UPDATE Bulletin Of the Peru Support Group No. 128 June - July 2008 The aims of the PSG are to promote the rights and interests of the people of Peru and in particular the poorest sectors García Two Years On: Inside this issue: The Neo-liberal Law of the Jungle? In the very same week, Peru won particularly in the highlands. The gov- Editorial 1-2 'investment grade' status and angry ernment is trying to stimulate public crowds burnt down the regional gov- investment in the interior of the country, News 2-3 ernment building in Madre de Dios. but up to now has been hobbled by the Two sides of the same coin that is operation of the so-called SNIP Legal but not legitimate: Peru: the fastest growth of any major (National System of Public Investment), Legislative Decree 1015 4-5 country in Latin America and a rising a device which gives the Minister of tide of popular discontent, particularly Economy and Finance control over Putis (Ayacucho) 6-7 in areas outside Lima. Two years into decisions on public investment projects his second government, President Alan and the disbursement of project García may well be wondering how to finance. Events and Members’ News 8 convert growth into popularity. The extent of popular dissatisfaction is In the first quarter of this year, Gross evident in García's declining approval Domestic Product grew by over 10% ratings; these now put him on around 30%, half those when he took office Two years into his two years ago. There have been Sponsors: second government, several instances of protest on the streets in recent weeks, culminating in John Battle MP President Alan García a one-day strike of the CGTP in mid- Lord Brennan QC may well be wondering July. The strike coincided with mobili- Ann Clwyd MP sations throughout the highlands and in Linda Fabiani MSP how to convert growth the jungle. Richard Howitt MEP into popularity Simon Hughes MP García made it clear two years ago that Cardinal Cormac Murphy on an annualised basis. Propelled by O'Connor his second government would not be a investment in the mining sector and repeat of the first. Abandoning all David Nobbs high world minerals prices, growth is pretence of heterodoxy, the new gov- Rev. Ed O'Connell spilling over into other sectors, such as ernment entered into alliance with the Hugh O'Shaughnessy construction and manufacture, as business elite by deepening the neolib- Harold Pinter demand in the economy increases. eral policies initiated by Alberto Professor William Rowe While construction activity is obvious Fujimori in the 1990s and pursued by Rosemary Thorp on every block in Lima's richer neigh- his immediate predecessors. bourhoods, it is also in evidence in Wendy Tyndale some of the poorer ones. As if to rebut all criticism of his govern- Founding Sponsor: ment's economic policies, on July 14th Graham Greene But trickle down does not trickle uphill. García appointed a new finance The economic boom that Lima is minister to replace the technocratic President: Lord Avebury enjoying is largely absent elsewhere, 1 Editorial/News Alan García Luis Carranza. In the search for a replace- del hortelano). [See PSG Update, No ment he went straight to the IMF in Wash- 124]. His idea includes reforming laws to remains ington to select Luis Valdivieso, a enable investors to buy up large-scale committed to Peruvian who has worked there for many property titles in the Amazon and to whittle his plans to years on the Asia desk. By coincidence, down the property rights of peasant com- Valdivieso was sworn in on the very day munities in the Andes to encourage mining regenerate the that Peru was conferred 'investment and other activities. Peruvian grade' by Standard & Poor's, the interna- economy by tional investment risk evaluators. Using presidential decrees to approve the so-called 'Law of the Jungle' was what promoting Despite the country's buoyant growth ignited the protests in Madre de Dios. private, rates, the new minister faces a number of There has also been opposition in Ucayali problems. First and foremost is the accel- and Loreto. García had to send off his new particularly erating rate of inflation. Whether or not this environment minister, Antonio Brack, as foreign reflects just the rising cost of imported envoy to calm the passions aroused. Apart food and energy, many people are from anything, the development of the investment beginning to see their incomes rise more Amazon for forestry and other uses has slowly than prices. To stem inflation, the massive environmental implications. authorities are having to rein in credit by raising interest rates. This will hit those At the same time, the executive has who have borrowed hand-over-fist in the announced decrees that will undercut the last couple of years to buy new houses, rights of peasant communities in cars and other consumer items. defending their lands against outsiders. Using