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Land reform

By now, many intellectuals and government officials saw the agrarian situation as an urgent economic problem as well as a matter of social justice. Even the army believed that land reform was a prerequisite for the development of a larger market, without which any genuine industrial development would prove impossible. On October 3, 1968, tanks smashed through the gates into the courtyard of the Presidential Palace. General Velasco and the army seized power, deporting Belaunde and ensuring that Haya de la Torre could not even participate in the forthcoming elections.

The new government, revolutionary for a military regime , gave the land back to the workers in 1969. The great plantations were turned virtually overnight into producer's co-operatives, in an attempt to create a genuinely self-determining peasant class. At the same time guerrilla leaders were brought to trial, political activity was banned in the universities, indigenous banks were controlled, foreign banks nationalized, and diplomatic relations established with East European countries. By the end of military rule, in 1980, the land reform programme had done much to abolish the large capitalist landholding system.

Even now, though, a shortage of good land in the sierra and the lack of decent irrigation on the coast mean that less than twenty percent of the landless workers have been integrated into the co-operative system - the majority remain in seasonal work and/or the small farm sector. One of the major problems for the military regime, and one which still plagues the economy, was the fishing crisis in the 1970s. An overestimation of the fishing potential led to the build up of a highly capital-intensive fish-canning and fish-meal industry, in its time one of the world's most modern. Unfortunately, the fish began to disappear because of a combination of ecological changes and over-fishing - leaving vast quantities of capital equipment inactive and thousands of people unemployed.

Although undeniably an important step forward, the 1968 military coup was always an essentially bourgeois revolution, imposed from above to speed up the transformation from a land-based oligarchy to a capitalist society. Paternalistic, even dictatorial, it did little to satisfy the demands of the more extreme peasant reformers, and the military leaders eventually handed back power voluntarily in democratic elections