Peruvian President Alberto Fujimori made a surprise announcement September 15 that he intends to hold new elections in which he will not run. If carried out, the pledge would put an end to his reign of more than a decade. After Fidel Castro, Fujimori is Latin America's longest-ruling head of state. Massive human rights violations, rigged elections and wholesale corruption have characterized his tenure in office.

Despite joyous demonstrations throughout Peru and flowery statements by figures like Peruvian novelist and former presidential candidate Mario Vargas Llosa predicting a new dawn of democracy, what form of rule will succeed the Fujimori regime is by no means clear. The shape of things to come will be determined largely in Washington and in the “Pentagonito,” or little Pentagon, the headquarters of the Peruvian military. So far, the military command has maintained an ominous silence over the president's proposals.

The immediate catalyst for the Peruvian president's pledge to renounce power was the broadcast on Peruvian television of a 56-minute videotape. In it, Vladimiro Montesinos, considered by many to have been the power behind Fujimori's throne, is shown handing two envelopes containing $15,000 to an opposition legislator in return for his agreement to switch his allegiance to the ruling party's parliamentary bloc.

Two days after the broadcast, Fujimori himself went on national television to deliver what amounted to a farewell speech and renounce future power in the name of national unity. At the same time, he announced the dissolution of the hated SIN, the National Intelligence Service, Peru's powerful secret police apparatus.

Montesinos, who served as the de facto chief of the SIN, has since disappeared into the military base that houses the intelligence agency's headquarters. In the days that followed Fujimori's speech, he has alternately been reported kidnapped, arrested or protected by the military high command.

Given his record, Fujimori's throwing in the towel over his aide being caught bribing a minor politician is anomalous to the say the least. The Peruvian president has steadfastly defended his shadowy intelligence chief from many equally well-substantiated charges in connection with far more serious crimes. [See: Vladimir Montesinos: the rise and fall of "our man in Lima"] This is a regime that has routinely ridden roughshod over democratic rights since coming to power. During the last election held earlier this year, observers found that Fujimori's name was placed on the ballot through the forging of more than one million signatures. In the runup to the vote a journalist who claimed to have a videotape of Montesinos bribing election officials to fix the vote was kidnapped by secret police agents, who sawed his arm to the bone in an attempt to extract the tape from him.

So ham-fisted were the regime's tactics in rigging the vote, the Clinton administration threatened briefly not to recognize Fujimori's victory. It backed off from this threat, however, pursuing a policy of pressuring the government to clean up its image, in part by ousting Montesinos.

Washington's concerns over democratic forms in Peru are bound up with its move toward a massive escalation of US military involvement in neighboring Colombia. Fujimori's regime has in some ways been seen as a model for what the Pentagon and State Department would like to accomplish in Colombia and elsewhere in Latin America. Under Fujimori, the security forces were unleashed in a brutally effective counterinsurgency campaign that crushed the Maoist Shining Path guerrilla movement, which had previously seized control of large parts of the countryside. Drug trafficking has been sharply reduced, with production shifting across the border to Colombia.

At the same time, the government has carried out sweeping privatization policies that have made it the toast of Wall Street. Indeed, in the wake of Fujimori's announcement that he intends to step down, the Peruvian stock market suffered its biggest fall of the year and bond prices fell sharply, with financial experts warning of a new period of “uncertainty.” The fear among investors is that a successor government may not continue economic policies that have made investments in Peru extremely profitable, while reducing more than half the country's population to extreme poverty.

In essence, US policy is aimed at preserving these “achievements” of the Fujimori regime, while doing away with some of its “excesses.” Continuing political unrest in Peru would represent a serious problem as the Colombian operation gets under way. At the same time, Washington needs Peru as a base of operations and a backstop as it pushes against guerrillas based in Colombia's south, not far from the Peruvian border.

The demand for Montesinos's ouster intensified in August following the discovery of a major arms shipment from Jordan through Peru, destined for the FARC, or Revolutionary Armed Forces, Colombia's largest guerrilla movement. Fujimori credited his secret police chief with uncovering the arms smuggling, which involved upwards of 10,000 Kalashnikov assault rifles, adding that the episode proved the need for such a man at the helm of the Peruvian security apparatus.

Jordan, however, rejected the Peruvian version, insisting the shipments were legitimate government-to-government deals. Evidence pointed to Montesinos having orchestrated the gunrunning operation rather than dismantling it. A senior Peruvian general was found to have participated in the deal, and another principal participant was a government contractor who has signed at least eleven deals with the regime, most of them to provide supplies to the Peruvian military.

