Señor Mendoza and the Devil's Cave

Señor Mendoza disappeared without warning, in the middle of the night, from his home in the village of Cabanaconde.

His family, including son-in-law Rogelio, a teacher at the local secondary school, searched for him throughout the town and the surrounding fields. But their searches were fruitless: after two days and two nights, Señor Mendoza was still missing.

A call was made to inform Señor Mendoza's daughter, who lives in Spain. The daughter, fearing for her father's life, went to consult a local curandero. The curandero did the required rituals, and then told her:

Your father is not dead. He is in the same place where they have been looking for him. They should send the night praying, and scattering holy water, and in the morning they should look again in the same place.

This message from the Spanish curandero was communicated to the searchers back in Cabanaconde, who did as had been instructed.

The next morning, they went out early to search again, on a pathway through the chacras up towards a place called Puqio. There, about forty-five minutes from the village, they found Señor Mendoza huddled under a big rock, below an opening in the mountainside which locals know as the Devil's Cave.


"At first we thought the devil had taken him", says Rogelio. "Now we think maybe he just wandered off in a coma. The place we found him was below the devil's cave, well below. And he he'd walked quite a long way to reach the path, from where he had been on the mountainside. That's where we found his glasses and his blanket".

"But it's true that where we found him, the devil is marked in the rocks of the hillside above. In the morning when we went up there, you could see the form of the devil, plain as day".

Maybe Señor Mendoza had just been absent-mindedly sleep walking. But somehow he survived on the barren hillside, without food or water, for three days and three freezing nights

What is true is that when they brought him back to the village, his wife showed her relief by scolding him: "What were you thinking?", she asked. "Why did you wander off like that and lose yourself in the wilderness?"

The old man looked at her strangely. "But why do you ask?", he said, "when it was you who took me there".

Señor Mendoza insisted that his wife had led him into the wilderness. When he had tried to walk back, she had blocked his path and wouldn't let him leave.

After that, for about a month, the señor kept getting up in the middle of the night and trying to leave the house. His wife, his daughter and son-in-law had to watch out for him, and restrain him when he tried to wander off.

This continued until the family contacted a local curandero. After ascertaining the reasons for the old man's restlessness, the curandero took him back up to the place where he had been found. The curandero performed a ceremony called a pago a la tierra, involving an appropriate mix of plant and animal offerings to the earth. After that, the señor was cured, and he once again slept soundly at night time.

"The curandero said he had left part of his soul out on the moutainside", says Rogelio. "We had to go out there and bring it back".

And The Darker Side

Last Thursday in Ayacucho was a day of rather intense conversation, culminating in me contracting another annoying stomach upset, potentially from any number of sources, which flattened any plans I might have had for Friday.

In the early afternoon I visited the Museo de la Memoria, or ANFASEP as it is more commonly known, which is dedicated to the victims of the conflict of the 1980s and 1990s. None of the reported titles of the parent organisation quite match with the acronym: it is at least the Asociación Nacional de Familiares, but the most common spelling-out mentions Secuestrados, Detenidos y Desaparecidos (kidnapped, arrested and disappeared) adding at least two missing 'd's, while the acronym appears to be stuck with a redundant 'p'.

Quibbling aside, ANFASEP can best be summed up as the Peruvian equivalent of the Argentinian Mothers of the Disappeared. It was first formed in the early 1980s by a group of brave mothers determined to get answers about the whereabouts of their family members who had been snatched from their homes or workplaces, as the state made a scorched-earth response to the Sendero Luminoso uprising. ANFASEP has grown and strengthened steadily through the years, playing a role in the work of the Truth and Reconciliation Commission and the recent uncovering of the remains of torture victims at the military base of Los Cabitos, about 40km from Ayacucho.

As I was the only visitor apart from a young anthropology student from UF Gainesville who was doing a project on the museum, I was fortunate to be able to have an extended talk with the acting curator, the señora Maribel.

Later, I had a long chat with the señora Ana, who runs a cafeteria in Ayacucho's (to date) only Arequipan-style colonial patio dedicated to commerce and dining. After that, I finally got to meet Ana's mother Celina, who is an anthropologist and has spent years working in development projects with NGOs and government institutions in rural Ayacucho (many thanks to Yalivi in Brisbane for the contacts).


Past Reminders

Tuesday's tourist trip was so pleasant I was starting to create an excessively warm and fuzzy image of the region. Casual conversation with smiling, excessively polite guide Leo on the way back to the city corrected some of that impression. While the city and its surrounds at least have made a remarkable recovery in only a few years, the legacy of its dark past has not disappeared.

Leo said he came from a small village in the south of the department and was about 8 or 9 years old during the worst part of the conflict. At the time, there was basically no middle way between the Senderistas and the military. Any one who was suspected of cooperating with either group ended up dead. There was also the forced recruitment by Sendero Luminoso of children as young as ten or eleven years. The only alternative was to migrate. For Leo, that meant moving to the capital city of Humanga. Thousands of his compatriots travelled further: to this day, several bus services in Ayacucho run direct to the Lima barrios of San Juan de Miraflores and Ate Vitarte, linking with the large immigrant ayacuchana communities there. Leo's seven brothers and sisters are now spread out across various different departments of Peru.

According to Leo, people in the Ayacucho region continue to have considerable sympathy for currently imprisioned former president Fujimori. They see him as having played an important part in ending the terrorist uprising, as well as having personally visited the region and being "the one president to deliver what he promised". Certainly, the one of the most prominent of the many slogans painted on roadside and walls in the region is "Keiko 2011", referring to Fujimori's daughter's likely run for the presidency at the next elections.

Alan Garcia, on the other hand, is close to being in the unpardonable category. During his first term as president, as the Sendero Luminoso uprising was worsening, he is supposed to have said something like: "Ayacucho is full of terrorists; we should just bomb the whole place". I'll write more in another post, but this is the same demagogic, authoritarian streak which many see as ultimately responsible for the recent fiasco, and tragic loss of life, in the northern jungle.


The Musuem of Memory

The ANFASEP museum was on a street corner, in a basic, dimly lit adobe building marked only by the murals painted across its walls. On the first level was a small meeting room lined with school assembly-style benches, while above was a small gallery containing photos, descriptions, and contemporary retablos depicting incidents from the years of conflict. The slogan for the musuem was "so it never happens again". It was by turns sad, poignant, and horrifying.

Although the musuem commemorates victims of both the Senderistas and the military, it has an unashamed focus on those who were detained, kidnapped and disppeared, which were almost exclusively tactics used by the armed forces.

The señora Maribel introduced the displays to me by trying to put into context what happened when the army was called in to respond the the Senderista uprising. For her, the key was language. Unlike in the countryside of Arequipa or Huancavelica where the majority of the population are competent in Spanish, in rural Ayacucho, most people could only speak Quechua. They were thus unable to commuinicate with the army units that were sent to the region, who in turn suspected that the local populations were plotting against them or deliberately speaking in code.

She tried to put herself in the shoes of the young soldiers who were posted into the region during the conflict. "For them, it was like an adventure. But the kind of adventure that could go very wrong".

Maribel had been in the city of Humanga for the entire duration of the conflict. For those who, like me, only have a vague knowledge of the war, it's worth noting that the capital was never actually held by the Sendero Luminoso. However, the descriptions of life during the conflict make it sound rather Baghdad-like: curfews, rationed electricity, explosions in the night, constant fear.

Señora Maribel spoke of hearing an explosion as she was walking down the street one morning and seeing what looked like a "rag doll" fly through the air. It was an eleven-year old boy, recruited by Sendero Luminoso from one of the poor rural communities, who had presumably been on the way to depositing a bomb in some state agency. Trembling with nerves, he would have clutched the device too closely to his stomach, setting it off.

Our conversation diverged on to many other topics, including literature and politics. The señora Maribel was unimpressed with Mario Vargas Llosa, who she said had was "completely limeño" and had a hostile attitude towards Ayacucho, which he had apparently never visited when he was writing his novel Death in the Andes. The novel is set in Ayachucho during the civil war, but is best summed up as an elaborate evocation of costeño paranoia toward the sierra.

