Voice and Vote: Decentralization and Participation in Post-Fujimori Peru

Voice and Vote

DECENTRALIZATION AND PARTICIPATION

IN POST-FUJIMORI PERU

Stephanie L. McNulty

Stanford University Press

Stanford, California

Stanford University Press

Stanford, California

© 2011 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved.

No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, or in any information storage or retrieval system without the prior written permission of Stanford University Press.

Printed in the United States of America on acid-free, archival-quality paper

Library of Congress Cataloging-in-Publication Data

McNulty, Stephanie L., author.

Voice and vote : decentralization and participation in post-Fujimori Peru / Stephanie L. McNulty.

     pages cm

Includes bibliographical references and index.

ISBN 978–0–8047–7397–3 (cloth : alk. paper)—ISBN 978–0–8047–7398–0 (pbk. : alk. paper)

1. Decentralization in government—Peru. 2. Political participation—Peru. 3. Democracy—Peru. 4. Peru—Politics and government—2000– I. Title.

JL3429.D42M39 2011

323′.0420985—dc22                            2011000526

Typeset by Westchester Book Group in 10/14 Minion

E-book ISBN: 978-0-8047-7768-1

For Ramón

CONTENTS

List of Illustrations

Acknowledgments

PART 1   INTRODUCING PERU’S DECENTRALIZATION EFFORT

1   Peru’s Fragile Democracy

2   Peru’s 2002 Participatory Decentralization Reform

PART 2   ANALYZING THE REFORM

3   Explaining the Decision to Empower New Actors

4   The Role of Political Interests in Constraining PDR Outcomes

PART 3   REGIONAL EXPERIENCES

5   Six Experiences with the Participatory Institutions

6   Factors That Facilitate Successful Participatory Institutions

PART 4   CONCLUSIONS

7   Concluding Notes and Looking Ahead

Notes

Works Cited

Index

ILLUSTRATIONS

Figures

4.1   Comparing causal processes

5.1   Administrative map of Peru

6.1   Participation’s virtuous cycle

Tables

1.1   Case selection criteria

2.1   Data on participating agents

2.2   Comparing key characteristics of participatory institutions

4.1   Number of CCR meetings (2003–2006)

4.2   Percent of budget by level of government (2000–2007)

4.3   Revisiting the comparison of Peru’s participatory institutions

5.1   CSO registration list: Lambayeque

5.2   CSO registration list: Moquegua

5.3   CSO registration and election lists: Cajamarca 2003

5.4   CSO registration and election lists: Cajamarca 2005

5.5   CSO registration list: Ayacucho

5.6   CSO registration list: Cusco

5.7   CSO registration list: Loreto

5.8   Categorizing regions

5.9   Summarizing socio-demographic characteristics and PI experiences

6.1   Annual regional investment budgets (in millions of Peruvian soles)

6.2   Regional per capita investment spending (in Peruvian soles, based on 2005 census)

6.3   Percentage of investment budget executed (2004–2006)

6.4   Regional government political party affiliation (2003–2006)

6.5   Level of regional president support for PIs

6.6   Motivations behind levels of support

6.7   Nonelected regional officials’ support for PIs

6.8   Historical organizational factors (1980–2001)

6.9   Post-reform levels of organization in the regional civil society sector

6.10   Post-reform levels of collaboration in the regional civil society sector

6.11   Summary of findings

6.12   Summary of variables

ACKNOWLEDGMENTS

I AM HIGHLY indebted to so many people, without whom this study would not have been possible. I simply cannot name them all in these pages. I do, however, want to single out some people as having played especially crucial roles over the eight years that it took to complete this project.

First, I would like to thank my mentor and friend, Cynthia McClintock. She has provided countless hours of patient assistance as these pages progressed from an idea about Peruvian politics to an actual book. She is a true role model, and I thank her for all that she has taught me. Several other professors at The George Washington University helped enormously during the research and writing process, including Jennifer Brinkerhoff, Nathan Brown, Chris Deering, Bruce Dickson, Gina Lambright, Forrest Maltzman, Lee Sigelman, and Susan Wiley.

