In the aftermath of Ollanta Humala’s June 5 victory in the Peruvian presidential election, the “investment community” and the international business press reacted with the hysteria of thieves who think they have heard a distant siren approaching.
Their first impulse was to cut and run. Peruvian stocks plunged amid fears that this “radical leftist” would put an end to the “good times”, levelling higher taxes on mining profits and perhaps nationalising key export industries.
Slowly, when it became clear that the Andean sky had not quite fallen in, investment dollars started to flow back. But there was still considerable anxiety as to whether Humala would take Peru down the road of radical Venezuelan President Hugo Chavez or the moderate former Brazilian president Luiz Inacio Lula da Silva.
In other words, would Humala adopt a “hard-line”, “socialist”, “confrontational” approach to resource development or would he govern as a “conciliatory”, “responsible, “business-friendly” leftist?
The composition of the president-elect’s ministerial cabinet was keenly awaited as a signal of his likely intentions. “Humala,” decreed the stock analysis website Bloomberg on June 8, “must calm nervous investors, starting with his choices for finance minister and the rest of his cabinet .
When the announcement came, the forces of capitalist globalisation were able to breathe a palpable sigh of relief.
Reuters’ Terry Wade reported on July 27: “Humala stunned skeptical investors last week by appointing a veritable ‘dream team’ of two respected economists who are adored by Wall Street to lead the Finance Ministry (Luis Miguel Castilla) and central bank (Julio Velarde).
“Peru's stock market rallied and its currency hit a three-year high on the news.”
The dream team of Castilla and Velarde “have doctorates in economics from top US universities [and] worked for outgoing President Alan Garcia, a fervent believer in free markets Humala once railed against for benefiting the rich instead of the poor”.
Of course, the market would have preferred a clear-cut right-wing candidate in the palace. But Wade said Humala did deserve some cautious credit for daring “to go where Lula never went [by moving] further toward the center, if not the right” than Brazil’s ex-president.
The “cabinet Humala has assembled”, it was noted with approval, “is more conservative than the one Lula put together when he took office … That suggests Humala will keep the existing economic model intact.”
Peru is the world’s second-largest producer of copper and silver and the sixth largest producer of gold. It is also rich in other metals and minerals as well as possessing significant timber and fossil fuel resources.
Annual export “earnings” (that is, profits for multinational investors) approach US$40 billion — a figure set to rise as the pace of “development” quickens.
The “loss” of Peru’s resources would be a severe setback for Washington in its struggle to contain grassroots democratic mobilisation in South America. Hence the intense concern over Humala, an ex-military officer with long-standing radical left nationalist leanings.
In 2006, Humala had nearly won the presidency on the back of a popular discontent that is very real and well-understood by US diplomatic observers (as WikiLeaks cable releases show).
Humala’s Peruvian Nationalist Party had campaigned on a left-leaning nationalist platform, openly praising the redistributive policies of Chavez in Venezuela and promising a closer alignment with countries in the anti-imperialist Bolivarian Alliance for Our Peoples of the Americas (ALBA — led by Venezuela and Cuba).
Considering the scale of the anti-Humala propaganda offensive in the all-pervasive corporate media, it was remarkable that the Chavez-praising PNP candidate still attracted 47.4% of the national vote.
This testifies to the widespread rejection of neoliberalism among Peru’s poor, especially in the provinces.
Yet it was not enough. A corporate-funded campaign managed to get Garcia over the line, resulting in five more years of unadulterated neoliberalism.
It was a real achievement in population control to reinstall Garcia, whose name has been synonymous with abuse and corruption on a massive scale since his first presidential term in the 1980s.
Issued with a blank cheque by the new Garcia administration, the mining companies immediately waged a renewed offensive against peasant and indigenous communities from the sierra to the selva. This lead to mass protests, the shooting of hundreds of protesters and the arrest of thousands.
The Lima-centric Peruvian political system, nominally democratic yet tightly-controlled by elite socio-economic interests, may not be efficient at delivering essential services. But it is very in one crucial area: containing the aspirations of the provincial downtrodden majority.
This has been its historic role since independence.
The oligarchy thought they could pull it off again this year by fielding a range of well-funded “business-friendly” candidates to counter the threat of Humala (a classic “ganging-up-on-the-outsider” strategy).