She also groaned at my comments of people retaining sympathy for Fujmori. Her account corresponded with my background reading: the defeat of the terrorists had little to do with the government's military response, and was largely owing to a small group of Lima-based police intelligence who had tracked down and arrested leader Abimael Guzman, around whom a cult-like following had developed.

She reiterated the paradox of the Shining Path: its radical Maoist ideology supposedly held that no one was indispensable, yet, after the arrest of Guzman, the whole organisation collapsed "like a pack of cards". She described how Fujimori and Montesinos had ignored and failed to provide support for the police intelligence efforts to track Guzman, but then rapidly tried to take the credit when they were successful.

The señora Maribel poured a little cold water on my comments that the city and its surrounds, at least, appeared to have made a remarkable recovery. "It's mostly on the surface", she said. One of things most lacking for ordinary people was decent health care. Señora Maribel explained that the much-vaunted Seguro Integral de Salud offered only the bare minimum and did not cover many medications or even such acute care as cancer surgery. She described a case of a campesina woman with thryoid cancer who had been unable to acess or afford appropriate medical care, and as a result this eminently curable disease (with generally at least a 95% 5-year relative survival rate) had turned metastatic and was now in its terminal phase. Needless to say, morphine and decent palliative care were not covered either.

Realities of Ayacucho


After the musuem, I stopped by Niñachay, the cafe run by the señora Ana. She met her Ukrainian husband (a quailifed teacher who speaks four languages) working on cruise ships in the Caribbean, and they had narrowly decided not to migrate to Adelaide in favour of staying in Ayacucho until their three year-old son got a little older.

Ana was a lot more at ease in Ayacucho than her husband, but assured me that there was "nothing here" for older kids and adolescents.

She also pre-empted my question about the economy by assuring me that there was "no industry" to compare with Arequipa and that the flashes of wealth around the city were in large part distilled from the compounds of the coca leaf. "Why do you think there are so many banks?", she asked, lowering her voice. She said that a few months previously there had been a group of American soldiers posted in Ayacucho, who had undertaken what she thought was a surveillance mission into the VRAE region. They had come and eaten at her cafe, because she spoke English.

After I ate lunch, Ana kindly gave me directions to her mother's house and called to say I was coming.

The señora Celina was now retired from full-time work had was working on a consultative basis for NGOs and other institutions. She had arrived back from a trip that morning, eight hours away to the south of the department. I sympathised with the journey across rough roads (six hours to or from Cabanaconde wipes me out) and asked if she had travelled by 4WD. A slow smile spread over her face and I corrected myself: "ah, no, by kombi". Working in development has a romantic ring to it, but it takes just one long, bone-jolting journey on Andean roads in public transport to appreciate the real commitment it must take to work for the sparsely-funded organisations to which the señora Celina had dedicated so many years.

Celina gave me a brief overview of the issues affecting the region. The reality for much of Ayacucho, especially the south, is of land without much water, where agriculture remains stuck at subsistence level, plots of land are tiny and scattered, and migration to the city is often the only way to get ahead. As with my previous interlocutors, Celina shook her head about the alluring flow of dollars from the illegal coca economy, with their ugly collateral of entrapment and violence.

I quizzed her on what policies could help the region move forward. The first thing that she mentioned was improved roads into the VRAE region, which would help develop the potential of alternative crops like coffee and cacao, and move the emphasis away from coca.

She also said that she had been working on a project plan for developing leadership among rural women, one of the areas that she saw as very important but that struggled to compete for a budget against more high-profile "ribbon-cutting" projects such as roads and bridges. Another area that could do with more support was reproductive information, which was in demand by campesina women. She said that there had been a big push for reproductive education and family planning in the past (under Fujimori, some of this had its own very dark side), but this had lost emphasis and resources.

She was skeptical of the government's Sierra Exportadora programme, which seems to have fizzled out, and was in any case, ironically directed mainly at crops that grow best on the coast. Instead, she gave props to the Sierra Emprendedora (entrepreneurial sierra) movement, a loose association of local groups aiming to promote the development and marketing of local products, rediscovering and enhancing traditional methods of production

For the development studies students, it's worth noting that you tend to get pretty similar answers when you ask these questions. Basic infrastructure, health and education services, development of skills and leadership -- especially for women -- and assistance for the kind of economic opportunities and market access defined by local people themselves in terms of what they feel they do best.

Even the leaders of the supposedly "radical" groups involved in the protests in the jungle were at pains to state that " we don't oppose investment as such". For all the tortuous philosophical debate about "post development" we engage in in universities, I'm not sure there's massive cultural differences in the things people want from the modern world. It's the human interactions required to achieve these objectives, and particularly the concession of power and resources, that seem to make the process so fraught.

The Charms of Ayacucho

Walking around the city of Ayacucho, or Humanga as it is traditionally known by its inhabitants, you would hardly imagine it as the centre of the region that originated, and most suffered from, the terrorism of the Sendero Luminoso and the brutal military response in the 1980s and 1990s.



First impressions are of people going busily about their daily affairs, while cheeky, smiling children are everywhere. The city and its surroundings are picturesque -- it has a typical Spanish colonial layout, flower-fringed plazoletas, and cobblestone streets. At face value at least, Catholicism is a dominant presence. As everyone will tell you, there are no less than 33 churches in Ayacucho, in a city with a population of at most 200,000. The Semana Santa (Easter) celebrations are renowned as being the most impressive in Latin America.

With its proximity to the jungle and its cosy location nestled in a shallow valley, the climate is warmer than Cuzco or Arequipa, the air softer and less bone dry The countryside is greener; although it is now starting to dry up, I understand the rains return in December with more regularity and plentitude than further south. The tap water is clean and sweet.

Ayacucho also seems to be overflowing with educational instutions -- schools, technical institutes, academies and universities. This means that the place is still full of young people, and thus doesn't have the abandoned feel of some smaller towns in Peru.

On the downside, issues of transit are even more fraught than elsewhere, even if you just want to walk around the few central city blocks near the plaza. The pavements are extremely narrow, and in the tight and bumpy streets, traffic drives extremely close to the kerb (Hiluxes and Corrollas mix with numerous battered moto-taxis; there are few of the little yellow 'Tico' taxis that dominate in Arequipa).

People seem to have little problem with any of the following: walking very slowlyy two abreast and blocking the footpath; weaving from side to side while talking on a cellphone, making overtaking difficult; walking two abreast and not making space for someone coming the other way; or simply standing still in a group and blocking the entire path.

This means that to make any progress, you often have to step off the sidewalk into the street. At the same time, there is no safe zone in the street, as the moto-taxis -- wth zero suspension and ancient steering -- often brush the gutter. You therefore have to make rapid tactical decisions about stepping on and off the pavement, calculating the proximity and likely speed of traffic and obstacles. With the jammed intersections, crumbling kerbs, and unpredictable human and vehicular traffic, almost every street crossing is a mini-adventure.

I've asked several people what the basis of the economy is here. Given that Ayacucho is in the bottom half of Peruvian departments with respect to poverty, there seems to be a suprising amount of apparent wealth. I've noticed an inordinate number of 4WD Toyota Hiluxes in the streets, on a per capita basis, many more than in much wealthier Arequipa. To be fair, a number of these seem to belong to various government agencies that maintain a notable presence. However, while the first couple of my interlocutors posited "just agriculture really" or "mainly goverment services" in response to my question, others later confirmed my suspicions.

What gives Ayachucho its sheen of dollar wealth is its connection with the coca economy. The lowland regions of the department, known as the VRAE (Valle de los Rios Apurimac y Ene, pronounced like the first syllable of "Bryan") are among the most fertile and productive in the world for growing coca, and according to United Nations reports, production is increasing more rapidly there than anywhere else. It goes without saying that the majority of the coca is not grown for traditional medicinal and cermonial uses. The VRAE is a remote, lawless zone where the presence of the Peruvian state remains shaky and the remnants of the Sendero Luminoso mix with ruthless drug traffickers. Yet it provides an injection of cash into the capital that shows up in the disproportionate number of banks, cars, and well-groomed women in expensive jackets.

Around Ayacucho


On Monday I took a little tour of one of the 'northern circuits' offered by local travel agencies. It was a very pleasant trip in a private vehicle, a middle-aged US-Peruvian couple my only company apart from Leo the guide.

