians and the military gathered momentum but was marked by advances and setbacks and accompanied by increasing civil resistance. Uruguay was now experiencing its worst economic crisis since the Great Depression. In 1983 the Interunion Workers’ Assembly (or Plenum) (Plenario Intersindical de Trabajadores–PIT) reclaimed the banner of the CNT and was authorized to hold a public demonstration on May 1; it later assumed the name PIT-CNT to show its link with the earlier organization. Students–united under the Students’ Social and Cultural Association for Public Education (Asociación Social y Cultural de Estudiantes de la Enseñanza Pública–ASCEEP), heir to the banned student organizations–were allowed to march through the streets of Montevideo. In November all opposition parties including the left staged a massive political rally, demanding elections with full restoration of democratic norms and without political proscriptions.

In March 1984, the PIT-CNT organized a civil strike and freed General Líber Seregni Mosquera, leader of the Broad Front, whom the military had imprisoned since January 11, 1976. By mid-1984 yet another civil strike took place, this
time organized by political parties and social groups. Blanco Senator Ferreira returned from exile. His subsequent imprisonment essentially deprived the National Party of the opportunity to participate in the meetings between politicians and the military that ended with the Naval Club Pact. Signed by the armed forces and representatives from the Colorado Party, UC, and Broad Front, this pact called for national elections to be held that same year on the traditional last Sunday in November.

The discussions at the Naval Club saw the military give up its long-sought goal of a Cosena dominated by the military and with virtual veto power over all civilian government decisions. The military now settled for an advisory board that would be controlled by the president and the cabinet. Some transitional features were agreed to by the civilian leadership, mostly relating to the ability of the armed forces to maintain its seniority system in the naming of the commanders of the various military services. The military also agreed to review the cases of all political prisoners who had served at least half of their sentences. Moreover, the military acquiesced to the relegalization of the left, although the PCU remained officially banned (until March 1985). The Communists were nonetheless able to run stand-in candidates under their own list within the leftist coalition. Nothing was said about the question of human rights violations by the dictatorship.

The election results were no great surprise. With Ferreira prohibited from heading the Blanco ticket and a similar fate for Seregni of the Broad Front, and with effective use of young newcomers and a savvy media campaign, the Colorado Party won. The Colorados received 41 percent of the vote; the Blancos, 34 percent; and the Broad Front, 21 percent. The UC received 2.5 percent of the vote. Within the Broad Front’s leftist coalition, social democratic Senator Hugo Batalla, who headed List 99, a faction started by Zelmar Michelini in 1971, was the big winner, garnering over 40 percent of the alliance’s vote. For the victorious Colorados, former President Pacheco brought the party 25 percent of its vote. However, the Colorado presidential ticket
receiving the most votes (in a system that allowed multiple candidacies for president in each party) was headed by Sanguinetti. After being sworn in as president on March 1, 1985, Sanguinetti led the transition to democracy. He did so with dignity and fairness, although the legacy of human rights violations under the dictatorship proved a troublesome problem.

Subsequent leaders contended with high inflation and a mammoth national debt. Presidential and legislative elections in November 1994 resulted in a narrow victory for the center-right Colorado Party and its presidential candidate, Julio
Sanguinetti Cairolo, who had been president in 1985–1990. He pushed for constitutional and economic reforms aimed at reducing inflation and the size of the public sector, including tax increases and privatization. In November 1999 Jorge Batlle, of the Colorado Party, won the presidency.

In 2002, Uruguay entered its fourth year of recession. Economic troubles in neighboring Argentina caused a staggering 90% drop in tourism. Batlle also faced a sizable budget deficit, a growing public debt, and a weakening of the peso on
international markets. The country’s economic outlook began improving in 2003. In a December 2003 referendum, 60% of the electorate voted against opening up the state oil monopoly to foreign investment. In October 2004, Tabaré Vázquez of the Socialist Broad Front won 50.7% of the vote; he took office in March 2005. It was the left’s first national victory in Uruguay. The building in Uruguay of two pulp mills on the Uruguay River along the Argentina border led to tensions between the two nations throughout 2006; fearful of possible pollution from the mills, Argentinians blockaded several bridges between the nations. The International Court of Justice agreed to hear Argentina’s contention that the mills violated a treaty on the use of the river but allowed construction to
proceed while the court considered the case; it also refused to order Argentina to stop the protests. Also in 2006, former president Bordaberry was charged and arrested in connection for involvement in the political murders of dissidents and others in 1976.


Trinidad & Tobago National History

Trinidad was the first inhabited island of the Caribbean, having been settled by Amerindians from South America as early as 5000 BC. They called the island "Leri", the land of the hummingbird. Later, Trinidad and Tobago became the first Caribbean Islands occupied by both the Igneri, a peaceful subgroup of the Arawak tribe; and the hostile Caribs.

The history of Trinidad & Tobago is one of invasion and conquest since its discovery by Christopher Columbus, who claimed it for Spain, in 1498. He christened it La Isla de la Trinidad, for the Holy Trinity, which he saw represented by three peaks on the southern coast. Trinidad’s sister island, Tobago, was named in 1502 for the tobacco the local Carib Indians smoked. The Spanish who followed in Columbus’  wake enslaved many of Trinidad’s Amerindian inhabitants, taking them to toil in the new South American colonies. Spain, in its rush for gold, gave only scant attention to the potential of Trinidad’s land, which lacked precious minerals. A Spanish colony was founded on Trinidad in 1532. It took until 1592 for the Spanish to establish their first settlement, San Josef, just east of the present-day capital of Port of Spain, but the colony was destroyed by Sir Walter Raleigh in 1595. Over the next two centuries unsuccessful attempts were made by Spanish colonizers to establish tobacco and cacao plantations but crop failures and a lack of support from Spain left the island only lightly settled. In 1704 it was declared a neutral territory, which left room for pirates to use the island as a base for raiding ships in the Eastern Caribbean. The British returned to establish a colonial administration on Tobago in 1763, and within two decades 10,000 African slaves were imported to establish the island’s sugar, cotton and indigo plantations.

The Spanish recovered their possession and held on to it until 1797, when it was captured by a British naval
expedition. The Spanish Crown’s most important Governor (from 1784 to 1797) was Don José Maria Chacon, a multilingual Spaniard with a black mistress and mulatto children. He was most responsible for the British colonizing Trinidad. Chacon executed a well
negotiated surrender preceded by a weak fight with the British. Apparently, he felt abandoned by the Spanish and trusted the British more than the French whom he called "treacherous friends". Trinidad was formally ceded to the British crown under the treaty of Amiens in 1802.

Tobago was raided and settled by the Dutch in the 1630s and they introduced sugar cane to the island. The French – with the Spanish as their allies on this occasion – took over in 1781, expanding sugar production using slave labour. The British took possession of Tobago in 1814, after the Napoleonic wars. Slavery was abolished in the 1830s prompting the British
to import thousands of indentured workers, mostly from India, to work in the cane fields and service the colony. The indentured labor system remained in place for over 100 years. In 1888, Tobago was amalgamated with Trinidad and administered as a single colony thereafter.

The depression of the 1930s led to a series of strikes and riots and the growth of a labor movement on the islands. Reforms began after World War II, with the introduction of adult suffrage in 1945. The British sponsored the West Indies Federation as a potential post-colonial model, in the belief that most of the Caribbean islands would be unable to survive politically or economically on their own. The Caribbean peoples thought otherwise and the Federation collapsed in the early 1960s. By this time, Trinidad & Tobago had already been granted internal self-government and achieved full independence on 31 August 1962. The islands’ leading political figure for the next two decades was Eric Williams, who served as prime minister from independence until his death in 1981. His party, the People’s National Movement (PNM), has dominated the country’s politics since independence, winning every general election from independence until the mid-1980s. Unlike other Caribbean islands, Trinidad is blessed with many natural resources. The island’s prior ancient status as part of the mainland means it shares substantial marine oil and gas reserves with its neighbor Venezuela and the 1970’s oil boom wealth transformed Trinidad & Tobago into democratically middle class nation. In April 1970 a uprising is put down by security forces. On 1 August 1976 Trinidad and Tobago got a new constitution and became a presidential republic.

The PNM’s main support comes from the Afro-Caribbean population. However, during the mid-1980s, the nation’s other ethnic groups, especially those of South Asian origin – descendants of those transported as indentured labour to work the sugar plantations in the 19th century – became more involved in politics and began to pose a threat to the hegemony of the PNM. And so, at the 1986 general election, the three-year-old National Alliance for Reconstruction (NAR), a coalition of four opposition parties under the leadership of Arthur Robinson, formed a government for the first time. The Robinson government took Trinidad into the Caribbean Common Market (CARICOM) in 1988, although the benefits were more than offset by the unfortunate, simultaneous collapse of oil prices, which cut government revenues and plunged the country into recession.

Over the next two years, popular discontent with the government was greater than normal but by no means a serious threat. The attempted coup of July 1990, staged by a 100-strong group of Islamic extremists, under leadership of Yasin Abu Bakir, thus came as a considerable surprise, although it was comfortably suppressed after five days. Militant Islam has since played no role in the country’s politics and although voters now tend to divide along ethnic lines, there is minimal political violence of the type seen in Jamaica or Guyana. However, the NAR was fatally damaged by the incident and, in December 1991, it was heavily defeated at the polls by the PNM, under Patrick Manning. It has since been wiped out – even in its Tobago stronghold – as an electoral force.

The 1990s saw the rise of the predominantly Asian United National Congress (UNC), under the leadership of Basdeo Panday, which narrowly won the December 1995 election. The Indian and Afro-Caribbean populations both account for around 40 per cent of the electorate and both main parties therefore competed fiercely for the 20 per cent mixed-race vote. The election of December 2000 followed a similar pattern, with the UNC once again coming out on top with a small majority. Panday continued as prime minister but his government was brought down by a serious corruption scandal (the UNC has been persistently dogged by such allegations) after less than a year. At the December 2001 poll, the UNC and Patrick Manning’s PNM were tied on 18 seats each. After 12 months of almost paralysed government, the country went to the polls once again, in October 2002. This time, the PNM, with Patrick Manning still at the helm, was returned with small working majority.


Suriname National History

Suriname’s earliest inhabitants were the Surinen Indians, after whom the country is named. At 1500 Yáñes Pinzón, from Spain, explored the coast of what is todays Suriname. As he did not expect mineral resources, the Spaniards lost interest in the country.  Spain explored Suriname in 1593 again, but by 1602 the Dutch began to settle the land, followed by the English. The English transferred sovereignty to the Dutch in 1667 (the Treaty of Breda) in exchange for New Amsterdam (New York). Although the territory formally changed hands many times between the Dutch, English and French, before finally being confirmed as a Dutch possession by the terms of the 1815 Treaty of Vienna. At this time, the majority of the population were slaves, working on the plantations. Colonization was confined to a narrow coastal strip, and until the abolition of slavery in 1863, African slaves furnished the labor for the coffee and sugarcane plantations. Escaped African slaves fled into the interior, reconstituted their western African culture, and came to be called “Bush Negroes” by the Dutch. After 1870, East Indian laborers were imported from British India and Javanese from the Dutch East Indies.

Known as Dutch Guiana, the colony was integrated into the kingdom of the Netherlands in 1948. Two years later Dutch Guiana was granted home rule, except for foreign affairs and defense. After race rioting over unemployment and inflation, the Netherlands granted Suriname complete independence on November 25, 1975. A coup d’état in 1980 brought military rule. During much of the 1980s Suriname was under the repressive control of Lieut. Col. Dési Bouterse. The Netherlands stopped all aid in 1982 when Suriname soldiers killed 15 journalists, politicians, lawyers, and union officials. Defense spending increased significantly, and the economy suffered.

A guerrilla insurgency by the Jungle Commando (a Bush Negro guerrilla group) threatened to destabilize the country and was harshly suppressed by Bouterse. The economic burden of the civil war that broke out between the regime and jungle-based dissident elements prompted the military regime to announce a return to civilian rule. A transitional constitution was agreed in March 1987. Elections in November gave 40 out of the 51 seats in the National Assembly to the Front for Democracy and Development – a pro-Bouterse party, created to engineer the return to civilian government without major policy changes. However, by this time, after a 1990 dispute with elected President Ransewak Shankar, Desi Bouterse had once again put the military back in charge via another coup. The new government was dominated by the Vice-President and Premier Jules Wijdenbosch. Wijdenbosch and his counterpart in the New Front (NF, the successor party to the Front for Democracy and Development), Runaldo Venetiaan, along with Bouterse, have since become the dominant figures in Surinam’s domestic politics. Free elections were held on May 25, 1991, depriving the military of much of its political power. In 1992 a peace treaty was signed between the government and several guerrilla groups. Venetiaan held the presidency from 1991 until 1996 – when he was replaced by Wijdenbosch – and then again, following the most recent national elections in May 2000.

Surinam’s most important foreign relations are with its near neighbours and with the former Dutch colonial power, which is its principal source of aid. In the case of the Dutch, relations have see-sawed since the early 1980s, depending
largely on the extent of Dutch aid and the extent of military influence over the Surinamese government. Bouterse, always a controversial figure in Dutch eyes, has been arraigned by Dutch courts for drug trafficking and the torture of political opponents. Relations with Surinam’s neighbours are generally good. A niggling border dispute with Guyana over territorial waters – the site of possible oil deposits – was settled in the summer of 2000, only for it to simmer enough for a UN tribunal to have to be set up in June 2004 in order to resolve the long-running dispute. However, the other main territorial dispute, with Brazil, has also yet to be resolved. In January 2004, the government introduced a new currency, the Surinamese dollar, to replace the guilder.


Peru National History

The first great conquest of Andean space began some 10,000 years ago when the descendants of the original migrants who crossed the land bridge over what is now the Bering Straits between the Asian and American continents reached northern South America. Over the next several millennia, hunter-gatherers fanned out from their bridgehead at Panama to populate the whole of South America. By about 2500 B.C., small villages inhabited by farmers and fishermen began to spring up in the fertile river valleys of the north coast of Peru.

These ancient Peruvians lived in simple adobe houses, cultivated potatoes and beans, fished in the nearby sea, and grew and wove cotton for their clothing. The catalyst for the development of the more advanced civilizations that followed was the introduction of a staple annual crop–maize (corn), and the development of irrigation, both dating from around the thirteenth century B.C. The stabilization of the food supply and ensuing surplus formed the foundation for the development of the great civilizations that rose and fell across the Andes for more than a thousand years prior to the arrival of the Europeans.

The Incas, of course, were only the most recent of these highly developed native American cultures to evolve in the Andes. The earliest central state to emerge in the northern highlands (that is, a state able to control both highland and coastal areas) was the Kingdom of Chavín, which emerged in the northern highlands and prospered for some 500 years between 950 B.C. and 450 B.C. Although it was originally thought by Julio C. Tello, the father of Peruvian archaeology, to have been "the womb of Andean civilization," it now appears to have had Amazonic roots that may have led back to Mesoamerica.

Chavín was probably more of a religious than political panAndean phenomenon. It seems to have been a center for the missionary diffusion of priests who transmitted a particular set of ideas, rituals, and art style throughout what is now northcentral Peru. The apparent headquarters for this religious cult in all likelihood was Chavín de Huantar in the Ancash highlands, whose elaborately carved stone masonry buildings are among the oldest and most beautiful in South America. The great, massive temple there, oriented to the cardinal points of the solstice, was perceived by the people of Chavín to be the center of the world, the most holy and revered place of the Chavín culture. This concept of God and his elite tied to a geographical location at the center of the cosmos–the idea of spatial mysticism–was fundamental to Inca and pre-Inca beliefs.

After the decline of the Chavín culture around the beginning of the Christian millennium, a series of localized and specialized cultures rose and fell, both on the coast and in the highlands, during the next thousand years. On the coast,
these included the Gallinazo, Mochica, Paracas, Nazca, and Chimú civilizations. Although each had their salient features, the Mochica and Chimú warrant special comment for their notable achievements.

The Mochica occupied a 136-kilometer-long expanse of the coast from the Río Moche Valley and reached its apogee toward the end of the first millennium A.D. They built an impressive irrigation system that transformed kilometers of barren
desert into fertile and abundant fields capable of sustaining a population of over 50,000. Without benefit of the wheel, the plough, or a developed writing system, the Mochica nevertheless achieved a remarkable level of civilization, as witnessed by their highly sophisticated ceramic pottery, lofty pyramids, and clever metalwork. In 1987 near Sipán, archaeologists unearthed an extraordinary cache of Mochica artifacts from the tomb of a great Mochica lord, including finely crafted gold and silver ornaments, large, gilded copper figurines, and wonderfully decorated ceramic pottery. Indeed, the Mochica artisans portrayed such a realistic and accurately detailed depiction of themselves and their environment that we have a remarkably authentic picture of their everyday life and work.

Whereas the Mochica were renowned for their realistic ceramic pottery, the Chimú were the great city-builders of pre-Inca civilization. As loose confederation of cities scattered along the coast of northern Peru and southern Ecuador, the Chimú flourished from about 1150 to 1450. Their capital was at Chan Chan outside of modern-day Trujillo. The largest pre-Hispanic city in South America at the time, Chan Chan had 100,000 inhabitants. Its twenty square kilometers of precisely symmetrical design was surrounded by a lush garden oasis intricately irrigated from the Río Moche several kilometers away. The Chimú civilization lasted a comparatively short period of time, however. Like other coastal states, its irrigation system, watered from sources in the high Andes, was apparently vulnerable to cutoff or diversion by expanding highland polities.

In the highlands, both the Tiwanaku (Tiahuanaco) culture, near Lake Titicaca in Bolivia, and the Wari (Huari) culture, near the present-day city of Ayacucho, developed large urban settlements and wide-ranging state systems between A.D.
500 and A.D. 1000. Each exhibited many of the aspects of the engineering ingenuity that later appeared with the Incas, such as extensive road systems, store houses, and architectural styles. Between A.D. 1000 and 1450, however, a period of fragmentation shattered the previous unity achieved by the Tiwanaku-Wari stage. During this period, scores of different ethnic-based groups
of varying sizes dotted the Andean landscape. In the central and southern Andes, for example, the Chupachos of Huánuco numbered some 10,000, while the Lupacas on the west bank of Lake Titicaca comprised over 100,000.

The Incas of Cusco (Cuzco) originally represented one of these small and relatively minor ethnic groups, the Quechuas. Gradually, as early as the thirteenth century, they began to expand and incorporate their neighbors. Inca expansion was slow until about the middle of the fifteenth century, when the pace of conquest began to accelerate, particularly under the rule of the great emperor Pachacuti Inca Yupanqui (1438-71). Historian John Hemming describes Pachacuti as "one of those protean figures, like Alexander or Napoleon, who combine a mania for conquest with the ability to impose his will on every facet of government." Under his rule and that of his son, Topa Inca Yupanqui (1471-93), the Incas came to control upwards of a third of South America, with a population of 9 to 16 million inhabitants under their rule. Pachacuti also promulgated a comprehensive code of laws to govern his far-flung empire, called Tawantinsuyu, while consolidating his absolute temporal and spiritual authority as the God of the Sun who ruled from a magnificently rebuilt Cusco.

Although displaying distinctly hierarchical and despotic features, Incan rule also exhibited an unusual measure of flexibility and paternalism. The basic local unit of society was the ayllu, which formed an endogamous nucleus of kinship groups who possessed collectively a specific, although often disconnected, territory. In the ayllu, grazing land was held in common (private property did not exist), whereas arable land was parceled out to families in proportion to their size. Since self-sufficiency was the ideal of Andean society, family units claimed parcels of land in different ecological niches in the rugged Andean terrain. In this way, they achieved what anthropologists have called "vertical complementarity," that is, the ability to produce a wide variety of crops–such as maize, potatoes, and quinoa (a protein-rich grain)–at different altitudes
for household consumption.

The principle of complementarity also applied to Andean social relations, as each family head had the right to ask relations, allies, or neighbors for help in cultivating his plot. In return, he was obligated to offer them food and
(a fermented corn alcoholic beverage), and to help them on their own plots when asked. Mutual aid formed the ideological and material bedrock of all Andean social and productive relations. This system of reciprocal exchange existed at every level of Andean social organization: members of the ayllus, curacas (local lords) with their subordinate ayllus, and the Inca himself with all his subjects.

Ayllus often formed parts of larger dual organizations with upper and lower divisions called moieties, and then still larger units, until they comprised the entire ethnic group. As it expanded, the Inca state became, historian Nathan Wachtel writes, "the pinnacle of this immense structure of interlocking units. It imposed a political and military apparatus on all of these ethnic groups, while continuing to rely on the hierarchy of curacas, who declared their loyalty to the Inca and ruled in his name." In this sense, the Incas established a system of indirect rule that enabled the incorporated ethnic groups to maintain their distinctiveness and self-awareness within a larger imperial system.

All Inca people collectively worked the lands of the Inca, who served as representative of the God of the Sun–the central god and religion of the empire. In return, they received food, as well as chicha and coca leaves (which were chewed and used for religious rites and for medicinal purposes); or they made cloth and clothing for tribute, using the Inca flocks; or they regularly performed mita, or service for public works, such as roads and buildings, or for military purposes that enabled the development of the state. The Inca people also maintained the royal family and bureaucracy, centered in Cusco. In return for these services, the Inca allocated land and redistributed part of the tribute received–such as food, cloth, and clothes–to the communities, often in the form of welfare. Tribute was stored in centrally located warehouses to be dispensed during periods of shortages caused by famine, war, or natural disaster. In the absence of a market economy, Inca redistribution of tribute served as the primary means of exchange. The principles of reciprocity and redistribution, then, formed the organizing ideas that governed all relations in the Inca empire from community to state.

One of the more remarkable elements of the Inca empire was the mitmaq system. Before the Incas, these were colonies of settlers sent out from the ayllus to climatically different Andean terrains to cultivate crops that would vary and enrich the community diet. Anthropologist John V. Murra dubbed these unique Andean island colonies "vertical archipelagos," which the Incas adapted and applied on a large scale to carve out vast new areas of cultivation. The Incas also expanded the original Andean concept of mitmaq as a vehicle for developing complementary sources of food to craft specialization and military expansion. In the latter instance, Inca mitmaq were used to establish permanent garrisons to maintain control and order on the expanding Inca frontier. What "began as a means of complementing productive access to a variety of ecological tiers had become," in the words of Murra, "an onerous means of political control" under the Incas.

By the late fifteenth century and early sixteenth century, the Inca Empire had reached its maximum size. Such powerful states as the coastal Chimú Kingdom were defeated and incorporated into the empire, although the Chimús spoke a language, Yunga, that was entirely distinct from the Incas’ Quechua. But as the limits of the central Andean culture area were reached in present-day Chile and Argentina, as well as in the Amazon forests, the Incas encountered serious resistance, and those territories were never thoroughly subjugated.

At the outset, the Incas shared with most of their ethnic neighbors the same basic technology: weaving, pottery, metallurgy, architecture, construction engineering, and irrigation agriculture. During their period of dominance, little was added to this inventory of skills, other than the size of the population they ruled and the degree and efficiency of control they attained. The latter, however, constituted a rather remarkable accomplishment, particularly because it was achieved without benefit of either the wheel or a formal system of writing. Instead of writing, the Incas used the intricate and highly accurate khipu (knot-tying) system of recordkeeping . Imperial achievements were the more extraordinary considering the relative brevity of the period during which the empire was built (perhaps four generations) and the formidable geographic obstacles of the Andean landscape.

Viewed from the present-day perspective of Peruvian underdevelopment, one cannot help but admire a system that managed to bring under cultivation four times the amount of arable land as today. Achievements such as these caused some twentieth-century Peruvian scholars of the indigenous peoples, known as indigenistas (Indigenists), such as Hildebrando Castro Pozo and Luis Eduardo Valcárcel, to idealize the Inca past and to overlook the hierarchical nature and totalitarian mechanisms of social and political control erected during their Incan heyday. To other intellectuals, however, from José Carlos
Mariátegui to Luis Guillermo Lumbreras, the path to development has continued to call for some sort of return to the country’s pre-Columbian past of communal values, autochthonous technology, and genius for production and organization.

By the time that the Spaniards arrived in 1532, the empire extended some 1,860 kilometers along the Andean spine–north to southern Colombia and south to northern Chile, between the Pacific Ocean in the west and the Amazonian rain forest in the east. Some five years before the Spanish invasion, this vast empire was rocked by a civil war that, combined with diseases imported by the Spaniards, would ultimately weaken its ability to confront the European invaders. The premature death by measles of the reigning Sapa Inca, Huayna Cápac (1493-1524), opened the way for a dynastic struggle between the emperor’s two sons, Huáscar (from Cusco) and the illegitimate Atahualpa (from Quito), who each had inherited half the empire. After a five-year civil war (1528-32), Atahualpa (1532-33) emerged victorious and is said to have tortured and put to death more than 300 members of Huáscar’s family. This divisive and debilitating internecine conflict left the Incas particularly vulnerable just as Francisco Pizarro and
his small force of adventurers came marching up into the Sierra.

While the Inca empire flourished, Spain was beginning to rise to prominence in the Western world. The political union of the several independent realms in the Iberian Peninsula and the final expulsion of the Moors after 700 years of intermittent warfare had instilled in Spaniards a sense of destiny and a militant religious zeal. The encounter with the New World by Cristóbal Colón (Christopher Columbus) in 1492 offered an outlet for the material, military, and religious ambitions of the newly united nation.

Francisco Pizarro, a hollow-cheeked, thinly beared Extremaduran of modest hidalgo (lesser nobility) birth, was not only typical of the arriviste Spanish conquistadors who came to America, but also one of the most spectacularly successful. Having participated in the indigenous wars and slave raids on Hispañiola, Spain’s first outpost in the New World, the tough, shrewd, and audacious Spaniard was with Vasco Nuñez de Balboa when he first glimpsed the Pacific Ocean in 1513 and was a leader in the conquest of Nicaragua (1522). He later found his way to Panama, where he became a wealthy encomendero and leading citizen. Beginning in 1524, Pizarro proceeded to mount several expeditions, financed mainly from his own capital, from Panama south along the west coast of South America.

After several failures, Pizarro arrived in northern Peru late in 1531 with a small force of about 180 men and 30 horses. The conquistadors were excited by tales of the Incas’ great wealth and bent on repeating the pattern of conquest and plunder that was becoming practically routine elsewhere in the New World. The Incas never seemed to appreciate the threat they faced. To them, of course, the Spaniards seemed the exotics. "To our Indian eyes," wrote Felipe Guamán Poma de Ayala, the author of Nueva crónica y buen gobierno (New Chronicle and Good Government), "the Spaniards looked as if they were shrouded like corpses. Their faces were covered with wool, leaving only the eyes visible, and the caps which they wore resembled little red pots on top of their heads."

On November 15, 1532, Pizarro arrived in Cajamarca, the Inca’s summer residence located in the Andean highlands of northern Peru, and insisted on an audience with Atahualpa. Guamán Poma says the Spaniards demanded that the Inca renounce his gods and accept a treaty with Spain. He refused. "The Spaniards began to fire their muskets and charged upon the Indians, killing them like ants. At the sound of the explosions and the jingle of bells on the horses’ harnesses, the shock of arms and the whole amazing novelty of their attackers’ appearance, the Indians were terrorstricken . They were desperate to escape from being trampled by the horses, and in their headlong flight a lot of them were crushed to death." Guamán Poma adds that countless "Indians" but only five Spaniards were killed, "and these few casualties were not caused by the Indians, who had at no time dared to attack the formidable strangers." According to other accounts, the only Spanish casualty was Pizarro, who received a hand wound while trying to protect Atahualpa.

