Neo-liberal Crisis Threatens Peru

Crisis threatens Peru, with presumed populist Humala taking a corporatist stand. Rhetoric is hardening on both sides, and no one appears able to define the struggle between the rural poor and international gold mining interests in a positive-sum manner.

When Ollanta Humala, who had presented himself as a populist who would put civil liberties ahead of international corporate interests, won election as Peru’s leader, Peru’s future seemed to be brightening, but his first year in power has left the country facing a text-book neo-liberal challenge: people versus gold. Despite local fears that a new gold mining project will destroy the population’s water supply and strong regional government support for anti-mining demonstrations, Humala has sided with the gold mining corporation and pushed his administration into crisis.

This delightful video shows the natural beauty of the Cajamarca region.

Following two resignations from the cabinet, the Humala administration has shown signs of a new willingness to listen to the people who elected him. Nevertheless, the extension for another month of the state of emergency in Cajamarca on Friday, a slap in the face of the head of the on-going negotiations between the central government and the regional government, suggests a continuing pro-corporate bias on the part of what was supposed to have been a popular, democratizing regime. In protest over Humala’s attitude, Cajamarca regional president Gregorio Santos, who now stands accused of “rebellion” against Humala, is boycotting the negotiations and flatly asserted on August 9 that at this point lifting the state of emergency would not suffice: the mining corporation must step back and the government must look into the deaths of the protesters. Speaking slowly and thoughtfully, Humala called for an “end to hypocrisy” (Dejémonos de hipocresías.) on August 8 and warned Humala not to “hide behind the priests” (ocultarse detras de los sacerdotes) serving as mediators. The Humala Administration, however, is demanding the retreat of the protesters before negotiations—assurances that there will be no more “actos radicals” before lifting the state of emergency, far from Santos’ demand for action by the mining corporation.

Despite the deaths of five protesters and mediation by the Catholic Church, the central government and the regional opposition to the mining project have not even managed to agree on the terms for sitting across the negotiating table from each other. Humala, seen by the elite a year ago as a troublemaker for his outspoken opposition to their policies, now sits in their seat, evidently expecting the same popular obedience the old elite once expected of him. His accomplishments during his first year in office may be overwhelmed by the controversy over gold mining:

Since taking office a year ago, Humala has introduced a minimum monthly pension for the elderly poor and grants for students while augmenting programs for infants and families in poverty. He said the number of the people enrolled in some of the programs would double during his term. Humala's approval rating fell to a fresh low of 40 percent this month, according to pollster Ipsos, after a crackdown on protesters opposed to Newmont Mining's $5 billion Conga project in the northern region of Cajamarca that killed five people this month. [Reuters 7/28/12.]

Humala plans a $30 billion expansion of gold and copper mining over the next five years in Peru; how that will address the quality of life of Peru’s rural poor remains unclear.

Rhetoric on both sides is hardening, and protesters have called for a strike on August 21 and 22.

Humala's Theoretical Error: Screwing the Lid on Tight Makes the Pot Boil Over

As a man of the people, Humala must know better, but once in office, he began to think he was, if not above the law, at least above the people. He has, as a result, discovered that top-down decision-making imposed upon the people, without gaining their buy-in generates exactly the chaos leaders want to avoid. By failing to show that residents would benefit from a new gold mine in their backyard, by failing to ensure that they would retain clean water, and most importantly of all by avoiding the short-term inefficiencies of democratic decision-making, he has provoked a deepening national crisis reminiscent of the decade-old Cochabamba water war against Bechtel Corporation and a Bolivian leader who made the same mistake...and turned Evo Morales into a national hero. More, he has thereby contracted a severe case of instability plus long-term counter-productivity, weakening himself both domestically and internationally while undermining his policy of befriending international mining corporations to boost Peru's economic prospects. Political processes are not linear: what works for a day may be the cause of failure by the weekend.

Humala had to play a two-level game (to simplify his reality), dealing with the international gold mining corporation and dealing with his countrymen. On the foreign policy side, he negotiated; in terms of domestic governance, he attempted a centralized decision-making process...thus landing, for this policy, solidly in the tricky blue arena where behavior toward domestic partners clashes with behavior toward international partners. Playing tough guy in the red arena of force might make a leader feared; playing nice guy in the green arena of conciliation might win a leader moral stature. Playing in the internally inconsistent blue arena makes a leader look like a push-over to foreigners and like a sell-out to those who voted for him.
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READINGS:

The Impact of the Way Decisions Are Made
Globalizing Paraguay
Neo-Liberalism
Humala’s First Six Month