From the city, we wound further downhill into a narrow valley with cactus lining the quebradas, spaghetti-western style. Natural irrigation from the river supported a fertile zone of fruit and vegetable production. We headed back uphill to our first stop, the archeological complex of Wari. The Wari were a 'horizon culture' that dominated the area from the 6th to the 11th century. In their two periods of expansion, they dominated as far north as Trujillo and south to Moquegua (basically three quarters of Peru, excluding the Amazon).

The Wari capital was the first walled city in South America, and their empire prefigured the Incas in important respects, notably in architecture and administration. They also seemed to have an impressive system of stone ducts that formed a subterranean water supply in a similar manner to the Nazca culture.



We walked through the military quarters, public amphitheatre, sacrificial platform (animals and occasionally people), and the royal tomb. The latter (pictured below) was perhaps the most impressive of the sites. It is divided into four sections, of which only two have been completely excavated. Unlike the tomb of the Señor de Sipan, near Chiclayo, little in the way of personal items has been found, and Leo speculated that these had most likely been the victim of huaqueros, or grave robbers.

Only 10 percent of the archeological complex has been excavated, and much of the area is still covered by cactus. Work began in the 1960s, and was of course completely abandonded during the 1980s and 90s and only got underway again around 2000. The Insituto Nacional de Cultura oversees archological investigations, but is predictably lacking funds, and any support from international institutes or universities or the private sector would reportedly be very welcome.



Later we continued on to the Pampa de Ayachucho, where the final battle for Peruvian independence was fought on 9 December 1824 and the outnumbered, outgunned 'patriotic' army of Jose Antonio Sucre defeated Royalist forces. The broad, flat windy plain at nearly 3,000 metres above sea level almost seems designed for an old-style cavalry battle -- you can imagine Braveheart being filmed there.

Dominating the landscape was the 44-metre obelisk depicted below. Its construction was commissioned in 1974 to commemorate 150 years of independence (designed, ironically, by a Spanish sculptor). The various levels in the scultpure are supposed to stand for the different geographical zones of Peru.



The final stop of the day was in La Quinua, a strikingly pretty and clean village of tiled roofs and cobblestone streets where almost every family is dedicated to the production of ceramics made from local clay. Most are model churches, campesinos working, or children playing muscial instruments. The photo below shows some of the typical designs. I couldn't resist, and bought a couple of ceramic pieces and a retablo, which, if they survive the journey back to New Zealand, will become presents for some lucky people.



On Wednesday, I caught a kombi to the town of Huanta, just over an hour from Ayacucho. It's another attractive town, nestled in a green valley, with exceptionally well laid out plazas incorporating botanical displays. I think I was a bit over tired by the time I got there, and perhaps coming down with something, so only stayed a few hours before heading back to the capital, without learning too much about the place. But as I learnt later, La Quinua and Huanta probably give a distorted impression of rural Ayacucho.



The above pictures and descriptions should provide a prima facie case for why Ayacucho is overlooked and should probably receive a lot more international tourism. However, it's not all sunshine and flowers, and in a further post I'll try and do a rather more image-light summary of the other things I learned while in the region.

Arequipita Linda

In Lima, you almost have to know what you're looking for to notice the effects of the Peru's rapid economic growth over the last few years (it's only since 2005 that the GDP per capita has exceeded that obtained in the 1970s). In Arequipa, the changes are much more obvious.

The calle Mercaderes, which runs east off the main plaza, and is the retail heart of the city for middle class shoppers, has been cleared of traffic along all its five blocks, with the sidewalks turned into flat tiles merging with the street's cobblestones. What used to be a chaotic though vibrant scene, pedestrians tipping off the pavements into the path of the congested traffic, is now an almost European-style mall.

Some of the principal avenues have been repaved with ashphalt and are near enough as smooth as those in a typical Western city, while I'm informed that upgrades for several more are scheduled. Cobblestone alleyways through the historic centre have been opened up and beautified, with the addition of bourgeois touches like flower pots and park benches.

Yet the public development is exceeded by the private. Retail has gone bigger, brighter, and more formalised. Nestled under its 6,000-metre volcanoes, Arequipa now actually has a couple of stores selling mountain gear. On the calle Mercaderes there's a menswear store, while on La Merced heading south from the plaza exotic new shops selling beds, furniture and solar water heating systems have appeared since my last visit. There's a diverse array of new cafes, restaurants, and hotels, while tourist oriented pizzerias, laundromats, alpaca-wear boutiques and, of course, travel agencies have filled in the available space on Santa Catalina, San Francisco and Jerusalen. Tasteful advertising frames most of the new businesses. Local makers of banners and signs rustically carved in wood have clearly enjoyed bonanza years.

Interspersed amongst the ubiquitous yellow 'Tico' taxi bouncing over the cobblestones are a handful of Hyundais and Toyotas and the occasional shiny 4WD. On the streets of the city, as far as I can tell, there are fewer beggars, vendors of random consumer items, or children selling sweets.

Walk from the centre into the inner suburbs and you see repaired walls, painted facades, less rubbish, even the odd private car or pitched roof. In streets such as those leading up to Hugo and Lizbeth's place there are more trees, shrubs and cacti planted along the sidewalks.

What it all adds up to is the significant expansion of that elusive entity, for Latin America, the middle class. If there's something unreflexively thought of as 'development', Arequipa has been seeing some of it. It's not as if there is exaggerated, flashy wealth sprouting up next to complete misery. Rather, the wealth seems to have been spread around moderately well -- perhaps coming down in splashes, instead of a trickle. More people have the means and the confidence to spend, and things to consume are appearing to meet their demand.

Much is still the same: the ancient, dirty kombis, the cracked and crumbling sidewalks, the pollution. But with the rough edges of decay and desperation softened, Arequipa is on its way from being a place of melancholy beauty to becoming a truly spectacular city.

I have to admit that it's surprised me somewhat. I've been used to reading the trenchant criticisms from the likes of Humberto Campodónico and other commentors, of the Peruvian government's unreformed neoliberalism and failure to take advantage of the boom times, the claimed manipulation of poverty statistics, and the lack of progress with economic diversification, health, education, pensions, or improved labour conditions.

However, the development that has occured is still consistent with those criticisms. So much money has flowed into the country, and hence government coffers, that although the adminstration hasn't done anything particularly progressive, in absolute terms it has had greatly increased resources to deploy. Arequipa is a mining region, and has benefited from the Canon Minero, a portion of the taxes paid by mining companies that goes directly to the affected regions. It's also the country's second-biggest, and most orderly, urban area, with an existing civil society and a core of educated, ambitious residents capable of developing an interconnected domestic economy if given the chance. If anywhere is going to take advantage of good times, it's here.

The question is how widepread and durable all this is. My impressions so far are all from walking and driving around the centre of Arequipa city, which has always been among the most middle class places in Peru. What is it like in outskirts and the pueblos jovenes? Have they also seen improvements? What about the rural areas? Have the beggars and street sellers really got jobs or improved their living standards, or have they been shovelled away out of sight by a government wanting to give a good impression to tourists and investors?

There's also the odd fact that for the moment, at least some Peruvians are more optimistic than those elsewhere in the world. Several people have told me that "the world economic crisis isn't really affecting Peru". Perhaps not that much so far. For one thing, at a macro level, Peru's government and major banks (like those of Chile, Brazil, Mexico and Colombia) have managed their accounts with technocratic efficency and didn't do anything stupid during the good times. There are also enough accumulated foreign reserves for the government to be able to apply an economic stimulus (through not to the same extent as Chile, which having squirreled away earnings from its copper exports, is one of the few countries to be able to act as Keynes foresaw and inject funds from its savings rather than borrowings).

At some stage, however, the world situation is going to affect Peru. The downturn of soaring mineral prices that have driven much of the economic growth, lesser demand and lower prices for the 'non-traditional' agricultural and garment exports, and fewer tourists arriving, will mean that the boom will end and export-led growth will likely slow dramatically. That's when it will become apparent just how much progress has been made with important but less visible things like the improvement of education, the recovery of civil society, the establishment of basic infrastucture in rural areas, and the integration of these areas into the wider economy.

