Alan García takes over as president of Peru on July 28. Few people would have thought that the disgraced politician who left his country in an economic shambles in 1990 would return to resume his tenancy of Lima’s Palacio de Pizarro. How much has he learned from past mistakes? This is the question that weighs on the minds of many Peruvians.

García has made no secret of his past errors with respect to management of the economy. What we are about to see is no return to the policies of limiting debt repayment, nationalisation of commercial banks, or to the policies associated with so-called ‘heterodoxy’. Alan has recanted of his youthful radicalism. Indeed, he seems set upon a course of macroeconomic orthodoxy, a source of delight and relief to the country’s business and foreign investor community. Indeed, to reassure the markets, he seems to want to be “más papista que el papa”. We shall wait and see who he appoints as his minister of economy and finance.

Perhaps more important for the long term is the question of whether a second García administration will seek to tackle the country’s social, ethnic and economic divides. The ‘social agenda’ was on the lips of most of the candidates fighting this year’s presidential elections. However, the divides are as deep as ever. Will García seek to stretch out his hand to engage with those who voted for Ollanta Humala? The election results were a clear indication of the political divide between the country’s poorest and most politically disadvantaged, who voted – in the first and second rounds – predominantly for Humala.

When president before, García was not oblivious to the needs of the poor. He tried to appeal to them, both those living in urban shantytowns and in peasant communities. But his efforts in this direction were frustrated by the counterinsurgency war against Sendero and the economic crisis of the late 1980s, which rendered social policy totally ineffective. In fact, Peru’s Truth and Reconciliation Commission found that Mr García was politically responsible for some of the bloodiest counter-insurgency operations during the armed conflict, including the massacre of prison inmates in 1986 known as El Fronton and the massacre of women and children peasants in the highland town of Cayara in 1988.

But how to pursue the strictures of neoliberal economics while at the same time delivering a social policy that really reduces levels of inequality and economic exclusion? This is the key question. Figures from the INEI (Statistics Office) show how inequality, though difficult to measure precisely, grew as the economy grew under Toledo. We must also ask then, how to ensure that the impoverished masses enjoy the fruits of growth to the extent that inequality is reduced on a sustained basis?

Unless this happens, Peru seems to be a country living on borrowed time. Sooner or later, in some form or another, political violence will resurface. Political stability cannot be taken for granted, and without it the investors who have sunk their money into the country will begin to head for the exit. So García’s task is formidable, and considering his atrocious human rights record and previous inability to govern the country, many Peruvians have little faith. He will not begin to depart from this analysis unless he can reconcile the demands of business with those of society. APRA, García’s long standing political party, has always claimed that this is possible. But the measure of success will be tangible improvements to the life of the average Peruvian.