Downsides of Decentralization: Lessons from Peru

By Eric Hershberg
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Decentralization – the buzzword among Washington-based specialists on governance during the 1990s and well into the first decade of the 21st century – failed to fulfill technocrats’ lofty expectations wherever it was implemented in the absence of a strong central government.  In one country after another, the World Bank, Inter-American Development Bank, and USAID prescribed political and administrative decentralization as a recipe for deepening democracy and boosting efficiencies in the delivery of governmental services.  An alliance of strange bedfellows united behind the “good governance” cause of decentralization, including grassroots democracy activists of the left who, in the aftermath of authoritarian rule, valued the notion of devolving decision-making authority to the citizenry.  Neoliberal economists, in turn, were attracted to virtually any initiative that would diminish the authority of central states, which they considered to be incorrigible bastions of inefficiency, rent-seeking and patronage.  Cautionary notes from skeptical political scientists were routinely dismissed as anachronistic.  At a seminar in Lima around a decade ago, USAID staff were utterly perplexed by the suggestion that, in the absence of central institutions holding the new regional authorities accountable, the headlong quest to political decentralization in Peru could bring extremely serious adverse consequences for democratic governance.  In their view, the capabilities of the central government had nothing to do with the success of decentralization.

Their enthusiasm was not entirely misplaced – but in many places the reforms eventually backfired.  The authoritarian regime of Alberto Fujimori (1990- 2000) had centralized power excessively, eliminating the handful of regional governments that had been created during the 1980s and ensuring that the social programs they had administered would be entirely dependent on the executive branch.  Fiscal decentralization, already minimal, was eliminated to make provincial municipalities completely dependent on transfers from the central government.  The few regional authorities who survived the Fujimori period were appointed by the president.  When President Alejandro Toledo (2001-06) and his Peru Posible party took office, the need to restore some decentralization was clear, but the two traditional parties – the APRA and Acción Popular –gradually coopted the movimientos regionales, creating clientelistic networks employing mafia-style tactics.  In the Ancash Department, for example, a rogue president is associated not only with corruption scandals – common in regional governments – but also with the assassination of his political enemies, including a political opponent murdered in March.  President Ollanta Humala has frozen the region’s assets, thereby putting a stop to some of the corruption but at the same time delaying needed infrastructure projects and social services.

The emergence of authoritarian enclaves was predictable of fledgling democratic regimes in Latin America, and the phenomenon is not unique to Peru (click here).  Sub-national authorities have access to vast resources to distribute to their clients (and themselves), and all too often the central state lacks the capacity or control over the purse strings to rein them in.  Social scientists have long been aware of the “paradox of decentralization,” and indeed at American University it is a concept that we typically teach freshmen in Comparative Politics – that decentralization only promotes democracy when it follows the consolidation of a strong central state.  This insight escaped the gaze of the technocrats so enamored of decentralization in Peru.  There, as elsewhere, the absence of horizontal accountability – that is, the ability of different branches of government to check one another’s authority – is aggravated by the inability of civil society to hold leaders accountable and allows for the emergence of local mafias in control of sub-national institutions.  Decentralization took on such steam at a time when Latin America’s national governments had been weakened by the economic crisis of the 1980s and the ideological assault on the central state that continued well into the current century.  It will take many years to rectify the damage.  

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  1. Michael Danielson

     /  May 5, 2014

    Great post. I might go even further and hypothesize (following Gibson) that national political actors in relatively strong and democratic central governments often have incentives to ally with (or at least tolerate) authoritarian governors and mayors. Just because democracy is “the only game in town” nationally, doesn’t mean that’s the only game to be played.

  2. Alex Wilde

     /  May 5, 2014

    International bankers, USAID officials and national technocrats weren’t the only to hold utopian hopes for administrative decentralization in the 1990s. There were similar predilections within international foundations in that era. This was particularly true in their US-based offices, in which tidy schemes exert a strong gravitational pull (and bring hope for simple, uplifting narratives in annual reports). In the case of the Ford Foundation, overseas offices working on the ground helped provide reality checks – perhaps above all some sense of the politics, power and interests which would inevitably shape outcomes.

    Many thanks to Eric Hershberg and Augustina Giraudy for their incisive analyses. The other important national case that should be included in comparative study of this phenomenon is Colombia.