Pizarro’s overwhelming victory at Cajamarca in which he not only captured Atahualpa, but devastated the Inca’s army, estimated at between 5,000 and 6,000 warriors, dealt a paralyzing and demoralizing blow to the empire, already weakened by civil war. The superior military technology of the Spaniards–cavalry, cannon, and above all Toledo steel–had proved unbeatable
against a force, however large, armed only with stone-age battle axes, slings, and cotton-padded armor. Atahualpa’s capture not only deprived the empire of leadership at a crucial moment, but the hopes of his recently defeated opponents, the supporters of Huáscar, were revived by the prospect of an alliance with a powerful new Andean power contender, the Spaniards.

Atahualpa now sought to gain his freedom by offering the Spaniards a treasure in gold and silver. Over the next few months, a fabulous cache of Incan treasure–some eleven tons of gold objects alone–was delivered to Cajamarca from all corners of the empire. Pizarro distributed the loot to his "men of Cajamarca," creating instant "millionaires," but also slighting Diego de Almagro, his partner who arrived later with reinforcements. This sowed the seeds for a bitter factional dispute that soon would throw Peru into a bloody civil war and cost both men their lives. Once enriched by the Incas’ gold, Pizarro, seeing no further use for Atahualpa, reneged on his agreement and executed the Inca–by garroting rather than hanging–after Atahualpa agreed to be baptized as a Christian.

With Atahualpa dead, the Spaniards proceeded to march on Cusco. On the way, they dealt another decisive blow, aided by native American allies from the pro-Huáscar faction, to the still formidable remnants of Atahualpa’s army. Then on November 15, 1533, exactly a year after arriving at Cajamarca, Pizarro, reinforced with an army of 5,000 native American auxiliaries, captured the imperial city and placed Manco Cápac II, kin of Huáscar and his faction, on the Inca throne as a Spanish puppet.

Further consolidation of Spanish power in Peru, however, was slowed during the next few years by both indigenous resistance and internal divisions among the victorious Spaniards. The native population, even those who had allied initially with the invaders against the Incas, had second thoughts about the arrival of the newcomers. They originally believed that the Spaniards simply represented one more in a long line of Andean power-contenders with whom to ally or accommodate. The continuing violent and rapacious behavior of many Spaniards, however, as well as the harsh overall effects of the new colonial order, caused many to alter this assessment. This change led Manco Cápac II to balk at his subservient role as a Spanish puppet and to rise in rebellion in 1536. Ultimately unable to defeat the Spaniards, Manco retreated to Vilcabamba in the remote Andean interior where he established an independent Inca kingdom, replete with a miniature royal court, that held out until 1572.

Native American resistance took another form during the 1560s with the millenarian religious revival in Huamanga known as Taki Onqoy (literally "dancing sickness"), which preached the total rejection of Spanish religion and customs. Converts to the sect expressed their conversion and spiritual rebirth by a sudden seizure in which they would shake and dance uncontrollably, often falling and writhing on the ground. The leaders of Taki Onqoy claimed that they were messengers from the native gods and preached that a pan-Andean alliance of native gods would destroy the Christians by unleashing disease and other
calamities against them. An adherent to the sect declared at an official inquiry in 1564 that "the world has turned about, and this time God and the Spaniards [will be] defeated and all the Spaniards killed and their cities drowned; and the sea will rise and overwhelm them, so that there will remain no memory of them."

To further complicate matters for the conquerors, a fierce dispute broke out among the followers of Pizarro and those of Diego de Almagro. Having fallen out over the original division of spoils at Cajamarca, Almagro and his followers challenged Pizarro’s control of Cusco after returning from an abortive conquest expedition to Chile in 1537. Captured by Pizarro’s forces at the Battle of Salinas in 1538, Almagro was executed, but his supporters, who continued to plot under his son, Diego, gained a measure of revenge by assassinating Pizarro in 1541.

As the civil turmoil continued, the Spanish crown intervened to try to bring the dispute to an end, but in the process touched off a dangerous revolt among the colonists by decreeing the end of the encomienda system in 1542. The encomienda was a much abused prerogative to extract labor and tribute from the indigenous peoples in return for the responsibility to protect and Christianize them. It had originally been granted as a reward to the conquistadors and their families
during the conquest and ensuing colonization, and was regarded as sacrosanct by the grantees, or encomenderos, who numbered about 500 out of a total Spanish population of 2,000 in 1536. However, to the crown it raised the specter of a potentially privileged, neofeudal elite emerging in the Andes to challenge crown authority.

The crown’s efforts to enforce the New Laws (Nuevos Leyes) of 1542 alienated the colonists, who rallied around the figure of Gonzalo Pizarro, the late Francisco’s brother. Gonzalo managed to kill the intemperate Viceroy Don Blasco Núñez de la Vela, who, on his arrival, had foolishly tried to enforce the New Laws. In 1544 Pizarro assumed de facto authority over Peru. His arbitrary and brutal rule, however, caused opposition among the colonists, so that when another royal representative, Pedro de la Gasca, arrived in Peru to restore crown authority, he succeeded in organizing a pro-royalist force that defeated and executed Pizarro in 1548. With Gonzalo’s death, the crown finally succeeded, despite subsequent intermittent revolts, in ending the civil war and exerting crown control over Spanish Peru.

It would take another two decades, however, to finally quell native American resistance. Sensing the danger of the Taki Onqoy heresy, the Spanish authorities moved quickly and energetically, through a church-sponsored anti-idolatry campaign, to suppress it before it had a chance to spread. Its leaders were seized, beaten, fined, or expelled from their communities. At the same time, a new campaign was mounted against the last Inca holdout at Vilcabamba, which was finally captured in 1572. With it, the last reigning Inca, Túpac Amaru, was tried and beheaded by the Spaniards in a public ceremony in Cusco, thereby putting an end to the events of the conquest that had begun so dramatically four decades earlier at Cajamarca.

Throughout the Americas, the impact of the Spanish conquest and subsequent colonization was to bring about a cataclysmic demographic collapse of the indigenous population. The Andes would be no exception. Even before the appearance of Francisco Pizarro on the Peruvian coast, the lethal diseases that had been introduced into the Americas with the arrival of the Spaniards– smallpox, malaria, measles, typhus, influenza, and even the common cold–had spread to South America and begun to wreak havoc throughout Tawantinsuyu. Indeed, the death of Huayna Cápac and his legitimate son and heir, Ninan Cuyoche, which touched off the disastrous dynastic struggles between Huáscar and Atahualpa, is believed to have been the result of a smallpox or measles epidemic that struck in 1530-31.

With an estimated population of 9 to 16 million people prior to the arrival of the Europeans, Peru’s population forty years later was reduced on average by about 80 percent, generally higher on the coast than in the highlands. The chronicler Pedro de Cieza de Leon, who traveled over much of Peru during this period, was particularly struck by the extent of the depopulation along the coast. "The inhabitants of this valley [Chincha, south of Lima]," he wrote, "were so numerous that many Spaniards say that when it was conquered by the Marquis [Pizarro] and themselves, there were … more than 25,000 men, and I doubt that there are now 5,000, so many have been the inroads and hardships they have suffered." Demographic anthropologists Henry F. Dobyns and Paul L. Doughty have estimated that the native American population fell to about 8.3 million by
1548 and to around 2.7 million in 1570. Unlike Mexico, where the population stabilized at the end of the seventeenth century, it did not reach its nadir in Peru until the latter part of the eighteenth century, after the great epidemic of 1719.

War, exploitation, socioeconomic change, and the generalized psychological trauma of conquest all combined to reinforce the main contributor to the demise of the native peoples–epidemic disease. Isolated from the old world for millennia and therefore lacking immunities, the Andean peoples were defenseless to the introduction of the deadly viruses by the Europeans. Numerous killer pandemics swept down from the north, laying waste to entire communities. Occurring one after the other in roughly tenyear intervals during the sixteenth century (1525, 1546, 1558-59, 1585), these epidemics did not allow the population time to recover, while impairing its ability to reproduce itself.

With the discovery of the great silver lodes at Potosí in Perú Alto (Upper Peru–present-day Bolivia) in 1545 and mercury at Huancavelica in 1563, Peru became what historian Frederick B. Pike describes as "Spain’s great treasure house in South America." As a result, the axis of the colonial economy began to move away from the direct expropriation of Incan wealth and production to sustain the initial Spanish population through the encomienda system to the extraction of mineral wealth. The population at Potosí in the high Andes reached its apogee in 1650 at about 160,000, making it one of the largest cities
in the Western world at the time. In its first ten years, according to Alexander von Humboldt, Potosí produced some 127 million pesos, which fueled for a time the Habsburg war machine and Spanish hegemonic political pretensions in Europe. Silver from Potosí also dynamized and helped to develop an internal economy of production and exchange that encompassed not only the northern highlands, but also the Argentine pampa, the Central Valley of Chile, and coastal Peru and Ecuador. The main "growth pole" of this vast "economic space," as historian Carlos Assadourian Sempat calls it, was the Lima-Potosí axis, which served as centers of urban concentration, market demand, strategic commodity flows (silver exports and European imports), and inflated prices.

If Potosí silver production was the mainspring of this economic system, Lima was its hub. "The city of the Kings" (Los Reyes) had been founded by Pizarro as the capital of the new viceroyalty in 1535 in order to reorient trade, commerce, and power away from the Andes toward imperial Spain and Europe. As the outlet for silver bullion on the Pacific, Lima and its nearby port, Callao, also received and redistributed the manufactured goods from the metropolis for the growing settlements along the growth pole. The two-way flow of imports and exports through Lima concentrated both wealth and administration, public and private, in the city. As a result, Lima became the headquarters for estate owners and operators, merchants connecting their Andean trading operations with sources of supply in Spain, and all types of service providers, from artisans to lawyers, who needed access to the system in a central place. Not far behind came the governmental and church organizations established to administer the vast
viceroyalty. Finally, once population, commerce, and administration interacted, major cultural institutions such as a university, a printing press, and theater followed suit.

The great architect of this colonial system was Francisco Toledo y Figueroa, who arrived in Lima in 1569, when its population was 2,500, and served as viceroy until 1581. Toledo, one of Madrid’s ablest administrators and diplomats, worked to expand the state, increase silver production, and generally reorganize the economy by instituting a series of major reforms during his tenure. Native communities (ayllus) were concentrated into poorly located colonial settlements called to facilitate administration and the conversion of the native Americans to Christianity. The Incaic mita system was shifted from performing public works or military service to supplying compulsory labor for the mines and other key sectors of the economy and state. Finally, various fiscal schemes, such as the tribute tax to be paid in coin and the forced purchase of Spanish merchandise, were levied on the indigenous population in order to force or otherwise induce it into the new monetary economy as "free wage" workers. In these, as in many other instances, the Spaniards used whatever elements of the Andean political, social, and economic superstructure that served their purposes and unhesitatingly modified or discarded those that did not.

As a result of these and other changes, the Spaniards and their creole successors came to monopolize control over the land, seizing many of the best lands abandoned by the massive native depopulation. Gradually, the land tenure system became polarized. One sector consisted of the large haciendas, worked by native peasant serfs in a variety of labor arrangements and governed by their new overlords according to hybrid Andean forms of Iberian paternalism. The other sector was made up of remnants of the essentially subsistence-based indigenous communities that persisted and endured. This left Peru with a legacy of one of the most unequal landholding arrangements in all of Latin America and a formidable obstacle to later development and modernization. The expansion of a colonial administrative apparatus and bureaucracy paralleled the economic reorganization. The viceroyalty was divided into audiences (audiencias), which were further subdivided into provinces or districts (corregimientos) and finally municipalities, which included a city or town, governed by town councils (cabildos), composed of the most prominent citizens, mostly encomenderos in the early years and later hacendados.

The most important royal official was the viceroy, who had a host of responsibilities ranging from general administration (particularly tax collection and construction of public works) and internal and external defense to support of the church and protection of the native population. He was surrounded by a number of other judicial, ecclesiastical, and treasury officials, who also reported to the Council of the Indies, the main governing body located in Spain. This configuration of royal officials, along with an official review of his tenure called the residencia, served as a check on viceregal power.

In the early years of the conquest, the crown was particularly concerned with preventing the conquistadors or encomenderos from establishing themselves as a feudal aristocracy capable of thwarting royal interests. Therefore, it moved quickly to quell the civil disturbances that had racked Peru immediately after the conquest and to decree the New Laws of 1542, which deprived the encomenderos and their heirs of their rights to native American goods and services.

The early administrative functions of the encomenderos over the indigenous population (protection and Christianization) were taken over by new state-appointed officials called correqidores de indios (governors of Indians). They were charged at the provincial level with the administration of justice, control of commercial relations between native Americans and Spaniards, and the collection of the tribute tax. The corregidores (Spanish magistrates) were assisted by curacas, members of the native elite, who had been used by the conquerors from the very beginning as mediators between the native population and the Europeans. Over time the corregidores used their office to accumulate wealth and power to dominate rural society, establishing mutual alliances with local and regional elites such as the curacas, native American functionaries, municipal officials, rural priests (doctrineros), landowners, merchants, miners, and others, as well as native and mestizo subordinates.

As the crown’s political authority was consolidated in the second half of the sixteenth century, so too was its ability to regulate and control the colonial economy. Operating according to the mercantilistic strictures of the times, the crown sought to maximize investment in valuable export production, such as silver and later other mineral and agricultural commodities, while supplying the new colonial market with manufactured imports, so as to create a favorable balance of trade for the metropolis. However, the tightly regulated trading monopoly, headquartered in Seville, was not always able to provision the colonies effectively. Assadorian shows that most urban and mining demand, particularly among the laboring population, was met by internal Andean production (rough-hewn clothing, foodstuffs, yerba mate tea, chicha beer, and the like) from haciendas, indigenous communities, and textile factories (obrajes). According to him, the value of these Andean products amounted to fully 60 to 70 percent of the value of silver exports and elite imports linking Peru and Europe. In any case, the crown was successful in
managing the colonial export economy through the development of a bureaucratic and interventionist state, characterized by a plethora of mercantilistic rules that regulated the conduct of business and commerce. In doing so, Spain left both a mercantilist and export-oriented pattern and legacy of "development" in the Andes that has survived up to the present day, and which remains a problem of contemporary underdevelopment.

The crown, as elsewhere in the Americas, worked to solidify the Andean colonial order in tandem with the church to which it was tied by royal patronage dating from the late fifteenth century. Having accompanied Francisco Pizarro and his force during the conquest, the Roman Catholic friars proceeded zealously to carry out their mission to convert the indigenous peoples to Christianity. In this endeavor, the church came to play an important role in the acculturation of the natives, drawing them into the cultural orbit of the Spanish settlers. It also waged a constant war to extirpate native religious beliefs. Such efforts met with only partial success, as the syncretic nature of Andean Roman Catholicism today attests. With time, however, the evangelical mission of the church gave way to its regular ecclesiastical endeavors of ministering to the growing Spanish and creole population.

By the end of the century, the church was beginning to acquire important financial assets, particularly bequests of land and other wealth, that would consolidate its position as the most important economic power during the colonial period. At the same time, it assumed the primary role of educator, welfare provider, and, through the institution of the Inquisition, guardian of orthodoxy throughout the viceroyalty. Together, the church-state partnership served to consolidate and solidify the crown authority in Peru that, despite awesome problems of distance, rough terrain, and slow communications, endured almost three centuries of continuous and relatively stable rule.

Silver production, meanwhile, began to enter into a prolonged period of decline in the seventeenth century. This decline also slowed the important transatlantic trade while diminishing the importance of Lima as the economic hub of the viceregal economy. Annual silver output at Potosí, for example, fell in value from a little over 7 million pesos in 1600 to almost 4.5 million pesos in 1650 and finally to just under 2 million pesos in 1700. Falling silver production, the declining transatlantic trade, and the overall decline of Spain itself during the seventeenth century have long been interpreted by historians as causing a prolonged depression both in the viceroyalties of Peru and New Spain. However, economic historian Kenneth J. Andrien has challenged this view, maintaining that the Peruvian economy, rather than declining, underwent a major transition and restructuring. After silver production and the transatlantic trade eroded the export economy, they were replaced by more diversified, regionalized, and autonomous development of the agricultural and manufacturing sectors. Merchants, miners, and producers simply shifted their investments and entrepreneurial activities away from mining and the transatlantic trade into internal production and import-substituting opportunities, a trend already visible on a small scale by the end of the previous century. The result was a surprising degree of regional diversification that stabilized the viceregal economy during the seventeenth century.

This economic diversification was marked by the rise and expansion of the great estates or haciendas that were carved out of abandoned native land as a result of the demographic collapse. The precipitous decline of the native population was particularly severe along the coast and had the effect of opening up the fertile bottom lands of the river valleys to Spanish immigrants eager for land and farming opportunities. A variety of crops were raised: sugar and cotton along the northern coast; wheat and grains in the central valleys; grapes, olives, and sugar along the entire coast. The highlands, depending on geographic
and climatic conditions, underwent a similar hacienda expansion and diversification of production. There, coca, potatoes, livestock, and other indigenous products were raised in addition to some coastal crops, such as sugar and cereals.

This transition toward internal diversification in the colony also included early manufacturing, although not to the extent of agrarian production. Textile manufacturing flourished in Cusco, Cajamarca, and Quito to meet popular demand for rough-hewn cotton and woolen garments. A growing intercolonial trade along the Pacific Coast involved the exchange of Peruvian and Mexican silver for oriental silks and porcelain. In addition, Arequipa and then Nazca and Ica became known for the production of fine wines and brandies. And throughout the viceroyalty, small-scale artisan industries supplied a range of lower-cost goods only sporadically available from Spain and Europe, which were now mired in the seventeenth-century depression.

If economic regionalization and diversification worked to stabilize the colonial economy during the seventeenth century, the benefits of such a trend did not, as it turned out, accrue to Madrid. The crown had derived enormous revenues from silver production and the transatlantic trade, which it was able to tax and collect relatively easily. The decline in silver production caused a precipitous fall in crown revenue, particularly in the second half of the seventeenth century. For example, revenue remittances to Spain dropped from an annual average of almost 1.5 million pesos in the 1630s to less than 128,000 pesos by the 1680s. The crown tried to restructure the tax system to conform to the new economic realities of seventeenth-century colonial production but was rebuffed by the recalcitrance of emerging local elites. They tenaciously resisted any new local levies on their production, while building alliances of mutual convenience and gain with local crown officials to defend their vested interests.

The situation further deteriorated, from the perspective of Spain, when Madrid began in 1633 to sell royal offices to the highest bidder, enabling self-interested creoles to penetrate and weaken the royal bureaucracy. The upshot was not only a sharp decline in vital crown revenues from Peru during the century, which further contributed to the decline of Spain itself, but an increasing loss of royal control over local creole oligarchies throughout the viceroyalty. Lamentably, the sale of public offices also had longer-term implications. The practice weakened any notion of disinterested public service and infused into the political culture the corrosive idea that office-holding was an opportunity for selfish, private gain rather than for the general public good.

If the economy of the viceroyalty reached a certain steady state during the seventeenth century, its population continued to decline. Estimated at around 3 million in 1650, the population of the viceroyalty finally reached its nadir at a little over 1 million inhabitants in 1798. It rose sharply to almost 2.5 million inhabitants by 1825. The 1792 census indicated an ethnic composition of 13 percent Spaniards, 56 percent native American, and 27 percent castas (mestizos), the latter category the fastest-growing group because of both acculturation and miscegenation between Spaniards and natives.

Demographic expansion and the revival of silver production, which had fallen sharply at the end of the seventeenth century, promoted a period of gradual economic growth from 1730 to 1770. The pace of growth then picked up in the last
quarter of the eighteenth century, partly as a result of the so-called Bourbon reforms of 1764, named after a branch of the ruling French Bourbon family that ascended to the Spanish throne after the death of the last Habsburg in 1700.

In the second half of the eighteenth century, particularly during the reign of Charles III (1759-1788), Spain turned its reform efforts to Spanish America in a concerted effort to increase the revenue flow from its American empire. The
aims of the program were to centralize and improve the structure of government, to create more efficient economic and financial machinery, and to defend the empire from foreign powers. For Peru, perhaps the most far-reaching change was the creation of a new viceroyalty in the Río de la Plata (River Plate) region in 1776 that radically altered the geopolitical and economic balance in South America. Upper Peru was detached administratively from the old Viceroyalty of Peru, so that profits from Potosí no longer flowed to Lima and Lower Peru, but to Buenos Aires. With the rupture of the old Lima-Potosí circuit, Lima suffered an inevitable decline in prosperity and prestige, as did the southern highlands (Cusco, Arequipa, and Puno). The viceregal capital’s status declined further from the general measures to introduce free trade within the empire. These measures stimulated the economic development of peripheral areas in northern South America (Venezuela) and southern South America (Argentina), ending Lima’s former monopoly of South American trade.

As a result of these and other changes, the economic axis of Peru shifted northward to the central and northern Sierra and central coast. These areas benefited from the development of silver mining, particularly at Cerro de Pasco, which was spurred by a series of measures taken by the Bourbons to modernize and revitalize the industry. However, declining trade and production in the south, together with a rising tax burden levied by the Bourbon state, which fell heavily on the native peasantry, set the stage for the massive native American revolt that erupted with the Túpac Amaru rebellion in 1780-82.

An upsurge in native discontent and rebellion had actually begun to occur in the eighteenth century. To survive their brutal subjugation, the indigenous peoples had early on adopted a variety of strategies but were never as passive
as portrayed in the scholarly literature until recently. To endure, the native Americans did indeed have to adapt to Spanish domination. As often as not, however, they found ways of asserting their own interests.

After the conquest, the crown had assumed from the Incas patrimony over all native land, which it granted in usufruct to indigenous community families, in exchange for tribute payments and mita labor services. This system
became the basis for a long-lasting alliance between the colonial state and the native communities, bolstered over the years by the elaboration of a large body of protective legislation. Crown officials, such as the corregidores de indios, were charged with the responsibility of protecting natives from abuse at the hands of the colonists, particularly the alienation of their land
to private landholders. Nevertheless, the colonists and their native allies, the curacas, often in collusion with the corregidores and local priests, found ways of circumventing crown laws and gaining control of native American lands and labor. To counter such exploitation and to conserve their historical rights to the land, many native American leaders shrewdly resorted to the legal system. Litigation did not always suffice, of course, and Andean history is full of desperate native peasant rebellions.

The pace of these uprisings increased dramatically in the eighteenth century, with five in the 1740s, eleven in the 1750s, twenty in the 1760s, and twenty in the 1770s. Their underlying causes were largely economic. Land was becoming increasingly scarce in the communities because of illegal purchases by unscrupulous colonists at a time when the indigenous population was once again growing after the long, postconquest demographic decline. At the same time, the native peasantry felt the brunt of higher taxes levied by the crown, part of the general reform program initiated by Madrid in the second half of the eighteenth century. These increased tax burdens came at a time when the highland elite–corregidores, priests, curacas, and Hispanicized native landholders–was itself increasing the level of surplus extracted from the native American peasant economy. According to historian Nils P. Jacobsen, this apparent tightening of the colonial "screw" during the eighteenth century led to the "over-exploitation" of the native peasantry and the ensuing decades of indigenous rebellions.

The culmination of this protest came in 1780 when José Gabriel Condorcanqui, a wealthy curaca and mestizo descendant of Inca ancestors who sympathized with the oppressed native peasantry, seized and executed a notoriously abusive corregidor near Cusco. Condorcanqui raised a ragtag army of tens of thousands of natives, castas, and even a few dissident creoles, assuming the name Túpac Amaru II after the last Inca, to whom he was related. Drawing on a rising tide of Andean millenarianism and nativism, Túpac Amaru II raised the specter of some kind of return to a mythic Incaic past among the indigenous masses at a time of increased economic hardship.

Captured by royalist forces in 1781, Condorcanqui was brought to trial and, like his namesake, cruelly executed, along with several relatives, in the main plaza in Cusco, as a warning to others. The rebellion continued, however, and even expanded into the Altiplano around Lake Titicaca under the leadership of his brother, Diego Cristóbal Túpac Amaru. It was finally suppressed in 1782, and in the following years the authorities undertook to carry out some of the reforms that the two native leaders had advocated.

Despite the Túpac Amaru revolts, independence was slow to develop in the Viceroyalty of Peru. For one
thing, Peru was a conservative, royalist stronghold where the potentially restless creole elites maintained a relatively privileged, if dependent, position in the old colonial system. At the same time, the "anti-white" manifestations of the Túpac Amaru revolt demonstrated that the indigenous masses could not easily be mobilized without posing a threat to the creole caste itself. Thus, when independence finally did come in 1824, it was largely a foreign imposition rather than a truly popular, indigenous, and nationalist movement. As historian David P. Werlich has aptly put it, "Peru’s role in the drama of Latin American independence was largely that of an interested spectator until the final act."

What the spectator witnessed prior to 1820 was a civil war in the Americas that pitted dissident creole elites in favor of independence against royalists loyal to the crown and the old colonial order. The movement had erupted in reaction to Napoleon Bonaparte’s invasion of Spain in 1808, which deposed Ferdinand VII and placed a usurper, Joseph Bonaparte, on the Spanish throne. In America this raised the question of the very political legitimacy of the colonial government. When juntas arose in favor of the captive Ferdinand in various South American capitals (except in Peru) the following year, even though of relatively short duration, they touched off a process toward eventual separation that ebbed and flowed throughout the continent over the next fifteen years. This process developed its greatest momentum at the periphery of Spanish power in South America–in what became Venezuela and Colombia in the north and the Río de la Plata region, particularly Argentina, in the south.

Not until both movements converged in Peru during the latter phases of the revolt, specifically the 4,500-man expeditionary force led by General José de San Martín that landed in Pisco in September 1820, was Spanish control of Peru seriously threatened. San Martín, the son of a Spanish army officer stationed in Argentina, had originally served in the Spanish army but returned to his native Argentina to join the rebellion. Once Argentine independence was achieved in 1814, San Martín conceived of the idea of liberating Peru by way of Chile. As commander of the 5,500-man Army of the Andes, half of which was composed of former black slaves, San Martín, in a spectacular military operation, crossed the Andes and liberated Chile in 1817. Three years later, his somewhat smaller army left Valparaíso for Peru in a fleet commanded by a former British admiral, Thomas Alexander Cochrane (Lord Dundonald).

Although some isolated stirrings for independence had manifested themselves earlier in Peru, San Martín’s invasion persuaded the conservative creole intendant of Trujillo, José Bernardo de Tagle y Portocarrero, that Peru’s liberation was at hand and that he should proclaim independence. It was symptomatic of the conservative nature of the viceroyalty that the internal forces now declaring for independence were led by a leading creole aristocrat, the fourth marquis of Torre Tagle, whose monarchist sympathies for any future political order coincided with those of the Argentine liberator.