I would also like to extend my gratitude to all the Peruvian scholars, professionals, and activists that generously provided their time and information during my visits to Lima and the regions. Almost all the people I interviewed showed an admirable dedication to improving their country. I hope and pray that their efforts pay off. Although there are too many people who contributed to this effort to name individually, several people went way above and beyond the standard call of duty, including Frida Bera, Yolanda Díaz Callirgos, José and Edita Delgado, Luis Chirinos, Carlos Contreras, Aldo Panfichi, Tom Reilly, José López Ricci, Gerardo Tavara, and Emma Zevallos Aguilar. I would also like to thank the political science department of the Pontificia Universidad Católica del Perú, which provided me with the opportunity to teach and publish in Peru. And, of course, thanks to the students of Latin American Political Processes (2004), who taught me as much about Latin American politics as I taught them.

Several good friends and colleagues have provided invaluable assistance with various pieces of this book, including: Chanya Charles, Sarah Chartock, Lan Chu, John Donaldson, Tasha Fairfield, Beth Franker, Lee Ann Fujii, Carolina Garay, Maiah Jaskoski, Maria Beatriz Orlando, Andrew Selee, Alejandra Vallejo, Connie Veillette, and Tamara Walker. Thanks, too, to the members of the 2009 Midwest Political Science Association Participation in Latin America roundtable in Chicago, Illinois the participants in the 2006 Latin American Studies Association New Forms of State-Society Relations panel in Puerto Rico, and the participants in the 2003 Institute for Qualitative and Multi-Method Research in Tempe, Arizona, all of whom gave me very useful feedback on different versions of this work. Much of the research for this book was made possible by the generous financial support of the Peruvian Fulbright Commission and the Department of Education’s Fulbright-Hays Doctoral Dissertation Research Award.

I am grateful to my editor, Stacy Wagner, and her assistant, Jessica Walsh, for making this book a reality. I am also grateful to two external reviewers for their extremely helpful comments that strengthened my logic, argumentation, and organization. Delphine Martin and Amanda Blewitt helped me with the technical aspects of publishing. Of course, all errors are mine alone.

Since I arrived in 2008 at Franklin and Marshall College, my colleagues in the government department and the institution have also incredibly supportive. I would like to especially thank Dr. Robert Gray for his mentoring during my first two years at F&M as the manuscript became the book.

Finally, I would like to thank my family and friends, for their love and encouragement during this long process. Most of you know who you are. My mother, grandmother, and sister have been incredibly supportive of this effort, and I am so lucky to be one of them. Our friends and family in Peru have made my multiple visits not only possible and productive but extremely fun as well. Special thanks go out to the fantastic caregivers who helped me work knowing that my girls were happy in loving environments.

Most important, I would like to thank my wonderful husband, Ramón Escudero, and our two beautiful daughters, who have supported me in countless ways, especially by providing endless amounts of love and joy. Without them, this book simply could not exist.

Part 1

INTRODUCING PERU’S DECENTRALIZATION EFFORT

1 PERU’S FRAGILE DEMOCRACY

IN LATE 2000 and early 2001, Peru faced a political crisis. The former president, Alberto Fujimori, had fled the country in disgrace and faxed his resignation to Congress after evidence surfaced that he and his chief of security had bribed legislators, judges, and the media. Congress rejected his resignation and then ousted him, calling him unfit to govern the country. Allegations of corruption and human rights violations by party politicians dominated the headlines. The international media followed the crisis closely, noting that videos of the corruption scandalized the country and calling Peru crisis-ridden later that year.¹

After Fujimori left, Peruvians were extremely dissatisfied with their political system. Congress and the judiciary struggled to regain legitimacy and autonomy after ten years of authoritarian rule. Many argued that the future of democracy in Peru partly rested on its ability to decentralize its highly centralized government and incorporate new actors into decision-making processes. Peruvians were not alone. Their neighbors in Ecuador and Bolivia were also clamoring for change. Farther away in Africa, Asia, and Eastern Europe, citizens of the Philippines, the former Yugoslavia, Haiti, and Tanzania were calling for the end of politics as usual. Representative political institutions no longer met the demands of citizens who wanted their voices to finally be heard.