  3. Michael Baney

     /  May 5, 2014

    This is a very interesting post. I wonder about the dynamics of this sub-national authoritarianism in Peru. The post says that the APRA and Acción Popular co-opted the decentralization process and installed their own clientelistic networks. That may very well be the case — the APRA historically has been clientelistic and has acted similar to the PRI in Mexico in its desire to incorporate society under the paternalistic benevolence of the party (“Only the APRA Can Save Peru” was the party slogan before hyperinflation under Garcia turned it into a punchline). I personally don’t know much about Acción Popular, although in the year following the collapse of the Fujimori regime AP’s Paniagua led the caretaker government, so I suppose there may have been spoils to hand out.

    But really since well before the collapse of the Fujimori government, the party system in Peru has been completely broken, and parties only truly serve as temporary electoral vehicles that virtually cease to exist the day after election day. Peru strikes me as being almost the opposite of Argentina, where being a Peronist is not only an identity that can be passed down through generations, but it can also mean the difference between landing a job or remaining unemployed. In Peru, you might know that your mayor chose last election cycle to run as a Somos Perú candidate, but I doubt that most people would have a clue as to what Somos Perú actually does, if it has any ideology at all, what its structure is, or if it will continue to exist in a few election cycles from now. The example given in this post of the horrible Regional President of Ancash, César Álvarez Aguilar, is a good one: his party is the Movimiento Regional Independiente Cuenta Conmigo, a party I’m sure almost no one in Peru has ever heard of and that exists for no other reason than to provide a vehicle through which Álvarez can register with the JNE every five years.

    With such weak parties, then, how exactly do these clientelistic networks operate? Is it just a recurring phenomenon in which one group of criminals gets elected and robs their constituents blind before turning things over to the next group of thugs? Apart from the corrupt businesses that profit from wastes of money like the Ancash stadium that Álvarez is “building,” does any sizable chunk of the Peruvian population actually benefit from the patronage of these parties, allowing them to stay in power? Or is it that even without a party to distribute resources, local politicians still find ways to give out the goods, thus cementing their own power — the typical “the roads will be paved the week before election day” dynamic we sometimes see in Latin America? As a student, I would be interested in seeing what people who have studied this think.

  4. Eduardo Dargent

     /  May 7, 2014

    Pues me parece que el proceso no fue como se describe. Coincido con la crítica al proceso de descentralizar funcione sin capacidades pero creo que la interpretaciòn del caso peruano tiene problemas. Los tecnócratas en Perú con poder no fueron descentralizadores. Al revés, desde el MEF en su mayoría no se compraron el rpcoeso y lo veían como un problema que les traían los políticos. La tecnocracia que apoya el diseño era otra, minoritaria, apoyada en la cooperación internacional, la sociedad civil y entre los políticos por Toledo/PErú Posible y el APRA en el Congreso. En el Perú la alianza tecnócratas (por lo menos los que pesaban en ese momento) y sociedad civil no se dio. Aquí el empuje fue más político-sociedad civil que tecnocrático me parece. También parece exagerado decir que el APRA y AP pudieron copar algo. El APRA pierde sus 12 gobiernos regionales en una elección, AP nunca gana uno. El problema actual muestra más bien alta volatilidad, no la estabilidad que sugeriría el tipo de clientelismo que se menciona. En resumen, me gusta la crítica al proceso, pero la historia no es como me la contaron (o la vivi). Tiene razón en concluir que los tecnócratas en el Perú pierden de vista la importancia de reforzar el Estado central, pero la descentralización no es el mejor ejemplo de ello.

  5. Alex Wilde

     /  May 7, 2014

    Eduardo Dargent makes a persuasive case that the decision-making reality in Peru was rather different than Hershberg implies. It sounds like a contemporary variant of the cases Paul Drake analyzed years ago of the impact of the Kemmerer missions of the 1920s – with the important difference that the contemporary context includes a wider range of official international actors and a greater presence of international civil society.

    This debate also recalls the increasing sophistication of dependency “theory” a generation or two back, as researchers looked more closely at different policy-makers within Latin American states and their alliances with specific international actors.

    Although structural analysis like that wielded by dependency theorists is indispensable, it is incomplete and can even be misleading without more careful study of actual power-holders and the processes by which public policies are formulated and implemented. The work of the best policy-oriented scholars – e.g. Albert Hirschman – incorporates this home truth.

  6. Eric Hershberg

     /  May 11, 2014

    I am grateful for the thoughtful reflections on the post I wrote a week ago, including the important corrective offered by Eduardo Dargent. I strongly suspect that he is right about the skepticism/opposition of Peruvian technocrats confronting the push toward decentralization coming from abroad and from sectors of civil society (i.e. the “strange bedfellows” to which I referred). That is an important nuance that I failed to capture in the initial post. Alex Wilde’s comparison of the landscape of actors operating at the time of the Kemmerer Commission and during our own times is very convincing, as well.


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