The defeat of the last bastion of royal power on the continent, however, proved a slow and arduous task. Although a number of other coastal cities quickly embraced the liberating army, San Martín was able to take Lima in July 1821 only when the viceroy decided to withdraw his considerable force to the Sierra, where he believed he could better make a stand. Shortly thereafter, on July 28, 1821, San Martín proclaimed Peru independent and then was named protector by an assembly of notables. However, a number of problems, not the least of which was a growing Peruvian resentment over the heavy-handed rule of the foreigner they dubbed "King José," stalled the campaign to defeat the royalists. As a result, San Martín decided to seek aid from Simón Bolívar Palacios, who had liberated much of northern South America from Spanish power.

The two liberators met in a historic meeting in Guayaquil in mid-1822 to arrange the terms of a joint effort to complete the liberation of Peru. Bolívar refused to agree to a shared partnership in the Peruvian campaign, however, so a frustrated San Martín chose to resign his command and leave Peru for Chile and eventual exile in France. With significant help from San Martín’s forces, Bolívar then proceeded to invade Peru, where he won the Battle of Junín in August 1824. But it remained for his trusted lieutenant, thirty-one-year-old General Antonio José de Sucre Alcalá, to complete the task of Peruvian independence by defeating royalist forces at the hacienda of Ayacucho near Huamanga (a city later renamed Ayacucho) on December 9, 1824. This battle in the remote southern highlands effectively ended the long era of Spanish colonial rule in South America.

Peru’s transition from more than three centuries of colonial rule to nominal independence in 1824 under President Bolívar (1824-26) proved torturous and politically destablizing. Independence did little to alter the fundamental structures of inequality and underdevelopment based on colonialism and Andean neofeudalism. Essentially, independence represented the transfer of power from the Spanish mainlanders (peninsulares) to sectors of the elite creole class, whose aim was to preserve and enhance their privileged socioeconomic status. However, the new creole elite was unable to create a stable, new
constitutional order to replace the crown monolith of church and state. Nor was it willing to restructure the social order in a way conducive to building a viable democratic, republican government. Ultimately, the problem was one of replacing the legitimacy of the old order with an entirely new one, something that many postcolonial regimes have had difficulty accomplishing.

Into the political vacuum left by the collapse of Spanish rule surged a particularly virulent form of Andean caudillismo. Caudillo strongmen, often officers from the liberation armies, managed to seize power through force of arms and the elaboration of extensive and intricate clientelistic alliances. Personalistic, arbitrary rule replaced the rule of law, while a prolonged and often byzantine struggle for power was waged at all levels of society. The upshot was internal political fragmentation and chronic political instability during the first two decades of the postindependence era. By one count, the country experienced at least twenty-four regime changes, averaging one per year between 1821 and 1845, and the constitution was rewritten six times.

This is not to say that larger political issues did not inform these conflicts. A revisionist study by historian Paul E. Gootenberg shows in great detail how the politics of trade (free or protectionist) and regionalism were central to the internecine caudillo struggles of the period. In this interpretation, nationalist elites–backing one caudillo or another–managed to outmaneuver and defeat liberal groups to maintain a largely protectionist, neomercantilistic, postcolonial regime until the advent of the guano boom at mid-century. This view stands in opposition to the dominant interpretation of the period, according to which unrestricted liberalism and free trade led to Peru’s "dependency" on the international economy and the West.

However bewildering, the chaotic era of the caudillo can be divided into several distinct periods. In the first, Bolívar tried, unsuccessfully, to impose a centralist and utopian liberal government from Lima. When events in Colombia caused him to relinquish power and return to Bogotá in 1826, his departure left an immediate vacuum that numerous Peruvian strongmen would try to fill. One of the most successful in terms of tenure was the conservative General Agustín Gamarra (1829-34) from Cusco, who managed to crush numerous rebellions and maintain power for five years. Then full-scale civil wars carried first General Luis de Orbegoso (1834-35) and then General Felipe Salaverry (1835-36) into the presidential palace for short terms. The power struggles reached such a chaotic state by the mid-1830s that General Andrés de Santa Cruz y Calahumana marched into Peru from Bolivia to impose the Peru-Bolivia Confederation of 1836-39. This alliance upset the regional balance of power and caused Chile to raise an army to defeat Santa Cruz and restore the status quo ante, which, in effect, meant a resumption of factional conflict lasting well into the 1840s.

The descent into chronic political instability, coming immediately after the destructive wars for independence (1820-24), accelerated Peru’s general postindependence economic decline. During the 1820s, silver mining, the country’s traditional engine of growth, collapsed, while massive capital flight resulted in large external deficits. By the early 1830s, the silver-mining industry began to recover, briefly climbing back to colonial levels of output in the early 1840s. Economic recovery was further enhanced in the 1840s as southern Peru began to export large quantities of wool, nitrates, and, increasingly, guano.

On the other hand, the large-scale importation of British textiles after independence virtually destroyed the production of native artisans and obrajes, which were unable to compete with their more technologically advanced and cost-efficient overseas competitors. For the most part, however, the economy continued in the immediate decades after independence to be characterized by a low level of marketable surplus from largely self-sufficient haciendas and native communities.

The expansion of exports during the 1840s did help, finally, to stabilize the Peruvian state, particularly under the statesmanlike, if autocratic, leadership of General Marshal Ramón Castilla (1845-51, 1855-62). Castilla’s rise to power, coming as it did at the onset of the guano boom, marked the beginning of an age of unparalleled economic growth and increasing political stability that effectively ended the country’s postindependence decline. Indeed, to many observers, Peru during the so-called guano age (1845-70) seemed uniquely positioned to emerge as the preeminent country in all of South America.

The guano boom, made possible by the droppings from millions of birds on the Chincha Islands, proved to be a veritable bonanza for Peru, beginning in the 1840s. By the time that this natural resource had been depleted three decades later, Peru had exported some 12 million tons of the fertilizer to Europe and North America, where it stimulated the commercial agricultural revolution. On the basis of a truly enormous flow of revenue to the state (nearly US$500 million), Peru was presented in the middle decades of the nineteenth century with a historic opportunity for development. Why this did not materialize, but
rather became a classic case of boom-bust export dependence, has continued to be the subject of intense discussion and debate. Most analysts, however, concur with historian Magnus Mörner that "guano wealth was, on the whole, a developmental opportunity missed."

On the positive side, guano-led economic growth–on average 9 percent a year beginning in the 1840s–and burgeoning government coffers provided the basis for the consolidation of the state. With adequate revenues, Castilla was able to
retire the internal and external debt and place the government on a sound financial footing for the first time since independence. That, in turn, shored up the country’s credit rating abroad (which, however, in time proved to be a double-edged sword in the absence of fiscal restraint). It also enabled Castilla to abolish vestiges of the colonial past–slavery in 1854 and the onerous native tribute– modernize the army, and centralize state power at the expense of local caudillos.

The guano bonanza also set in motion more negative trends. Castilla "nationalized" guano in order to maximize benefits to the state but in so doing reinforced aspects of the old colonial pattern of a mercantilist political economy. The state then consigned the commercialization of guano to certain favored private sectors based in Lima that had foreign connections. This created a nefarious and often collusive relationship between the state and a new "liberal" group of guano consignees.

Soon, this increasingly powerful liberal plutocracy succeeded in reorienting the country’s trade policy away from the previous nationalist and protectionist era toward export-led growth and low tariffs. Capital investment derived from the guano boom and abroad flowed into the export sector, particularly sugar, cotton, and nitrate production. The coast now became the most economically dynamic region of the country, modernizing at a pace that outstripped the Sierra. Coastal export-led growth not only intensified the uneven and dualist nature of Peruvian development, but subjected the economy to the vicissitudes of world trade. Between 1840 and 1875, the value of exports surged from 6 million pesos to almost 32 million, while imports went from 4 to 24 million pesos. On the face of it, the liberal export model, based on guano, pulled Peru out of its post independence economic stagnation and seemed dramatically successful. However, while great fortunes were accruing to the new coastal plutocracy, little thought was given to closing the historical inequalities of wealth and income or to fostering a national market for incipient home manufacturing that might have created the foundation for a more diversified and truly long-term economic development.

What proved a greater problem in the short term was the state’s increasing reliance and ultimate dependence on foreign loans, secured by the guano deposits which, however, were a finite and increasingly depleted natural resource. These loans helped finance an overly ambitious railroad and road-building scheme in the 1860s designed to open up Peru’s natural, resourcerich interior to exploitation. Under the direction of American railroad engineer Henry Meiggs (known as the "Yankee Pizarro"), Chinese coolies constructed a spectacular Andean railroad system over some of the most difficult topography in the world. But the cost of constructing some 1,240 kilometers of railroad, together with a litany of other state expenditures, caused Peru to jump from last to first place as the world’s largest borrower on London money markets.

Peru also fought two brief but expensive wars. The first, in which Peru prevailed, was with Ecuador (1859-60) over disputed territory bordering the Amazon. However, Castilla failed to extract a definitive agreement from Ecuador that might have settled conclusively the border issue, so it continued to fester throughout the next century. More successful was the Peruvian victory in 1866 over Spain’s attempts to seize control of the guano-rich Chincha Islands in a tragicomic venture to recapture some of its lost empire in South America.

By the 1870s, Peru’s financial house of cards, constructed on guano, finally came tumbling down. As described by Gootenberg, "Under the combined weight of manic activity, unrestrained borrowing, dismal choice of developmental projects, the evaporation of guano, and gross fiscal mismanagement, Peru’s state finally collapsed …" Ironically, the financial crisis occurred during the presidency of Manuel Pardo (1872-76), the country’s first elected civilian president since independence and leader of the fledgling antimilitary Civilista Party (Partido Civilista–PC).

By the 1870s, economic growth and greater political stability had created the conditions for the organization of the country’s first political party. It was composed primarily of the plutocrats of the guano era, the newly rich merchants, planters, and businesspeople, who believed that the country could no longer afford to be governed by the habitual military "man on horseback." Rather, the new age of international trade, business, and finance needed the managerial skills that only civilian leadership could provide. Their candidate was the dynamic and cosmopolitan Pardo, who, at age thirty-seven, had already made a fortune in business and served with distinction as treasury minister and mayor of Lima. Who better, they asked, at a time when the government of Colonel José Balta (1868-72) had sunk into a morass of corruption and incompetence, could clean up the government, deal with the mounting financial problems, and further develop the liberal export-model that so benefited their particular interests?

However, the election of the competent Pardo in 1872 and his ensuing austerity program were not enough to ward off the impending collapse. The worldwide depression of 1873 virtually sealed Peru’s fate, and as Pardo’s term drew to a close in 1876, the country was forced to default on its foreign debt. With social and political turmoil once again on the rise, the Civilistas found it expedient to turn to a military figure, Mariano Ignacio Prado (1865-67, 1876-79), who had rallied the country against the Spanish naval attack in 1865 and then served as president. He was reelected president in 1876 only to lead the country into a disastrous war with its southern neighbor Chile in 1879.

The war with Chile developed over the disputed, nitrate-rich Atacama Desert. Neither Peru, nor its ally, Bolivia, in the regional balance of power against Chile, had been able to solidify its territorial claims in the desert, which left the rising power of Chile to assert its designs over the region. Chile chose to attack Bolivia after Bolivia broke the Treaty of 1866 between the two countries by raising taxes on the export of nitrates from the region, mainly controlled by Chilean companies. In response, Bolivia invoked its secret alliance with Peru, the Treaty of 1873, to go to war.

Peru was obligated, then, to enter a war for which it was woefully unprepared, particularly since the antimilitary Pardo government had sharply cut the defense budget. With the perspective of hindsight, the outcome with Peru’s more powerful and better organized foe to the south was altogether predictable. This was especially true after Peru’s initial defeat in the naval Battle of Iquique Bay, where it lost one of its two iron-clad warships. Five months later, it lost the other, allowing Chile to gain complete control of the sea lanes and thus to virtually dictate the pace of the war. Although the Peruvians fought the superior Chilean expeditionary forces doggedly thereafter, resorting to guerrilla action in the Sierra after the fall of Lima in 1881, they were finally forced to conclude a peace settlement in 1883. The Treaty of Ancón ceded to Chile in perpetuity the nitrate-rich province of Tarapacá and provided that the provinces of Tacna and Arica would remain in Chilean possession for ten years, when a plebiscite would be held to decide their final fate. After repeated delays, both countries finally agreed in 1929, after outside mediation by the United States, to a compromise solution to the dispute by which Tacna would be returned to Peru and Chile would retain Arica. For Peru, defeat and dismemberment by Chile in war brought to a final disastrous conclusion an era
that had begun so auspiciously in the early 1840s with the initial promise of guano-led development.

After a period of intense civil strife similar to the political chaos during the immediate postindependence period half a century earlier, the armed forces, led by General Andrés Avelina Cáceres (1886-90, 1894-95), succeeded in establishing a measure of order in the country. Cáceres, a Creole and hero of the guerrilla resistance to the Chilean occupation during the War of the Pacific, managed to win the presidency in 1886. He succeeded in imposing a general peace, first by crushing a native rebellion in the Sierra led by a former ally, the respected native American varayoc (leader) Pedro Pablo Atusparía. Cáceres then set about the task of reconstructing the country after its devastating defeat.

The centerpiece of his recovery program was the Grace Contract, a controversial proposal by a group of British bondholders to cancel Peru’s foreign debt in return for the right to operate the country’s railroad system for sixty-six years. The contract provoked great controversy between nationalists, who saw it as a sellout to foreign interests, and liberals, who argued that it would lay the basis for economic recovery by restoring Peru’s investment and creditworthiness in the West. Finally approved by Congress in 1888, the Grace Contract, together with a robust recovery in silver production (US$35 million by 1895), laid the foundations for a revival of export-led growth.

Indeed, economic recovery would soon turn into a sustained, long-term period of growth. Nils Jacobsen has calculated that "Exports rose fourfold between the nadir of 1883 and 1910, from 1.4 to 6.2 million pounds sterling and may have doubled again until 1919; British and United States capital investments grew nearly tenfold between 1880 and 1919, from US$17 to US$161 million." However, he also notes that it was not until 1920 that the nation fully recovered from the losses sustained between the depression of 1873 and the postwar beginnings of recovery at the end of the 1880s. Once underway economic recovery inaugurated a long period of stable, civilian rule beginning in 1895.

The Aristocratic Republic began with the popular "Revolution of 1895," led by the charismatic and irrepressible José Nicolás de Piérola (1895-99). He overthrew the increasingly dictatorial Cáceres, who had gained the presidency
again in 1894 after having placed his crony Colonel Remigio Morales Bermúdez (1890-94) in power in 1890. Piérola, an aristocratic and patriarchal figure, was fond of saying that "when the people are in danger, they come to me." Although he had gained the intense enmity of the Civilistas in 1869 when, as minister of finance in the Balta government, he had transferred the lucrative guano consignment contract to the foreign firm of Dreyfus and Company of Paris, he now succeeded in forging an alliance with his former opponents. This began a period known as the Aristocratic Republic (1895-1914), during which Peru was characterized not only by relative political harmony and rapid economic growth and modernization, but also by social and political change.

From the ruins of the War of the Pacific, new elites had emerged along the coast and coalesced to form a powerful oligarchy, based on the reemergence of sugar, cotton, and mining exports, as well as the reintegration of Peru into the international economy. Its political expression was the reconstituted Civilista Party, which had revived its antimilitary and proexport program during the period of intense national disillusion and introspection that followed the country’s defeat in the war. By the time the term of Piérola’s successor, Eduardo López de Romaña (1899-1903), came to an end, the Civilistas had cleverly
managed to gain control of the national electoral process and proceeded to elect their own candidate and party leader, the astute Manuel Candamo (1903-1904), to the presidency. Thereafter, they virtually controlled the presidency up until World War I, although Candamo died a few months after assuming office. Elections, however, were restricted, subject to strict property and literacy
qualifications, and more often than not manipulated by the incumbent Civilista regime.

The Civilistas were the architects of unprecedented political stability and economic growth, but they also set in motion profound social changes that would, in time, alter the political panorama. With the gradual advance of export capitalism, peasants migrated and became proletarians, laboring in industrial enclaves that arose not only in Lima, but in areas of the countryside as well. The traditional haciendas and small-scale mining complexes that could be connected to the international market gave way increasingly to modern agroindustrial plantations and mining enclaves. With the advent of World War I, Peru’s international markets were temporarily disrupted and social unrest intensified, particularly in urban centers where a modern labor movement began to take shape.

The Civilistas, however, were unable to manage the new social forces that their policies unleashed. This first became apparent in 1912 when the millionaire businessman Guillermo Billinghurst (1912-14)–the reform-minded, populist former mayor of Lima–was able to organize a general strike to block the election of the official Civilista presidential candidate and force his own election by Congress. During his presidency, Billinghurst became embroiled in an increasingly bitter series of conflicts with Congress, ranging from proposed advanced social legislation to settlement of the Tacna-Arica dispute. When Congress opened impeachment hearings in 1914, Billinghurst threatened to arm the workers and forcibly dissolve Congress. This provoked the armed forces under Colonel Oscar Raimundo Benavides (1914-15, 1933-36, and 1936-39) to seize power.

The coup marked the beginning of a long-term alignment of the military with the oligarchy, whose interests and privileges it would defend up until the 1968 revolution of General Juan Velasco Alvarado (1968-75). It was also significant
because it not only ended almost two decades of uninterrupted civilian rule, but, unlike past military interventions, was more institutional than personalist in character. Benavides was a product of Piérola’s attempt to professionalize the armed forces under the tutelage of a French military mission, beginning in 1896, and therefore was uncomfortable in his new political role. Within a year, he arranged new elections that brought José de Pardo y Barreda (1904-1908, 1915-19) to power.

A new round of economic problems, deepening social unrest, and powerful, new ideological currents toward the end of World War I, however, converged to bring a generation of Civilista rule to an end in 1919. The war had a roller coaster effect on the Peruvian economy. First, export markets were temporarily cut off, provoking recession. Then, when overseas trade was restored, stimulating demand among the combatants for Peru’s primary products, an inflationary spiral saw the cost of living nearly double between 1913 and 1919.

This inflation had a particularly negative impact on the new working classes in Lima and elsewhere in the country. The number of workers had grown sharply since the turn of the century–by one count rising from 24,000, or 17 percent of
the capital’s population in 1908, to 44,000, or 20 percent of the population in 1920. Similar growth rates occurred outside of Lima in the export enclaves of sugar (30,000 workers), cotton (35,000), oil (22,500), and copper. The Cerro de Pasco copper mine alone had 25,500 workers. The growth and concentration of workers was accompanied by the spread of anarchic ideas before and during the
war years, making the incipient labor movement increasingly militant. Violent strikes erupted on sugar plantations, beginning in 1910, and the first general strike in the country’s history occurred a year later.

Radical new ideologies further fueled the growing social unrest in the country at the end of the war. The ideas of the Mexican and Russian revolutions, the former predating the latter, quickly spread radical new doctrines to the far corners of the world, including Peru. Closer to home, the indigenista (Indigenist) movement increasingly captured the imagination of a new generation of Peruvians, particularly urban, middle-class mestizos who were reexamining their roots in a changing Peru. Indigenismo (Indigenism) was promoted by a group of writers and artists who sought to rediscover and celebrate the virtues and values of Peru’s glorious Incan past. Awareness of the indigenous masses was heightened at this time by another wave of native uprisings in the southern highlands. They were caused by the disruption and dislocation of traditional native American communities brought about by the opening of new international markets and reorganization of the wool trade in the region.

All of these social, economic, and intellectual trends came to a head at the end of the Pardo administration. In 1918-19 Pardo faced an unprecedented wave of strikes and labor mobilization that was joined by student unrest over university reform. The ensuing worker-student alliance catapulted a new generation of radical reformers, headed by Víctor Raúl Haya de la Torre–a young, charismatic student at San Marcos University–and José Carlos Mariátegui–a brilliant Lima journalist who defended the rights of the new, urban working class–to national prominence.

The immediate political beneficiary of this turmoil, however, was a dissident Civilista, former president Augusto B. Leguía y Salcedo (1908-12, 1919-30), who had left the party after his first term. He ran as an independent in the 1919
elections on a reform platform that appealed to the emerging new middle and working classes. When he perceived a plot by the Civilistas to deny him the election, the diminutive but boundlessly energetic Leguía (he stood only 1.5 meters tall and weighed a little over 45 kilograms) staged a preemptive coup and assumed the presidency.

Leguía’s eleven-year rule, known as the oncenio (1919-30), began auspiciously enough with a progressive, new constitution in 1920 that enhanced the power of the state to carry out a number of popular social and economic reforms. The regime weathered a brief postwar recession and then generated considerable economic growth by opening the country to a flood of foreign loans and investment. This allowed Leguía to replace the Civilista oligarchy with a new, if plutocratic, middle-class political base that prospered from state contracts and expansion of the government bureaucracy. However, it was not long into his regime that Leguía’s authoritarian and dictatorial tendencies appeared. He cracked down on labor and student militancy, purged the Congress of opposition, and amended the constitution so that he could run, unopposed, for reelection in 1924 and again in 1929.

Leguía’s popularity was further eroded as a result of a border dispute between Peru and Colombia involving territory in the rubber-tapping region between the Río Caquetá and the northern watershed of the Río Napo. Under the United Statesmediated Salomón-Lozano Treaty of March 1922, which favored Colombia, the Río Putumayo was established as the boundary between Colombia and Peru. Pressured by the United States to accept the unpopular treaty, Leguía finally submitted the document to the Peruvian Congress in December 1927, and it was ratified. The treaty was also unpopular with Ecuador, which found itself
surrounded on the east by Peru.

The orgy of financial excesses, which included widespread corruption and the massive build-up of the foreign debt, was brought to a sudden end by the Wall Street stock market crash of 1929 and ensuing worldwide depression. Leguía’s
eleven-year rule, the longest in Peruvian history, collapsed a year later. Once again, the military intervened and overthrew Leguía, who died in prison in 1932.

Meanwhile, the onset of the Great Depression galvanized the forces of the left. Before he died prematurely at the age of thirty-five in 1930, Mariátegui founded the Peruvian Socialist Party (Partido Socialista Peruano–PSP), shortly
to become the Peruvian Communist Party (Partido Comunista Peruano–PCP), which set about the task of political organizing after Leguía’s fall from power. Although a staunch Marxist who believed in the class struggle and the revolutionary role of the proletariat, Mariátegui’s main contribution was to recognize the revolutionary potential of Peru’s native peasantry. He argued that
Marxism could be welded to an indigenous Andean revolutionary tradition that included indigenismo, the long history of Andean peasant rebellion, and the labor movement.

Haya de la Torre returned to Peru from a long exile to organize the American Popular Revolutionary Alliance (Alianza Popular Revolucionaria Americana–APRA), an anti-imperialist, continent-wide, revolutionary alliance, founded in Mexico
in 1924. For Haya de la Torre, capitalism was still in its infancy in Peru and the proletariat too small and undeveloped to bring about a revolution against the Civilista oligarchy. For that to happen, he argued, the working classes must be joined to radicalized sectors of the new middle classes in a cross-class, revolutionary alliance akin to populism. Both parties–one from a Marxist and the other from a populist perspective–sought to organize and lead the new middle and working classes, now further dislocated and radicalized by the Great Depression. With his oratorical brilliance, personal magnetism, and national-populist message, Haya de la Torre was able to capture the bulk of these classes and to become a major figure in Peruvian politics until his death in 1980 at the age of eighty-six.

After 1930 both the military, now firmly allied with the oligarchy, and the forces of the left, particularly APRA, became important new actors in Peruvian politics. This period (1930-68) has been characterized in political terms by sociologist Dennis Gilbert as operating under essentially a "tripartite" political system, with the military often ruling at the behest of the oligarchy to suppress the "unruly" masses represented by APRA and the PCP. Lieutenant Colonel Luis M. Sánchez Cerro and then General Benavides led another period of military rule during the turbulent 1930s.

In the presidential election of 1931, Sánchez Cerro (1931-33), capitalizing on his popularity from having deposed the dictator Leguía, barely defeated APRA’s Haya de la Torre, who claimed to have been defrauded out of his first bid for office. In July 1932, APRA rose in a bloody popular rebellion in Trujillo, Haya de la Torre’s hometown and an APRA stronghold, that resulted in the execution of some sixty army officers by the insurgents. Enraged, the army unleashed a brutal suppression that cost the lives of at least 1,000 Apristas (APRA members) and their sympathizers (partly from aerial bombing, used for the first time in South American history). Thus began what would become a virtual vendetta between the armed forces and APRA that would last for at least a generation and on several occasions prevented the party from coming to power.

Politically, the Trujillo uprising was followed shortly by another crisis, this time a border conflict with Colombia over disputed territory in the Letícia region of the Amazon. Before it could be settled, Sánchez Cerro was assassinated
in April 1933 by a militant Aprista, and Congress quickly elected former president Benavides to complete Sánchez Cerro’s five-year term. Benavides managed to settle the thorny Letícia dispute peacefully, with assistance from the League of Nations, when a Protocol of Peace, Friendship, and Cooperation was signed in May 1934 ratifying Colombia’s original claim. After a disputed election in 1936, in which Haya de la Torre was prevented from running and which Benavides nullified with the reluctant consent of Congress, Benavides remained in power and extended his term until 1939.

During the 1930s, Peru’s economy was one of the least affected by the Great Depression. Thanks to a relatively diversified range of exports, led by cotton and new industrial metals (particularly lead and zinc), the country began a rapid recovery of export earnings as early as 1933. As a result, unlike many other Latin American countries that adopted Keynesian and
import-substitution industrialization measures to counteract the decline, Peru’s policymakers made relatively few alterations in their long-term model of export-oriented growth.

Under Sánchez Cerro, Peru did take measures to reorganize its debt-ridden finances by inviting Edwin Kemmerer, a well-known United States financial consultant, to recommend reforms. Following his advice, Peru returned to the gold standard, but could not avoid declaring a moratorium on its US$180-million debt on April 1, 1931. For the next thirty years, Peru was barred from the United States capital market.

Benavides’s policies combined strict economic orthodoxy, measures of limited social reform designed to attract the middle classes away from APRA, and repression against the left, particularly APRA. For much of the rest of the decade, APRA continued to be persecuted and remained underground. Almost from the moment APRA appeared, the party and Haya de la Torre had been attacked by the oligarchy as antimilitary, anticlerical, and "communistic." Indeed, the official reason often given for APRA’s proscription was its "internationalism," because the party began as a continent-wide alliance "against Yankee
imperialism"– suggesting that it was somehow subversively un-Peruvian.

Haya de la Torre had also flirted with the Communists during his exile in the 1920s, and his early writings were influenced by a number of radical thinkers, including Marx. Nevertheless, the 1931 APRA program was essentially reformist, nationalist, and populist. It called, among other things, for a redistributive and interventionist state that would move to selectively nationalize land and industry. Although certainly radical from the perspective of the oligarchy, the program was designed to correct the historical inequality of wealth and income in Peru, as well as to reduce and bring under greater governmental control the large-scale foreign investment in the country that was high in comparison with other Andean nations.