Yet the very public bickering of former cohorts Alejandro Toledo and Pedro Pablo Kuczynsk negated each other's campaigns, allowing Keiko Fujimori — daughter of former dictator Alberto Fujimori — to capitalise.
Sticking to the script, Fujimori promised more of the same neoliberal medicine, earning her the open endorsement of the international business press and the veiled endorsement of Washington.
In the long lead-up to the July run-off, Humala and Fujimori were tied in the opinion polls, a situation that provoked further strategic concessions on Humala’s part.
Having already “softened” his radical image by hiring ex-Lula advisers, Humala struck a crucial deal with Toledo, whose PeruPosible party was still tipped to win a significant share of Peru’s 130 congressional seats.
The Humala-Toledo accord meant Toledo would direct his base to vote for Humala. In return, Toledo demanded an oversight role in economic policy.
Shortly after Humala’s victory (with 51.5% of the vote), Toledo promised the markets that he would “jealously guard” Peru’s existing economic policies, preventing Humala and his people from committing any “excesses”.
The subsequent installation of Castilla, Velarde and other “safe” ministers in Humala’s cabinet indicates that there will be no immediate moves to bring an end to the policy settings that have perpetuated de facto US rule in Peru.
However, there are some positive, progressive developments — such as the appointment of veteran Afro-Peruvian folk singer Susana Baca as Humala’s culture minister.
Despite the fact that Peruvians of predominantly African descent number more than 2 million, Baca is the first member of that marginalised community to attain the position of cabinet minister.
This is both a shocking indictment of the deeply-ingrained racism that still besets Peruvian society and evidence a reformist dynamic in the new administration.
Another step forward is the Humala administration’s official attitude toward the people of the Peruvian Amazon.
Garcia fought an undeclared war against them and often expressed open contempt for indigenous protesters, calling them “uncivilised” on national television. Humala, by contrast, has gone out of his way to address the population of the selva with respect.
On September 6, Humala went to Bagua — the scene of a massacre ordered by Garcia in 2009 — to sign a “previous consultation” law.
In theory, this reform means resource development projects can take place only with the consent of affected indigenous communities.
“We are going to ensure,” pledged Humala, “that the spirit of this law will be maintained, so that no community is disrespected.”
He said the government was seeking the construction of a “great republic” based on respect for all ethnicities and cultural groups: “The Aguarunas, Huambisas, Quechuas, Aymaras, Awajun and so many others throughout the entire territory of the nation.”
These are the sort of remarks that make “the market” nervous.
Also, AFP reported on September 28 that Humala had passed three new mining laws containing a tax hike aimed at raising $5.5 billion over the next five years to be used for social spending.
Humala said: "This will allow the state to have more resources to be used primarily for infrastructure in the poorest areas of the country, in order to bring about social inclusion."
Andina.com.pe said on September 30 that Humala promised to govern from different provinces to seek to bring the state closer to the poor.
Humala has also expressed a desire to reform other areas such as the so-called “war on drugs”.
Under previous administrations, the US pressured Peru to implement costly, destructive and ineffective coca eradication programs.
These military-style operations mainly targeted small, traditional, medicinal producers — leaving the larger “narco-terrorist” plantations in remote lawless areas largely untouched.
During the campaign, Humala promised to change this approach.
In the weeks after his election, Ricardo Soberon — a progressive critic of eradication programs — was appointed “drug czar”.
Soberon announced a temporary suspension of eradication programs in August. Under pressure from the US, this was reversed in a week.
However, Humala has promised that new interdiction efforts will focus more on crop substitution programs rather than physical destruction.
And in an apparent effort to stamp out the cocaine-related corruption that infests the Peruvian armed forces and police, Humala has carried out a leadership purge, sacking two-thirds of the generals in the police and promoting 48 new officers in the military.
Supporters point to the move as an attempt to clean up the corrupt state. Critics accuse Humala of stacking the military with his own people.
The competing pressures on the new administration — from powerful corporate forces on one hand and pressure from the poor base that elected Humala on the other — ensures Humala will face enormous difficulties delivering on campaign promises, such as implementing wide-ranging social spending to redistribute wealth.
More than any other time in recent history, Peru is at a crossroads. To win progressive change, popular mobilisation will be required to resist the reactionary pressures that will inevitably be brought to bear on the Humala administration.
The rise of progressive social movements managed to counter corporate influence and get Humala elected — no mean feat. Now it is time for the people of Peru to set the agenda for real change.