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The Role of Economic Factors in The Civil War in Peru

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The study of civil wars has grown in importance for both scholars and practitioners since the 1990s. With many preoccupied over finding causative factors explaining the onset and duration of internal conflicts. Scholars, such as Hans Enzensberger (1993), Martin Van Creveld (1991) and Robert Kaplan (2000) argued that modern day civil wars are caused by simply: Nothing at all. That they were simply an outpouring of an inner anger and savageness, a return to medieval impulses of raping and pillaging. Civil war, in their eyes, was simply war for the sake of war. These arguments are, however, problematic, as there is an innate xenophobia in describing others, particularly in poor war prone countries, as savages, intent on killing for the sake of killing.

The works of Mary Kaldor and other ‘new war’ theorists, offer a much more subtle interpretation of the phenomenon of internal conflict in the post-cold war era. For Kaldor, new wars were mainly an overgrowth of organised crime, and the conclusion of extreme identity politics. These factors, coupled with the erosion of state power from above due to globalisation and from below due to ethnic tensions, erupt in a hitherto unknown form of warfare, focused more lengthening hostilities than achieving military victory. As conflict takes hold and becomes a profitable venture for belligerents, they choose to continue fighting not to accomplish political goals, but to amass economic benefits.

While Mary Kaldor broadly discussed the role of economics, mainly the profits from a war economy, in sustaining and prolonging civil wars others such as Paul Collier, whose work and its criticisms will be more extensively discussed later in this essay, brought an increased focus on the role of economic factors in the onset, duration and end of conflicts, with economics, or greed, for Collier, being the primary motivation behind conflict.

This essay explores the role of economic factors, going beyond simple greed, in shaping civil wars. After offering a brief overview of Collier and his critics, it will be looking at the Sendero Luminoso insurgency in Peru (1980-present), and the factors behind its onset, duration and end. It concludes that while macro and micro economic factors had a definite role in shaping the conflict, it is crucial to look at others, namely socio-cultural factors such as ethnic divisions and horizontal inequalities, and political ones such as the government response, to gain a better understanding of the insurgency. In sum, while it is impossible to understand civil wars without looking at the economics behind them, it is also impossible to understand them by looking solely at economic factors.

The Greed Thesis

Much of the early focus on the role of economics shaping internal conflicts emanates from the work of Paul Collier and Anke Hoeffler. In their seminal study on ‘Greed and Grievance in Civil War’, they ascertain that the vast majority of civil rebellions against an established government are caused and sustained by a greed to control natural resources, rather than the pursuit of a cause or to redress past grievances. The onset and duration of a given conflict, for Hoeffler and Collier, would then be mainly explained by the availability of easily lootable commodities (Collier & Hoeffler, 2000, p. 590). The natural conclusion of that argument is that economic factors are thus the primary causative explanation for civil wars.

Critics of Collier and Hoeffler, notably Frances Stewart, point out how he overlooks non-macro economic factors in his analysis of rebellion. Namely horizontal inequalities: Inequalities between different ethnic/religious groups rather than inequalities within them. For Stewart, easily lootable natural resources can increase the likelihood and intensity of conflict, but only if they worsen existing horizontal inequalities between different groups (Stewart et al, 2008, p. 295). Others, such as David Keen, point to Collier using variables to approximate for greed and grievance that do not necessarily reflect them (Keen, 2012, p. 761). For instance, Collier and Hoeffler code ‘lack of access to education’ as a parameter reflecting greed, whereas for Keen, it more closely relates to grievances. For David Keen, some of the central weaknesses of Colliers’ view of civil war are his excessive focus on the causes and motivations of rebels rather than government forces, and that even when regarding rebels, Collier deemed the actual statements of rebels about their reasons for fighting were irrelevant, as they would simply talk about grievances to justify them. For Keen, this is tantamount to saying that “the answer to questions about that conflict seem now to lie not in the wisdom of Darfur, for example, but in the wisdom of Oxford and in the sophistication of Washington”.

The Onset of the Conflict in Peru

The Partido Communisto del Peru- Sendero Luminoso, Communist Party of Peru-Shining Path, which will be henceforth referred to in this essay as Sendero Luminoso or Sendero, began as a small, mainly university-based movement in the late 1960s. Over the following decades, it grew exponentially from its initial base in Ayacucho. By the mid-1990s, the Sendero insurgency and central government response had caused 69,000 deaths. The group and its government opponents conducted multiple massacres, targeting peasants, journalists and local officials. The rise of Sendero Culminated in 1992, when the group threatened to take over the capital, Lima, and depose the then government.