The intensity of the oligarchy’s attacks was also a response to the extreme rhetoric of APRA polemicists and reflected the polarized state of Peruvian society and politics during the depression. Both sides readily resorted to force and violence, as the bloody events of the 1930s readily attested–the 1932 Trujillo revolt, the spate of prominent political assassinations (including Sánchez Cerro and Antonio Miró Quesada, publisher of El Comercio), and widespread imprisonment and torture of Apristas and their sympathizers. It also revealed the oligarchy’s apprehension, indeed paranoia, at APRA’s sustained
attempt to mobilize the masses for the first time into the political arena. At bottom, Peru’s richest, most powerful forty families perceived a direct challenge to their traditional privileges and absolute right to rule, a position they were not to yield easily.

When Benavides’s extended term expired in 1939, Manuel Prado y Ugarteche (1939-45), a Lima banker from a prominent family and son of a former president, won the presidency. He was soon confronted with a border conflict with Ecuador that led to a brief war in 1941. After independence, Ecuador had been left without access to either the Amazon or the region’s other major waterway, the Río Marañón, and thus without direct access to the Atlantic Ocean. In an effort to assert its territorial claims in a region near the Río Marañón in the Amazon Basin, Ecuador occupied militarily the town of Zarumilla along its southwestern border with Peru. However, the Peruvian Army (Ejército Peruano–EP) responded with a lightning victory against the Ecuadorian Army. At subsequent peace negotiations in Rio de Janeiro in 1942, Peru’s ownership of most of the contested region was affirmed.

On the domestic side, Prado gradually moved to soften official opposition to APRA, as Haya de la Torre moved to moderate the party’s program in response to the changing national and international environment brought on by World War II. For example, he no longer proposed to radically redistribute income, but instead proposed to create new wealth, and he replaced his earlier strident "anti-imperialism" directed against the United States with more favorable calls for democracy, foreign investment, and hemispheric harmony. As a result, in May 1945 Prado legalized the party that now reemerged on the political scene after thirteen years underground.

The Allied victory in World War II reinforced the relative democratic tendency in Peru, as Prado’s term came to an end in 1945. José Luis Bustamante y Rivero (1945-48), a liberal and prominent international jurist, was overwhelmingly elected president on the basis of an alliance with the now legal APRA. Responding to his more reform- and populist-oriented political base,
Bustamante and his Aprista minister of economy moved Peru away from the strictly orthodox, free-market policies that had characterized his predecessors. Increasing the state’s intervention in the economy in an effort to stimulate growth and redistribution, the new government embarked on a general fiscal expansion, increased wages, and established controls on prices and exchange rates. The policy, similar to APRA’s later approach in the late 1980s, was neither well-conceived nor efficiently administered and came at a time when Peru’s exports, after an initial upturn after the war, began to sag. This resulted in a surge of inflation and labor unrest that ultimately destabilized the government.

Bustamante also became embroiled in an escalating political conflict with the Aprista-controlled Congress, further weakening the administration. The political waters were also roiled in 1947 by the assassination by Aprista militants of
Francisco Grana Garland, the socially prominent director of the conservative newspaper La Prensa. When a naval mutiny organized by elements of APRA broke out in 1948, the military, under pressure from the oligarchy, overthrew the government and installed General Manuel A. Odría (1948-50, 1950-56), hero of the 1941 war with Ecuador, as president.

Odría imposed a personalistic dictatorship on the country and returned public policy to the familiar pattern of repression of the left and free-market orthodoxy. Indicative of the new regime’s hostility toward APRA, Haya de la Torre, after seeking political asylum in the Embassy of Colombia in Lima in 1949, was prevented by the government from leaving the country. He remained a virtual prisoner in the embassy until his release into exile in 1954. However, along with such repression Odría cleverly sought to undermine APRA’s popular support by establishing a dependent, paternalistic relationship with labor and the urban poor through a series of charity and social welfare measures.

At the same time, Odría’s renewed emphasis on export-led growth coincided with a period of rising prices on the world market for the country’s diverse commodities, engendered by the outbreak of the Korean War in 1950. Also, greater political stability brought increased national and foreign investment, particularly in the manufacturing sector. Indeed, this sector grew
almost 8 percent annually between 1950 and 1967, increasing from 14 to 20 percent of gross domestic product. Overall, the economy experienced a prolonged period of strong, export-led growth, amounting on average to 5 percent a year during the same period.

Not all Peruvians, however, benefited from this period of sustained capitalist development, which tended to be regional and confined mainly to the more modernized coast. This uneven pattern of growth served to intensify the dualistic structure of the country by widening the historical gap between the Sierra and the coast. In the Sierra, the living standard of the bottom one- quarter of the population stagnated or fell during the twenty years after 1950. In fact, the Sierra had been losing ground economically to the modernizing forces operative on the coast ever since the 1920s. With income distribution steadily worsening, the Sierra experienced a period of intense social mobilization during the 1950s and 1960s.

This was manifested first in the intensification of rural- urban migration and then in a series of confrontations between peasants and landowners. The fundamental causes of these confrontations were numerous. Population growth, which had almost doubled nationally between 1900 and 1940 (3.7 million to 7 million), increased rapidly to 13.6 million by 1970. This turned the labor market from a state of chronic historical scarcity to one of abundant surplus. With arable land constant and locked into the system of latifundios, ownership-to-area ratios deteriorated sharply, increasing peasant pressures on the land.

Peru’s land-tenure system remained one of the most unequal in Latin America. In 1958 the country had a high coefficient of 0.88 on the Gini index, which measures land concentration on a scale of 0 to 1. Figures for the same year show that 2 percent of the country’s landowners controlled 69 percent of arable land. Conversely, 83 percent of landholders holding no more than 5 hectares controlled only 6 percent of arable land. Finally, the Sierra’s terms of trade in agricultural foodstuffs steadily declined because of the state’s urban bias in food pricing policy, which kept farm prices artificially low.

Many peasants opted to migrate to the coast, where most of the economic and job growth was occurring. The population of metropolitan Lima, in particular, soared. While standing at slightly over 500,000 in 1940, it increased threefold to over 1.6 million in 1961 and nearly doubled again by 1981 to more than 4.1 million. The capital became increasingly ringed with squalid barriadas (shantytowns) of urban migrants, putting pressure on the liberal state, long accustomed to ignoring the funding of government services to the poor.

Those peasants who chose to remain in the Sierra did not remain passive in the face of their declining circumstances but became increasingly organized and militant. A wave of strikes and land invasions swept over the Sierra during the
1950s and 1960s as campesinos demanded access to land. Tensions grew especially in the Convención and Lares region of the high jungle near Cusco, where Hugo Blanco, a Quechua-speaking Trotskyite and former student leader, mobilized peasants in a militant confrontation with local gamonales.

While economic stagnation prodded peasant mobilization in the Sierra, economic growth along the coast produced other important social changes. The postwar period of industrialization, urbanization, and general economic growth created a new middle and professional class that altered the prevailing political panorama. These new middle sectors formed the social base for two new political parties–Popular Action (Acción Popular–AP) and the Christian Democratic Party (Partido Demócrata Cristiano– PDC)–that emerged in the 1950s and 1960s to challenge the oligarchy with a moderate, democratic reform program. Emphasizing modernization and development within a somewhat more activist state framework, they posed a new challenge to the old left, particularly APRA.

For its part, APRA accelerated its rightward tendency. It entered into what many saw as an unholy alliance (dubbed the convivencia, or living together) with its old enemy, the oligarchy, by agreeing to support the candidacy of conservative Manuel Prado y Ugarteche in the 1956 elections, in return for legal recognition. As a result, many new voters became disillusioned with APRA and flocked to support the charismatic reformer Fernando Belaúnde Terry (1963-68, 1980-85), the founder of the AP. Although Prado won, six years later the army intervened when its old enemy, Haya de la Torre (back from six years of exile), still managed, if barely, to defeat the upstart Belaúnde by less than one percentage point in the 1962 elections. A surprisingly reform-minded junta of the armed forces headed by General Ricardo Pérez Godoy held power for a year (1962-63) and then convoked new elections. This time Belaúnde, in alliance with the Christian Democrats, defeated Haya de la Torre and became president.

Belaúnde’s government, riding the crest of the social and political discontent of the period, ushered in a period of reform at a time when United States president John F. Kennedy’s Alliance for Progress was also awakening widespread expectations for reform throughout Latin America. Belaúnde tried to diffuse the growing unrest in the highlands through a three- pronged approach: modest agrarian reform, colonization projects in the high jungle or montaña, and the construction of the north- south Jungle Border Highway (la carretera marginal de la selva or la marginal), running the entire length of the country along the jungle fringe. The basic thrust of the Agrarian Reform Law of 1969, which was substantially watered down by a conservative coalition in Congress between the APRA and the National Odriist Union (Unión Nacional Odriísta–UNO), was to open
access to new lands and production opportunities, rather than dismantle the traditional latifundio system. However, this plan failed to quiet peasant discontent, which by 1965 helped fuel a Castroite guerrilla movement, the Movement of the Revolutionary Left (Movimiento de la Izquierda Revolucionaria– MIR), led by rebellious Apristas on the left who were unhappy with the party’s
alliance with the country’s most conservative forces.

In this context of increasing mobilization and radicalization, Belaúnde lost his reformist zeal and called on the army to put down the guerrilla movement with force. Opting for a more technocratic orientation palatable to his urban middle class base, Belaúnde, an architect and urban planner by training, embarked on a large number of construction projects, including irrigation, transportation, and housing, while also investing heavily in education. Such initiatives were made possible, in part, by the economic boost provided by the dramatic expansion of the fishmeal industry. Aided by new technologies and the abundant fishing grounds off the coast, fishmeal production soared. By 1962 Peru became the leading fishing nation in the world, and fishmeal accounted for fully one-third of the country’s exports.

Belaúnde’s educational expansion dramatically increased the number of universities and graduates. But, however laudable, this policy tended over time to swell recruits for the growing number of left-wing parties, as economic opportunities diminished in the face of an end, in the late 1960s, of the long cycle of export- led economic expansion. Indeed, economic problems spelled trouble for Belaúnde as he approached the end of his term. Faced with a growing balance-of-payments problem, he was forced to devalue the sol (for value) in 1967. He also seemed to many nationalists to capitulate to foreign capital in a final settlement in 1968 of a controversial and long-festering dispute with the International Petroleum Company (IPC) over La Brea y Pariñas oil fields in northern Peru. With public discontent growing, the armed forces, led by General Velasco Alvarado, overthrew the Belaúnde government in 1968 and proceeded to undertake an unexpected and unprecedented series of reforms.

The military intervention and its reformist orientation represented changes both in the armed forces and Peruvian society. Within the armed forces, the social origins of the officer corps no longer mirrored the background and outlook of the creole upper classes, which had historically inclined the officers to follow the mandate of the oligarchy. Reflective of the social changes and mobility that were occurring in society at large, officers now exhibited middle- and lower middle class, provincial, mestizo or cholo backgrounds. General Velasco, a cholo himself, had grown up in humble circumstances in the northern department of Piura and purportedly went to school barefoot.

Moreover, this generation of officers had fought and defeated the guerrilla movements in the backward Sierra. In the process, they had come to the realization that internal peace in Peru depended not so much on force of arms, but on implementing structural reforms that would relieve the burden of chronic poverty and underdevelopment in the region. In short, development, they concluded, was the best guarantee for national security. The Belaúnde government had originally held out the promise of reform and development, but had failed. The military attributed that failure, at least in part, to flaws in the democratic political system that had enabled the opposition to block and stalemate reform initiatives in Congress. As nationalists, they also abhorred the proposed pact with the IPC and looked askance at stories of widespread corruption in the Belaúnde government.

Velasco moved immediately to implement a radical reform program, which seemed, ironically, to embody much of the original 1931 program of the army’s old nemesis, APRA. His first act was to expropriate the large agroindustrial plantations along the coast. The agrarian reform that followed, the most extensive in Latin America outside of Cuba, proceeded to destroy the economic base of power of the old ruling classes, the export oligarchy, and its gamonal allies in the Sierra. By 1975 half of all arable land had been transferred, in the form of various types of cooperatives, to over 350,000 families comprising about onefourth of the rural population, mainly estate workers and renters (colonos). Agricultural output tended to maintain its rather low pre-reform levels, however, and the reform still left out an estimated 1 million seasonal workers and only marginally benefited campesinos in the native communities (about 40 percent of the rural population).

The Velasco regime also moved to dismantle the liberal, export model of development that had reached its limits after the long postwar expansion. The state now assumed, for the first time in history, a major role in the development process. Its immediate target was the foreign-dominated sector, which during the 1960s had attained a commanding position in the economy. At the end of the Belaúnde government in 1968, three-quarters of mining, one-half of manufacturing, two-thirds of the commercial banking system, and one-third of the fishing industry were under direct foreign control.

Velasco reversed this situation. By 1975 state enterprises accounted for more than half of mining output, two-thirds of the banking system, a fifth of industrial production, and half of total productive investment. Velasco’s overall development strategy was to shift from a laissez-faire to a "mixed" economy, to replace export-led development with import-substitution industrialization. At the same time, the state implemented a series of social measures designed to protect workers and redistribute income in order to expand the domestic market.

In the realm of foreign policy, the Velasco regime undertook a number of important initiatives. Peru became a driving force not only behind the creation of an Andean Pact in 1969 to establish a common market with coordinated trade and investment policies, but also in the movement of nonaligned countries of the Third World. Reflecting a desire to end its perceived dependency economically and politically on the United States, the Velasco government also moved to diversify its foreign relations by making trade and aid pacts with the Soviet Union and East European countries, as well as with Japan and West European nations. Finally, Peru succeeded during the 1970s in establishing its international claims to a 303-kilometer territorial limit in the Pacific Ocean.

By the time Velasco was replaced on August 29, 1975, by the more conservative General Francisco Morales Bermúdez Cerrutti (1975-80), his reform program was already weakening. Natural calamities, the world oil embargo of 1973, increasing international indebtedness (Velasco had borrowed heavily abroad to replace lost investment capital to finance his reforms), overbureaucratization , and general mismanagement had undermined early economic growth and triggered a serious inflationary spiral. At the same time, Velasco, suffering from terminal cancer, had become increasingly personalistic and autocratic, undermining the
institutional character of military rule. Unwilling to expand his initial popularity through party politics, he had created a series of mass organizations, tied to the state in typically corporatist and patrimonialist fashion, in order to mobilize support and control the pace of reform. However, despite his rhetoric to create truly popular, democratic organizations, he manipulated them from above in an increasingly arbitrary manner. What had begun as an unusual populist type of military experiment evolved into a form of what political scientist Guillermo O’Donnell calls "bureaucratic authoritarianism," with increasingly authoritarian and personalistic characteristics that were manifested in "Velasquismo."

Velasco’s replacement, General Morales Bermúdez, spent most of his term implementing an economic austerity program to stem the surge of inflation. Public opinion increasingly turned against the rule of the armed forces, which it blamed for the country’s economic troubles, widespread corruption, and mismanagement of the government, as well as the general excesses of the "revolution." Consequently, Morales Bermúdez prepared to return the country to the democratic process.

Elections were held in 1978 for a Constituent Assembly empowered to rewrite the constitution. Although Belaúnde’s AP boycotted the election, an array of newly constituted leftist parties won an unprecedented 36 percent of the vote, with much of the remainder going to APRA. The Assembly, under the leadership of the aging and terminally ill Velasco (who would die in 1980), completed the new document in 1979. Meanwhile, the popularity of former president Belaúnde underwent a revival. Belaúnde was decisively reelected president in 1980, with 45 percent of the vote, for a term of five years.

Belaúnde inherited a country that was vastly different from the one he had governed in the 1960s. Gone was the old export oligarchy and its gamonal allies in the Sierra, and the extent of foreign investment in the economy had been sharply reduced. In their place, Velasco had borrowed enormous sums from foreign banks and so expanded the state that by 1980 it accounted for 36 percent of national production, double its 1968 share. The informal sector of small- and medium-sized businesses outside the legal, formal economy had also proliferated.

By 1980 Belaúnde’s earlier reforming zeal had substantially waned, replaced by a decidedly more conservative orientation to government. A team of advisers and technocrats, many with experience in international financial organizations, returned home to install a neoliberal economic program that emphasized privatization of state-run business and, once again, export-led growth. In an effort to increase agricultural production, which had declined as a result of the agrarian reform, Belaúnde sharply reduced food subsidies, allowing producer prices to rise.

However, just as Velasco’s ambitious reforms of the early 1970s were eroded by the 1973 worldwide oil crisis, Belaúnde’s export strategy was shattered by a series of natural calamities and a sharp plunge in international commodity prices to their lowest levels since the Great Depression. By 1983 production had fallen 12 percent and wages 20 percent in real terms while inflation once again surged. Unemployment and underemployment was rampant, affecting perhaps two-thirds of the work force and causing the minister of finance to declare the country in "the worst economic crisis of the century." Again, the government opted to borrow heavily in international money markets, after having severely criticized the previous regime for ballooning the foreign debt. Peru’s total foreign debt swelled from US$9.6 billion in 1980 to US$13 billion by the end of Belaúnde’s term.

The economic collapse of the early 1980s, continuing the long-term cyclical decline begun in the late 1960s, brought into sharp focus the country’s social deterioration, particularly in the more isolated and backward regions of the Sierra. Infant mortality rose to 120 per 1,000 births (230 in some remote areas), life expectancy for males dropped to 58 compared with 64 in neighboring Chile, average daily caloric intake fell below minimum United Nations standards, upwards of 60 percent of children under five years of age were malnourished, and underemployment and unemployment were rampant. Such conditions were a breeding ground for social and political discontent, which erupted with a vengeance in 1980 with the appearance of the Shining Path (Sendero Luminoso–SL).

Founded in the remote and impoverished department of Ayacucho by Abimáel Guzmán Reynoso, a philosophy professor at the University of Huamanga, the SL blended the ideas of MarxismLeninism , Maoism, and those of José Carlos Mariátegui, Peru’s major Marxist theoretician. Taking advantage of the return to democratic rule, the deepening economic crisis, the failure of the Velasco-era reforms, and a generalized vacuum of authority in parts of the Sierra with the collapse of gamonal rule, the SL unleashed a virulent and highly effective campaign of terror and subversion that caught the Belaúnde government by surprise.

After first choosing to ignore the SL and then relying on an ineffective national police response, Belaúnde reluctantly turned to the army to try to suppress the rebels. However, that proved extremely difficult to do. The SL expanded its original base in Ayacucho north along the Andean spine and eventually into Lima and other cities, gaining young recruits frustrated by their dismal prospects for a better future. To further complicate pacification efforts, another rival guerrilla group, the Túpac Amaru Revolutionary Movement (Movimiento Revolucionario Túpac Amaru–MRTA), emerged in Lima.

Counterinsurgency techniques, often applied indiscriminately by the armed forces, resulted in severe human rights violations against the civilian population and only created more recruits for the SL. By the end of Belaúnde’s term in 1985, over 6,000 Peruvians had died from the violence, and over US$1 billion in property damage had resulted. Strongly criticized by international human rights organizations, Belaúnde nevertheless continued to rely on military solutions, rather than other emergency social or developmental measures that might have served to get at some of the fundamental, underlying socioeconomic causes of the insurgency.

The severe internal social and political strife, not to mention the deteriorating economic conditions, manifested in the Shining Path insurgency may have contributed in 1981 to a flareup of the border dispute with Ecuador in the disputed Marañón region. Possibly looking to divert public attention away from internal problems, both countries engaged in a brief, five-day border skirmish on the eve of the thirty-ninth anniversary of the signing of the 1942 Protocol of Rio de Janeiro (Rio Protocol). Peruvian forces prevailed, and although a ceasefire was quickly declared, it did nothing to resolve the two opposing positions on the issue of the disputed territory. Essentially, Peru continued to adhere to the Rio Protocol by which Ecuador had recognized Peruvian claims. On the other hand, Ecuador continued to argue that the Rio Protocol should be renegotiated, a position first taken by President Velasco Ibarra in 1960 and adhered to by all subsequent Ecuadorian presidents.

Along with these internal and external conflicts, Belaúnde also confronted a rising tide of drug trafficking during his term. Coca had been cultivated in the Andes since pre-Columbian times. The Inca elite and clergy used it for certain ceremonies, believing that it possessed magical powers. After the conquest, coca chewing, which suppresses hunger and relieves pain and cold, became common among the oppressed indigenous peasantry to deal with the hardships imposed by the new colonial regime, particularly in the mines. The practice has continued, with an estimated 15 percent of the population chewing coca on a daily basis by 1990.

As a result of widespread cocaine consumption in the United States and Europe, demand for coca from the Andes soared during the late 1970s. Peru and Bolivia became the largest coca producers in the world, accounting for roughly four-fifths of the production in South America. Although originally produced mainly in five highland departments, Peruvian production has become increasingly concentrated in the Upper Huallaga Valley, located some 379 kilometers northeast of Lima. Peasant growers, some 70,000 in the valley alone, are estimated to receive upwards of US$240 million annually for their crop from traffickers–mainly Colombians who oversee the processing, transportation, and smuggling operations to foreign countries, principally the United States.

After the cultivation of coca for narcotics uses was made illegal in 1978, efforts to curtail production were intensified by the Belaúnde government, under pressure from the United States. Attempts were made to substitute other cash crops while police units sought to eradicate the plant. This tactic only served to alienate the growers and to set the stage for the spread of the SL movement into the area in 1983-84 as erstwhile defenders of the growers. By 1985 the SL had become an armed presence in the region, defending the growers not only from the state, but also from the extortionist tactics of the traffickers. The SL, however, became one of the wealthiest guerrilla movements in modern history by collecting an estimated US$30 million in "taxes" from Colombian traffickers who controlled the drug trade.

As the guerrilla war raged on and with the economy in disarray, Belaúnde had little to show at the end of his term, except perhaps the reinstitution of the democratic process. During his term, political parties had reemerged across the
entire political spectrum and vigorously competed to represent their various constituencies. With all his problems, Belaúnde had also managed to maintain press and other freedoms (marred, however, by increasing human rights violations) and to observe the parliamentary process. In 1985 he managed to complete his elected term, only the second time that this had happened in forty

After presiding over a free election, Belaúnde turned the presidency over to populist Alan García Pérez of APRA who had swept to victory with 48 percent of the vote. Belaúnde’s own party went down to a resounding defeat with only 6 percent of the vote, while the Marxist United Left (Izquierda Unida–IU) received 23 percent. The elections revealed a decided swing to the left by the Peruvian electorate. For APRA García’s victory was the culmination of more than half a century of political travail and struggle.

As García took office on July 28, 1985–at thirty-six the youngest chief executive to assume power in Peru’s history–he seemed to awaken hope among Peruvians for the future. Although he had no previous experience in elected office, he possessed, as his decisive electoral victory illustrated, the necessary charisma to mobilize Peruvians to confront their problems. At the same time, the governing APRA party won a majority in the new Congress, assuring the new president support for his program to meet the crisis.

The crisis seemed daunting indeed. The foreign debt stood at over US$13 billion, real wages had eroded by 30 percent since 1980, prices for Peru’s exports on the world market remained low, the economy was gripped in recession, and guerrilla violence was spreading. The future of Peru’s fledgling redemocratization now hinged on García’s ability to reverse these trends and, at bottom, to restore sustained economic growth and development.

With a parliamentary majority for the first time in APRA’s history, Alan García started his administration with hopes for a better future. However, economic mismanagement led to hyperinflation from 1988 to 1990. García’s term in office was marked by bouts of hyperinflation, which reached 7,649% in 1990 and had a cumulative total of 2,200,200% between July 1985 and
July 1990, thereby profoundly destabilizing the Peruvian economy.

Owing to such chronic inflation, the Peruvian currency, the sol, was replaced by the Inti in mid-1985, which itself was replaced the nuevo sol ("new sol") in July 1991, at which time the new sol had a cumulative value of one billion old soles. During his administration, the per capita annual income of Peruvians fell to $720 (below the level of 1960) and Peru’s Gross Domestic Product dropped 20%. By the end of his term, national reserves were a negative $900 million. The economic turbulence of the time acerbated social tensions in Peru and partly contributed to the rise of the violent rebel movement SL. The García administration unsuccessfully sought a military solution to the growing terrorism, committing human rights violations which are still under investigation.

Concerned about the economy, the increasing terrorist threat from SL, and allegations of official corruption, voters chose a relatively unknown mathematician-turned-politician, Alberto Kenya Fujimori, as president in 1990. The first round of the election was won by well-known writer Vargas Llosa, a conservative candidate, but Fujimori defeated him in the second round.
Fujimori implemented drastic measures that caused inflation to drop from 7,650% in 1990 to 139% in 1991. Faced with opposition to his reform efforts, Fujimori dissolved Congress in the auto-golpe of April 5, 1992. He then revised the constitution; called new congressional elections; and implemented substantial economic reform, including privatization of numerous state-owned companies, creation of an investment-friendly climate, and sound management of the economy.

Fujimori’s administration was dogged by several insurgent groups, most notably SL, which carried on a terrorist campaign in the countryside throughout the 1980s and 1990s. He cracked down on the insurgents and was successful in largely quelling them by the late 1990s, but the fight was marred by atrocities committed by the both Peruvian security forces and the
insurgents: the Barrios Altos massacre and La Cantuta massacre by Government paramilitary groups, and the bombings of Tarata and Frecuencia Latina by SL. Those examples subsequently came to be seen as symbols of the human rights violations committed during the last years of violence. With the capture of Abimael Guzmán (known as President Gonzalo) in September 1992, the SL received a severe blow which practically destroyed the organization.

In December 1996, a group of insurgents belonging to the MRTA took over the Japanese embassy in Lima, taking 72 people hostage. Military commandos stormed the embassy compound in May 1997, which resulted in the death of all 15 hostage takers, one hostage, and 2 commandos. It later emerged, however, that Fujimori’s security chief Vladimiro Montesinos may have ordered the killing of at least eight of the rebels after they surrendered.

Fujimori’s constitutionally questionable decision to seek a third term and subsequent tainted victory in June 2000 brought political and economic turmoil. A bribery scandal that broke just weeks after he took office in July forced Fujimori to call new elections in which he would not run. The scandal involved Vladimiro Montesinos, who was shown in a video broadcast on TV bribing a politician to change sides. Montesinos subsequently emerged as the center a vast web of illegal activities, including embezzlement, graft, drug trafficking, as well as human rights violations committed during the war against SL.

In November 2000, Fujimori resigned from office and went to Japan in self-imposed exile, avoiding prosecution for human rights violations and corruption charges by the new Peruvian authorities. His main intelligence chief, Vladimiro Montesinos, fled Peru shortly afterwards. Authorities in Venezuela arrested him in Caracas in June 2001 and turned him over to Peruvian authorities; he is now imprisoned and charged with acts of corruption and human rights violations committed during Fujimori’s administration.

A caretaker government presided over by Valentín Paniagua took on the responsibility of conducting new presidential and congressional elections. The elections were held in April 2001; observers considered them to be free and fair. Alejandro Celestino Toledo Manrique (who led the opposition against Fujimori) defeated former President Alan García. The newly elected government took office on July 28, 2001. The Toledo Administration managed to restore some degree of democracy to Peru following the authoritarianism and corruption that plagued both the Fujimori and García governments. Innocents wrongfully tried by military courts during the war against terrorism (1980–2000) were allowed to receive new trials in civilian courts.

