The Peru Paradox; Toledo has boosted the economy. And he's more unpopular than ever.(Alejandro Toledo)

Byline: Joseph Contreras and Sharon Stevenson

There must be times when Alejandro Toledo wishes he had been born an only child. In the three years since he was sworn in as president of Peru, Toledo has been rocked by a series of scandals involving five of his seven siblings, several nephews and nieces and, most recently, a sister-in-law. A brother named Pedro is under criminal investigation for allegedly using the family's name to land a lucrative telephone concession for a fledgling local company. Last February a congressional committee opened an investigation of the president's sister Margarita after press reports accused her of using the family name to help a friend win a construction contract with the national port authority. The president's sister-in-law Juana Rodriguez was arrested in October for her alleged role in a scheme to put six friends on the Education Ministry's payroll. A Toledo nephew is under investigation for rape. Toledo's relatives have stoutly denied the accusations, but the ensuing political fallout has further undermined the position of a president whose approval rating stands at a dismal 10 percent. "The cumulative effect of the scandals are enormous," says Michael Shifter of the Washington-based Inter-American Dialogue policy group. "[He should] thank God he doesn't have a bigger family."

In the minds of most Peruvians, the stench of scandal has eclipsed what has been a little-noticed but significant Toledo achievement: the Peruvian economy has been robust and in fact has outperformed the rest of Latin America over the past three years. The various inquiries have also raised serious questions about the sincerity and competence of a president who took office vowing to stamp out the rampant corruption of his disgraced predecessor Alberto Fujimori. "He has said publicly that in no way should the government's positive actions be confused with the isolated acts of a group of relatives," says senior presidential adviser Juan Sheput. "[But] we can't deny that it's caused a lot of damage."

To Toledo supporters, the 58-year-old president is getting a bum rap. The Stanford-educated former business-school professor has assembled a first-rate team of economic advisers, and foreign investors have responded by pouring large amounts of capital into the mining and energy sectors. The country's gross domestic product has grown at healthy rates of between 4 and 5 percent each year since 2001, and low inflation has helped boost the purchasing power of consumers. And by all accounts, the malfeasance inside the Toledo administration is less egregious than the corruption that flourished under Fujimori, who was recently accused by the Berlin-based watchdog group Transparency International of looting the country of $600 million. "When I compare his performance to previous Peruvian presidents, Toledo has been a good president who's been overly criticized," argues Cynthia McClintock, a Peru expert and professor at George Washington University.

What is to be made of this Peruvian paradox? Aside from the corruption scandals, Toledo catches flak because he isn't the populist he portrayed himself to be while running for president. On the campaign trail, Toledo said he'd create a million jobs and double the meager salaries of the country's public-school teachers. But once in office, the English-fluent technocrat charted a neoliberal course in economic policy that backed free trade and tried to privatize more inefficient ...