Marks and Palmer (2005) consider Peru to have been a counterintuitive setting for a communist insurgency to take hold. By 1980, not only did Peru have decent relations with socialist states, its own Marxist leftist opposition was widely integrated in the broader political system. La Izquierda Unida, or united left, composing a variety of both centrist and more fringe left wing parties, was the second biggest party in parliament, and held important regional posts such as the Lima municipality. The vote was extended, De Jure, to a majority of the population, including illiterate peasants, many of whom where indigenous. However, indigenous majority areas, particularly Ayacucho had the highest rate of voter abstention in all of Peru. Amongst those who did vote, they had the highest national rate of null and blank votes, with up to 42% of all votes cast in the province being blank, compared to 22% at the national average. Reflecting a lack of belief in the democratic transition amongst residents. Overall, the economy of Peru had undertaken a steady growth since the 1940s, despite hyperinflation later plaguing the country during the 1980s, coinciding with the rise of Sendero to national prominence. However, the majority indigenous provinces of Ayacucho and its neighbours registered an opposing trend in previous decades, with poverty increasing compared to the rest of the country (McClintock, 2001, p. 76).

The areas where Sendero thrived and recruited the most were, initially, the impoverished mountain areas of Ayacucho, which had a majority Quechua speaking indigenous population. In sharp contrast to the economy of other parts of Peru, these regions had high rates of extreme poverty and failed to see the benefits of overall economic growth, coupled with systemic prejudice against the culture and language of their inhabitants (Marks & Palmer, 2006, p. 91). However, despite its low incomes compared to the national average, the population of Ayacucho was overall wealthier than its neighbours, mainly Apurimac and Huancavelica (Marks & Palmer, 2006, p. 96). What separated Ayacucho from these areas, however, was the increased access to education granted to its residents, as the rise in literacy, as well as the wider availability of newspapers and TVs, amongst indigenous groups in Ayacucho allowed them to see their problems in a national context, contextualising their poverty in comparison to the progress the rest of the country was making.

The leaders of the Sendero Luminoso on the other hand, particularly in its early days, were not representative of the indigenous rank and file. Rather, they were mainly middle and upper middle class native Spanish speakers from outside the region, who had met and began to be radicalised at university. Scott attributes the left wing swing in Peruvian campuses to broader trends taking place all over Latin America, where from the 1960s onwards, higher education began to expand its offers outside the establishment, allowing for more alternative left wing policies to take hold. Scott also mentions the influence of the Cuban revolution as an inspiration for other rebellions across latin America. Unlike other Marxist factions in Peru and the region, the Sendero took its inspiration, training and support from Maoist China rather that Soviet Russia, despite leader Abimael Guzman Reynoso’s initial membership of the far more mainstream, Stalinist Peruvian Communist Party. In addition to this, they embraced a radical philosophy of indigismo , centred around the ‘empowerment’ of indigenous people, and modelling the perfect communist utopia around the organisation of traditional indigenous communities.

Despite the clear warning signs of the group’s radicalisation by the mid 1970s, the central government, then controlled by the Revolutionary Military Government, which took power in a 1968 coup, didn’t pay much heed to these developments, as Ayacucho was considered to be a remote, inconsequential province with little effect on the broader political developments of the country, and the central administration, following its own quasi socialist tendencies, was more focused on threats from the right than the left. This led to the Sendero Luminoso having ample time to quietly grow in the shadows. By 1975, although Guzman Reynoso had gone into hiding, he had a vast network of supporters throughout the region, and many of his former pupils had taken on teaching posts in other universities, where they recruited additional numbers into the movement, which had been able to grow despite being cut off from financial and ideological support from China in 1976. Once it expanded beyond intellectual elites, the Sendero appealed to existing horizontal inequalities to bolster its ranks. It recruited indigenous fighters and sympathisers through food handouts, propaganda, and Robin Hood strategies by which they would rob wealthy landowners and merchants, redistributing the gains to the poor (McClintock, 2001, p. 79). In Ayacucho, Sendero was able to tap into widespread tacit support, with local journalists reporting nearly unanimous support amongst younger indigenous people.

Beyond the charisma and networking power of its leadership, it becomes clear that many economic and non-economic factors contributed to the rise of Sendero Luminoso, and thus to the onset of conflict. While the unequal economic development present in Peru, and the resulting horizontal inequalities set the stage for profound grievances amongst the local population of Ayacucho, these were exacerbated by new technologies, such as television and an increased access to education. In addition to both national and international political factors, such as the Sino-Soviet split, which led the Sendero leadership to split from more mainstream Peruvian Communism, and the early inaction of the Peruvian government against the rising insurgency.