On August 28, 2003, the Truth and Reconciliation Commission (CVR), which had been charged with studying the roots of the violence of the 1980–2000 period, presented its formal report to the President. President Toledo was forced to make a number of cabinet changes, mostly in response to personal scandals. Toledo’s governing coalition had a minority of seats in Congress and had to negotiate on an ad hoc basis with other parties to form majorities on legislative proposals. Toledo’s popularity in the polls suffered throughout the last years of his regime, due in part to family scandals and in part to
dissatisfaction amongst workers with their share of benefits from Peru’s macroeconomic success. After strikes by teachers and agricultural producers led to nationwide road blockages in May 2003, Toledo declared a state of emergency that suspended some civil liberties and gave the military power to enforce order in 12 regions. The state of emergency was later reduced to only the few areas where the SL was operating.

On July 28, 2006 former president Alan Gabriel Ludwig García Pérez became the current President of Peru. He won the 2006 elections after winning in a runoff against Ollanta Humala. Coastal Peru was hit by a devastating earthquake in August 2007.


Panama National History

Estimates vary greatly of the number of Indians who inhabited the isthmus when the Spanish explorers arrived. By some accounts, the population was considerably greater than that of contemporary Panama. Some Panamanian historians have suggested that there might have been a population of 500,000 Indians from some sixty "tribes", but other researchers have concluded that the Cuna alone numbered some 750,000.

Besides the Cuna, which constituted by far the largest group in the area, two other major groups, the Guaymí and the Chocó, have been identified by ethnologists. The Guaymí, of the highlands near the Costa Rican border, are believed to be related to Indians of the Nahuatlan and Mayan nations of Mexico and Central America. The Chocó on the Pacific side of Darién Province appear to be related to the Chibcha of Colombia. Although the Cuna, now found mostly in the Comarca de San Blas, an indigenous territory or reserve considered part of Colón Province for some official purposes, have been categorized as belonging to the Caribbean culture, their origin continues to be a subject of speculation. Various ethnologists have indicated the possibility of a linguistic connection between the name Cuna and certain Arawak and Carib tribal names. The possibility of cultural links with the Andean Indians has been postulated, and some scholars have noted linguistic and other affinities with the Chibcha. The implication in terms of settlement patterns is that the great valleys of Colombia, which trend toward the isthmus, determined migration in that direction.

Lines of affiliation have also been traced to the Cueva and Coiba tribes, although some anthropologists suggest that the Cuna might belong to a largely extinct linguistic group. Some Cuna believe themselves to be of Carib stock, while others trace their origin to creation by the god Olokkuppilele at Mount Tacarcuna, west of the mouth of the Río Atrato in Colombia. Among all three Indian groups–the Cuna, Guaymí, and Chocó– land was communally owned and farmed. In addition to hunting and fishing, the Indians raised corn, cotton, cacao, various root crops and other vegetables, and fruits. They lived then–as many still do–in circular thatched huts and slept in hammocks. Villages specialized in producing certain goods, and traders moved among them along the rivers and coastal waters in dugout canoes. The Indians were skillful potters, stonecutters, goldsmiths, and silversmiths. The ornaments they wore, including breastplates and earrings of beaten gold, reinforced the Spanish myth of El Dorado, the city of gold.

Rodrigo de Bastidas, a wealthy notary public from Seville, was the first of many Spanish explorers to reach the isthmus. Sailing westward from Venezuela in 1501 in search of gold, he explored some 150 kilometers of the coastal area before heading for the West Indies. A year later, Christopher Columbus, on his fourth voyage to the New World, touched several points on the isthmus. One was a horseshoe-shaped harbor that he named Puerto Bello (beautiful port), later renamed Portobelo.

Vasco Núñez de Balboa, a member of Bastidas’s crew, had settled in Hispaniola (present-day Dominican Republic and Haiti) but stowed away on a voyage to Panama in 1510 to escape his creditors. At that time, about 800 Spaniards lived on the isthmus, but soon the many jungle perils, doubtless including malaria and yellow fever, had killed all but 60 of them. Finally, the
settlers at Antigua del Darién (Antigua), the first city to be duly constituted by the Spanish crown, deposed the crown’s representative and elected Balboa and Martin Zamudio co-mayors. Balboa proved to be a good administrator. He insisted that the settlers plant crops rather than depend solely on supply ships, and Antigua became a prosperous community. Like other conquistadors, Balboa led raids on Indian settlements, but unlike most, he proceeded to befriend the conquered tribes. He took the daughter of a chief as his lifelong mistress.

On September 1, 1513, Balboa set out with 190 Spaniards–among them Francisco Pizarro, who later conquered the Inca Empire in Peru–a pack of dogs, and 1,000 Indian slaves. After twenty-five days of hacking their way through the jungle, the party gazed on the vast expanse of the Pacific Ocean. Balboa, clad in full armor, waded into the water and claimed the sea and all the shores on which it washed for his God and his king. Balboa returned to Antigua in January 1514 with all 190 soldiers and with cotton cloth, pearls, and 40,000 pesos in gold. Meanwhile, Balboa’s enemies had denounced him in the Spanish court, and King Ferdinand appointed a new governor for the colony, then known as Castilla del Oro. The new governor, Pedro Arias de Avila, who became known as "Pedrarias the Cruel," charged Balboa with treason. In 1517 Balboa was arrested, brought to the court of Pedrarias, and executed.

In 1519 Pedrarias moved his capital away from the debilitating climate and unfriendly Indians of the Darién to a fishing village on the Pacific coast (about four kilometers east of the present-day capital). The Indians called the village Panama, meaning "plenty of fish." In the same year, Nombre de Dios, a deserted early settlement , was resettled and until the end of the sixteenth century served as the Caribbean port for trans-isthmian traffic. A trail known as the Camino Real, or royal road, linked Panama and Nombre de Dios. Along this trail, traces of which can still be followed, gold from Peru was carried by muleback to Spanish galleons waiting on the Atlantic coast. The increasing importance of the isthmus for transporting treasure and the delay and difficulties posed by the Camino Real inspired surveys ordered by the Spanish crown in the 1520s and 1530s to ascertain the feasibility of constructing a canal. The idea was finally abandoned in mid-century by King Philip II (1556-98), who concluded that if God had wanted a canal there, He would have built one.

Pedrarias’s governorship proved to be disastrous. Hundreds of Spaniards died of disease and starvation in their brocaded silk clothing; thousands of Indians were robbed, enslaved, and massacred. Thousands more of the Indians succumbed to European diseases to which they had no natural immunity. After the atrocities of Pedrarias, most of the Indians fled to remote areas to avoid the Spaniards. The regulations for colonial administration set forth by the Spanish king’s Council of the Indies decreed that the Indians were to be protected and converted to Christianity. The colonies, however, were far from the seat of ultimate responsibility, and few administrators were guided by the humane spirit of those regulations. The Roman Catholic Church, and particularly the Franciscan order, showed some concern for the welfare of the Indians, but on the whole, church efforts were inadequate to the situation. The Indians, nevertheless, found one effective benefactor among their Spanish oppressors. Bartolomé de las Casas, the first priest ordained in the West Indies, was outraged by the persecution of the Indians. He freed his own slaves, returned to Spain, and persuaded the council to adopt stronger measures against enslaving the Indians. He made one suggestion that he later regretted–that Africans, whom the Spaniards considered less than human, be imported to replace the Indians as slaves.

In 1517 King Charles V (1516-56) granted a concession for exporting 4,000 African slaves to the Antilles. Thus the slave trade began and flourished for more than 200 years. Panama was a major distribution point for slaves headed elsewhere on the mainland. The supply of Indian labor had been depleted by the midsixteenth century, however, and Panama began to absorb many
of the slaves. A large number of slaves on the isthmus escaped into the jungle. They became known as cimarrones, meaning
wild or unruly, because they attacked travelers along the Camino Real. An official census of Panama City in 1610 listed 548 citizens, 303 women, 156 children, 146 mulattoes, 148 Antillean blacks, and 3,500 African slaves.

The period of free, though licensed, exploration gave way to a period in which the king exercised royal control by appointing governors and their staffs. All were to be paid from crown revenues expected from the royal profits on the colony. The king’s representative was responsible for ensuring such returns; he tracked all gold, pearls, and income from trade and conquest; he weighed out and safeguarded the king’s share. Governors had some summary powers of justice, but audiencias (courts) were also established. The first such audiencia, in Santo Domingo, Hispaniola, had jurisdiction over the whole area of conquest. As settlement spread, other audiencias were set up. By a decree of 1538, all Spanish territory from Nicaragua to Cape Horn was to be administered from an audiencia in Panama. This audiencia lasted only until 1543 because of the impossibility of exercising jurisdiction over so vast an area. A new Panamanian audiencia, with jurisdiction over an area more nearly coinciding with the territory of present-day Panama, was established in 1563. The viceroy’s position was revived for the rich empires of Mexico and Peru. After 1567 Panama was attached to the Viceroyalty of Peru but retained its own audiencia.

Beginning early in the sixteenth century, Nombre de Dios in Panama, Vera Cruz in Mexico, and Cartagena in Colombia were the only three ports in Spanish America authorized by the crown to trade with the homeland. By the mid-1560s, the system became regularized, and two fleets sailed annually from Spain, one to Mexico, and the other to southern ports. These fleets would then rendezvous at Havana and return together to Cádiz, Spain. In principle, this rigid system remained in effect until the eighteenth century. From the middle of the seventeenth century, however, as the strength and prosperity of Spain declined, annual visits became the exception. Shipments of bullion and goods were to be delivered to Panama on the Pacific side for transport over the isthmus and return to Spain. Panama’s own contribution to the loading of the fleet was relatively small. Gold production was never great, and little exportable surplus of agricultural and forest products was available. Nothing was manufactured; in fact, Spain discouraged the production of finished goods. The colony’s prosperity, therefore, fluctuated with the volume of trade, made up largely of Peruvian shipments. When the Inca gold was exhausted, great quantities of silver mined in Peru replaced gold in trade for 150 years, supplemented eventually by sugar, cotton, wine, indigo, cinchona, vanilla, and cacao.

Except for traffic in African slaves, foreign trade was forbidden unless the goods passed through Spain. Africans were brought to the colonies on contract (asiento) by Portuguese, English, Dutch, and French slavers, who were forbidden to trade in any other commodities. Spanish efforts to retain their monopoly on the rich profits from trade with their
colonies provided a challenge to the rising maritime nations of Europe. Intermittent maritime warfare resulted in the Caribbean and later in the Pacific. The first serious interference with trade came from the English.

From 1572 to 1597, Francis Drake was associated with most of the assaults on Panama. Drake’s activities demonstrated the indefensibility of the open roadstead of Nombre de Dios. In 1597 the Atlantic terminus of the trans-isthmian route was moved to Portobelo, one of the best natural harbors anywhere on the Spanish Main (the mainland of Spanish America). Despite raids on shipments and ports, the registered legal import of precious metals increased threefold between 1550 and 1600. Panama’s prosperity was at its peak during the first part of the seventeenth century. This was the time of the famous ferias (fairs, or exchange markets) of Portobelo, where European merchandise could be purchased to supply the commerce of the whole west coast south of Nicaragua. When a feria ended, Portobelo would revert to its quiet existence as a small seaport and garrison town.

Panama City also flourished on the profits of trade. Following reconstruction after a serious fire in 1644, contemporary accounts credit Panama City with 1,400 residences "of all types" (probably including slave huts); most business places, religious houses, and substantial residences were rebuilt of stone. Panama City was considered, after Mexico City and Lima, the most beautiful and opulent settlement in the West Indies. Interest in a canal project was revived early in the seventeenth century by Philip III of Spain (1598-1621). The Council of the Indies dissuaded the king, arguing that a canal would draw attack from other European nations–an indication of the decline of Spanish sea power.

During the first quarter of the seventeenth century, trade between Spain and the isthmus remained undisturbed. At the same time, England, France, and the Netherlands, one or all almost constantly at war with Spain, began seizing colonies in the Caribbean. Such footholds in the West Indies encouraged the development of the buccaneers–English, French, Dutch, and
Portuguese adventurers who preyed on Spanish shipping and ports with the tacit or open support of their governments. Because of their numbers and the closeness of their bases, the buccaneers were more effective against Spanish trade than the English had been during the previous century.

Henry Morgan, a buccaneer who had held Portobelo for ransom in 1668, returned to Panama with a stronger force at the end of 1670. On January 29, 1671, Morgan appeared at Panama City. With 1,400 men he defeated the garrison of 2,600 in pitched battle outside the city, which he then looted. The officials and citizens fled, some to the country and others to Peru, having
loaded their ships with the most important church and government funds and treasure. Panama City was destroyed by fire, probably from blown up powder stores, although the looters were blamed. After 4 weeks, Morgan left with 175 mule loads of loot and 600 prisoners. Two years later, a new city was founded at the location of the present-day capital and was heavily fortified. The buccaneer scourge rapidly declined after 1688 mainly because of changing European alliances. By this time Spain was chronically bankrupt; its population had fallen; and it suffered internal government mismanagement and corruption.

Influenced by buccaneer reports about the ease with which the isthmus could be crossed–which suggested the possibility of digging a canal–William Paterson, founder and ex-governor of the Bank of England, organized a Scottish company to establish a colony in the San Blas area. Paterson landed on the Caribbean coast of the Darién late in 1698 with about 1,200 persons. Although well received by the Indians, the colonists were poorly prepared for life in the tropics with its attendant diseases. Their notion of trade goods–European clothing, wigs, and English Bibles–was of little interest to the Indians. These colonists gave up after six months, unknowingly passing at sea reinforcements totaling another 1,600 people. The Spanish reacted to these new arrivals by establishing a blockade from the sea. The English capitulated and left in April 1700, having lost many lives, mostly from malnutrition and disease.

In Spain Bourbon kings replaced the Habsburgs in 1700, and some liberalization of trade was introduced. These measures were too late for Panama, however. Spain’s desperate efforts to maintain its colonial trade monopoly had been self-defeating. Cheaper goods supplied by England, France, and the Netherlands were welcomed by colonial officials and private traders alike. Dealing in contraband increased to the detriment of official trade. Fewer merchants came to the Portobelo feria to pay Spain’s inflated prices because the foreign suppliers furnished cheaper goods at any port at which they could slip by or bribe the coastal guards. The situation worsened; only five of the previously annual fleets were dispatched to Latin America between 1715 and 1736, a circumstance that increased contraband operations.

Panama’s temporary loss of its independent audiencia, from 1718 to 1722, and the country’s attachment to the Viceroyalty of Peru were probably engineered by powerful Peruvian merchants. They resented the venality of Panamanian officials and their ineffectiveness in suppressing the pirates (outlaws of no flag, as distinct from the buccaneers of the seventeenth century). Panama’s weakness was further shown by its inability to protect itself against an invasion by the Miskito Indians of Nicaragua, who attacked from Laguna de Chiriquí. Another Indian uprising in the valley of the Río Tuira caused the whites to abandon the Darién.

The final blow to Panama’s shrinking control of the transit trade between Latin America and Spain came before the mid-eighteenth century. As a provision of the Treaty of Utrecht at the end of the War of the Spanish Succession in 1713, Britain secured the right to supply African slaves to the Spanish colonies (4,800 a year for 30 years) and also to send 1 ship a year to Portobelo. The slave trade provision evidently satisfied both countries, but the trade in goods did not. Smuggling by British ships continued, and a highly organized contraband trade based in Jamaica–with the collusion of Panamanian merchants–nearly wiped out the legal trade. By 1739 the importance of the isthmus to Spain had seriously declined; Spain again suppressed Panama’s autonomy by making the region part of the Viceroyalty of New Granada (encompassing present-day Colombia, Venezula, Ecuador, and Panama).

In the same year, war broke out between Britain and Spain. A British military force took Portobelo and destroyed it. Panamanian historians maintain that this attack diverted Spanish trade from the trans-isthmian route. The Seville-Cádiz monopoly of colonial trade had been breached by royal decrees earlier in the century, and precedent was thus furnished for the merchants of the Latin American colonies to agitate for direct trade with Spain and for intercolonial trade. After 1740 the Pacific coast ports were permitted to trade directly via ships rounding Cape Horn, and the Portobelo feria was never held again. Relaxing the trading laws benefited both Spanish America and Spain, but Panama’s economic decline was serious. Transit trade had for so long furnished the profits on which Panama had flourished that there had been no incentive to develop any other economic base. After the suppression of its audiencia in 1751, Panama became a quiet backwater, a geographically isolated appendage of New Granada, scarcely self-supporting even in food and producing little for export.

In 1793, near the close of the colonial period, the first recorded attempt at a comprehensive census of the area that had comprised the Panamanian audiencia was made. Incomplete and doubtless omitting most of the Indian and cimarrón population, specifically excluding soldiers and priests, the census recorded 71,888 inhabitants, 7,857 of whom lived in Panama City. Other principal towns had populations ranging from 2,000 to a little over 5,000.

Lacking communication except by sea, which the Spanish generally controlled, Panama remained aloof from the early efforts of the Spanish colonies to separate from Spain. Revolutionaries of other colonies, however, did not hesitate to use Panama’s strategic potential as a pawn in revolutionary maneuvers. General Francisco Miranda of Venezuela, who had been attracting support for revolutionary activities as early as 1797, offered a canal concession to Britain in return for aid. Thomas Jefferson, while minister to France, also showed interest in a canal, but the isolationist policies of the new United States and the absorption of energies and capital in continental expansion prevented serious consideration. Patriots from Cartagena attempted to
take Portobelo in 1814 and again in 1819, and a naval effort from liberated Chile succeeded in capturing the island of Taboga in the Bay of Panama. Panama’s first act of separation from Spain came without violence. When Simón Bolívar’s victory at Boyacá on August 7, 1819, clinched the liberation of New Granada, the Spanish viceroy fled Colombia for Panama, where he ruled harshly until his death in 1821. His replacement in Panama, a liberal constitutionalist, permitted a free press and the formation of patriotic associations. Raising troops locally, he soon sailed for Ecuador, leaving a native Panamanian, Colonel Edwin Fábrega, as acting governor.

Panama City immediately initiated plans to declare independence, but the city of Los Santos preempted the move by proclaiming freedom from Spain on November 10, 1821. This act precipitated a meeting in Panama City on November 28, which is celebrated as the official date of independence. Considerable discussion followed as to whether Panama should remain part of Colombia (then comprising both the present-day country and Venezuela) or unite with Peru. The bishop of Panama, a native Peruvian who realized the commercial ties that could be developed with his country, argued for the latter solution but was voted down. A third possible course of action, a union with Mexico proposed by emissaries of that country, was rejected. Panama thus became part of Colombia, then governed under the 1821 Constitution of Cúcuta, and was designated a department with two provinces, Panamá and Veraguas. With the addition of Ecuador to the liberated area, the whole country became known as Gran Colombia. Panama sent a force of 700 men to join Bolívar in Peru, where the war of liberation continued.

The termination of hostilities against the royalists in 1824 failed to bring tranquillity to Gran Colombia. The constitution that Bolívar had drafted for Bolivia was put forward by him to be adopted in Gran Colombia. The country was divided principally over the proposal that a president would serve for life. The president would not be responsible to the legislature and would have power to select his vice president. Other provisions, generally centralist in their tendencies, were repugnant to some, while a few desired a monarchy. Panama escaped armed violence over the constitutional question but joined other regions in petitioning Bolívar to assume dictatorial powers until a convention could meet. Panama announced its union with Gran Colombia as a "Hanseatic State," i.e., as an autonomous area with special trading privileges until the convention was held.

In 1826 Bolívar honored Panama when he chose it as the site for a congress of the recently liberated Spanish colonies. Many leaders of the revolutions in Latin America considered the establishment of a single government for the former Spanish colonies the natural follow-up to driving out the peninsulares. Both José de San Martin and Miranda proposed creating a single vast monarchy ruled by an emperor descended from the Incas. Bolívar, however, was the one who made the most serious attempt to unite the Spanish American republics.

Although the league or confederation envisioned by Bolívar was to foster the blessings of liberty and justice, a primary purpose was to secure the independence of the former colonies from renewed attacks by Spain and its allies. In this endeavor Bolívar sought Britain’s protection. He was reluctant to invite representatives of the United States, even as observers, to the congress of plenipotentiaries lest their collaboration compromise the league’s position with the British. Furthermore, Bolívar felt that the neutrality of the United States in the war between Spain and its former colonies would make its representation inappropriate. In addition, slavery in the United States would be an obstacle in discussing the abolition of the African slave trade. Bolívar nevertheless acquiesced when the governments of Colombia, Mexico, and Central America invited the United States to send observers.

Despite the sweeping implications of the Monroe Doctrine, President John Quincy Adams–in deciding to send delegates to the Panama conference–was not disposed to obligate the United States to defend its southern neighbors. Adams instructed his delegates to refrain from participating in deliberations concerning regional security and to emphasize discussions of maritime neutrality and commerce. Nevertheless, many members of the United States Congress opposed participation under any conditions. By the time participation was approved, the delegation had no time to reach the conference. The British and Dutch sent unofficial representatives.

The Congress of Panama, which convened in June and adjourned in July of 1826, was attended by four American states–Mexico, Central America, Colombia, and Peru. The "Treaty of Union, League, and Perpetual Confederation" drawn up at that congress would have bound all parties to mutual defense and to the peaceful settlement of disputes. Furthermore, because some feared that monarchical elements sympathetic to Spain and its allies might regain control of one of the new republics, the treaty included a provision that if a member state substantially changed its form of government, it would be excluded from the confederation and could be readmitted only with the unanimous consent of all other members.

The treaty was ratified only by Colombia and never became effective. Bolívar, having made several futile attempts to establish lesser federations, declared shortly before his death in 1830 that "America is ungovernable; those who served the revolution have plowed the sea." Despite his disillusion, however, he did not see United States protection as a substitute for collective security arrangements among the Spanish-speaking states. In fact, he is credited with having said, "The United States seems destined by Providence to plague America with misery in the name of Liberty." Three abortive attempts to separate the isthmus from Colombia occurred between 1830 and 1840. The first was undertaken by an acting governor of Panama who opposed the policies of the president, but the Panamanian leader reincorporated the department of Panama at the urging of Bolívar, then on his deathbed. The second attempted separation was the scheme of an unpopular dictator, who was soon deposed and executed. The third secession, a response to civil war in Colombia, was declared by a popular assembly, but reintegration took place a year later.

Throughout the nineteenth century, governments and private investors in the United States, Britain, and France intermittently displayed interest in building a canal across the Western Hemisphere. Several sites were considered, but from the start the ones in Nicaragua and Panama received the most serious attention. President Andrew Jackson sent Charles A. Biddle as his
emissary in the 1830s to investigate both routes, but the project was aborted when Biddle abandoned his government mission and negotiated instead with Colombian capitalists for a private concession. Nevertheless, Colombia continued to express interest in negotiating with the United States on building a canal. A treaty was signed in 1846 between the two countries. The treaty removed the existing restrictive tariffs and gave the United States and its citizens the right of free transit of persons and goods over any road or canal that might be constructed in the isthmus. In addition, the United States guaranteed the neutrality of the isthmus and Colombia’s sovereignty over it, with a view to ensuring uninterrupted transit for the duration of the treaty, which was to be
twenty years or as long thereafter as the parties gave no notice to revise it. Called the Bidlack-Mallarino Treaty of 1846, it was actually ratified and became effective in 1848.

Because the canal interests of Britain and the United States had continued to clash, particularly in Nicaragua, Britain and the United States sought to ease tensions by entering into the Clayton-Bulwer Treaty of 1850. The governments agreed specifically that neither would acquire rights to or construct a Nicaraguan canal without the participation of the other. This
general principle was extended to any canal or railroad across Central America, to include the Isthmus of Tehuantepec in Mexico and Panama. In effect, since neither government was then willing or able to begin a canal, the treaty was for the time an instrument of neutrality. Colombia’s attempt to attract canal interest finally brought French attention to bear on Panama. After several surveys, a concession of exclusive rights was obtained from Colombia, and a company was formed in 1879 to construct a sea-level canal generally along the railroad route. Ferdinand de Lesseps, of Suez Canal fame, headed the company. The terms of the concession required completion in twelve years, with the possibility of a six-year extension at Colombia’s discretion. The lease was for ninety years and was transferable, but not to any foreign government. The company also purchased most of the stock of the Panama Railroad Company, which, however, continued to be managed by Americans.

A ceremonious commencement of work was staged by de Lesseps on January 1, 1880, but serious earth moving did not start until the next year. As work progressed, engineers judged that a sea-level canal was impracticable. De Lesseps, a promoter but not an engineer, could not be convinced until work had gone on for six years. Actual labor on a lock canal did not start until late in 1888, by which time the company was in serious financial difficulty. At the peak of its operations the company employed about 10,000 workers.

De Lesseps had to contend not only with enemies who hampered financing by spreading rumors of failure and dumping stocks and bonds on the market but also with venal French politicians and bureaucrats who demanded large bribes for approving the issue of securities. His efforts to get the French government to guarantee his bonds were blocked by the United States, on the grounds that such action would lead to government control in violation of the Monroe Doctrine. The end result in January 1889 was the appointment of a receiver to liquidate the company, whereupon all work stopped. Despite the French company’s disastrous financial experience, an estimated two-fifths of the excavation necessary for the eventual canal had been completed. Many headquarters and hospital buildings were finished. Some of the machinery left on the site was usable later, and the railroad had been maintained. Another legacy of the French company’s bankruptcy was a large labor force, now unemployed, mostly Antillean blacks. More than half were repatriated, but thousands remained, many of whom eventually worked on the United States canal.

During the last half of the nineteenth century, violent clashes between the supporters of the Liberal and Conservative parties in Colombia left the isthmus’ affairs in constant turmoil. Local selfgovernment for the department of Panama was extended when the Liberals were in power and withdrawn when the Conservatives prevailed. The Catholic Church was disestablished under the Liberals and reestablished under the Conservatives. The fortunes of local partisans rose and fell abruptly and often violently. According to one estimate, the period witnessed forty administrations of the Panamanian department, fifty riots and rebellions, five attempted secessions, and thirteen interventions by the United States, acting under the provisions of the Bidlack-Mallarino Treaty. Partisan clashes and foreign intervention exacerbated racial antagonisms and economic problems and intensified grievances against the central government of Colombia.

Between 1863 and 1886, the isthmus had twenty-six presidents. Coups d’état, rebellions, and violence were almost continuous, staged by troops of the central government, by local citizens against centrally imposed edicts, and by factions out of power. The chaotic conditions that had prevailed under the federalist constitution of 1863 culminated in the 1884 election of Rafael Nuñez as president of Colombia, supported by a coalition of moderate Liberals and Conservatives. Nuñez called all factions to participate in a new constituent assembly, but his request was met by an armed revolt of the radical Liberals. Early in 1885, a revolt headed by a radical Liberal general and centered in Panama City developed into a three-way fight. Colón was virtually destroyed. United States forces landed at the request of the Colombian government but were too late to save the city. Millions of dollars in claims were submitted by companies and citizens of the United States, France, and Britain, but Colombia successfully pleaded its lack of responsibility.