In Arequipa, I see the growth in retail and services as being driven by an expanding middle class, rather than being just the rosy flush of a transient mining and tourist boom. But so much is directed at the international tourist that the concerns I outlined in this post still hold. Since I was last here, the number of travel agencies has increased significantly again, while tourist numbers or destinations haven't really changed. What will happen when all those people who have sunk loans or savings into their shiny new offices come up against the reality of fierce competition for dwindling numbers of clients?

Peru has seen booms before, often based around a single raw material, and generally dissolving into thin air leaving little more than social dislocation and a damaged environment. This time, will the development stick? Or will the raised expectations of the last ten years make the come down even harsher and more destabilising?

Voices of the Not So Poor

It wouldn't cost that much more, in international terms, to fly from Lima to Arequipa, but for me it wouldn't be quite right. After arriving, I wanted to work my way into the country by land, as if making its acquaintance again.

On my way to the bus station in Lima, I had a more jovial and conversational taxi driver. Still preoccupied with the theme of security, I asked him which parts of Lima were more or less safe. He thought a second and said: "only really the very centre". He said that things had got no better in the last couple of years. What was worse for citizens was that the very police supposed to protect them were sometimes implicated in the crimes. He cited two cases where police were accused of robbing motorists who had stopped or been pulled over.

My driver acknowledged that some things had been improved in Lima; public works and the modernization of some parts, but that while credit had to be given to Luis Castañeda for gettig things done, "no one holds him to account".

He was particularly critical of public education and health services:

"if it's an emergency and you're dying, you'll get treatment; anything else, they send you off to wait, even though you're sick. Then you get the basic treatment, but they send you off to get a whole range of scans and tests, which of course you have to pay for. Or there's some process to get reimbursed, but you know, those processes...and then you have to pay more for brand medicines, otherwise you only get the generic ones, which aren't effective, and you have to take ten times as much".

We moved on to talking about politics, and my driver reported himself unimpressed with Alan Garcia, who this time around was only doing better because, he had more money:

"Last time things were ok from 1985 to 1987, until the money ran out. It's like, in football, if you've got some skill, you're playing with good team mates, you get on the field, you'll do ok".

Not quite following the analogy, I asked: "So, is Alan a bad player surrounded by good team mates, or a good player surrounded by bad team mates?"

"I think he's a bad player surrounded by bad team mates", said my driver.

His theory on what underlaid Peru's problems was a familar one: "insitutionalized" corruption, at every level. I asked him how he thought that could be changed, and after a moment's thought he replied: "with difficulty...with great difficulty".

At the Ormeño bus terminal on avenida Javier Prado, surgical masks were again ubiquitous. The terminal has been improved, and now has a cafe, nice seats and a TV. However, passengers were scare, and when the Arequipa bus was called only a handful of people hopped on. The announcement for the bus indicated its destinations would include Cañete, Chincha, Ica, Nazca, and Camaná, before arriving in Arequipa. This contradicted the stated "direct" service of the Royal Class buses, but given the paucity of clients, I could forgive them.

On board, I struck up a conversation with practically my only fellow passengers in the front of the bus. Carlos and Claudio were from Ayapata, which they explained to me is reached from Juliaca, first heading southeast to the frigid Andean town of Macusani and later dropping down to around 3,000 metres on the way towards the jungle of Puno.

They explained that the main industry there is gold mining. With the current high prices of gold, it has become worthwhile to work over the tailings of old mines, and business is good. Carlos is a middle man, buying the gold off the prospectors, while Claudio is himself a prospector. He said that on average he could get 2 grams per day, worth around $250 USD, but some days there could be 10 or even 20 grams.

Carlos told me that in their territory, "the state is almost entirely absent", and the government does nothing for them, except for the paved highway from Macusani to Puno, "which in any cse was put in by Fujimori". He also criticised the level of bureaucracy that the central government imposes on the regions, and makes it difficult to get any projects moving. "They make an example out of the Puno regional government for only spending 1 percent of its investment budget, but it's them who made it so hard to do anything".

I asked if the state didn't even provide basic functions like police and health services.

"No, we threw the police out", said Carlos. He said that the police post used to be staffed by unwilling recruits sent from the likes of Lima and Arequipa, who didn't fit into the local culture. He claimed that they abused local women, and hassled local youths by constantly imposing fines on them. Now, security was provided by the ronda campesina, a kind of district-wide, rural neighbourhood watch. If a thief was caught in the community, "we take care of him ourselves".

In their community, Carlos and Claudio had developed a cooperative project to generate hydroelectric power, but wanted to expand it from 100 MW to 400 MW, to be able to supply the whole district with electricity. They had met with similar community groups from Junin who had received loans from NGOs to support them, and they wanted my advice on how to get something similar going. I gave them the names and addresses of some Peruvian NGOs that could possibly help.

According to Carlos, the community was welcoming the development of the Interoceanic Highway between Brazil and Peru, which, if they could get a 13km connecting road built, would greatly improve the ability to get their products to market, including subtropical fruits from the lower part of the territory.

This would be a typical story from the development literature: mariginalized rural, ethnic community, ignored or abused by the central government, working things out for themselves and becoming more empowered in the process. But reality usually has something incongruous to add to the picture.

As Carlos dropped off to sleep, Claudio, who had been pretty quiet, began to tell me about the Chinese herbal medicine for which he was a sales representative. I'll have to find the pamphlet that he gave me for the exact name and description, but it apparently involves different pastes, creams and tonics, which cure a range of ills, and are sent prefabricated from China according to a secret recipe. According to Claudio, this medicine was originally introduced to Peru after some soldiers with lingering ailments from the Peru-Ecuador jungle frontier war found that it was the only thing that worked for them. It was now so popular that a company representative had been received in the government palace by Alejandro Toledo.

Disturbed that Claudio was turning quacky on me, I said ¨what about the gold mining?". "Oh, I do both", he said. He explained that the medicine was sold through a system of "affiliation", and offered to get me the affilitation papers out of his suitcase. I politely declined, and adjusted my conceptual settings to recognize the possibility of a Chinese-origin Amway scheme operating out of remote Quechua communities.

The jet lag was still messing with me, and by the time we got to Ica, I was practically the only one still awake. A young guy occupied the seat behind me, and I apologised for the angle my seat was pushed back at. He introduced himself as Abraham, and said he was originally from Chumbivilca, a remote pueblito about halfway between Arequipa and Cuzco. He was an operator of heavy machinery, and had been working on construction projects in the area affected by the 2007 earthquake. He said that he earned about 1,500 soles monthly for working "at least" 10 hours a day, six days a week.

This, readers, is now up to what would count as a "decent" salary in Peru. Even as the sole income for a family of four or five, it would still leave them miles above the poverty line. But take into account the conditions and the hours of work, and you'll admit that what amounts to $125 USD per week is nothing to get excited about.

I asked Abraham how the reconstruction of the earthquake-affected zone was going and he said it was more or less on schedule. I recalled that he would mainly be working on the highways. What about the planned rebuilding of people's houses, I asked?

"Ahh, well, that's going a bit slower", he said.

Snapshots of Lima

Even when winter is arriving and the sun is slowly losing its battle with the coat of hazy fog that encroaches from the Pacific, Lima's air has a tactile thickness that makes you feel as if it's working its way into your pores. I also reckon it takes on different qualities during the day, evolving from a ripe flavour of decaying vegetables early in the morning to a heady odor of used cooking oil by the evening; always underlaid with a rich base of dust and exhaust fumes.

Over the last 10--15 years, the governance of Peru's capital has been somewhat better than that of the nation as a whole. This has probably been aided by the fact that it's problems are at least tangible and geographically concentrated, and that, despite the chaos, this is where most of the country's money flows through.

In recent times, Lima's municipal government has taken the approach of carving out small, public oases of order and calm, of which the most notable has been the resoration of the historic centre of the city since the mid-1990s. The grand colonial architecture has been restored and security for locals and tourists alike is assured by the armed, paramilitary-style serenazgos, like those pictured below, who literally have a squad on every second corner within the few designated central city blocks.





While this approach is open to the normal criticisms of elitism and authoritarianism, it's hard to disagree with entirely. When social problems are so massive that they can't be tackled all at once, and many of them are inter-generational, you have to start somewhere. Security, some green space, and well-maintained public facilities benefit everyone and have a direct effect on the quality of life. The alternative is to give the city up to complete chaos and let the rich wall themselves off in private compounds. It would just be nice if the same objectives could be achieved without quite so many guns.

