July 28, 2002

LIMA, Peru - With his approval ratings plunging, President Alejandro Toledo apologized Sunday for promising too much in his first year in office but urged Peruvians not to give up on democracy.

"The greatest self criticism that my government can make is not to have reconciled the nation or lowered social expectations," Toledo said in his first state of the union address on his first anniversary in power

Toledo's approval ratings have plummeted to below 20 percent from near 60 percent when he took office shortly after his predecessor Alberto Fujimori fled to Japan amid a corruption scandal.

Blaming Fujimori for leaving the country in shambles, Toledo said: "Our democracy inherited a nation in four years of recession due to corruption."

But Toledo, Peru's first freely elected president of Indian descent, warned not to let "pessimism work against democracy."

"Be careful, let's not play with fire," he said.

Toledo, 56, fulfilled a classic rags-to-riches story — rising from childhood poverty to attend U.S. universities, work for the World Bank and overcome a tainted election he lost to Fujimori in 2000 to achieve the presidency.

Praise quickly faded as the economy crawled along amid complaints that Toledo lacks decisiveness and the ability to comply with promises, such as creating jobs.

His credibility has also suffered from a paternity case in which a 14-year-old girl claims he is her father. He did not mention the case Sunday.

In the speech, Toledo asked for "patience while we realize this dificult work" of fixing the economy. He proposed programs to build low income housing and promote Peruvian products.

"We will focus on domestic goods first, then imports," he said.

Toledo also said the U.S. renewal of the Andean Trade Preference Act would lead to 1 million new jobs in agriculture.

The decade-old agreement gives Bolivia, Colombia, Ecuador and Peru duty-free access to U.S. markets for products including certain fruits and vegetables, textiles and alpaca and llama wool.

Toledo ended by calling on Peru's often fractious political parties to work together in Congress.

Former president Alan Garcia, who heads the opposition as the leader of the populist Aprista party, declared Toledo's honeymoon over last week and demanded an economic policy that creates jobs and ends the sale of state assets.

Protests against the sale of two state-owned energy companies in southern Peru broke into rioting that killed two and injured dozens in June, forcing Toledo to suspend the privatizations. Protesters say the privatizations lead to rate hikes and job cuts.

Toledo's march Sunday from the presidential palace to Congress was flanked by flag-waving supporters, although police kept protesters up to seven blocks away by shutting down much of the historic downtown.

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