In Peru, a newly elected government decided to meet the crisis head-on. Influenced by participatory models of governance, such as the experience with participatory budgets in areas of Brazil, local councils in the Philippines, and town hall meetings in the United States, the newly empowered political elite designed a comprehensive decentralization² reform that explicitly mixes representative and participatory democratic institutions. As one Peruvian congressman stated during Congressional debates:

This proposal defends participatory democracy within the regional governments by establishing an adequate combination of representative democracy by those who have been elected and participatory democracy with the presence of civil society (December 17, 2002; italics mine).

By 2002, the reform—an example of what I call participatory decentralization reforms, or PDRs—had been finalized.

Peru’s PDR restructures the state in several ways. In addition to empowering several levels of new governments—including regions (akin to states in the United States), provinces (akin to counties), and municipalities (akin to cities)—the reform also creates new ways for civil society³ to participate formally in regional and local decision-making processes. As such, it is one of the most ambitious examples of a participatory decentralization reform in recent history.

Peruvians designed and implemented several new participatory institutions (PIs)⁴ at the regional and local level. These institutions are also starting to appear around the world. As Brian Wampler (2007a, 57–58) writes, directly incorporating citizens into participatory decision-making venues has been a central feature of institutional innovations in Brazil, South Africa, Spain, Venezuela, Indonesia, and other new democracies over the past two decades.

This book focuses on two PIs in the newly created regions: (1) a mandatory participatory budgeting process, in which civil society actors participate in regional budget planning;⁵ and (2) Regional Coordination Councils (Consejos de Coordinación Regional, or CCRs), which bring together mayors and elected civil society representatives twice a year to discuss development plans and budgets. These new participatory institutions are considered by some to be the real success stories of the reform (PRODES 2007a, 2009).

THE ARGUMENT

The Peruvian experience presents a multilayered story about why countries decentralize, why particular designs are chosen, and the constraints that these designs put into place. It also demonstrates the power that local factors can have in overcoming these constraints once the reform starts to be implemented around the country. The book begins by addressing national-level design issues. Specifically, Part 2 tackles three questions:

1. What explains national policy-makers’ decision to devolve power to regional governmental and societal actors through constitutional reform?

2. What factors help us understand the particular design of the participatory institutions?

3. How does this design then condition the implementation of the reform?

The analysis highlights the important role that electoral strategies and domestic politics play in the origin and outcome of PDRs. In answering the first question, I argue that the post-Fujimori democratization process provided the right context, or opportunity structure, for this kind of reform. A window of opportunity opened for reform-minded agents. National politicians, specifically presidential candidates, then made strategic electoral calculations to push through a constitutional decentralization reform very quickly after Fujimori fled the country. Thus, the case suggests that in countries like Peru, with weak political parties and few subnational political elites, strategic calculations by national political elites explain the decision to decentralize.

What led these same reformers to embrace participation in the early phases of the reform? Again, the return to democratic rule provided the opportunity structure. Three additional factors combine to help us understand the emergence of a PDR in this case: (1) experiences with corporate structures in the 1970s and 1980s; (2) the experiences of some participatory planning processes in a few localities in Peru during the 1980s and 1990s, some of which implemented by these very reformers; and, in the case of the participatory budget, (3) institutional relations between the Ministry of Economy and Finance and Congress.

Debates in Congress also help us understand the specific PI designs that emerged during the reform process. Congressional debate surrounding the PIs became politically charged at times, especially as regional elections approached. When debating the CCR design, a group of politicians intervened to grant civil society voice but no vote. Some resisted granting civil society more power for ideological reasons; others worried that the CCRs might grant too much power to potential competitors in the regions. The participatory budget, however, was viewed widely as a technical process and never seen as potentially threatening the power of elected officials. As a result, civil society retained voice and vote. The analysis demonstrates the power that political strategies—motivated by both ideology and the fear of losing power—have when undertaking specific PI design issues.