Next to its headquarters on the west side of the Plaza Mayor, the municipality had an exhibition showing the changes that have occurred through various building projects that are part of the Construyendo Peru programme. It was quite impressive, and represented a welcome effort by government to communicate with citizens about the fruits of their taxes.

A noticeable feature, however, was how often the name of the mayor, Luis Castañeda Lossio, appeared on the posters and exhibits. To me it looked rather like a case of using the state to promote the politician. The same day, I saw an article in La Republica confirming this view. Congress is drafting a law that will prevent local government advertising particular politicians or parties as part of public information campaigns. One of Lima's district mayors was complaining that the law was 'discriminatory', as it should also apply to central and regional government, public ministries, and so forth.

In the pedestrian walkway next to the municipality was another exhibition, of photos by evangelical Christian photographer Graham Gordon. The exhibition was titled Rostros Diversos, los Mismos Derechos ("Diverse Faces, the Same Rights"), and featured images of Peruvians from all backgrounds, organized around eight groupings of universal human rights. The municipality of Lima was a key sponsor, while, among others, the European Union had added its endorsement.

It's hard to know how much to take from the motherhood-and-apple pie tone of the exhibition, but some of the commentary offered a mild rebuke to Alan Garcia's administration, only metres away across the plaza in the Palacio del Gobierno. Garcia and the likes of former Prime Minister Jorge Castillo have famously argued that development will only come through large-scale investment involving privatization of resources and the breakup of communal property; those who oppose such moves are "dogs in the manger" impeding progress. However, the text next to the photos under the "right to territory" declared that:

...these rights are being jeopardised by the priority that is being given to mining, petroleum and logging companies over communal territories. Priority needs to be given to the development of indigenous peoples, based on the protection and sustainable use of natural resources, and respect for their cultures and the lands that they have traditionally occupied.

For evidence that the central city restoration project is limited, and in some ways merely symbolic, you just need to walk a few blocks east to the avenida Abancay, where the city resdiscovers its edgy, grimy, chaotic character. It's all but impossible to capture this in a photo, which will always miss the noise, the smoke, the odors, the constant movement and the vague sense of physical threat that only partly comes from the worried urgings of hoteliers, officials and taxi drivers to be a good tourist and not walk down the avenida Abancay. But for some idea of the change in a few blocks, I offer the contrast between the following two photos.




On day two in Lima, I had already booked a ticket to Arequipa, keen to get on with the main purposes of my trip. Before leaving, I wanted to at least see something new, so I decided to cross the Rimac river to visit the bullring at the plaza de Acho. There's a long, impressionistic passage in Alfredo Bryce Echenique's Un Mundo para Julius that describes a family outing to a bullfight. The book is set in the 1960s, and from my own experience of Lima I couldn't really imagine the scene, so I thought I would walk by and take a look.


Things have certainly changed from Julius' world; crossing the Rimac towards the bullring, the view is dominated by the pueblos jovenes sprawling up the Cerro San Cristobal (above). On the other side, nestled between the grimy bridge underside and the dust and chaos of the avenue, I lunched at a restaurant specialising in Arequipan food, with a bright and spotless interior and run by a softly-spoken woman from the village of Yanqui. This reminded me that the oases of cleanliness and order in Peru are not just those created by a patrician municipality, but more often are carved out in individual homes and businesses by people determined to make the best of their lives and surroundings.

I found the plaza de Acho, a faded and sad-looking coliseum, smaller than I had imagined. The entrance way led to a 'taurine musuem' that didn't appear to have any visitors. I didn't have time to go inside, so contented myself with walking around the outside. The most poignant image was this door, presumably once a prestigous entranceway, judging by the sign which announces that entrance is restricted to "officials, bullfighters , police, journalists, invited guests and children".





Across the street from the plaza, and near the base of one of Luis Castañeda's advertised accomplishments, a rather steep footbridge across the avenue, I took an obligatory couple of photos of the bullring's exterior. I was beckoned across by a group of people sitting around a cebiche stand. While I acceded to topping myself up with a plate of cebiche and canchita, a voluminous woman called Marta subjected me to a lecture, wanting to know what was I thinking, a tourist, in coming to this spot by myself. "As long as you're with me no one will touch you; I'm from the barrio", she told me. Then, when I had paid the cebiche stand woman, Marta demanded a tip for being so helpful and protecting me. I gave her two soles, "for the conversation".

Imbalances and the Global Crisis

A number of erudite commentators point to 'underlying economic imbalances' as a major factor in the current global crisis. They argue that the situation where some parts of the world produce and save more than they consume, while others live beyond their means, has helped create the conditions for the financial speculation that has led us to the present meltdown. Paul Krugman makes a case something like this here and here.

When boiled down to its bare bones, the argument goes more or less as follows: China keeps selling things to the West and saving the money. It then lends that money back to allow Westerners to continue their spendthrift ways and put it on the tab. But this is unsustainable, and eventually all that debt has to be unwound. A solution would have to involve Western consumers being more prudent and creditors like the Chinese spending more.

The way it's described makes it sound like millions of thrifty Chinese shopkeepers being tight with their cash and refusing to spend on luxuries. Easy for readers to visualize, but surely this isn't the reality? China is an authoritarian state, with the exchange rate controlled centrally, and if the earnings from exports are banked, this is not done by individual workers but by the government and corporate elites. Surely the problem isn't that the Chinese masses prefer holding US Treasury bills to consuming goods and services, but that they are paid much less than the real value of their labour? 'China' might save too much, but it's questionable whether Chinese do.

Meanwhile, the situation of China has a flow-on effect on the rest of the world. Thomas Pogge argues here that by winning the race to the bottom in terms of labour and environmental standards, China has restricted the potential for export-led growth in other developing nations. So those who control China's economy could be denying not only their own citizens, but those of other countries, the possibility to consume in line with their productive ability.

If imbalances in the real economy are behind the bursting financial bubbles, would it be suprising if these were in turn underlaid by imbalances of power and resources that are essentially political?

The Millenium Development Goals: Still New Zealand's Focus?

On Saturday morning I attended the first two sessions of a symposium on the Millenium Development Goals (MDGs) at Victoria University's Pipitea Campus downtown.

In the opening session, Labour MP and former head of Oxfam International Phil Twyford critiqued the intentions signalled by Minister of Foreign Affairs Murray McCully to change New Zealand's aid emphasis on poverty elimination to a focus on economic growth, and possibly to roll back NZAID into the Ministry of Foreign Affairs and Trade.

Twyford said McCully's proposals threaten to "turn the clock back" on eight years of building more effective development aid, undermine New Zealand's standing in the Pacific and repudiate signed commitments to the MDGs. Furthermore, they would involve changes to spending of $500 million of taxpayer's money without public debate or consultation.

According to Twyford, at the opening of the symposium on Friday night at Parliament Buildings, National's John Hayes, Chair of the Foreign Affairs, Defence and Trade Select Committe, had indicated that the government wants to channel aid to support tourism, trade and infrastructure in the Pacific.

But this raises the question of what the purpose of economic development is. For Twyford, development aims to 'lift people out of poverty and expand the possibilities of human freedom.' The purpose of economic development is to serve the needs of people – the ultimate goal is still poverty elimination.

Twyford said that sixty years of experience shows that economic growth is necessary but not sufficient for reducing poverty and improving wellbeing. Growth alone can be captured by elites and lead to environmental damage, as in the disastrous destruction of rainforest in the Solomon Islands. Despite rapid economic growth, India continues to have higher levels of malnutrition and child mortality than sub-Saharan Africa, while Bangladesh has reduced child mortality more quickly than India, despite being poorer.

Likewise, Vietnam has been much more effective at reducing poverty than a country like Peru, largely because the poorest 20 percent in Vietnam have a four times greater share of national income. Greater inequality in Latin America is a familiar story. However, Twyford pointed out that in Brazil since 1998, extreme poverty has fallen by 3 times the MDG target rate, and the Gini coefficient has fallen by 3 points. This illustrates what is possible with committed leadership.

