Peru News Summary: June 2011

30 June 2011

Humala Prepares to Take Office

After narrowly winning Peru’s presidential elections earlier this month Ollanta Humala has focused on strengthening diplomatic relations prior to assuming office on 28 July. In recent weeks Humala has visited Brazil, Uruguay, Argentina, Chile, Ecuador, Colombia and Bolivia to meet with these countries’ respective presidents. A planned trip to Venezuela to meet with President Hugo Chávez, who voiced support for Humala during his 2006 presidential campaign, was postponed after the Venezuelan leader underwent surgery in Cuba.

On his visit to Chile the president-elect sought to assuage concerns over the future of Peruvian energy exports. Earlier in his presidential campaign Humala had declared his opposition to gas exports from Peru, arguing that this would lead to domestic price hikes and supply shortages. Such pronouncements were not welcomed by neighbouring Chile, a country heavily dependent on energy imports and with which Peru has traditionally experienced tensions. During his meeting with President Sebastián Piñera this month Humala clarified that his government was prepared to export gas to neighbouring countries provided national demand was met first.

Domestically, Humala has made moves to placate the 48% of the population who did not vote for him in the second round. He has sought to cement links with the centrist Perú Posible party of former President Alejandro Toledo (2001 – 2006) by including a number of its representatives in his transition team. In a sop to allies of Keiko Fujimori, his rival in the June run-off, Humala also mooted the possibility of releasing ex-President Alberto Fujimori from prison on humanitarian grounds. However, this now seems unlikely after the former president publicly announced that, contrary to media speculation, he was not suffering from terminal cancer.

Latest opinion polls give the president-elect a 70% approval rating, indicating that many of those who did not vote for him in the elections have now reconciled themselves to the prospect of a Humala government.

Renewed Social Conflict in Puno

In early May thousands of residents of the Puno region (southern Peru) participated in protests over planned extractive activity in the area. Voicing concerns over potential water pollution and land management issues related to the Santa Ana mining project, demonstrators called a general strike and blocked the region’s major transport arteries. Protestors’ demands were initially limited to the cancellation of the project which is run by Canadian firm Bear Creek. However, as more communities joined the ongoing demonstrations throughout May protestors also began to call for a ban on future exploratory or extractive activity in all of southern Puno.

In an effort to mollify the protestors, the government issued a series of supreme decrees last month. The first of these, DS 023-2011 passed in early May, increased the requirements for consultation with indigenous communities prior to the start of extractive projects. However, given that the legislation only applied to new concessions, and therefore not the Santa Ana project, it failed to end the protests.

Following further negotiations with community leaders, in late May the government introduced an additional supreme decree suspending exploration and/or extractive activity in the provinces of Chucuito, Yunguyo, Collao, and Puno, for 12 months. This measure was again rejected by the demonstrators who claimed it was a delaying tactic which sought to leave the underlying problems for the new administration to resolve.

Protests were briefly suspended at the beginning of June to allow people to vote in the presidential elections, but resumed shortly afterwards. In the face of continued unrest the government passed three more decrees on 25 June agreeing to:

  • The withdrawal of the Santa Ana mining concession and a ban on further exploration or extractive activity in the districts of Huacullani and Kelluyo.
  • A 36-month suspension of extractive or exploration activities in the Puno region.
  • A commitment that all firms currently holding or seeking to obtain concessions would have to consult adequately with local communities prior to commencing or resuming operations.

Though the measures were well received by the Aymara communities, which largely ended their protests, various commentators have highlighted that they could leave the state open to legal challenge. The move to cancel the Santa Ana project has proved particularly contentious internationally, with Bear Creek’s share price falling by 27% following the announcement. The firm’s CEO, Andrew Swarthout, has already threatened to take legal action against the decision. Should he do so, the government may find it difficult to defend its position, given that Peruvian law has no provision for revoking a concession due to protests.

Civil unrest in the area has largely diminished for the moment but a resurgence of protests remains a real possibility. Over the past eight years the total area under concession in Puno has increased by nearly 300%, according to Lima-based NGO CooperAcción. At the same time, the region is home to over 1,200 peasant communities, which depend heavily on local resources for their livelihoods. Disputes between extractive firms and local communities, which invariably centre on land management and water resources, often flare into violent conflicts and have on several occasions resulted in fatalities.

As if to highlight the ongoing difficulties in the province, in late June five people died in clashes with authorities during a separate protest over the pollution of the Ramis river by informal and semi-formal mining activity.