When we explore the outcomes of the PIs, we see that design does matter. A national-level analysis of the participatory budget shows that it has emerged in most cases as an institution with the potential to help democratize Peru and increase participation. In contrast, the CCRs are weak and ineffective in most regions of the country. Thus, to understand PDR outcomes we first need to look at the genesis and evolution of the design. Politics affect design, and design affects outcomes.

Part 3 of the book explores the implementation of the reform in more detail. It asks two additional questions: (1) How are the newly created participatory institutions unfolding in six of Peru’s new regional governments? (2) What factors contribute to the successful implementation of participatory institutions in these cases?

When we look more closely, we see that some regions have overcome design constraints and are implementing the participatory institutions better than others. In some regions, the CCRs are actually emerging as a dynamic and innovative space for collaboration between civil society and the state. In other regions, governments are restricting participation in or manipulating the budget process to fund their own projects. Using data from six regions of Peru, this book explores the factors that allow these more successful regions to overcome design constraints or avoid legal requirements when implementing these new institutions. I argue that in the most successful cases, two regional factors—leadership and a collaborative and organized civil society—create a virtuous cycle of participation that leads to the successful implementation of the CCRs and the participatory budget.

Analyzing the Peru case both confirms previous research and adds new findings and research debates to scholarship on decentralization. Studying Peru’s experience builds our knowledge of the strengths and limitations of decentralization generally and of participatory decentralization reforms more specifically. This book’s extensive data on regional politics in Peru—a level of government often overlooked in most existing studies about participatory institutions—moves the discussion beyond conventional wisdom in several ways. It demonstrates that not only leftist leaders implement these institutions; rather, politicians from the entire political spectrum use these institutions to improve their image and expand their electoral base. Further, although it is true that successful institutions necessitate some level of cooperation and coordination within the regional civil society, this cooperation and organization can be relatively new. This finding goes against some arguments about social capital that suggest that the benefits of organizing can only be seen after long periods of time.

This book also provides useful information about the successful implementation of participatory institutions in general—whether part of a decentralization package or not. Similar innovations exist in several other Latin American countries (for example, Guatemala, Mexico, the Dominican Republic, and Brazil) and around the world (for example, France, Spain, and Canada). Neighborhoods in Los Angeles, Chicago, and Philadelphia are experimenting with new ways of involving citizens in decision-making at the local level. The 2009 military coup in Honduras took place in part as a response to the desire to implement participatory democracy in this small Central American country. We will surely see a rise in these efforts in more countries around the world as participatory models of governance are seen as potential solutions to the problems with representative democratic institutions. In many ways, this study helps us understand the conditions that will increase the chances for success for the institutions that emerge from these efforts.

These issues are important to policy-makers and international development organizations, such as the United States Agency for International Development (USAID), the World Bank, and the Inter-American Development Bank. USAID is actively supporting Peru’s decentralization efforts—and similar efforts around the world—through several projects. Similarly, multilateral development banks spend billions of dollars promoting decentralization reforms around the world. According to the World Bank’s website, from 1997 to 2003 more than 190 projects, totaling more than 2.5 billion dollars, had decentralization components (World Bank Bank Projects). Donors tend to assume that decentralization improves democracy and governance and that participatory institutions will ensure accountability and transparency in the developing world. Yet, more data are needed to assess this assumption. The conclusion of this book provides policy recommendations that can help strengthen similar experiments in other parts of the world.