(See this post for a more detailed discussion of growth vs poverty reduction).

Twyford concluded that a focus on trade and growth alone is not going to work. The NZAID strategy of working in an integrated with other donors and country governments is "more likely to be effective". But such approaches could be threatened by the absorbtion of NZAID back into MFAT.

Twyford referred to the original report from a Ministerial review which recommended the establishment of NZAID eight years ago. The report found that the official development assistance branch within MFAT had confused objectives, lacked professionalism, and could be typified as a "training ground for diplomats, and a dumping ground for non-performers".

Twyford saus that NZAID "is not perfect", but has made considerable progress, especially with the sector-wide approaches in the Solomon Islands and Papua New Guinea. He said that the Progressives, Greens, United Future and Labour parties would be holding their own summit on the future of NZAID on Friday 27 March.

The symposium was sponsored by Victoria University's Institute of Policy Studies, the Council for International Development, Oxfam New Zealand and the British High Commission. Sources connected to NZAID said that they would have joined in the co-hosting but had been prevented from adding their name to the programme by order of the Minister.

At the beginning of Phil Twyford's speech, he queried whether any of his parliamentary colleagues had joined him at the symposium. There was no repsonse from the gallery.

The Economist Agrees

I don't agree with The Economist on everything, and in fact strongly disagree on some matters. But their articles are generally lucid and interesting and they rarely fail to provide at least the semblance of a reasonable argument.

This editorial, in advance of the United Nations summit on drug policy, is one of the magazine's finer moments. With typical pithiness, the editorial declares that "prohibition has failed; legalisation is the least bad solution"

There's a fair-minded evaluation of both sides of the question:

“Least bad” does not mean good. Legalisation, though clearly better for producer countries, would bring (different) risks to consumer countries. As we outline below, many vulnerable drug-takers would suffer. But in our view, more would gain.

In short, while ending prohibition could on balance be a good thing for the rich countries where people take most of the drugs, the real benefits would be in the poor countries that are currently being turned into war zones by the gangsterism that illegality promotes. This is basically what I've argued before on this blog, but the editorial puts it particularly well:

In the developing world blood is being shed at an astonishing rate. In Mexico more than 800 policemen and soldiers have been killed since December 2006 (and the annual overall death toll is running at over 6,000). This week yet another leader of a troubled drug-ridden country—Guinea Bissau—was assassinated.

An aside. The horrors of drug-related crime and violence suffered by Colombia in the 1990s are well known. The country is somewhat more peaceful and orderly now, which is often credited to the hard-line security policies of Alvaro Uribe. Taking a longer view, histories of the cocaine trade describe how the centre of power moved from Colombia to Mexico in the 1990s after resources were poured into defeating the Cali and Medellin cartels and shutting down the Caribbean routes into the US. Is the current chaos in Mexico coincidental, or have all the law enforcement battles merely shifted the violence from one country to another?

As a staunchly internationalist, though anglocentric, publication, the Economist is able to point out how ludicrous it is to address addiction in Western cities by turning Latin America, Asia and Africa into a battle zone, Sadly, with their eye on the the anxieties of their own middle class voters, the politicans attending the latest international conference in Vienna may not see it the same way.

A War on Drugs, Or On Peasants?

A good article in the Guardian describes how US-funded aerial spraying of coca plants in Colombia is poisoning people, crops and livestock, while cocaine production continues to increase. Grace Livingstone, who has visited and interviewed Colombian coca growers, reports information received from a parish priest in Caquetá that spraying of herbicide is having a marked effect on human and animal health. As she notes:

The US focuses on one element of the trafficking chain, the poverty-stricken peasant. But the policy is not even effective. When their land is poisoned, peasants migrate and start growing coca again. They have no alternative. Spraying simply displaces the problem. Despite decades of spraying, coca cultivation in Colombia has grown by 500% since the 1980s, according to US state department figures. US politicians heralded a drop in cultivation after the launch of Plan Colombia, but the area of land covered by coca crops is now larger than when the plan was launched. Perhaps the clearest indication that the policy is failing is the falling price of cocaine, suggesting more, not less, of the drug is entering the US market.

To quote a previous post, "there's little that's more perverse than a social problem in the rich world being tackled by spraying poison all over environmentally fragile land in a much poorer country".

Burro Sitting on a Lithium Mine

I came across this story on the BBC when I was clarifying some facts about Bolivia's Salar de Uyuni for a page on the Images section of this website.

It turns out that below the surface of the salar lies about 50% of the world's commercially viable lithium deposits. As anyone who has compared a lithium battery to a normal alkaline battery will be aware, lithium stores energy better than alternative substances. Lithium batteries are the preferred technology for new fully electric and hybrid cars being produced by Toyota, GM and other companies. With demand for lithium set to increase rapidly, auto makers are eager to see its production stepped up.

Ironically, impoverished Bolivia once again has something that the rich world desparately wants.

The BBC article itself is quite a good, well-balanced piece. But the guy who writes the copy doesn't get to do the captions, and I can imagine Damian Kahya not being particularly impressed by the note under a photo of salt mounds on the salar that Bolivia's lithium reserves could bring wealth to the country.

As the article points out, wave after wave of resource extraction certainly has not brought wealth to the altiplano. Bolivia is a classic illustration of the 'resource curse', where a surfeit of natural riches within a country produces only massive inequality, corruption, conflict and environmental damage.

Bolivia's government is not enthusiastic about opening up the salt flats to mining. The BBC reports Minister for Mining Luis Alberto Echazu as saying:

"We will not repeat the historical experience since the fifteenth century: raw materials exported for the industrialisation of the west that has left us poor."

This is fair enough. Bolivia's original experience with mineral riches was the mass enslavement of indigenous workers in the silver and tin mines of Potosi. Times have moved on since the 16th century, but the current simmering conflict over gas revenues demonstrates that turning resource wealth into benefit for all is far from a straightforward proposition.

Of the countries 'cursed' with mineral riches, Chile (copper) and Botswana (diamonds) are the notable exceptions where this wealth has contributed to sustainable development. And even in the best cases the unhealthy dominance of a single product produces economic and social distortions. Chile's military still benefits from a law developed during the Pinochet regime which awards it a guaranteed percentage of the revenue from the national copper mining company, and the military's disproportionate strength continues to cast a shadow over local democracy and the regional balance of power.

Bolivia's government is planning a small-scale lithium mining pilot project which will be under local control. The BBC article suggests impatience from the auto companies that this will not lead to enough production quickly enough to satify their demands.

Although it's good that car companies are now getting over their reluctance about developing electric vehicles, this isn't as progressive as it might look. I'm not all that sympathetic to 'no more growth' environmentalism, but in this case the pattern that environmentalists warn about is all too evident. The problems of peak oil and global warming caused by historical modes of western oil consumption are being 'addressed' by moving on to exploit another finite resource extracted from another environmentally fragile setting.

In essence, the purpose of escalating lithium production would be to allow people in the rich world to swap one addiction for another and carry on driving their cars around in the same way as before. In Bolivia, where functional roads are few and far between, and private cars extremely rare, there's an understandable lack of urgency about this objective.

With its 10,000 square kilometres of shimmering salt, the Salar de Uyuni is one the natural wonders of the world. It's not even economically 'idle', but is a focus of tourism which leaves visitors in awe their surroundings and gives reign to the imagination. It would be a tragedy to see such a unique place despoiled by mining.

Does Land Reform = Socialism?

Some of the bloggers I've been reading from Bolivia say that the coverage from Reuters on the situation there has been reasonably balanced. Overall I suppose they're not doing a bad job by not making the expulsion of the American ambassador the only or the most crucial news.

However, it's annoying that most mainstream news sources see the need to mention Bolivia's 'leftist' or 'socialist' government, about four times more than they describe the regional governors as 'rightist'. And nowhere in the international media can we find any mention that the Union Juvenil Cruceñista, the Santa Cruz 'youth organisation' involved in the attacks on national government property, is described by independent parties as a neo-fascist group.

The article I linked to also contains subtle dog whistles such as describing Brazilian president Luiz Ignacio 'Lula da Silva as a 'moderate leftist' (with the implication that Evo Morales and the Bolivian government are 'extreme'?).

