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Success Stories

To deal with the queues, paperwork and excessive bureaucratic procedures that caused most Peruvians so much lost time, unnecessary expense, not to mention the general constraints on economic activity, the ILD created a draft of the law and an administrative strategy to streamline bureaucratic procedures and facilitate institutional reform.

Throughout the 1980s, the ILD continued to work toward making the Peruvian government more accountable to the people. The nation’s economy was still weighed down by its mercantilist past, where legislation was used to obtain economic benefits for a privileged few.

In 1984, to further increase the odds that the real needs of the people would be heard by the government, the ILD mounted a campaign for an independent national “ombudsman” to represent the interests of citizens, no matter how poor they might be. Though there was no provision in the constitution for such a position, it authorized the Attorney General to “defend the public interest.” The ILD petitioned the sitting Attorney General who agreed that he, too, thought that an ombudsman would improve the quality of Peruvian lawmaking. In July 1984 and December 1985, the ILD signed two agreements with the Office of the Attorney General to design the legal mechanisms for Peru’s first “Office of the Ombudsman” —El Defensor del Pueblo.

Piles of red tape

In April 1984, the ILD completed its first project, handing President Belaúnde a draft for legislation, the goal of which was to keep lawmakers informed about the public’s concerns and make them accountable by giving the people an opportunity to comment on the drafts of the laws as well as their effects. The President accepted the ILD draft and enacted Legislative Decree No. 283 and Supreme Decree No 071-84-PCM, stipulating that all laws and regulations issued by the executive branch except those relating to public security and foreign affairs must be published first in draft form for public scrutiny along with a statement of their objectives plus an estimate of the costs and benefits for Peruvian society. Citizens and the press would then be given one month to submit to the appropriate ministry or agency comments and suggestions about the draft. The government would also be required to provide adequate opportunities for people to discuss the new procedures in public.

By 1987, ILD’s research had determined that the value of real estate assets that were not duly titled or could not be leveraged to generate capital was in the neighborhood of US$ 70 billion. Such “extralegal” homes could not be used in the legal market to obtain credit or produce surplus value. Therefore, for their owners, this enormous investment was “dead capital.”

The ILD launched another communications campaign and held public hearings along with open discussions in urban and rural areas to probe public opinion about what informal legal arrangements people actually had to secure and transfer their assets in the extralegal sector.

As in other developing countries, the administration of justice in Peru is inefficient and costly, especially for the poor. It is one of the reasons why many poor people decide to resolve their conflicts outside the law. To create a conflict resolution system that would be accessible to the poor, the ILD studied the limitations of the official legal system along with the extralegal mechanisms that the poor themselves used to resolve their disputes that were relatively efficient. Once again, the ILD carried out hundreds of interviews, held dozens of public hearings, and hired several prominent foreign and local legal experts to help draft a new arbitration law.

During his 1990 campaign for the Presidency, Fujimori used ILD research to make a major issue of the obstacles that small enterprises were facing in Peru. In September 1990, one month after Fujimori’s inauguration, the ILD presented the new president with a draft law aimed at reducing radically the time required to obtain a license to operate a business legally. In September 1990, the President enacted Supreme Decree No. 118-90-PCM establishing the Unified Business Registry.

 

Municipal operating license

Most of the obstacles to creating a new business in Peru occur at the national level, and the Unified Business Registry was aimed at wiping them out. But there is another level of bureaucratic obstacles presented by municipal governments that operate independently of the national government. To deal with those obstacles, the ILD proposed in May 1990 to all of Peru’s municipalities a public ordinance for simplifying the granting of municipal operating licenses. This ordinance is also based on the ILD’s four pillars of administrative simplification.

The poor are also victims of a slow and onerous criminal justice system. In 1990, ILD research revealed that 13,595 prisoners —75% of the prison population— had not been tried. Worse, many of these prisoners had already served jail terms that were longer than those set by law for the crimes they had allegedly committed.

Until the 1980s, independent transport operators in Peru, who were primarily from the nation’s lower income groups, had a negative public image. Almost all proposals seeking to regulate public transportation sought to eliminate them. The presiding theory was that the poor could not become entrepreneurs and only government could (or should) run public transport. In November 1986, however, the publication of De Soto’s book The Other Path, based on years of ILD field work and analysis, revealed a different picture: 85 percent of Lima’s urban transportation belonged to extralegal entrepreneurs and the total replacement value of their fleet was US$ 620 million. Most of Lima was literally travelling through the city in extralegal vehicles. The ILD’s analysis also revealed that for decades government had put in place numerous legal obstacles impeding private lower income entrepreneurs from gaining direct legal access to the urban transportation market.

In an exclusive interview the night before his election as President of Peru on June 10 1990, Alberto Fujimori identified his constituency: “The truly marginalized Peruvians are the informal people, that large sector of the population that Hernando de Soto studied in his book The Other Path, which I read some time ago. It was then that I realized that it is they who are the great new Peru.” In fact, just 22 days earlier, Fujimori had published his government program 50 percent of which was based on ILD proposals for reform.

Fujimori and Hernando de Soto

De Soto agreed, provided Fujimori accept two non-negotiable conditions: The return to electoral democracy, and the implementation of the ILD’s version of the democratic decision-making law, including the initiative for referendum and the independent ombudsman, that the President had approved a few months before until he bent to conservative pressure.

 After four days of negotiations, Fujimori accepted. A new window to carry out fundamental democratic reforms in Peru had been opened.

After years of research, the ILD began to understand that in Peru democracy had essentially been reduced to the act of voting. Because voters have no mechanisms at their disposal to register their reaction to new laws or policies, and the authorities do not have peaceful and organized means to gather public opinion or to channel existing initiatives by citizens, political participation ends at the ballot box. Peruvians thus hand over a virtual “blank check” to their elected officials, who, in turn, convert this check into thousands of laws and decisions that significantly affect the life of the people —without consulting or being accountable to them. And so, even when politicians govern with the best interests of the electorate in mind, they do so in ignorance and on the basis of biased information provided by those with special access to power.

On September 26, 1990, two months after assuming power, President Fujimori informed the public —and the US Ambassador— that the Peruvian government would not renew its anti-narcotics agreement with the US. At the time, there was a strong sentiment among the nation’s opinion makers that though disapproval of drug trafficking was high, Peru was being forced to fight a US war on Peruvian soil.

ILD carried out several studies on the underlying causes of the Arab Spring throughout the MENA region. The preliminary findings for Tunisia were presented in Tunis in December 2012

From 2004 to 2006, the ILD conducted an in-depth real estate and business diagnosis and identified the 67 most important bottlenecks in the legal system.

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(511) 222-5566