Ayacucho Government Introduces Conflict Resolution Model

A successful new initiative to manage social conflict in the Ayacucho region is now being suggested as a potential blueprint for the rest of the country. In early May the regional government created a conflict management committee in which representatives from both mining firms and the regional council participate. The committee’s purpose is to help address local concerns over extractive projects and resolve any disputes between local communities and the firms before they escalate.

The initiative represents a move away from the highly-centralised approach to conflict management adopted by the government of President Alan García. For most of the past five years conflicts have been examined by high level committees overseen by the prime minister. Accordingly, authorities in Lima took responsibility for the resolution of conflicts which had the effect of stunting local initiatives.

Community leaders have criticised this centralised approach, arguing that progress is invariably very slow and claiming that officials in Lima are often unsympathetic to local concerns. The dramatic escalation of social conflict in the country over the past five years in part reflects the failure of present forms of conflict management. When García took office in 2006 there were just over 90 conflicts in the country; by April this year this had risen to 233.

Local NGOs have welcomed the Ayacucho initiative as a positive step towards reducing levels of social conflict in the country. "This seems a very interesting and innovative project” reports José de Echave, head of community rights and extractive industries at CooperAcción. “We believe this type of initiative is essential [if we are] to create regional institutions able to examine the problems surrounding the mining sector".

Finding a way to address local concerns over extractive projects will likely constitute one of the major challenges for the incoming administration.

Scuffle in Congress over Ombudsman's Election

Earlier this month rival politicians in Peru’s Congress came to blows over the election of the new head of the Office of the Peruvian Human Rights Ombudsman (Defensoría del Pueblo). The disturbance, between congressmen from the incumbent ruling APRA party and representatives of the incoming Humala government, occurred when APRA congressmen sought to extend voting to secure the election of its candidate, Walter Gutiérrez. Noting that the allotted period for voting had already elapsed, congressmen from Humala’s Gana Perú party attempted to close the session. In press interviews former Ombudswoman Beatriz Merino stated that the election should have been held in October as planned. She criticised the attempt to rush the process, stating: "it is impossible to choose the ethical authority of the nation in such a context, at the last minute and without consensus." Congressional President César Zumaeta has decided to suspend the vote until after the new administration assumes office in July.


Humala Denounces 'Pro-Corruption' Legislation

President-elect Ollanta Humala this month criticised Law 29703, passed by the outgoing Congress on 10 June, as a “pro-corruption” law.

The legislation introduced a series of modifications to existing corruption statutes, altering articles relating to collusion, embezzlement, abuse of authority, influence peddling and illicit enrichment. The cumulative effect of the changes was to increase the burden of proof on prosecutors seeking to obtain convictions for corruption charges.

Under the previous legislation public officials could be convicted of ‘influence peddling’ if he or she had offered to exert undue influence over state matters in favour of a particular individual. However, under the new legislation prosecutors must prove not only that the official offered to influence a government decision, but also that he or she was indeed able to exert influence in the area discussed. This means that an official who accepts money from a third party - for example, to secure a contract in their favour - yet is not successful in this endeavour, will not face prosecution. To obtain a conviction for collusion, prosecutors must now demonstrate that a defendant’s involvement in the crime has had an economically detrimental impact on the state; a requirement which did not exist beforehand. Sentences for other crimes have also been relaxed under the new law, with convictions for illicit enrichment no longer leading to bans on holding public office (as was previously the case).

Congressional approval of such legislation is a worrying development for a country which has traditionally struggled with corruption at the highest levels of its political system. In the 1990s the then head of the Peruvian intelligence agency under former president Alberto Fujimori (1990 – 2000), Vladimiro Montesinos, was notoriously videoed paying large bribes to judges, politicians and newspaper editors; Fujimori himself is currently serving 25 years in prison for corruption and human rights offences. Though somewhat improved since the Fujimori era, corruption remains a serious issue in the country. In 2010, Peru scored only 3.7 out of 10 (where 10 is ‘highly clean’ and 0 ‘highly corrupt’) on the global corruption perceptions index of anti-corruption watchdog Transparency International.

Some observers have questioned the motives behind passing this legislation right at the end of the current government, highlighting that a number of the incumbent congressmen have been accused of corruption. Some of these were not re-elected in April and from late July will no longer benefit from the protection of Congressional immunity.

Shortly after Congress passed the law Humala announced he would seek to overturn it once in office. Even if successful however, all corruption charges filed in the intervening period will still be judged by the standards of law 29703. This will make it harder to secure convictions of wayward public officials and sets an unfortunate precedent for the country.

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