PERU: Working Alliance

Peru last week suffered the standard South American ailments: a big deficit, a puff of inflation. Unions pressed for higher wages, and an executive of one of Peru's largest industries growled: "In six months we'll have some army officers walk into the presidential palace and take over."

But in the ornate palace he is occupying for a second term (his first: 1939-45), wispy, white-haired President Manuel Prado y Ugarteche, 69, told TIME Correspondent George de Carvalho in elegant French: "Be tranquil, mon cher. There will be no collapse." Quite possibly he was right. In a strange alliance, this dandified scion...