According to one report, a group of military officers angered by Montesinos's apparent role in the arms deal broke into his offices and stole the video that was subsequently broadcast. The intelligence chief is said to maintain a library of thousands of tapes containing incriminating statements by politicians, officials and military officers and, in all probability, Fujimori himself.

With Washington's demand that Montesinos be removed, the regime began to collapse under its own internal contradictions. Given Montesinos's role in hand-picking the senior officers of the military and police (his brother-in-law commands the Second Military Region based in Lima, the country's most powerful armed unit) Fujimori had little support within the top brass for firing his intelligence chief and disbanding the agency that has served as a coordinating center for state repression.

Many in the upper echelons of the military fear that Montesinos's fall, and the realization of the opposition's demand that he be placed on trial for human rights violations and corruption, could lead to themselves being accused and tried for the massacres, assassinations and torture carried out by the regime. With the recent moves to prosecute Chile's Gen. Augusto Pinochet as well as former chiefs of the Argentine junta, concerns that they may find themselves in the defendant's dock are foremost in the minds of Peru's generals.

Given the military's opposition to taking measures against Montesinos, Peruvian sources say, Fujimori had no choice but to announce that he himself would step down. The president is exceedingly vulnerable in a confrontation with the secret police chief, given the latter's considerable information about Fujimori's own illicit dealings.

Thus, Washington's attempt to “democratize” the Fujimori regime has led to its apparent implosion. Whether Fujimori will carry out his pledge to hold new elections by March, with a successor supposedly taking his place next July, remains to be seen. Having disbanded the Congress, thrown out the constitution to allow himself an unprecedented third term and then rigged an election to guarantee that he won, the Peruvian president's promise is hardly reliable.

What the military will ultimately do is also unknown. US officials have declared that the army's commanders will play a “key role” in determining the nature of any post-Fujimori transition, while at the same time urging them to take no other action than supporting a “return to full democracy.” There is concern that a military coup is a distinct possibility.

In an attempt to mediate conflicting interests within Peru's ruling circles, the State Department may well push for the opposition parties to approve a promise of amnesty for crimes carried out by the security forces, similar to those implemented in Argentina, Uruguay, Brazil and Chile as part of the transition to civilian rule.

Fujimori rose to power as a virtual unknown in 1990, benefiting from wide popular disgust with a corrupt parliamentary system that served to enrich a layer of politicians and their cohorts while providing no solution to a raging inflationary crisis and a civil war that had cost the country 17,000 lives. Adopting a stance of authoritarian populism, his regime was able to garner substantial support not only from the country's impoverished middle class, but also from the most oppressed layers in the countryside. Part of this backing stemmed from hostility among poor peasant farmers to the Shining Path guerrillas, and part to the government's handing out modest amounts of food and supplies to these layers.

Coming to power denouncing the machinations of the country's traditional party machines, Fujimori himself had no real party or any defined program. His regime rested heavily on the secret police apparatus built up by Montesinos, which grew to control much of the country's mass media as well. As for a program, Washington and the international financial agencies gave him his marching orders.

When his attempts to rule through presidential decrees and enact special anti-terrorist laws ran into congressional opposition, Fujimori carried out the so-called “self coup” of April 1992, closing Congress, suspending the constitution and declaring a “Government of National Emergency and Reconstruction.”

While the military provided the key support for carrying through these dictatorial measures, the SIN secret police apparatus under Montesinos played a pivotal role in controlling the military command itself.

Ironically, the leading figure in the political opposition, Alejandro Toledo, is, like Fujimori, a man without any real party. A Harvard-educated economist and former functionary in the World Bank, his program also will be set for him by the major banks and lending institutions. Despite flirting with demagogy in his abortive election campaign last spring and playing to the mass rallies that have taken place against the Fujimori regime, he is a well-known quantity in international financial circles, where there is little to fear from his political ascendancy.

Political tensions in Peru are, nonetheless, extremely sharp. Despite the virtual end to the guerrilla struggles that dominated the country for more than a decade, intense social polarization and deepening misery for the masses of workers and rural poor make any change in the form of rule an extremely risky proposition for the country's military as well as its financial elite.

If Washington's efforts to curb the excesses of corruption and repression by the Fujimori regime only succeed in further destabilizing the country, the US may soon face a much wider crisis in the region. In that case, the military intervention that is being prepared in Colombia could rapidly extend across the Peruvian border.