Juan Velasco Alvarado of the Velasco administration's economic policies is still debated today. As the Peruvian military government ran deeper into debt, it was forced to devalue the currency and run inflationary policies. This however, was in part due to the 1970s Energy Crisis, which also affected Peru and made it impossible for the Velasco administration to fund some of its most ambitious reforms. In foreign policy, in contrast with his 1970s Latin American contemporaries, which were mostly right-wing military dictatorships, he pursued a partnership with the Soviet bloc, tightening relations with Cuba and Fidel Castro and undertaking major purchases of Soviet military
Juan Bautista Alvarado Frémont arrived in Monterey at the beginning of 1846. Afraid of foreign aggression, Castro assembled his militia, with Alvarado second in command, but Frémont went north to Oregon instead. An unstable political situation in Mexico strained relations among the Californios and it seemed that civil war would break out between north and south. On July 7, Commodore John D. Sloat occupied Monterey, declaring to the citizenry that the Mexican–American War had begun. Pico, Castro, and Alvarado set aside their differences to focus on the American threat, but by the end of August, Pico and Castro fled to Mexico, and Alvarado