Additional United States naval forces occupied both Colón and Panama City and guarded the railroad to ensure uninterrupted transit until Colombian forces landed to protect the railroad. The new constitution of 1886 established the Republic of Colombia as a unitary state; departments were distinctly subordinate to the central government, and Panama was singled out as
subject to the direct authority of the government. The United States consul general reported that three-quarters of the Panamanians wanted independence from Colombia and would revolt if they could get arms and be sure of freedom from United States intervention.

Panama was drawn into Colombia’s War of a Thousand Days (1899-1902) by rebellious radical Liberals who had taken refuge in Nicaragua. Like the rest of Colombia, opinion in Panama was divided, and revolts in the southwest had hardly been suppressed when Liberals from Nicaragua invaded the Pacific coastal region and nearly succeeded in taking Panama City in mid-1900. The fortunes of war varied, and although a local armistice gave supporters of the Colombian government temporary security in the Panama-Colón region, the rebels were in control throughout the isthmus. Meanwhile, by early 1902 the rebels had been defeated in most of Colombia proper. At that point, the Colombian government asked the United States to intercede and bring about an armistice in Panama, which was arranged aboard the U.S.S. Wisconsin in the Bay of Panama in 1902.

Throughout the period of turmoil, the United States had retained its interest in building a canal through either Nicaragua or Panama. An obstacle to this goal was overcome in December 1901 when the United States and Britain signed the Hay-Pauncefote Treaty. This treaty nullified the provisions of the Clayton-Bulwer Treaty of 1850 and signified British acceptance of a canal constructed solely by or under the auspices of the United States with guarantees of neutrality.

Naval operations during the Spanish-American War (1898-1901) served to convince President Theodore Roosevelt that the United States needed to control a canal somewhere in the Western Hemisphere. This interest culminated in the Spooner Bill of June 29, 1902, providing for a canal through the isthmus of Panama, and the Hay-Herrán Treaty of January 22, 1903, under which Colombia gave consent to such a project in the form of a 100-year lease on an area 10 kilometers wide. This treaty, however, was not ratified in Bogotá, and the United States, determined to construct a canal across the isthmus, intensively encouraged the Panamanian separatist movement.

By July 1903, when the course of internal Colombian opposition to the Hay-Herrán Treaty became obvious, a revolutionary junta had been created in Panama. José Augustin Arango, an attorney for the Panama Railroad Company, headed the junta. Manuel Amador Guerrero and Carlos C. Arosemena served on the junta from the start, and five other members, all from prominent Panamanian families, were added. Arango was considered the brains of the revolution, and Amador was the junta’s active leader.

With financial assistance arranged by Philippe Bunau-Varilla, a French national representing the interests of de Lesseps’s company, the native Panamanian leaders conspired to take advantage of United States interest in a new regime on the isthmus. In October and November 1903, the revolutionary junta, with the protection of United States naval forces, carried out a
successful uprising against the Colombian government. Acting, paradoxically, under the Bidlack-Mallarino Treaty of 1846 between the United States and Colombia–which provided that United States forces could intervene in the event of disorder on the isthmus to guarantee Colombian sovereignty and open transit across the isthmus –the United States prevented a Colombian force from moving across the isthmus to Panama City to suppress the insurrection.

President Roosevelt recognized the new Panamanian junta as the de facto government on November 6, 1903; de jure recognition came on November 13. Five days later Bunau-Varilla, as the diplomatic representative of Panama (a role he had purchased through financial assistance to the rebels) concluded the Isthmian Canal Convention with Secretary of State John Hay in Washington. Bunau-Varilla had not lived in Panama for seventeen years before the incident, and he never returned. Nevertheless, while residing in the Waldorf-Astoria Hotel in New York City, he wrote the Panamanian declaration of independence and constitution and designed the Panamanian flag. Isthmian patriots particularly resented the haste with which Bunau-Varilla concluded the treaty, an effort partially designed to preclude any objections an arriving Panamanian delegation might raise. Nonetheless, the Panamanians, having no apparent alternative, ratified the treaty on December 2, and approval by the United States Senate came on February 23, 1904.

The rights granted to the United States in the so-called Hay-Bunau-Varilla Treaty were extensive. They included a grant "in perpetuity of the use, occupation, and control" of a sixteenkilometer-wide strip of territory and extensions of three nautical miles into the sea from each terminal "for the construction, maintenance, operation, sanitation, and protection" of an isthmian canal. Furthermore, the United States was entitled to acquire additional areas of land or water necessary for canal operations and held the option of exercising eminent domain in Panama City. Within this territory Washington gained "all the rights, power, and authority . . . which the United States would possess and exercise if it were the sovereign . . . to the entire exclusion" of Panama.

The Republic of Panama became a de facto protectorate of the larger country through two provisions whereby the United States guaranteed the independence of Panama and received in return the right to intervene in Panama’s domestic affairs. For the rights it obtained, the United States was to pay the sum of US$10 million and an annuity, beginning 9 years after ratification, of US$250,000 in gold coin. The United States also purchased the rights and properties of the French canal company for US$40 million.

Colombia was the harshest critic of United States policy at the time. A reconciliatory treaty with the United States providing an indemnity of US$25 million was finally concluded between these two countries in 1921. Ironically, however, friction resulting from the events of 1903 was greatest between the United States and Panama. Major disagreements arose concerning the rights granted to the United States by the treaty of 1903 and the Panamanian constitution of 1904. The United States government subsequently interpreted these rights to mean that the United States could exercise complete sovereignty over all matters in the Canal Zone. Panama, although admitting that the clauses were vague and obscure, later held that the original concession of authority related only to the construction, operation, and defense of the canal and that rights and privileges not necessary to these functions had never been relinquished

The provisional governing junta selected when independence was declared governed the new state until a constitution was adopted in 1904. Under its terms, Amador became Panama’s first president. The constitution was modeled, for the most part, after that of the United States, calling for separation of powers and direct elections for the presidency and the
legislature, the National Assembly. The assembly, however, elected three persons to stand in the line of succession to the presidency. This provision remained in effect until 1946, when a new constitution provided for direct election of the vice president. The new republic was unitary; municipalities were to elect their own officials, but provincial authorities were to be appointed by the central government. The most controversial provision of the constitution was that which gave the United States the right to intervene to guarantee Panamanian sovereignty and to preserve order.

A two-party system of Liberals and Conservatives was inherited from Colombia, but the party labels had even less precise or ideological meaning in Panama than they had in the larger country. By the early 1920s, most of the Conservative leaders of the independence generation had died without leaving political heirs. Thus, cleavages in the Liberal Party led to a new system of personalistic parties in shifting coalitions, none of which enjoyed a mass base. Politics remained the exclusive preserve of the oligarchy, which tended to be composed of a few wealthy, white families. Having successfully severed their ties with Colombia, the secessionists of Panama’s central government were soon faced with a secessionist problem of their own. The Cuna of the San Blas Islands were unwilling to accept the authority of Panama, just as they had been unwilling to accept the authority of Colombia or Spain. The Panamanian government exercised no administrative control over the islands until 1915, when a departmental government was established; its main office was in El Porvenir. At that time, forces of the Colonial Police, composed of blacks, were stationed on several islands. Their presence, along with a number of other factors, led to a revolt in 1925.

In 1903 on the island of Narganá, Charlie Robinson was elected chief. Having spent many years on a West Indian ship, he began a "civilizing" program. His cause was later taken up by a number of young men who had been educated in the cities on the mainland. These Young Turks advocated forcibly removing nose rings, substituting dresses for molas, and establishing dance halls like those in the cities. They were actively supported by the police, who arrested men who did not send their daughters to the dance hall; the police also allegedly raped some of the Indian women. By 1925 hatred for these modernizers and for the police was intense throughout the San Blas Islands. The situation was further complicated by the factionalism that resulted when Panama separated from Colombia. The leader of one of these factions, Simral Coleman, with the help of a sympathetic American explorer, Richard Marsh, drew up a "declaration of independence" for the Cuna, and on February 25, 1925, the rebellion was underway. During the course of the rebellion, about twenty members of the police were killed. A few days later a United States cruiser appeared; with United States diplomatic and naval officials serving as intermediaries, a peace treaty was concluded. The most important outcome of this rebellion against Panama was a treaty that in effect recognized San Blas as a semiautonomous territory.

When the United States canal builders arrived in 1904 to begin their momentous task, Panama City and Colón were both small, squalid towns. A single railroad stretched between the towns, running alongside the muddy scars of the abortive French effort. The new builders were haunted by the ghosts of de Lesseps’s failure and of the workers, some 25,000 of whom had died on the project. These new builders were able, however, to learn from de Lesseps’s mistakes and to build on the foundations of the previous engineering. The most formidable task that the North Americans faced was that of ridding the area of deadly mosquitoes. After a couple of false starts under a civilian commission, President Roosevelt turned the project over to the United States Army Corps of Engineers, guided by Colonel George Washington Goethals. Colonel William Crawford Gorgas was placed in charge of sanitation. In addition to the major killers–malaria and yellow fever–smallpox, typhoid, dysentery, and intestinal parasites threatened the newcomers.

Because the mosquito carrying yellow fever was found in urban areas, Gorgas concentrated his main efforts on the terminal cities. "Gorgas gangs" dug ditches to drain standing water and sprayed puddles with a film of oil. They screened and fumigated buildings, even invading churches to clean out the fonts of holy water. They installed a pure water supply and a modern system of sewage disposal. Goethals reportedly told Gorgas that every mosquito killed was costing the United States US$10. "I know, Colonel," Gorgas reportedly replied, "but what if one of those ten-dollar mosquitoes were to bite you?". Gorgas’s work is credited with saving at least 71,000 lives and some 40 million days of sickness. The cleaner, safer conditions enabled the canal diggers to attract a labor force. By 1913 approximately 65,000 men were on the payroll. Most were West Indians, although some 12,000 workers were recruited from southern Europe. Five thousand United States citizens filled the administrative, professional, and supervisory jobs. To provide these men with the comforts and amenities to which they were accustomed, a paternalistic community was organized in the Canal Zone.

The most challenging tasks involved in the actual digging of the canal were cutting through the mountain ridge at Culebra; building a huge dam at Gatún to trap the Río Chagres and form an artificial lake; and building three double sets of locks–Gatun Locks, Pedro Miguel Locks, and Miraflores Locks–to raise the ships to the lake, almost twenty-six meters above sea level, and then lower them. On August 15, 1914, the first ship made a complete passage through the canal. By the time the canal project was completed, its economic impact had created a new middle class. In addition, new forms of discrimination occurred. Panamanian society had become segregated not only by class but by race and national origin as well. Furthermore, United States commercial competition and political intervention had already begun to generate resentment among Panamanians.

In the very first year of the Hay-Bunau-Varilla Treaty, dissension had already arisen over the sovereignty issue. Acting on an understanding of its rights, the United States had applied special regulations to maritime traffic at the ports of entry to the canal and had established its own customs, tariffs, and postal services in the zone. These measures were opposed by the Panamanian government. Mounting friction finally led Roosevelt to dispatch Secretary of War William Howard Taft to Panama in November 1904. His visit resulted in a compromise agreement, whereby the United States retained control of the ports of Ancón and Cristóbal, but their facilities might be used by any ships entering Panama City and Colón. The agreement also involved a reciprocal reduction of tariffs and the free passage of persons and goods from the Canal Zone into the republic. Compromises were reached in other areas, and both sides emerged with most of their grievances blunted if not wholly resolved.

Before the first year of independence had passed, the intervention issue also complicated relations. Threats to constitutional government in the republic by a Panamanian military leader, General Estéban Huertas, had resulted, at the suggestion of the United States diplomatic mission, in disbanding the Panamanian army in 1904. The army was replaced by the National Police, whose mission was to carry out ordinary police work. By 1920 the United States had intervened four times in the civil life of the republic. These interventions involved little military conflict and were, with one exception, at the request of one Panamanian faction or another.

The internal dynamics of Panamanian politics encouraged appeals to the United States by any currently disgruntled faction for intervention to secure its allegedly infringed rights. United States diplomatic personnel in Panama also served as advisers to Panamanian officials, a policy resented by nationalists. In 1921 the issue of intervention was formally raised by the republic’s government. When asked for a definitive, written interpretation of the pertinent treaty clauses, Secretary of State Charles Evans Hughes pointed to inherent difficulties and explained that the main objectives of the United States were to act against any threat to the Canal Zone or the lives and holdings of non-Panamanians in the two major cities. Actual intervention took several forms. United States officials supervised elections at the request of incumbent governments. To protect lives of United States citizens and property in Chiriquí Province, an occupation force was stationed there for two years over the protests of Panamanians who contended that the right of occupation could apply only to the two major cities. United States involvement in the 1925 rent riots in Panama City was also widely resented. After violent disturbances during October, and at the request of the Panamanian government, 600 troops with fixed bayonets dispersed mobs threatening to seize the city.

At the end of the 1920s, traditional United States policy toward intervention was revised. In 1928 Secretary of State Frank B. Kellogg reiterated his government’s refusal to countenance illegal changes of government. In the same year, however, Washington declined to intervene during the national elections that placed Florencio H. Arosemena in office. The Arosemena government was noted for its corruption. But when a coup d’état was undertaken to unseat Arosemena, the United States once again declined to intervene. Though no official pronouncement of a shift in policy had been made, the 1931 coup d’état–the first successful one in the republic’s history–marked a watershed in the history of United States intervention.

Meanwhile, popular sentiment on both sides calling for revisions to the treaty had resulted in the Kellogg-Alfaro Treaty of 1925. The United States in this instrument agreed to restrictions on private commercial operations in the Canal Zone and also agreed to a tightening of the regulations pertaining to the official commissaries. At the same time, however, the United States gained several concessions involving security. Panama agreed to automatic participation in any war involving the United States and to United States supervision and control of military operations within the republic. These and other clauses aroused strong opposition and, amid considerable tumult, the National Assembly on January 26, 1927, refused to consider the draft treaty. The abortive Kellogg-Alfaro Treaty involved the two countries in a critical incident with the League of Nations. During the fall of 1927, the League Assembly insisted that Panama could not legally participate in the proposed arrangement with the United States. The assembly argued that an automatic declaration of war would violate Panama’s obligations under the League Covenant to wait three months for an arbitral decision on any dispute before resorting to war. The discussion was largely academic inasmuch as the treaty had already been effectively rejected, but Panama proposed that the dispute over sovereignty in the Canal Zone be submitted to international arbitration. The United States denied that any issue needed arbitration.

In the late 1920s, United States policymakers noted that nationalist aspirations in Latin America were not producing desired results. United States occupation of the Dominican Republic, Haiti, and Nicaragua had not spawned exemplary political systems, nor had widespread intervention resulted in a receptive attitude toward United States trade and investments. As the subversive activities of Latin American Nazi and Fascist sympathizers gained momentum in the 1930s, the United States became concerned about the need for hemispheric solidarity. The gradual reversal of United States policy was heralded in 1928 when the Clark Memorandum was issued, formally disavowing the Roosevelt Corollary to the Monroe Doctrine. In his inaugural address in 1933, President Franklin D. Roosevelt enunciated the Good Neighbor Policy. That same year, at the Seventh Inter-American Conference in Montevideo, the United States expressed a qualified acceptance of the principle of nonintervention; in 1936 the United States approved this principle without reservation.

In the 1930s, Panama, like most countries of the Western world, was suffering economic depression. Until that time, Panamanian politics had remained a competition among individuals and families within a gentleman’s club–specifically, the Union Club of Panama City. The first exception to this succession was Harmodio Arias Madrid (unrelated to the aristocratic family of the same name) who was elected to the presidency in 1932. A mestizo from a poor family in the provinces, he had attended the London School of Economics and had gained prominence through writing a book that attacked the Monroe Doctrine. Harmodio and his brother Arnulfo, a Harvard Medical School graduate, entered the political arena through a movement known as Community Action (Acción Communal). Its following was primarily mestizo middle class, and its mood was antioligarchy and anti-Yankee. Harmodio Arias was the first Panamanian president to institute relief efforts for the isolated and impoverished countryside. He later established the University of Panama, which became the focal point for the political articulation of middle-class interests and nationalistic zeal.

Thus, a certain asymmetry developed in the trends underway in the 1930s that worked in Panama’s favor. While the United States was assuming a more conciliatory stance, Panamanians were losing patience, and a political base for virulent nationalism was emerging. A dispute arose in 1932 over Panamanian opposition to the sale of 3.2-percent beer in the Canal Zone competing with Panamanian beers. Tension rose when the governor of the zone insisted on formally replying to the protests, despite the Panamanian government’s well-known view that proper diplomatic relations should involve only the United States ambassador. In 1933 when unemployment in Panama reached a dangerous level and friction over the zone commissaries rekindled, President Harmodio Arias went to Washington.

The result was agreement on a number of issues. The United States pledged sympathetic consideration of future arbitration requests involving economic issues that did not affect the vital aspects of canal operation. Special efforts were to be made to protect Panamanian business interests from the smuggling of cheaply purchased commissary goods out of the zone. Washington also promised to seek appropriations from Congress to sponsor the repatriation of the numerous immigrant canal workers, who were aggravating the unemployment situation. Most important, however, was President Roosevelt’s acceptance, in a joint statement with Harmodio Arias, that United States rights in the zone applied only for the purposes of "maintenance, operation, sanitation, and protection" of the canal. The resolution of this long-standing issue, along with a clear recognition of Panama as a sovereign nation, was a significant move in the direction of the Panamanian interpretation of the proper United States position in the isthmus. This accord, though welcomed in Panama, came too early to deal with a major problem concerning the US$250,000 annuity.
The devaluation of the United States dollar in 1934 reduced its gold content to 59.6 percent of its former value. This meant that the US$250,000 payment was nearly cut in half in the new devalued dollars. As a result, the Panamanian government refused to accept the annuity paid in the new dollars.

Roosevelt’s visit to the republic in the summer of 1934 prepared the way for opening negotiations on this and other matters. A Panamanian mission arrived in Washington in November, and discussions on a replacement for the Hay-Bunau-Varilla Treaty continued through 1935. On March 2, 1936, Secretary of State Cordell Hull and Assistant Secretary of State Sumner Welles joined the Panamanian negotiators in signing a new treaty–the Hull-Alfaro Treaty–and three related conventions. The conventions regulated radio communications and provided for the United States to construct a new trans-isthmian highway connecting Panama City and Colón. The treaty provided a new context for relations between the two countries. It ended the protectorate by abrogating the 1903 treaty guarantee of the republic’s independence and the concomitant right of intervention. Thereafter, the United States would
substitute negotiation and purchase of land outside the zone for its former rights of expropriation. The dispute over the annuity was resolved by agreeing to fix it at 430,000 balboas (the balboa being equivalent to the devalued dollar) which increased the gold value of the original annuity by US$7,500. This was to be paid retroactively to 1934 when the republic had begun refusing the

Various business and commercial provisions dealt with longstanding Panamanian complaints. Private commercial operations unconnected with canal operations were forbidden in the zone. This policy and the closing of the zone to foreign commerce were to provide Panamanian merchants with relief from competition. Free entry into the zone was provided for Panamanian goods, and the republic’s customhouses were to be established at entrances to the zone to regulate the entry of goods finally destined for Panama. The Hull-Alfaro revisions, though hailed by both governments, radically altered the special rights of the United States in the isthmus, and the United States Senate was reluctant to accept the alterations. Article X of the new treaty provided that in the event of any threat to the security of either nation, joint measures could be taken after consultation between the two. Only after an exchange of interpretative diplomatic notes had permitted Senator Key Pittman, chairman of the Foreign Relations Committee, to advise his colleagues that Panama was willing under this provision to permit the United States to act unilaterally, did the Senate give its consent on July 25, 1939.

After ratifying the Hull-Alfaro Treaty in 1939, Panama and the United States began preparation for and collaboration in the coming war effort. Cooperation in this area proceeded smoothly for more than a year, with the republic participating in the series of conferences, declarations, and protocols that solidified the support of the hemisphere behind Washington’s efforts to meet the threat of Axis aggression. This cooperation halted with the inauguration of Arnulfo Arias. Arnulfo Arias has been elected to the presidency at least three times since 1940 (perhaps four or five if, as many believe, the vote counts of 1964 and 1984 were fraudulent), but he has never been allowed to serve a full term. He was first elected when he headed a mass movement known as Panameñismo. Its essence was nationalism, which in Panama’s situation meant opposition to United States hegemony. Arias aspired to rid the country of non-Hispanics, which meant not only North Americans, but also West Indians, Chinese, Hindus, and Jews. He also seemed susceptible to the influence of Nazi and Fascist agents on the eve of the United States declaration of war against the Axis.

North Americans were by no means the only ones in Panama who were anxious to be rid of Arias. Even his brother, Harmodio, urged the United States embassy to move against the leader. United States officials made no attempt to conceal their relief when the National Police, in October 1941, took advantage of Arias’s temporary absence from the country to depose him. Arnulfo Arias had promulgated a new constitution in 1941, which was designed to extend his term of office. In 1945 a clash between Arias’s successor, Ricardo Adolfo de la Guardia, and the National Assembly, led to the calling of a constituent assembly that elected a new president, Enrique A. Jiménez, and drew up a new constitution. The constitution of 1946 erased the innovations introduced by Arias and restored traditional concepts and structures of government.

In preparation for war, the United States had requested 999-year leases on more than 100 bases and sites. Arias balked, but ultimately approved a lease on one site after the United States threatened to occupy the land it wanted. De la Guardia proved more accommodating; he agreed to lease the United States 134 sites in the republic but not for 999 years. He would extend the leases only for the duration of the war plus one year beyond the signing of the peace treaty. The United States transferred Panama City’s water and sewer systems to the city administration and granted new economic assistance, but it refused to deport the West Indians and other non-Hispanics or to pay high rents for the sites. Among the major facilities granted to the United States under the agreement of 1942 were the airfield at Río Hato, the naval base on Isla Taboga, and several radar stations.

The end of the war brought another misunderstanding between the two countries. Although the peace treaty had not entered into effect, Panama demanded that the bases be relinquished, resting its claim on a subsidiary provision of the agreement permitting renegotiation after the cessation of hostilities. Overriding the desire of the United States War Department to hold most of the bases for an indefinite period, the Department of State took cognizance of growing nationalist dissatisfaction and in December 1946 sent Ambassador Frank T. Hines to propose a twenty-year extension of the leases on thirteen facilities. President Jiménez authorized a draft treaty over the opposition of the foreign minister and exacerbated latent resentment. When the National Assembly met in 1947 to consider ratification, a mob of 10,000 Panamanians armed with stones, machetes, and guns expressed opposition. Under these circumstances the deputies voted unanimously to reject the treaty. By 1948 the United States had evacuated all occupied bases and sites outside the Canal Zone. The upheaval of 1947 was instigated in large measure by university students. Their clash with the National Police on that occasion, in which both students and policemen were killed, marked the beginning of a period of intense animosity between the two groups. The incident was also the first in which United States intentions were thwarted by a massive expression of Panamanian rage.

A temporary shift in power from the civilian aristocracy to the National Police occurred immediately after World War II. Between 1948 and 1952, National Police Commander José Antonio Remón installed and removed presidents with unencumbered ease. Among his behind-the-scenes manipulations were the denial to Arnulfo Arias of the presidency he apparently had won in 1948, the installation of Arias in the presidency in 1949, and the engineering of Arias’s removal from office in 1951. Meanwhile, Remón increased salaries and fringe benefits for his forces and modernized training methods and equipment; in effect, he transformed the National Police from a police into a paramilitary force. In the spheres of security and public order, he achieved his long-sought goal by transforming the National Police into the National Guard in 1953 and introduced greater militarization into the country’s only armed force. The missions and functions were little changed by the new title, but for Remón, this change was a step toward a national army.

From several preexisting parties and factions, Remón also organized the National Patriotic Coalition (Coalición Patriótico Nacional–CPN). He ran successfully as its candidate for the presidency in 1952. Remón followed national tradition by enriching himself through political office. He broke with tradition, however, by promoting social reform and economic development. His agricultural and industrial programs temporarily reduced the country’s overwhelming economic dependence on the canal and the zone. Remón’s reformist regime was short-lived, however. In 1955 he was machine-gunned to death at the racetrack outside Panama City. The first vice president, José Ramón Guizado, was impeached for the crime and jailed, but he was never tried, and the motivation for his alleged act remained unclear. Some investigators believed that the impeachment of Guizado was a smokescreen to distract attention from others implicated in the assassination, including United States organized crime figure "Lucky" Luciano, dissident police officers, and both Arias families. The second vice president, Ricardo Arias (of the aristocratic Arias family), served out the remainder of the presidential term and dismantled many of Remón’s reforms.

Remón did not live to see the culmination of the major treaty revision he initiated. In 1953 Remón had visited Washington to discuss basic revisions of the 1936 treaty. Among other things, Panamanian officials wanted a larger share of the canal tolls, and merchants continued to be unhappy with the competition from the nonprofit commissaries in the Canal Zone. Remón also demanded that the discriminatory wage differential in the zone, which favored United States citizens over Panamanians, be abolished. After lengthy negotiations a Treaty of Mutual Understanding and Cooperation was signed on January 23, 1955. Under its provisions commercial activities not essential to the operation of the canal were to be cut back. The annuity was enlarged to US$1,930,000. The principle of "one basic wage scale for all . . . employees . . . in the Canal Zone" was accepted and implemented. Panama’s request for the replacement of the "perpetuity" clause by a ninety-nine-year renewable lease was rejected, however, as was the proposal that its citizens accused of violations in the zone be tried by joint United States-Panamanian tribunals. Panama’s contribution to the 1955 treaty was its consent to the United States occupation of the bases outside of the Canal Zone that it had withheld a few years earlier. Approximately 8,000 hectares of the republic’s territory were leased rent-free for 15 years for United States military maneuvers. The Río Hato base, a particularly important installation in
defense planning, was thus regained for the United States Air Force. Because the revisions had the strong support of President Ricardo Arias, the National Assembly approved them with little hesitation.

The CPN placed another candidate, Ernesto de la Guardia, in the presidency in 1956. The Remón government had required parties to enroll 45,000 members to receive official recognition. This membership requirement, subsequently relaxed to 5,000, had excluded all opposition parties from the 1956 elections except the National Liberal Party (Partido Liberal Nacional–PLN) which traced its lineage to the original Liberal Party. De la Guardia was a conservative businessman and a member of the oligarchy. By Panamanian standards, he was by no means anti-Yankee, but his administration presided over a new low in United States-Panamanian relations. The Egyptian nationalization of the Suez Canal in 1956 raised new hopes in the republic, because the two canals were frequently compared in the world press. Despite Panama’s large maritime fleet (the sixth greatest in the world), Britain and the United States did not invite Panama to a special conference of the major world maritime powers in London to discuss Suez. Expressing resentment, Panama joined the communist and neutral nations in a rival Suez proposal. United States secretary of state John Foster Dulles’s unqualified statement on the Suez issue on September 28, 1956–that the United States did not fear similar nationalization of the Panama Canal because the United States possessed "rights of sovereignty" there– worsened matters.