facilities conceded to him by the At the same time, imports are rising faster Congress to make Peruvian law conform than exports, and in the first quarter Peru to the Free Trade Agreement (FTA) with had a deficit on its current account for the the United States, García proceeded to first time for several years. Also, aware of sign a decree that reduces the margin by the poor use to which public spending has which communities agree the sale of land been put, the new minister may wish to to third parties. reduce public spending. In sum, Val- divieso may well reach for the lever to These controversial policies are gauged to slam on the brakes. increase the government's unpopularity in those parts of the country where its level Come what may, Alan García remains of support is already meagre. How this committed to his plans to regenerate the expresses itself politically, is difficult to Peruvian economy by promoting private, foresee. But Standard & Poor's may find particularly foreign investment. He that it has not given enough thought to mapped out his thinking last year in a political risk in awarding Peru 'investment newspaper article, entitled the 'dog in the grade'. manger syndrome' (El síndrome del perro News: President of Constitutional Tribunal Resigns César Landa Arroyo unexpectedly Peruvian NGO which defends and resigned from his position as President of promotes human rights. Mesía claims that Peru's Constitutional Tribunal. He was his predecessor had always been "very Mesía claims replaced by APRA's Carlos Mesía close to IDL". The appeal concerns the that his Ramírez, who told Peruvian newspaper La trial of one of the marines who was República that he would remain in the suspected of being involved in the military predecessor position until December, which is when repression and subsequent killing that had always Landa Arroyo would normally have left occurred during a riot at the El Frontón office. He also revealed that he would prison in 1986, during President Alan been "very soon deal with an appeal lodged by the García's first term in office. close to IDL" Institute of Legal Defence (IDL), a 2 News "Accused" Give Statements to Public victims' families in the trial related to the The accused Prosecutor in Río Blanco Case human rights violations in the Barrios Altos (1991) and La Cantuta (1992) killings, Mon- Piura's Public Prosecutor has begun hearings helped organise tesinos defended Fujimori stating that in the case of 35 environmental and human "President Fujimori has no responsibility for a local rights activists and local politicians from the the matters in this case." region who are accused of terrorism, kidnap- referendum in ping and extortion by the local civic associa- Retired General Nicolás Hermoza Ríos September 2007 tion ACFUCCSC (Asociación Civil Frente de recently testified in the trial. He admitted that Unidad de la Comunidad Campesina de excesses in the war against the Shining Path in which 90% of Segunda y Cajas). The accused helped rebels had occurred, but maintained that this voters expressed organise a local referendum in September could not be labelled systematic political 2007 in which 90% of voters expressed their violence. He alleged that his commando had their opposition opposition to the proposed mining activity of always defended human rights but then to the proposed Minera Río Blanco Copper (formerly Minera refused to explain why he had concealed the Majaz, and part of Monterrico Metals) in the fact that intelligence agents had killed nine mining activity region. The first of the accused to give their students and one professor at La Cantuta Uni- of Minera Río statements was Javier Jahncke, a human versity in 1992. He stated that this had been a rights defender and lawyer for non-govern- personal decision and he had not been asked Blanco Copper mental Ecumenical Foundation for Develop- to do so, either by Montesinos or by Fujimori. ment and Peace (FEDEPAZ) and coordinator of a technical support team that advises com- La Cantuta & Calle Tarata Anniversaries munities affected by the Río Blanco mining Meanwhile, relatives of the ten victims of the project. Carlos Martínez, mayor of San Ignacio La Cantuta massacre (students Bertila Lozano (Cajamarca) and president of the Front for the Torres, Dora Oyague Fierro, Luis Enrique Sustainable Development of the Northern Ortiz Perea, Armando Richard Amaro Cóndor, Border, made up of authorities and represen- Robert Édgar Teodoro Espinoza, Heráclides tatives of the communities affected by Majaz, Pablo Meza, Felipe Flores Chipana, Marcelino also made a statement. Rosales Cárdenas, Juan Gabriel Mariños The accused will give statements over the Figueroa, and Professor Hugo Muñoz course of a month so that the prosecutor can Sánchez) have commemorated the 16th assess whether or not to pursue the criminal anniversary of the deaths.