One throwaway phrase describes Evo Morales as advocating 'deeply socialist policies such as land reform'. This refers to Morales' aim to redistribute idle land from farms larger than 10,000 hectares to poor landless peasants. The paper I previously linked to from Mark Weisbrot and Luis Sandoval makes the case for why such reform might be needed; Bolivia has close to the most concentrated land ownership in the world.

But regardless of arguments about inequality, is it true that land reform is 'deeply socialist'?

Land reform was indeed a key policy of socialist governments in Cuba, Chile and Nicaragua. But breaking up estates and redistributing land has a long history in many countries, and has been carried out by administrations across the political spectrum, including nationalist military administrations in South Korea, Taiwan and Peru.

In fact, in a number of places land reform has been seen as a key step in capitalist development. There is evidence, argued by Amartya Sen and others, that small farms are more efficient, at least in the developing world. Small farmers need less incentive to become more productive compared to landlords with large holdings. The surplus generated by argiculture can be used for investment in industrial development. The distribution of land also equalises income and creates a larger internal market for the rest of the economy, further stimulating industry.

Renowned Latin America scholar Cristobal Kay argues that the comprehensive agrarian reforms, in South Korea and Taiwan, and agriculture's synergistic relationship with industry, were key reasons for the startling success of industrial development in those countries, while the half-hearted reforms in Latin America were too late and limited to have a similar effect (and in the case of Chile and Guatemala were almost entirely reversed).

We also shouldn't forget our part of the world, where in New Zealand the first Liberal goverment broke up large estates and distributed property to smallholders in the nineteenth century, and land reform began in Victoria from about 1860. These early reforms were instrumental in New Zealand and Australia becoming the relatively egalitarian countries of today rather than ending up more like Argentina.

It's worth drawing a comparison between Bolivia, and another land reform that is currently being pushed by a Latin American government that no one would accuse of being socialist. In Peru, Alan Garcia has argued stridently that large areas of communal land in the sierra and jungle regions are 'idle' and should be 'put into value' by being sold to investors.

Taking advantage of its powers to issue decrees granted by Congress to 'ready' the country for the implementation of the FTA with the US, the Peruvian government decreed that communal land in the sierra and jungle regions could be alienated if 50% of the community voted in favour. This sparked such vehement protests that Peru's usually-supine congress drafted a draw to repeal these provisions.

Like Evo Morales, Alan Garcia and his government are also pushing for the redistribution of land, only into fewer hands rather than more. He has described those who oppose such moves as 'dogs in the manger' for holding back the more intensive exploitation promised by outside investment in agribusiness, forestry and petroleum.

But if this is the description applied to impoverished communities in the sierra and jungle resisting the loss of what little they have, what should we then say about the rich landlords of Santa Cruz?

Radical Solutions?

Before I started a Master's in Development Studies, I was already interested in questions about development and mused frequently about them on this blog. After one-and-a-half semesters of fairly intensive studying and reading, it's interesting to look back at how my understanding and views have changed.

In deleting some emails, I came across a mini-rant (pasted below in italics) I'd sent to my US-based sister about the trade deals with Peru, Panama and Colombia, which were at the time a topic of discussion in both the mainstream and grassroots media there.

These were my thoughts a year ago:

I am on balance a supporter of the FTA for Peru because of the commercial opportunities it offers. However, a rudimentary examination of the existing agreement demonstrates that Peru, Panama and Colombia are being forced to suck eggs in order to get their deals. The US has been using its weight in the bilateral negotiations to impose conditions it can't get through the WTO (esp. with regard to intellectual property). This has little to do with the appropriateness or plausibility of these conditions for the country (US-standard copyright protection in Peru within 3 years, yeah right) but rather with a wider agenda.

I reckon if the US really wants to support development in the Andean countries, it should do the following:

1. offer unilateral tariff reductions on all products for a 10--15 year period (similar to the Andean Trade Promotion and Drug Eradication Act, but with more certainty)
2. trade partners required to move towards international/WTO standards on labour, environment and intellectual property (i.e. NOT US-level standards for the latter); milestones to be met to ensure continuation of tariff-free access after 5 and 10-year review periods
3. reduce or freeze direct-to-government aid (including export subsidies disguised as aid), but offer technical assistance especially in local government, law enforcement, education, infrastructure development, agricultural productivity, distribution, marketing, etc. Foment partnerships between schools, universities, police departments, public service, small NGOs, churches, etc. Loans available for insfastructure conditional on robust analysis of the viability of the project.
4. trade partners remove or reduce tariffs on all or most non-agricultural products; non-complementary agricultural products to be left alone for the first 5 years
5. investment protections in place but trade partners allowed to place 'development' conditions such as use of local products or technology transfer
6. legalize cocaine, but slap on big import and sales taxes; coca leaves can be imported tariff-free

The last one is only partly in jest. At present, cocaine is one processed, added-value product that is highly profitable and makes its way easily into US markets (despite all attempts at law enforcement). It's also inevitably associated with significant violence and corruption. What needs to happen is the opposite of the historical: developing countries have a chance to produce and market added-value, mainstream products, while drug-related activity is disincentivised through making it uncompetitive. Such an approach would see all the cocaine labs move inside the US, where their activity would be tightly regulated by ATF officers...). Meanwile, Peru, Bolivia, and Colombia would fill US health food stores with a range of coca teas, sweets, oils, and essences. Groups like the FARC, Shining Path (now moprhing into narcotrafficking operations in Peru), paramilitaries lose their funding and much raison d'etre, either disappearing or being forced to become normal political entities.

Many weighty articles and long perambulations through the thickets of economic history, sociology and politics, I've become much better informed, feel more able to engage in debate, but my views are not a million miles away from what they were then.

Overall, I'm even less sure about the net benefit of the US-Peru trade agreement than I was, in part because I've been made aware that the link between overall economic growth and benefit for the majority is even more tenuous than I realised; in part because of gaining a greater understanding of just how one-sided and hypocritical the conditions in the trade agreements are (and how few of them are even about trade).

As I've learnt recently, suggestion 3 above is just a partial version of what's been on the agenda for international donors for a while through the 'good governance' agenda and the OECD's Paris Declaration on aid effectiveness. There's been a commitment to phasing out 'tied aid' (i.e. exports subsidies disguised as aid) and 'technical assistance' is a major buzz phrase in the aid community (along with its sibling 'capability development'). However, this does still seem to suffer from the longstanding high-handedness of development assistance, and mainly be aimed at bureaucratic elites.

If we do care about 'institutions', a nice alternative approach would be for some kind of properly-funded 'adult exchange programme', where the likes of police officers, petty officials, local council members, etc from developing countries could spend a three-month sabbatical in the equivalent department in a rich country -- and vice versa.

Suggestion 6 is of course mostly flippant, but I'd still be interested in people's reaction to it. The drug trade is not a good thing -- but at the end of the day it's just another manifestation of the inexorable market logic that is elsewhere trumpeted as the solution to everyone's problems. It's rarely mentioned even by liberal commentators, but there's little that's more perverse than a social problem in the rich world being tackled by spraying poison all over environmentally fragile land in a much poorer country.

Categories: development, Latin America, trade, cocaine, coca, Peru, Bolivia, Colombia

The Sustainability of Development

The semester passes quickly. In a couple of weeks, this subsection of my development studies course is all over, and next Friday I have to hand in the 'journal' which is made up by the last umpteen posts on this blog.

I've jumped about thematically, and have spent an inordinate amount of time on a couple of peripheral topics. I'll try and wrap it up in some kind of coherent way.

Within much of the standard development theory, a range of competing theories -- from both liberal/modernisationist and Marxist/dependency perspectives -- assume similar processes and results for development: urbanisation, industrialisation, economic growth and increased material consumption.

In the last couple of weeks we've been looking at critiques of those assumptions from the indigenous, rural, feminist, environmentalist, and postmodernist angles.

I'm just going to look briefly at one of those: the environmental perspective. This is often presented as the true full-frontal challenge to the 'development' paradigm. It worms its way into most debates, whether they be in the letters to the editor, blog comments section, and questions to visiting speakers (the Joe Stiglitz talk was no exception).

Let for a moment me take on the character of the environmentalist interlocutor.