Panamanian public opinion was further inflamed by a United States Department of the Army statement in the summer of 1956 that implied that the 1955 treaty had not in fact envisaged a total equalization of wage rates. The United States attempted to clarify the issue by explaining that the only exception to the "equal pay for equal labor" principle would be a 25-percent differential that would apply to all citizens brought from the continental United States. Tension mounted in the ensuing years. In May 1958 students demonstrating against the United States clashed with the National Guard. The violence of these riots, in which nine died, was a forecast of the far more serious difficulties that followed a year later. In November 1959 anti-United
States demonstrations occurred during the two Panamanian independence holidays. Aroused by the media, particularly by articles in newspapers owned by Harmodio Arias, Panamanians began to threaten a "peaceful invasion" of the Canal Zone, to raise the flag of the republic there as tangible evidence of Panama’s sovereignty. Fearful that Panamanian mobs might actually force entry into the Canal Zone, the United States called out its troops. Several hundred Panamanians crossed barbedwire restraints and clashed with Canal Zone police and troops. A second wave of Panamanian citizens was repulsed by the National Guard, supported by United States troops.

Extensive and violent disorder followed. A mob smashed the windows of the United States Information Agency library. The United States flag was torn from the ambassador’s residence and trampled. Aware that public hostility was getting out of hand, political leaders attempted to regain control over their followers but were unsuccessful. Relations between the two governments were severely strained. United States authorities erected a fence on the border of the Canal Zone, and United States citizens residing in the Canal Zone observed a voluntary boycott of Panamanian merchants, who traditionally depended heavily on these patrons. On March 1, 1960–Constitution Day–student and labor groups threatened another march into the Canal Zone. The widespread disorders of the previous fall had had a sobering effect on the political elite, who seriously feared that new rioting might be transformed into a revolutionary movement against the social system itself. Both major coalitions contesting the coming elections sought to avoid further difficulties, and influential merchants, who had been hard hit by the November 1959 riots, were apprehensive. Reports that the United States was willing to recommend flying the republic’s flag in a special site in the Canal Zone served to ease tensions. Thus, serious disorders were averted.

De la Guardia’s administration had been overwhelmed by the rioting and other problems, and the CPN, lacking effective opposition in the National Assembly, began to disintegrate. Most dissenting factions joined the PLN in the National Opposition Union, which in 1960 succeeded in electing its candidate, Roberto Chiari, to the presidency. De la Guardia became the first postwar president to finish a full four-year term in office, and Chiari had the distinction of being the first opposition candidate ever elected to the presidency. Chiari attempted to convince his fellow oligarchs that change was inevitable. He cautioned that if they refused to accept moderate reform, they would be vulnerable to sweeping change imposed by uncontrollable radical forces. The tradition-oriented deputies who constituted a majority in the National Assembly did not heed his warning. His proposed reform program was simply ignored. In foreign affairs, Chiari’s message to the Assembly on October 1, 1961, called for a new revision of the Canal Zone arrangement. When Chiari visited Washington on June 12 to 13, 1962, he and President John F. Kennedy
agreed to appoint high-level representatives to discuss controversies between their countries regarding the Canal Zone. The results of the discussions were disclosed in a joint communique issued on July 23, 1963.

Agreement had been reached on the creation of the Bi-National Labor Advisory Committee to consider disputes arising between Panamanian employees and zone authorities. The United States had agreed to withhold taxes from its Panamanian employees to be remitted to the Panamanian government. Pending congressional approval, the United States agreed to extend to Panamanian employees the health and life insurance benefits available to United States citizens in the zone. Several other controversial matters, however, remained unresolved. The United States agreed to increase the wages of Panamanian employees in the zone, but not as much as the Panamanian government requested. No agreement was reached in response to Panamanian requests for jurisdiction over a corridor through the zone linking the two halves of the country. Meanwhile, the United States had initiated a new aid program for all of Latin America–the Alliance for Progress. Under this approach to hemisphere relations, President Kennedy envisioned a long-range program to raise living standards and advance social and economic development. No regular United States government development loans or grants had been available to Panama through the late 1950s. The Alliance for Progress, therefore, was the first major effort of the United States to improve basic living conditions. Panama was to share in the initial, large-scale loans to support self-help housing. Nevertheless, pressure for major revisions of the treaties and resentment of United States recalcitrance continued to move.

Public demonstrations and riots arising from popular resentment over United States policies and the overwhelming presence of United States citizens and institutions had not been uncommon, but the rioting that occurred in January 1964 was uncommonly serious. The incident began with a symbolic dispute over the flying of the Panamanian flag in the Canal Zone. For some time the dispute had been seriously complicated by differences of opinion on that issue between the Department of Defense and the Department of State. On the one hand, the military opposed accepting a Panamanian flag, emphasizing the strategic importance of unimpaired United States control in the Canal Zone and the dangerous precedent that appeasement of the rioters’ demands would set for future United States-Panamanian relations. The Department of State, on the other hand, supported the flag proposal as a reasonable concession to Panamanian demands and a method of avoiding major international embarrassment. Diplomatic officials also feared that the stability of Panamanian political institutions themselves might be threatened by extensive violence and mob action over the flag issue.

The United States finally agreed to raise the Panamanian and United States flags side by side at one location. The special ceremony on September 21, 1960, at the Shaler Triangle was attended by the new governor of the zone, Major General William A. Carter, along with all high United States military and diplomatic officers and the entire Panamanian cabinet. Even this incident, however, which marked official recognition of Panama’s "titular" sovereignty, was marred when the United States rejected de la Guardia’s request to allow him to raise the flag personally. De la Guardia, as a retaliatory measure, refused to attend the ceremony and extended invitations to the presidential reception after the ceremony only to the United States ambassador
and his senior diplomatic aides; United States Canal Zone and military officials were excluded. Panamanians remained dissatisfied as their flag appeared at only one location in the Canal Zone, while the United States flag flew alone at numerous other sites. An agreement was finally reached that at several points in the Canal Zone the United States and Panamanian flags would be flown side by side. United States citizens residing in the Canal Zone were reluctant to abide by this agreement, however, and the students of an American high school, with adult encouragement, on two consecutive days hoisted the American flag alone in front of their school.

Word of the gesture soon spread across the border, and on the evening of the second day, January 9, 1964, nearly 200 Panamanian students marched into the Canal Zone with their flag. A struggle ensued, and the Panamanian flag was torn. After that provocation, thousands of Panamanians stormed the border fence. The rioting lasted 3 days, and resulted in more than 20 deaths, serious injuries to several hundred persons, and more than US$2 million of property damage. At the outbreak of the fighting, Panama charged the United States with aggression. Panama severed relations with the United States and appealed to the Organization of American States (OAS) and the United Nations (UN). On January 10 the OAS referred the case to the Inter-American Peace Committee. When the UN Security Council met, United States ambassador Adlai E. Stevenson noted that the Inter-American Peace Committee had already scheduled an on-the-spot investigation and urged that the problem be considered in the regional forum. A proposal by the Brazilian delegate that the president of the Security Council address an appeal to the two parties to exercise restraint was agreed on, and the UN took no further action.

The United States had hoped to confine the controversy to the Inter-American Peace Committee. But when negotiations broke down, Panama insisted that the Organ of Consultation under the 1947 Inter-American Treaty of Reciprocal Assistance (the so-called Rio Treaty) be convoked. The OAS Council, acting provisionally as the Organ of Consultation, appointed an investigating committee consisting of all the members of the Council except the two disputants. A joint declaration recommended by the Committee was signed by the two countries in April, and diplomatic relations were restored. The controversy smoldered for almost a year, however, until President Lyndon B. Johnson announced that plans for a new canal would be drawn up and that an entirely new treaty would be negotiated. Negotiations were carried on throughout the first half of the presidency of Chiari’s successor, Marcos Aurelio Robles. When the terms of three draft treaties–concerning the existing lock canal, a possible sea-level canal, and defense matters–were revealed in 1967, Panamanian public reaction was adverse. The new treaties would have abolished the resented "in perpetuity" clause in favor of an expiration date of December 13, 1999, or the date of the completion of a new sea-level canal if that were earlier. Furthermore, they would have compensated the Panamanian government on the basis of tonnage shipped through the canal, an arrangement that could have increased the annuity to more than US$20 million.

The intensity of Panamanian nationalism, however, was such that many contended that the United States should abandon involvement in Panama altogether. Proposals for the continued United States military bases in the Canal Zone, for the right of the United States to deploy troops and armaments anywhere in the republic, and for a joint board of nine governors for the zone,
five of which were to be appointed by the United States, were particularly unpopular. Robles initially attempted to defend the terms of the drafts. When he failed to obtain treaty ratification and he learned that his own coalition would be at a disadvantage in the upcoming elections, he declared that further negotiations would be necessary.

In the mid-1960s, the oligarchy was still tenuously in charge of Panama’s political system. Members of the middle class, consisting largely of teachers and government workers, occasionally gained political prominence. Aspiring to upper-class stations, they failed to unite with the lower classes to displace the oligarchy. Students were the most vocal element of the middle class and the group most disposed to speak for the inarticulate poor; as graduates, however, they were generally coopted by the system. A great chasm separated the rural section from the urban population of the two major cities. Only the rural wageworkers, concentrated in the provinces of Bocas del Toro and Chiriquí, appeared to follow events in the capital and to express themselves on issues of national policy. Among the urban lower classes, antagonism between the Spanish speakers and the English- and French-speaking blacks inhibited organization in pursuit of common interests.

The multi-party system that existed until the coup d’état of 1968 served to regulate competition for political power among the leading families. Individual parties characteristically served as the personal machines of leaders, whose clients (supporters or dependents) anticipated jobs or other advantages if their candidate were successful. Of the major parties competing in the 1960s, only the highly factionalized PLN had a history of more than two decades. The only parties that had developed clearly identifiable programs were the small Socialist Party and the Christian Democratic Party (Partido Demócrato Cristiano—PDC). The only party with a mass base was the Panameñista Party (Partido Panameñista—PP), the electoral vehicle of the erratic former
president, Arnulfo Arias. The Panameñista Party appealed to the frustrated, but lacked a clearly recognizable ideology or program. Seven candidates competed in the 1964 presidential elections, although only three were serious contenders. Robles, who had served as minister of the presidency in Chiari’s cabinet, was the candidate of the National Opposition Union, comprising the PLN and seven
smaller parties. After lengthy backstage maneuvers, Robles was endorsed by the outgoing president. Juan de Arco Galindo, a former member of the National Assembly and public works minister and brother-in-law of former President de la Guardia, was the candidate of the National Opposition Alliance (Alianza Nacional de Oposición) coalition, comprising seven parties headed by the CPN. Arnulfo
Arias was supported by the PP, already the largest single party in the country.

As usual, the status of the canal was a principal issue in the campaign. Both the liberal and the CPN coalitions cultivated nationalist sentiment by denouncing the United States. Arias, abandoning his earlier nationalistic theme, assumed a cooperative and conciliatory stance toward the United States. Arias attracted lower-class support by denouncing the oligarchy. The Electoral Tribunal announced that Robles had defeated Arias by a margin of more than 10,000 votes of the 317,312 votes cast. The CPN coalition trailed far behind the top two contenders. Arias supporters, who had won a majority of the National Assembly seats, attributed Robles’s victory to the "miracle of Los Santos"; they claimed that enough corpses voted for Robles in that province to enable him to carry the election. The problems confronting Robles were not unlike those of his predecessors but were aggravated by the consequences of the 1964 riots. In addition to the hardships and resentments resulting from the losses of life and property, the riots had the effect of dramatically increasing the already serious unemployment in the metropolitan areas. Despite his nationalistic rhetoric during the campaign, the new president was dependent on United States economic and technical assistance to develop projects that Chiari’s government, also with United States assistance, had initiated. Chiari emphasized building schools and low-cost housing. He endorsed a limited agrarian-reform program. Like his predecessor, Robles sought to increase the efficiency of tax collection rather than raise taxes.

By 1967 the coalitions were being reshuffled in preparation for the 1968 elections. By the time Arias announced his candidacy, he had split both the coalitions that had participated in the 1964 elections and had secured the support of several factions in a coalition headed by the Panameñista Party. Robles’s endorsement went to David Samudio of the PLN. A civil engineer and architect of middle-class background, Samudio had served as an assemblyman and had held several cabinet posts, including that of finance minister under Robles. In addition to the PLN, he was supported by the Labor and Agrarian Party (Partido Laborista Agrario–PALA) and other splinter groups. (Party labels are deceptive; the PALA, for example, had neither an agrarian base nor organized labor support.) A PDC candidate, Antonio González Revilla, also entered the race. Because many of Arias’s supporters believed that the 1964 election had been rigged, the principal issue in the 1968 campaign became the prospective validity of the election itself. The credibility crisis became acute in February 1968 when the president of the Electoral Tribunal, a Samudio supporter, closed the central registration office in a dispute with the other two members of the tribunal, Arias supporters, over electoral procedures. The government brought suit before the Supreme Court for their dismissal, on the grounds that each man had a son who was a candidate for elective office. Thereupon González Revilla, with the backing of Arias, petitioned the National Assembly to begin impeachment proceedings against Robles for illegal interferences in electoral matters. Among other issues, Robles was accused of diverting public funds to Samudio’s campaign.

The National Assembly met in special session and appointed a commission to gather evidence. Robles, in turn, obtained a judgment from a municipal court that the assembly was acting unconstitutionally. The National Assembly chose to ignore a stay order issued by the municipal court pending the reconvening of the Supreme Court on April 1, and on March 14 it voted for
impeachment. On March 24, the National Assembly found Robles guilty and declared him deposed. Robles and the National Guard ignored the proceedings, maintaining that they would abide by the decision of the Supreme Court when it reconvened. The Supreme Court, with only one dissenting vote, ruled the impeachment proceedings unconstitutional. The Electoral Tribunal subsequently ruled that thirty of the parliamentary deputies involved in the impeachment proceedings were ineligible for reelection. Robles, with the support of the National Guard, retained the presidency.

The election took place on May 12, 1968, as scheduled, and tension mounted over the succeeding eighteen days as the Election Board and the Electoral Tribunal delayed announcing the results. Finally the Election Board declared that Arias had carried the election by 175,432 votes to 133,887 for Samudio and 11,371 for González Revilla. The Electoral Tribunal, senior to the Board and still loyal to Robles, protested, but the commander of the National Guard, Brigadier General Bolívar Vallarino, despite past animosity toward Arias, supported the conclusion of the Board. Arias took office on October 1, demanding the immediate return of the Canal Zone to Panamanian jurisdiction and announcing a change in the leadership of the National Guard. He attempted to remove the two most senior officers, Vallarino and Colonel José María Pinilla, and appoint Colonel Bolívar Urrutia to command the force. On October 11 the Guard, for the third time, removed Arias from the presidency. With seven of his eight ministers and twentyfour members of the National Assembly, Arias took refuge in the Canal Zone.

The overthrow of Arias provoked student demonstrations and rioting in some of the slum areas of Panama City. The peasants in Chiriquí Province battled guardsmen sporadically for several months, but the Guard retained control. Urrutia was initially arrested but was later persuaded to join in the two-man provisional junta headed by Pinilla. Vallarino remained in retirement. The original cabinet appointed by the junta was rather broad based and included several Samudio supporters and one Arias supporter. After the first three months, however, five civilian cabinet members resigned, accusing the new government of dictatorial practices. The provisional junta moved swiftly to consolidate government control. Several hundred actual or potential political leaders were arrested on charges of corruption or subversion. Others went into voluntary or imposed exile, and property owners were threatened with expropriation. The National Assembly and all political parties were disbanded, and the University of Panama was closed for several months while its faculty and student body were purged. The communications media were brought under control through censorship, intervention in management, or expropriation.

Pinilla, who assumed the title of president, had declared that his government was provisional and that free elections were to be scheduled. In January 1969, however, power actually rested in the hands of Omar Torrijos and Boris Martínez, commander and chief of staff, respectively, of the Guard. In early March, a speech by Martinez promising agrarian reform and other
measures radical enough to alarm landowners and entrepreneurs provoked a coup within the coup. Torrijos assumed full control, and Martinez and three of his supporters in the military government were exiled. Torrijos stated that "there would be less impulsiveness" in government without Martinez. Torrijos did not denounce the proposed reforms, but he assured Panamanian and United States investors that their interests were not threatened. Torrijos, now a brigadier general, became even more firmly entrenched in power after thwarting a coup attempted by Colonels Amado Sanjur, Luis Q. Nentzen Franco, and Ramiro Silvera in December 1969. While Torrijos was in Mexico, the three colonels declared him deposed. Torrijos rushed back to Panama, gathered supporters at the garrison in David, and marched triumphantly into the capital. The colonels followed earlier competitors of Torrijos into exile. Because the governing junta (Colonel Pinilla and his deputy, Colonel Urrutia) had not opposed the abortive coup, Torrijos replaced them with two civilians, Demetrio B. Lakas, an engineer well liked among businessmen, and Arturo Sucre, a lawyer and former director of the national lottery. Lakas was designated "provisional president," and Sucre was appointed his deputy.

In late 1969 a close associate of Torrijos announced the formation of the New Panama Movement. This movement was originally intended to organize peasants, workers, and other social groups and was patterned after that of Mexico’s Institutional Revolutionary Party. No organizational structure was established, however, and by 1971 the idea had been abandoned. The government
party was revived under a different name, the Democratic Revolutionary Party (Partido Revolucionario Democrático–PRD) in the late 1970s. A sweeping cabinet reorganization and comments of high-ranking officials in 1971 portended a shift in domestic policy. Torrijos expressed admiration for the socialist trends in the military governments of Peru and Bolivia. He also established a mutually supportive relationship with Cuba’s Fidel Castro. Torrijos carefully distanced himself from the Panamanian Marxist left. The political label he appeared to wear most comfortably was "populist." In 1970 he declared, "Having finished with
the oligarchy, the Panamanian has his own worth with no importance to his origin, his cradle, or where he was born." Torrijos worked on building a popular base for his government, forming an alliance among the National Guard and the various sectors of society that had been the objects of social injustice at the hands of the oligarchy, particularly the long-neglected campesinos. He regularly traveled by helicopter to villages throughout the interior to hear their problems and to explain his new programs.

In addition to the National Guard and the campesinos, the populist alliance that Torrijos formed as a power base included students, the People’s Party (Partido del Pueblo–PdP), and portions of the working classes. Support for Torrijos varied among interest groups and over time. The alliance contained groups, most notably the Guard and students, that were traditionally
antagonistic toward one another and groups that traditionally had little concern with national politics, e.g., the rural sector. Nationalism, in the form of support of the efforts of the Torrijos regime to obtain control over the canal through a new treaty with the United States, provided the glue for maintaining political consensus. In the early 1970s, the strength of the alliance was
impressive. Disloyal or potentially disloyal elements within the National Guard and student groups were purged; increased salaries, perquisites, and positions of political power were offered to the loyal majority. The adherence of the middle classes was procured partly through more jobs. In return for its support, the PdP was allowed to operate openly when all other political parties were

The Torrijos effort to secure political support in the rural sector was an innovation in Panamanian politics. With the exception of militant banana workers in the western provinces of Chiriquí and Bocas del Toro, the campesinos traditionally have had little concern with national political issues. Unlike much of Latin America, in Panama the elite is almost totally urban based, rather than being a landed aristocracy. No elections were held under the military government until April 1970, when the town of San Miguelito, incorporated as the country’s sixty-fourth municipal district, was allowed to elect a mayor, treasurer, and municipal council. Candidates nominated by trade groups and other nonpartisan bodies were elected indirectly by a council that had been elected by neighborhood councils. Subsequently, the new system was extended throughout the country, and in 1972 the 505-member National Assembly of Municipal Representatives met in Panama City to confirm Torrijos’s role as head of government and to approve a new constitution. The new document greatly expanded governmental powers at the expense of civil liberties. The state also was empowered to "oversee the rational distribution of land" and, in general, to regulate or initiate economic activities. In an obvious reference to the Canal Zone, the Constitution also declared the ceding of national territory to any foreign country to be illegal.

The governmental initiatives in the economy, legitimated by the new Constitution, were already underway. The government had announced in early 1969 its intention to implement 1962 legislation by distributing 700,000 hectares of land within 3 years to 61,300 families. Acquisition and distribution progressed much more slowly than anticipated, however. Nevertheless, major
programs were undertaken. Primary attention and government assistance went to farmers grouped in organizations that were initially described as cooperatives but were in fact commercial farming operations by state-owned firms. The government also established companies to operate banana plantations–partly because a substantial amount of the land obtained under the land-reform laws was most suited to banana cultivation and had belonged to international fruit companies. Educational reforms instituted by Torrijos emphasized vocational and technical training at the expense of law, liberal arts, and the humanities. The programs introduced on an experimental basis in some elementary and secondary schools resembled the Cuban system of "basic schools in the countryside." New schools were established in rural areas in which half the student’s time was devoted to instruction in farming. Agricultural methods and other practical skills were taught to urban students as well, and ultimately the new curriculum
was to become obligatory even in private schools. Although the changes were being instituted gradually, they met strong resistance from the upper-middle classes and particularly from teachers.

Far-reaching reforms were also undertaken in health care. A program of integrated medical care became available to the extended family of anyone who had been employed for the minimal period required to qualify for social security. A wide range of services was available not only to the worker’s spouse and children, but to parents, aunts, uncles, cousins–to any dependent relative. Whereas in the past medical facilities had been limited almost entirely to Panama City, under Torrijos hospitals were built in several provincial cities. Clinics were established throughout the countryside. Medical-school graduates were required to spend at least two years in a rural internship servicing the scattered clinics. Torrijos also undertook an ambitious program of public works. The construction of new roads and bridges contributed particularly to greater prosperity in the rural areas. Although Torrijos showed greater interest in rural development than in urban problems, he also promoted urban housing and office construction in Panama City. These projects were funded, in part, by both increased personal and corporate taxes and increased efficiency in tax collection. The 1972 enactment of a new labor code attempted to fuse the urban working class into the populist alliance. Among other things the code provided obligatory collective agreements, obligatory payroll deduction of union fees, the establishment of a superior labor tribunal, and the incorporation of some 15,000 additional workers, including street vendors and
peddlers, into labor unions. At the same time, the government attempted unsuccessfully to unite the nation’s three major labor confederations into a single, government-sponsored organization.

Meanwhile, Torrijos lured foreign investment by offering tax incentives and provisions for the unlimited repatriation of capital. In particular, international banking was encouraged to locate in Panama, to make the country a regional financial center. A law adopted in 1970 facilitated offshore banking. Numerous banks, largely foreign owned, were licensed to
operate in Panama; some were authorized solely for external transactions. Funds borrowed abroad could be loaned to foreign borrowers without being taxed by Panama. Most of the reforms benefiting workers and peasants were undertaken between 1971 and 1973. Economic problems beginning in 1973 led to some backtracking on social programs. A new labor law passed in 1976, for example, withdrew much of the protection provided by the 1972 labor code, including compulsory collective bargaining. The causes of these economic difficulties included such external factors as the decline in world trade, and thus canal traffic. Domestic problems included a decline in agricultural production that many analysts attributed to the failure of the economic measures of the Torrijos
government. The combination of a steady decline in per capita gross national product, inflation, unemployment, and massive foreign debts adversely affected all sectors of society and contributed heavily to the gradual erosion of the populist alliance that had firmly supported Torrijos in the early 1970s. Increasingly, corruption in governing circles and within the National Guard also had become an issue in both national and international arenas. Torrijos’s opponents were quick to note that his relatives appeared in large numbers on the public payroll.

During the first two years after the overthrow of Arias, while the Guard consolidated its control of the government and Torrijos rooted out his competitors within the Guard, the canal issue was downplayed and generally held in abeyance. By 1971, however, the negotiation of new treaties had reemerged as the primary goal of the Torrijos regime. In the 1970s, about 5 percent of world trade, by volume, some 20 to 30 ships daily, were passing through the canal. Tolls had been kept artificially low, averaging a little more than US$10,000 for the 8- to 10-hour passage, and thus entailing a United States government subsidy. Nevertheless, canal use was declining in the 1970s, because of alternate routes, vessels being too large to transit the canal, and the decline in world trade. The canal, nevertheless, was clearly vital to Panama’s economy. Some 30 percent of Panama’s foreign trade passed through the canal. About 25 percent of the country’s foreign exchange earnings and 13 percent of its GNP were associated with canal activities. The level of traffic and the revenue thereby generated were key factors in the country’s economic life.

Under the 1903 treaty, the governor of the Canal Zone was appointed by the president of the United States and reported to the secretary of war. The governor also served as president of the Canal Zone Company, and reported to a board of directors appointed by the secretary of war. United States jurisdiction in the zone was complete, and residence was restricted to
United States government employees and their families. On the eve of the adoption of new treaties in 1977, residents of the Canal Zone included some 40,000 United States citizens, two-thirds of whom were military personnel and their dependents, and about 7,500 Panamanians. The Canal Zone was, in effect, a United States military outpost with its attendant prosperous economy, which stood in stark contrast to the poverty on the other side of its fences.

By the 1960s military activities in the zone were under the direction of the United States Southern Command (SOUTHCOM). The primary mission of SOUTHCOM was defending the canal. In addition, SOUTHCOM served as the nerve center for a wide range of military activities in Latin America, including communications, training Latin American military personnel, overseeing United States military assistance advisory groups, and conducting joint military exercises with Latin American armed forces. Negotiations for a new set of treaties were resumed in June 1971, but little was accomplished until March 1973 when, at the urging of Panama, the UN Security Council called a special meeting in Panama City. A resolution calling on the United States to negotiate a "just and equitable" treaty was vetoed by the United States on the grounds that the disposition of the canal was a bilateral matter. Panama had succeeded, however, in dramatizing the issue and gaining international support.

The United States signaled renewed interest in the negotiations in late 1973, when Ambassador Ellsworth Bunker was dispatched to Panama as a special envoy. In early 1974, Secretary of State Henry Kissinger and Panamanian foreign minister Juan Antonio Tack announced their agreement on eight principles to serve as a guide in negotiating a "just and equitable treaty eliminating once and for all the causes of conflict between the two countries." The principles included recognition of Panamanian sovereignty in the Canal Zone; immediate enhancement of economic benefits to Panama; a fixed expiration date for United States control of the canal; increased Panamanian participation in the operation and defense of the canal; and continuation of United States participation in defending the canal. American attention was distracted later in 1974 by the Watergate scandal, impeachment proceedings, and ultimately the resignation of President Richard M. Nixon. Negotiations with Panama were accelerated by President Gerald R. Ford in mid-1975 but became deadlocked on four central issues: the duration of the treaty; the amount of canal revenues to go to Panama; the amount of territory United States military bases would occupy during the life of the treaty; and the United States demand for a renewable forty- or fifty-year lease of bases to defend the canal. Panama was particularly concerned with the open-ended presence of United States military bases and held that the emerging United States position retained the bitterly opposed "perpetuity" provision of the 1903 treaty and thus violated the spirit of the 1974 Kissinger-Tack principles. The sensitivity of the issue during negotiations was illustrated in September 1975 when Kissinger’s public declaration that "the United States must maintain the right, unilaterally, to defend the Panama Canal for an indefinite future" provoked a furor in Panama. A group of some 600 angry students stoned the United States embassy.