PARTICIPATORY DECENTRALIZATION REFORMS

How is a participatory decentralization reform differentiated from other reforms that devolve power to subnational governments? In many ways they are part and parcel of the wave of decentralization reforms taking place around the world. However, two necessary dimensions characterize PDRs: decentralization and mandated participation. Reformers must devolve new powers to subnational levels of government and mandate new forms of citizen participation in these governments. Reformers generally design new institutions to channel citizen participation and give citizens decision-making power in governmental processes. In other words, these reforms find new ways to give both voice and vote in subnational decision-making processes to societal actors.⁶

There are several similar cases of this kind of reform. In Bolivia, reformers coupled decentralization with efforts to increase civil society’s participation. The Popular Participation Law, passed in 1994, grants formal power to territorial base organizations, including indigenous, campesino, and neighborhood groups, and assigns them important functions in municipal government processes. Additionally, representatives of these organizations form oversight committees to monitor and control the use of local funds.⁷ Another effort took place in the Philippines, where the government formally institutionalized the participation of civil society organizations (CSOs) at the local level as part of its 1991 local government reform. Accredited organizations participate in development councils, work on councils that set up local contracts and bids, deliver social services, and manage local projects (Angeles and Magno 2004). Other cases of PDRs include the Dominican Republic, Nicaragua, South Africa, and Uganda.⁸ By including both participatory budgets and coordination councils (as well as other PIs that are not studied in this book), Peru has passed one of the most ambitious examples to date of a PDR.

PDRs, therefore, represent one kind of decentralization. Their key features are top-down, mandated participation in subnational governments as part of a legal framework. The newly empowered governments are required to implement the PIs. These cases can be distinguished from cases where innovative new forms of participation emerged after a decentralization reform, such as the participatory budget in Brazil and in municipalities around Mexico. The Brazilian and Mexican experiences stemmed from grass-roots local innovations that encourage citizen participation after a reform.⁹ PDRs set up these channels as part of the actual reform package.

This innovative policy mix is heavily influenced by democratic theories that stress direct, or participatory, democracy. Inspired by the thought of political philosophers such as Jean-Jacques Rousseau and James Harrington, several political theorists have pointed to the need for citizen participation beyond elections.¹⁰ They argue that a country can hold competitive elections, but citizens may still not adequately participate in the system (Avritzer 2002; Barber 1984; O’Donnell 1994). Scholars, activists, and policy-makers, especially since the 1970s, have come forth to call for complementary strategies: implementing participatory approaches to complement and strengthen representative institutions. Binding decision-making power is devolved to these new actors through institutions that formalize society’s participation.

However, the Peru case demonstrates that mandated participation, when stemming from top-down national political forces, does not always translate to meaningful citizen participation in practice. It is no surprise to those who study the developing world that laws are not always implemented as intended after passage. Thus, in many countries these new forms of participation are working well in some areas of the country, yet barely functioning in others. Decisions to design and pass PDRs as well as their implementation are the main topics of this book.

LAYING THE GROUNDWORK

This book contributes to two major strands of theoretical analysis: the extant literature that explores the decision-making process that leads to decentralization reforms, as well as an emerging body of literature on participatory institutions.

Decentralization Reforms

There is an extensive debate, going back to the early 1990s, that explores the puzzling decision to design a reform that empowers new levels of government (and, as a result, new political elites).¹¹ This decision is counter-intuitive because national politicians devolve power to their subnational political counterparts—counterparts that could eventually emerge as competitors. When examining this issue, early literature tended to stress three variables as explaining the reforms: (1) international pressures, such as pressure by donors and/or foreign investors (Doner and Hershberg 1996; Fox 1992; IDB 1997; Wong-Gonzalez 1992); (2) economic crisis and/or reform (Bresser Pereira 1993; Manor 1999; Rondinelli 1989); and (3) socioeconomic development or modernization, measured in light of economic growth and urbanization (Bahl and Linn 1986; Campbell 2003).

A second wave of studies convincingly shows that these variables do not explain the majority of cases.¹² For example, in terms of donor pressure, Montero and Samuels (2004, 17) note that "[d]ecentralization emerged as a major theme in the [international donors’] discourse in the region only after [italics in original] 1988 . . . well after political, fiscal, and administrative decentralization were under way [in many countries]." Sabatini (2003) correctly argues that international support probably reinforced these trends, but did not cause them.

Socioeconomic factors do not always lead to decentralization either. Alfred Montero and David Samuels bring this point home when writing, "quite simply, both developmentalist and neoliberal governments have historically decentralized and recentralized" (2004, 14; italics in original). As O’Neill (2004) points out, in Bolivia there