Duration and Intensity of the Sendero Luminoso Insurgency

Once the insurgency proper began in 1980, the government’s response remained slow. Peru’s first democratically elect president, Fernando Belaunde Terry, was reluctant to use military force against the Sendero Luminoso, as he was worried of re-empowering the army, shortly after they had given the government over to civilian power. He downplayed the level of insurgency in the media, despite recurrent attacks, referring to Sendero insurgents as ‘cattle rustlers’ and refusing to commit proper force until 1982. Once the army was allowed into Ayacucho, they played right into the Sendero’s provocational insurgent tactics, fighting back with brutal repression which caused 7,500 direct casualties, particularly amongst the impoverished rural indigenous population, and many others to flee the region, or become Sendero sympathizers. It is possible that this excessive brutality, at the level of individual soldiers, was due to racism against the indigenous majority of the area. After the military intervention, Sendero fighters fled to the Upper Huallaga Valley, a remote area of the jungle with a predominantly indigenous population, mainly employed in the cultivation of the coca leaf, which represented 90% of the region’s GDP (McClintock, 1988, p. 130). Initially Sendero took action against coca cultivation, denouncing it as contrary to the principles of Marxism, this led to conflicts with the local population. In contrast to its original Ayacucho, the Upper Huallaga Valley was a relatively wealthy area, where the message about empowering indigenous people through Marxist revolution did not resonate as much as it did during Sendero’s beginnings. Sendero Luminoso then changed its message, offering protection to local cocaleros (coca farmers and processors) against an increasingly aggressive US led eradication campaign  Felbab Brown, 2010, p. 43). Although the Sendero held very little full-time fighting forces, even at the peak of the insurgency, with Scott (2017), estimating its local and regional base not to exceed 2,000 individuals. It was able to generate massive income from taxes and profits derived from the cultivation, processing and trafficking of the coca leaf and its products, up to 10 million USD per year by 1989. In addition to generating profits, Sendero’s involvement in the coca trade, especially the protection it offered peasant farmers against eradication policies, allowed the group to gain the protection of the local population, who refused to provide intelligence to the Peruvian army during the height of the eradication campaign.

The presence of a flourishing coca trade in the areas Sendero was most active in, and the massive profits the group was able to generate does lend a certain credit to the greed thesis in the context of Peru. However, it is important to consider other factors that have led to the lasting brutality of the conflict. For instance, it could be argued that had the government reacted earlier, the insurgency could have been crushed in its infancy. Had the army reacted with less brutality, indigenous peasants may have been more willing to cooperate with the government.

Decline of the Shining Path

Officially speaking, the conflict is still on-going, and the Sendero Luminoso maintains a limited presence, mainly in Ayacucho. However, its intensity and membership has broadly declined since its heyday in the 1980s and 1990s. Particularly after the arrest and capture of the organisation’s leader Abimael Guzman Reynoso in 1992. Guzman had broadly concentrated leadership within his own person, and failed to delegate or appoint successors, leading to a power vacuum and hierarchical collapse after his arrest.

President Fujimori’s macroeconomic policies managed to reduce the growth of hyperinflation, bringing it down from 2,600% in 1990 to 15% in 1994, this led to a renewed interest in both international and local investment in Peru, which led to economic improvements all over the country. His administration also improved their judicial sentencing rates as well as their intelligence operations. Most importantly, however, the army revamped their counterinsurgency strategy in 1989, abandoning their previous tactics of extreme repression and adopted a more pragmatic Hearts and Mind approach to fighting the Sendero, with army personnel building rapport with civilians by building roads, offering healthcare and with soldiers even offering free haircuts to build a one to one rapport, which led to less grievances amongst the local population.

After 1989, the army adopted a laissez faire attitude towards coca cultivations in Sendero strongholds. They refused to work with police and other counternarcotics forces, leading to a higher willingness amongst peasants to cooperate with security forces and provide intelligence on Sendero’s operations. On a national level, both President Garcia in 1989 and Fujimori in 1990, refused U.S. eradication aid, which weakened the Sendero portrayal of the central government as a shill for imperialist forces.

On a microeconomic level, beginning with the Fujimori administration, the central government sought to cut off the Sendero’s base of popular support by instituting a variety of development and microcredit projects centred around Peru’s poorest areas. The programmes were decentralised, with small budgets and few officers. However they implicated local communities, who were directly responsible for the choice and implementation of the programmes, according to a community wide vote. These initiatives had a resounding success in reducing Peru’s rural poverty levels, dropping the extreme poverty rate from 31% to 15% of the population. Improving the circumstances of locals as a result of government intervention allowed government forces better access to rural indigenous farmers, leading to an increase in the quality and quantity of intelligence the army could collect on insurgents, as well as the ability to recruit peasants to form self defence groups, directly fighting Sendero forces.


The economic aspects underpinning the rise, duration and decline of the insurgency in Peru are crucial to understanding the conflict. Most importantly, the presence of a flourishing trade in coca leaf and its derivatives, as well as the government reaction to it, lends credit to Collier’s greed thesis. However, other factors must be taken into account in order to truly grasp the local context of the Peruvian conflict. Namely, the widespread presence of horizontal inequalities amidst the indigenous population, as Frances Stewart predicted. The Peruvian case also lends credit to the classical counterinsurgency theory of placing hearts and minds above all else. In addition to highlighting the importance of organisational and leadership factors within insurgent groups themselves. If there is one thing that can be generalised from the Peruvian case, however, is the importance of considering a wide variety of factors when analysing a given conflict. Even when looking at Peru itself, the dynamics of the insurgency in Ayacucho differed substantially from those in the Upper Huallaga Valley, despite the similar ethnic make up in both regions. As every country, or indeed every region, presents in own unique local contexts. 

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The Role Of Economic Factors In The Civil War In Peru. (2021, October 25). GradesFixer. Retrieved September 24, 2022, from
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