Negotiations remained stalled during the United States election campaign of 1976 when the canal issue, particularly the question of how the United States could continue to guarantee its security under new treaty arrangements, became a major topic of debate. Torrijos replaced Foreign Minister Tack with Aquilino Boyd in April 1976, and early the next year Boyd was replaced by Nicolás González Revilla. Rómulo Escobar Bethancourt, meanwhile, became Panama’s chief negotiator. Panama’s growing economic difficulties made the conclusion of a new treaty, accompanied by increased economic benefits, increasingly vital. The new Panamanian negotiating team was thus encouraged by the high priority that President Jimmy Carter placed on rapidly concluding a new treaty. Carter added Sol Linowitz, former ambassador to the OAS, to the United States negotiating team shortly after taking office in January 1977. Carter held that United States interests would be protected by possessing "an assured capacity or capability" to guarantee that the canal would remain open and neutral after Panama assumed control. This view contrasted with previous United States demands for an ongoing physical military presence and led to the negotiation of two separate treaties. This changed point of view, together with United States willingness to provide a considerable amount of bilateral development aid in addition to the revenues associated with Panama’s participation in the operation of the canal, were central to the August 10, 1977 announcement that agreement had been reached on two new treaties.

On September 7, 1977, Carter and Torrijos met in Washington to sign the treaties in a ceremony that also was attended by representatives of twenty-six other nations of the Western Hemisphere. The Panama Canal Treaty, the major document signed on September 7, abrogated the 1903 treaty and all other previous bilateral agreements concerning the canal. The treaty was to enter into force six months after the exchange of instruments of ratification and to expire at noon on December 31, 1999. The Panama Canal Company and the Canal Zone government would cease to operate and Panama would assume complete legal jurisdiction over the former Canal Zone immediately, although the United States would retain jurisdiction over its citizens during a thirty-month transition period. Panama would grant the United States rights to operate, maintain, and manage the canal through a new United States government agency, the Panama Canal Commission. The commission would be supervised by a board of five members from the United States and four from Panama; the ratio was fixed for the duration of the treaty. The commission would have a United States administrator and Panamanian deputy administrator until January 1, 1990, when the nationalities of these two positions would be reversed. Panamanian nationals would constitute a growing number of commission employees in preparation for their assumption of
full responsibility in 2000. Another binational body, the Panama Canal Consultative Committee, was created to advise the respective governments on policy matters affecting the canal’s operation.

Article IV of the treaty related to the protection and defense of the canal and mandated both nations to participate in that effort, though the United States was to hold the primary responsibility during the life of the treaty. The Combined Board, composed of an equal number of senior military representatives from each country, was established and its members
charged with consulting their respective governments on matters relating to protection and defense of the canal. Guidelines for employment within the Panama Canal Commission were set forth in Article X, which stipulated that the United States would establish a training program to ensure that an increasing number of Panamanian nationals acquired the skills needed to operate and maintain the canal. By 1982 the number of United States employees of the commission was to be at least 20 percent lower than the number working for the Panama Canal Company in 1977. Both nations pledged to assist their own nationals who lost jobs because of the new arrangements in finding employment. The right to collective bargaining and affiliation with international labor organizations by commission employees was guaranteed.

Under the provisions of Article XII, the United States and Panama agreed to study jointly the feasibility of a sea-level canal and, if deemed necessary, to negotiate terms for its construction. Payments to Panama from the commission ("a just and equitable return on the national resources which it has dedicated to the … canal") were set forth in Article XIII.
These included a fixed annuity of US$10 million, an annual contingency payment of up to US$10 million to be paid out of any commission profits, and US$0.30 per Panama Canal net ton of cargo that passed through the canal, paid out of canal tolls. The latter figure was to be periodically adjusted for inflation and was expected to net Panama between US$40 and US$70 million annually during the life of the treaty. In addition, Article III stipulated that Panama would receive a further US$10 million annually for services (police, fire protection, street cleaning, traffic management, and garbage collection) it would provide in the canal operating areas.

The second treaty, the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, or simply the Neutrality Treaty, was a much shorter document. Because it had no fixed termination date, this treaty was the major source of controversy. Under its provisions, the United States and Panama agreed to guarantee the canal’s neutrality "in order that both
in time of peace and in time of war it shall remain secure and open to peaceful transit by the vessels of all nations on terms of entire equality." In times of war, however, United States and Panamanian warships were entitled to "expeditious" transit of the canal under the provisions of Article VI. A protocol was attached to the Neutrality Treaty, and all nations of the world were invited to subscribe to its provisions. At the same ceremony in Washington, representatives of the United States and Panama signed a series of fourteen executive agreements associated with the treaties. These included two Agreements in Implementation of Articles III and IV of the Panama Canal Treaty that detailed provisions concerning operation, management, protection, and defense, outlined in the main treaty. Most importantly, these two agreements defined the areas to be held by the United States until 2000 to operate and defend the canal. These areas were distinguished from military areas to be used jointly by
the United States and Panama until that time, military areas to be held initially by the United States but turned over to Panama before 2000, and areas that were turned over to Panama on October 1, 1979.

One foreign observer calculated that 64 percent of the former Canal Zone, or 106,700 hectares, came under Panamanian control in 1979; another 18 percent, or 29,460 hectares, would constitute the "canal operating area" and remain under control of the Panama Canal Commission until 2000; and the remaining 18 percent would constitute the various military installations controlled by the United States until 2000. The agreements also established the Coordinating Committee, consisting of one representative of each country, to coordinate the implementation of the agreement with respect to Article III of the Panama Canal Treaty, and an analogous Joint Committee to perform the defense-related functions called for in the agreement with respect to Article IV of the treaty. Ancillary agreements signed on September 7 allowed the United States to conduct certain activities in Panama until 2000, including the training of Latin American military personnel at four schools located within the former Canal Zone; provided for cooperation to protect wildlife within the area; and outlined future United States economic and military assistance. This latter agreement, subject to the availability of congressionally approved funds, provided for United States loan guarantees, up to US$75 million over a 5-year period, for housing; a US$20-million loan guarantee by the United States Overseas Private Investment Corporation for financing projects in the Panamanian private sector; loans, loan guarantees, and insurance, up to a limit of US$200 million between 1977 and 1982, provided by the United States Export-Import Bank for financing Panamanian purchases of United States exports; and up to US$50 million in foreign military sales credits over a 10-year period.

The speeches of Carter and Torrijos at the signing ceremony revealed the differing attitudes toward the new accords by the two leaders. Carter declared his unqualified support of the new treaties. The statement by Torrijos was more ambiguous, however. While he stated that the signing of the new treaties "attests to the end of many struggles by several generations of Panamanian patriots," he noted Panamanian criticism of several aspects of the new accords, particularly of the Neutrality Treaty: Mr. President, I want you to know that this treaty, which I shall sign and which repeals a treaty not signed
by any Panamanian, does not enjoy the approval of all our people, because the twenty-three years agreed upon as a transition period are 8,395 days, because during this time there will still be military bases which make my country a strategic reprisal target, and because we are agreeing to a treaty of neutrality which places us under the protective umbrella of the Pentagon. This pact could, if it is not administered judiciously by future generations, become an instrument of permanent intervention.

Torrijos was so concerned with the ambiguity of the Neutrality Treaty, because of Panamanian sensitivity to the question of United States military intervention, that, at his urging, he and President Carter signed the Statement of Understanding on October 14, 1977, to clarify the meaning of the permanent United States rights. This statement, most of which was subsequently included as an amendment to the Neutrality Treaty and incorporated into its instrument of ratification, included a declaration that the United States "right to act against any aggression or threat directed against the Canal . . . does not mean, nor shall it be interpreted as the right of intervention of the United States in the internal affairs of Panama." Despite this clarification, the plebiscite that took place the next week and served as the legal means of ratification in Panama, saw only two-thirds of Panamanians registering their approval of the new treaties, a number considerably smaller than that hoped for by the government.

Ratification in the United States necessitated the approval of two-thirds of the Senate. The debates, the longest in Senate history, began on February 7, 1978. The Neutrality Treaty was approved on March 16, and the main treaty on April 18, when the debate finally ended. To win the necessary sixty-seven Senate votes, Carter agreed to the inclusion of a number of
amendments, conditions, reservations, and understandings that were passed during the Senate debates and subsequently included in the instruments of ratification signed by Carter and Torrijos in June. Notable among the Senate modifications of the Neutrality Treaty were two amendments incorporating the October 1977 Statement of Understanding, and interpreting the "expeditious" transit of United States and Panamanian warships in times of war as being preferential. Another modification, commonly known as the DeConcini Condition, stated that "if the Canal is closed, or its operations are interfered with [the United States and Panama shall each] have the right to take such steps as each deems necessary, … including the use of military force in the Republic of Panama, to reopen the Canal or restore the operations of the Canal." Modifications of the Panama Canal Treaty included a reservation requiring statutory authorization for payments to Panama set forth in Article XIII and another stating that any action taken by the United States to secure accessibility to the Canal "shall not have as its purpose or be interpreted as a right of intervention in the internal affairs of the Republic of Panama or interference with its political independence or sovereign integrity." Reservations attached to both treaties made the United States provision of economic and military assistance, as detailed in the ancillary agreements attached to the treaties, nonobligatory.

The inclusion of these modifications, which were never ratified in Panama, was received there by a storm of protest. Torrijos expressed his concern in 2 letters, the first to Carter and another sent to 115 heads of state through their representatives at the UN. A series of student protests took place in front of the United States embassy. The DeConcini Condition was the major object of protest. Although the reservation to the Panama Canal Treaty was designed to mollify Panamanian fears that the DeConcini Condition marked a return to the United States gunboat diplomacy of the early twentieth century, this provision would expire in 2000, whereas the DeConcini Condition, because it was attached to the Neutrality Treaty, would remain in force permanently. Despite his continuing concern with the ambiguity of the treaties with respect to the United States role in defense of the canal after 2000, the close Senate vote made Torrijos aware that he could not secure any further modification at that time. On June 16, 1978, he and Carter signed the instruments of ratification of each treaty in a ceremony in Panama City. Nevertheless, Torrijos added the following statement to both Panamanian instruments: "The Republic of Panama will reject, in unity and with decisiveness and firmness, any attempt by any country to intervene in its internal or external affairs." The instruments of ratification became effective on June 1, 1979, and the treaties entered into force on October 1, 1979.

Ironically, the successful conclusion of negotiations with the United States and the signing of the Panama Canal treaties in August 1977 added to the growing political difficulties in Panama. Virtually all observers of Panamanian politics in the late 1970s agreed that the situation in the late 1970s could only be understood in terms of the central role traditionally played by nationalism in forming Panamanian political consensus. Before August 1977, opponents of Torrijos were reluctant to challenge his leadership because of his progress in gaining control over the Canal Zone. The signing of the treaties eliminated that restraint; in short, after August 1977, Panamanian resentment could no longer be focused exclusively on the United States. The widespread feeling among Panamanians that the 1977 treaties were unacceptable, despite their being approved by a two-thirds majority in the October 1977 plebiscite, contributed to growing opposition to the government. Critics pointed especially to the amendments imposed by the United States Senate after the October 1977 plebiscite, which they felt substantially altered the spirit of the treaties. Furthermore, political opponents of Torrijos argued that the government purposely limited the information available on the treaties and then asked the people to vote "yes" or "no," in a plebiscite that the opposition maintained was conducted fraudulently.

Another factor contributing to the erosion of the populist alliance built by Torrijos during the early 1970s was the graduated and controlled process of "democratization" undertaken by the Torrijos government after signing the new canal treaties. In October 1978, a decade after the government declared political parties illegal in the aftermath of the 1968
military coup d’état, the 1972 Constitution was reformed to implement a new electoral law and legalize political parties. In the spirit of opening the political system that accompanied the ratification of the Panama Canal treaties, exiled political leaders, including former President Arnulfo Arias, were allowed to return to the country, and a flurry of political activity was evident during the subsequent eighteen months. Foremost among the activities were efforts to obtain the 30,000 signatures legally required to register a party for the October 1980 elections. The 1978 amendments to the 1972 Constitution markedly decreased the powers of the executive branch of government and increased those of the legislature, but the executive remained the dominant branch. From October 1972 until October 1978, Torrijos had acted as the chief executive under the titles of head of government and "Maximum Leader of the Panamanian Revolution." After the 1978 amendments took effect, Torrijos gave up his position as head of government but retained control of the National Guard and continued to play an important role in the government’s decision-making process. Before stepping down, Torrijos had agreed to democratize Panama’s political system, in order to gain United States support for the canal treaties. In October 1978, the National Assembly elected a thirty-eight-year-old lawyer and former education minister, Aristides Royo, to the presidency and Ricardo de la Espriella to the vice presidency, each for a six-year term.

The PRD–a potpourri of middle-class elements, peasant and labor groups, and marginal segments of Panamanian society–was the first party to be officially recognized under the registration process that began in 1979. Wide speculation held that the PRD would nominate Torrijos as its candidate for the presidential race planned for 1984. Moreover, many assumed that with
government backing, the PRD would have a substantial advantage in the electoral process. In March 1979, a coalition of eight parties called the National Opposition Front (Frente Nacional de Oposición–FRENO) was formed to battle the PRD in the 1980 legislative elections, the first free elections to be held in a decade. FRENO was composed of parties on both the right and the left of center in the political spectrum, including the strongly nationalistic, anti-Yankee Authentic Panameñista Party (Partido Panameñista Auténtico–PPA), which was led by the aged but still popular former president, Arnulfo Arias; the PLN; the reform-oriented PDC; and the Social Democratic Party (Partido Social Democrático–PSD), which was left of center and reform-oriented. Three right-of-center parties–the Republican Party (Partido Republicano–PR), the Third Nationalist Party, and PALA–had also joined the FRENO coalition. The Independent Democratic Movement, a small, moderately left-of-center party, completed the coalition. Such diverse ideologies in the opposition party suggested a marriage of convenience. FRENO opposed the Panama Canal treaties and called for their revision on terms more favorable to Panama.

All qualified parties competed in the 1980 legislative elections, but these elections posed no threat to Torrijos’s power base because political parties vied for only nineteen of the fiftyseven seats in the legislature. The other two-thirds of the representatives were appointed, in essence by Torrijos’s supporters. The PRD won twelve of the available nineteen
seats; the PLN won five seats, and the PDC, one. The remaining seat was won by an independent candidate running with the support of a communist party, the Panamanian People’s Party (Partido Panameño del Pueblo– PPP). The PPP had failed to acquire the signatures required for a place on the ballot. Despite the lopsided victory of the progovernment party and the weakness of the National Legislative Council (budgeting and appropriations were controlled by President Royo, who had been handpicked by Torrijos), this election represented a small step toward restoring democratic political processes. The election also demonstrated that Panama’s political party system was too fragmented to form a viable united front against the government.

Omar Torrijos was killed in an airplane crash in western Panama on July 31, 1981. His death deprived Central America of a potential moderating influence when that region was facing increased destabilization, including revolutions in Nicaragua and El Salvador. His death also created a power vacuum in his own country and ended a twelve-year "dictatorship with a heart," as Torrijos liked to call his rule. He was succeeded immediately as Guard commander by the chief of staff, Colonel Florencio Florez Aguilar, a Torrijos loyalist. Although Florez adopted a low profile and allowed President Royo to exercise more of his constitutional authority, Royo soon alienated the Torrijos clique, the private sector, and the Guard’s general staff, all of whom rejected his leadership style and his strongly nationalistic, anti-United States rhetoric. Royo had become the leader of leftist elements within the government, and he used his position to accuse the United States of hundreds of technical violations in the implementation of the canal treaties. The general staff considered the Guard to be the country’s principal guarantor of national stability and began to challenge the president’s political authority. Royo attempted to use the PRD as his power base, but the fighting between leftists and conservatives within the party became too intense to control. Meanwhile, the country’s many and diverse political parties, although discontented with the regime, were unable to form a viable and solid opposition. Torrijos had been the unifying influence in Panama’s political system. He had kept Royo in the presidency, the PRD functioning, and the Guard united. The groups were loyal to him but distrustful of each other.

Florez completed twenty-six years of military service in March 1982 and was forced to retire. He was replaced by his own chief of staff, General Rubén Darío Paredes, who considered himself to be Torrijos’s rightful successor and the embodiment of change and unity. In a press interview, Paredes stated that he had become "what some people sometimes call a strong man." Without delay the new Guard commander asserted himself in Panamanian politics and formulated plans to run for the presidency in 1984. Many suspected that Paredes had struck a deal with Colonel Manuel Antonio Noriega Moreno, who had been the assistant chief of staff for intelligence since 1970, whereby Noriega would assume command of the Guard and Paredes would become president in 1984. Paredes publicly blamed Royo for the rapidly deteriorating economy and the pocketing of millions of dollars from the nation’s social security system by government officials.

In July 1982, growing labor unrest led to an outbreak of strikes and public demonstrations against the Royo administration. Paredes, claiming that "the people wanted change," intervened to remove Royo from the presidency. With National Guard backing, Paredes forced Royo and most of his cabinet to resign on July 30, 1982, almost one year to the day after the death of Torrijos. Royo was succeeded by Vice President Ricardo de la Espriella, a United States-educated former banking official. De la Espriella wasted no time in referring to the National Guard as a "partner in power." In August 1982, President de la Espriella formed a new cabinet that included independents and members of the Liberal Party and the PRD; Jorge Illueca Sibauste, Royo’s foreign minister, became the new vice president. Meanwhile, Colonel Armando Contreras became chief of staff of the National Guard. Colonel Noriega continued to hold the powerful position of assistant chief of staff for intelligence–the Panamanian government’s only intelligence arm. In December 1982, Noriega became chief of staff of the National Guard.

In November 1982, a commission was established to draft a series of proposed amendments to the 1972 Constitution. The PRD supported the amendments and claimed that they would limit the power of the Guard and help the country return to a fully democratic system of government. These amendments reduced the term of the president from six to five years, created a second vice presidency, banned participation in elections by active members of the Guard, and provided for the direct election of all members of the legislature (renamed the Legislative Assembly) after nomination by legitimate political parties. These amendments were approved in a national referendum held on April 24, 1983, when they were considered to be a positive step toward lessening the power of the National Guard. In reality, however, the National Guard leadership would surrender only the power it was willing to surrender.

General Paredes, in keeping with the new constitutional provision that no active Guard member could participate in an election, reluctantly retired from the Guard in August 1983. He was succeeded immediately by Noriega, who was promoted to brigadier general. During the same month, Paredes was nominated as the PRD candidate for president. National elections were only five months away, and Paredes appeared to be the leading presidential contender. Nevertheless, in early September, President de la Espriella purged his cabinet of Paredes loyalists, and Noriega declared that he would not publicly support any candidate for president. These events convinced Paredes that he had no official government or military backing for his candidacy. He withdrew from the presidential race on September 6, 1983, less than a month after retiring from the Guard. Although Paredes subsequently gained the support of the Popular Nationalist Party (Partido Nacionalista Popular–PNP) and was able to appear on the 1984 ballot, he was no longer a major presidential contender. Constitutional reforms notwithstanding, the reality of Panamanian politics dictated that no candidate could become president without the backing of the National Guard and, especially, its commander.

With Paredes out of the way, Noriega was free to consolidate power. One of his first acts was to have the Legislative Assembly approve a bill to restructure the National Guard, which thereafter would operate under the name of Panama Defense Forces (Fuerzas de Defensa de Panamá–FDP). Nominally, the president of the republic would head the FDP, but real power would be in the hands of Noriega, who assumed the new title of commander in chief of the FDP. Meanwhile, the PRD–the military-supported party–was left without a candidate. To strengthen its base for the upcoming election, the PRD created a coalition of six political parties called the National Democratic Union (Unión Nacional Democrática– UNADE), which included the PALA, PLN, and PR, as well as the smaller PP and the left-of-center Broad Popular Front (Frente Amplio Popular–FRAMPO). With the approval of the military, UNADE selected Nicolás Ardito Barletta Vallarino to be its presidential candidate. Ardito Barletta, a
University of Chicago-trained economist and former minister of planning, had been a vice president of the World Bank for six years before his nomination in February 1984. Ardito Barletta was considered well qualified for the presidency, but he lacked his own power base.

Opposing Ardito Barletta and the UNADE coalition was the Democratic Opposition Alliance (Alianza Democrática de Oposición– ADO) and its candidate, the veteran politician, Arnulfo Arias. ADO, formed by the PPA, the PDC, the center-right National Liberal Republican Movement (Movimiento Liberal Republicano Nacional– MOLIRENA), and an assortment of leftist parties, was a diverse coalition made up of rural peasants (especially from Arias’s home province of Chiriquí) and lower- and middle-class elements that opposed military rule and government corruption. During the campaign, Arias emphasized the need to reduce military influence in Panamanian politics. He called for the removal of the defense bill passed in September 1983, which had given the FDP control over all security forces and services. The campaign proved to be bitterly contested, with both sides predicting victory by a large margin. Arias and his backers claimed that Ardito Barletta was conducting the campaign unfairly. Indeed, UNADE took advantage of being the pro-government coalition, and used government vehicles and funds to help conduct its campaign. In addition, most of the media–television, radio stations, and newspapers–favored the government coalition. For example, only one of the country’s five daily newspapers supported the ADO.

Voting day, May 6, 1984, was peaceful. Violence broke out the next day between supporters of the two main candidates in front of the Legislative Palace, where votes were being counted. One person was killed, and forty others were injured. Irregularities and errors in the voter registration and in the vote count led to credible charges of electoral misconduct and fraud. Thousands of people, who believed that they had registered properly, showed up at the polling places only to discover that their names had been inexplicably left off the voting list. Large-scale vote-buying, especially in rural areas, was reported. More serious problems developed during the next several days. Very few official vote tallies were being delivered from the precinct and district levels to the National Board of Vote Examiners, with no apparent reason for the delay. The vote count proceeded slowly amid a climate of suspicion and rumor. On May 9, the vote tabulation was suspended. On May 11, the members of the National Board of Vote Examiners declared that they could not fulfill their function because of 2,124 allegations of fraud, and they turned the process over to the Electoral Tribunal. The opposition coalition publicized evidence showing that many votes had been destroyed before they had been counted. These charges and all subsequent challenges by the opposition were rejected by the tribunal, even though the head of the three-man tribunal demanded a further investigation into the allegations. The election results were made public on May 16. Ardito Barletta won the election with 300,748 votes; Arias came in second with 299,035; retired General Paredes received 15,976. The military-supported candidate had won the election, and the threat to the political power of the FDP had been

The United States government acknowledged that the election results were questionable but declared that Ardito Barletta’s victory must be seen as an important forward step in Panama’s transition to democracy. Relations between the United States and Panama worsened later in the year because of Panama’s displeasure at the alleged slowness with which the United
States-controlled Panama Canal Commission was replacing American workers with Panamanians. The resignation of President Ricardo de la Espriella and his cabinet on February 13, 1984 was barely noticed during the intense election campaign. De la Espriella was forced out by Noriega. De la Espriella had opposed the military’s manipulation of the election and strongly advocated free elections for 1984. During his brief tenure, de la Espriella had failed to institute any significant policy changes, and his presidency was lackluster. De la Espriella was succeeded immediately by Vice President Jorge Illueca, who formed a new cabinet.

Ardito Barletta, a straitlaced and soft-spoken technocrat, took office on October 11, 1984. He quickly launched an attack on the country’s economic problems and sought help from the International Monetary Fund (IMF) to refinance part of the country’s US$3.7-billion debt–the world’s highest on a per-capita basis. He promised to modernize the government’s bureaucracy and
implement an economic program that would create a 5-percent annual growth rate. On November 13–to meet IMF requirements for a US$603-million loan renegotiation–he announced economic austerity measures, including a 7-percent tax on all services and reduced budgets for cabinet ministries and autonomous government agencies. He revoked some of the measures ten days later in response
to massive protests and strikes by labor, student, and professional organizations. Negative popular reaction to Ardito Barletta’s efforts to revive the country’s stagnant economy troubled opposition politicians, the military, and many of his own UNADE supporters. Ardito Barletta’s headstrong administrative style also offended Panamanian politicians who had a customary backslapping and back- room style of politicking. Moreover, Arditto Barletta’s economic program conflicted with the military’s traditional use of high government spending to keep the poor and the political left placated.

On August 12, 1985, Noriega stated that the situation in the country was "totally anarchic and out of control;" he also criticized Ardito Barletta for running an incompetent government. Observers speculated that another reason–and probably the real one–for the ouster of Ardito Barletta was FDP opposition to the president’s plan to investigate the murder of Dr. Hugo Spadafora, a prominent critic of the Panamanian military. Shortly before his death, Spadafora had announced that he had evidence linking Noriega to drug trafficking and illegal arms dealing. Relatives of Spadafora claimed that witnesses had seen him in the custody of Panamanian security forces in the Costa Rican border area immediately before his decapitated body was found on September 14, just a few miles north of the Panamanian border. Because of uneasiness within the FDP over the Spadafora affair, Noriega, using Ardito Barletta’s ineffectiveness as an excuse, pressured Ardito Barletta to resign, which he did on September 27, 1985, after only eleven months in office. Ardito Barletta was succeeded the next day by his first vice president, Eric Arturo Delvalle Henríquez, who announced a new cabinet on October 3, 1985.

Manuel Noriega’s policies and his personal activities, including alleged involvement in drug trafficking, produced very strained relations with the USA. American development aid and military assistance were cut but with little effect. US intervention became more likely after the Panamanian presidential election of May 1989. This was won by the principal opposition candidate, Guillermo Endara Galimany, who took 62 per cent of the vote. However, the election was almost immediately annulled. After an attempted coup in October 1989 – believed to have had US backing – Endara was quickly crushed by Noriega’s forces. The only means of getting rid of the troublesome dictator was military intervention. So, in December 1989, US President

George Bush authorised an invasion of the country. After a few days of fierce fighting, US forces secured control of the country and the capture of Noriega, who had taken refuge with the Papal Nuncio. As Noriega was flown to the USA – where, in April 1992, he was tried, convicted and sentenced to 40 years of imprisonment – Guillermo Endara was installed as the head of a new administration drawn from the ADOC coalition, which had won the May 1989 election. After a slow start caused by chronic lack of finance, the Endara government gradually started to put the country back on its feet. Early discontent was reflected in a number of coup attempts during 1991 and 1992, although all were easily subdued.

Endara’s term ended in 1994. At the presidential election held that May, the victor was Ernesto Perez Balladares, backed by a three-party centre-left coalition under the banner of Pueblo Unido. 5 years later, Panamanians reverted to the conservative bloc, which took control of the national assembly, where a four-party coalition is in government. Mireya Elisa

Moscoso Rodriguez, the leader of the largest party in the coalition, the Partido Anulfista, also won the presidential race. Moscoso, who thus became Panama’s first female president, presided over the defining event in recent Panamanian history – the return of the Panama Canal Zone to Panama under the terms of the agreement negotiated by the Panamanians and the US Carter administration in 1980. (The prospect of Noriega enjoying unrestricted control of the canal had been an important reason behind the US invasion.) Despite obvious US irritation at the unusual phenomenon of ceding territory to a foreign government, the Americans pulled out on schedule in a low-key ceremony in December 1999. Since then, the Moscoso government has been forced to respond to a string of violent street protests against government corruption and mismanagement of the country’s social security fund.