All these arguments you're having, you the capitalists and you the socialists, they all assume that what we want is growth. As if there are unlimited resources and we can just keep on growing. We let me tell you, we live on a single planet with finite resources, and we just can't keep on growing forever...

Taken at face value, there's a lot there to nod sagely and agree with. We do indeed live on a physical world with finite resources. (We haven't figured out how to live anywhere else yet, and even if we could create some controlled environment on Mars, I know where I'd rather be). In just a couple of hundred years of industrial development, we've managed to make some significant alterations to fragile membrane of rocks and gases on which we live. About thirty years ago, we'd begun to punch a hole in the ozone layer. Now climate change is the dominant issue. Who knows what irreversible changes will eventually be seen in the world's oceans?

Preserving the environment and even rolling back some of the damage is an essential part of development. GDP per capita is an inadequate measure of human wellbeing, and no technological miracle in the near future will make it reasonable for replicas of Los Angeles to cover the planet.

Yet, I do have some problems with the attitudes that are lurking in this environmentalist objection. Firstly, there's a strong streak of pessimism about human potential and the ability to creatively overcome difficulties. Collective action to address the ozone problem was an example of what canbe achieved when needed. Climate change presents a far greater challenge, but we can only keep trying. Also, if the negative consequences of our actions are often unpredictable, so are the positive twists of fate: who in the 1950s and 1960s would have predicted the internet, or even the Green Revolution.

More importantly, I find the 'no more growth' to frequently be in bad faith. All too often, it is delivered by the 'we live a sustainable lifestyle with our olives and organic chickens in Martinborough, our solar heating panels and our Toyota Prius' set. If such people reluctantly acknowledge their inability to 'wean' themselves off all modern conveniences, they rarely accept that their position as privileged members of an interdependent capitalist society (computer programmer, consultant, boutique food producer) is the result of a centuries-long chain of specialisation, high energy use, and resource exploitation.

As I said in the 'why do I care' post, the freedoms they [I] have, and the ability to worry so much about future generations, are a direct result of the material prosperity which we have inherited from the resource-using technological development of the past. Making a choice to live a certain kind of life with the cushion of money in the bank and modern services at hand is entirely different from condemning people in developing countries to stick to their donkey-powered wells.

Of course the very same processes that built Sheffield and Los Angeles can't be repeated in exactly the same way all around the world. And the rest of the world has probably learnt enough not to want that (ok, China's current development pathway notwithstanding). But assertingthat 'sustainable development is impossible' is a unilateral declaration that progress has ended. This violates the Kantian or Rawlsian principle of integrity (if you didn't know your place within it, what kind of world would you wish for).

Witin the debates are about how the lives of the world's billions of poor can be improved, putting forward the 'no more growth' environmentalist objection is a little like saying 'I don't care'.

The Paradoxes of Development, Part 1

If I'm asked to think of how life should be, I think of my time in La Antigua, Guatemala. In a valley with a climate of eternal spring, in a town of cobblestone streets with flowers growing from rooftops, I and scores of other backpackers happily wiled away our days studying or teaching in language schools. We drank mojitos and played dominoes with the beautiful daughters of the local oligarchy; relaxed in splendid baroque courtyards full of hanging plants in large ceramic pots; ate delicious late breakfasts of fresh beans and eggs, seasoned with green chili and served by indulgent mestizo matrons.

In the streets, local women in colourful, elaborately woven ponchos sold crafts or plump bocadillos of chicken and avocado. People were friendly and smiled a lot. On Sundays, people gathered to gossip and flirt in the plaza, as the hazy outline of Volcan de Agua hovered over the 17th-century arches. To this day it brings me pleasant memories.

But did not the whole reality of this idyll rest -- from the 16th century to the modern day -- on hierarchy, exploitation and oppression?

Beyond the pretty plazas of Antigua was a polluted capital of slums and rampant crime, a rural hinterland of peasants struggling to subsist on patches of land, rich landlords exporting cash crops on the back of exploited rural labourers. The whole country was still traumatized by a vicious, twenty-year civil war that had seen death squads rampaging through indigenous villages.

Gazing dreamily over the volcanoes from our sunny courtyards as we drank the damn fine coffee, we were inheriting the role of the Spanish colonial elite. Look into almost any critical history of Latin America, and this lot come out the villains. Whether as the first wave of a long line of outsiders tapping the continent's 'open veins'; a corrupt and decadent culture who bequeathed fatalism, supersitition and lethargy to their mestizo descendants; or simply inflexible defenders of privilege who failed to ever achieve political reform, the Spanish tend to get the blame.

And yet...has anyone devised an urban layout more harmonious, an architecture more suited for living; a religion richer in ritual, metaphor and existential comfort, a more seductive blend of music and food and romance?

Compared to Guatemala, New Zealand is an oasis of peace, equitable wealth distribution, transparent government and progressive politics. Despite a few economic hiccups in the past forty years, we're still in the world's twenty 'most developed' countries. We've always been at the forefront: land reform, the vote for women, social welfare programmes, rejection of the nuclear umbrella, civil rights for gay people. We're thirty years into an imperfect but world-leading process to compensate indigenous tribes for historical abuses.

Life should be good, right?

Instead, people are grumpy and bitter that they aren't even better off. The political issues that most excite people are tax cuts are retaining the legal right to hit their kids. There's precious little respect for the life of the intellect. The popular press has nearly scraped right though the bottom of the barrel. Our cities have nothing that is visionary and very little that is even attractive. The slums of third world cities are hardly more depressing, and certainly more colourful, than the surburban monotony of Papakura, Tawa, or Bishopdale. Social interaction is timid and superficial. We go out to bars where we can't hear, and drink until we can't speak. When we win at our favourite sport we feel only relief; when we lose we're plunged into wordless despair. An undercurrent of violence simmers uncomfortably beneath the surface of our society.

Do the most pleasant ways of organising life need to be the province of a privileged elite? Does opportunity to contemplate the volcanoes over a coffee rely on an underclass of peasants slaving in the fields? Does it take antidemocratic tyranny to make the imaginative leap beyond acquiring the next consumer good?

Does equity and progress produce only people envious of each other's imagined advantages, squabbling over their rightful share? Does successful political compromise and the rule of law just produce a nation of NIMBYs? Does beauty, charm and passion require hierarchy, oppression and supersitition? Does development equal banality?

Or could it be that it's all even more complicated than we thought; that there are good things hidden in the middle of the worst systems? That our greatest satisfactions might be our greatest illusions? That we haven't even really started to figure it out?

Venezuela: Yes, There's More

In two recent posts I covered the debate about social and economic policies in Venezuela, partly to emphasize how in considering development issues it's important to understand the facts and all their nuances before lanching into ideological debates.

I linked to an article from Francisco Rodriguez, former economist to the Venezuelan national assembly, who made the intriguing argument that the Hugo Chavez government had not actually made a very high priority of addressing poverty (something generally assumed by both boosters and critics of Chavez).

I then discovered a piece by US analyst Mark Weisbrot, who critiqued Rodriguez' use of data and suggested that in fact the evidence generally pointed to increased social spending and steady progress for the Venzuelan poor.

My second post was sympathetic to Weisbrot's contention that the picture changed after a fuller review of the data. However, I then received a communication from Francisco Rodriguez himself, who pointed out that I had obviously not seen his rebuttal to Weisbrot. He noted that because Foreign Policy does not allow the use of footnotes, it hadn't been possible to make clear all the data sources he had used, which in fact drew from the work he has been doing for at least ten years.

Rodriguez says that the arguments of Weisbrot "[rely] on erroneous reading of the evidence or use of severely biased indicators that do not accurately reflect the evolution of the Venezuelan economy or the well-being of the poor".

Let's review the substance of the rebuttal to Weisbrot, under the categories I used in the previous two posts.

Spending Priorities

Rodriguez questions the relevance of Weisbot's point that the absolute level of social spending has increased during the Chavez administration. Given that Venezuela has had a huge windfall thanks to oil boom, he points out, all categories of spending are going to increase. Therefore, " if we are interested in evaluating a government’s priorities... we want to study how it has allocated it among different possible objectives". And he returns to his original point that the relative portion allocated to Venezuelan health, education, and housing is the same as it was in the 1990s.

The only big increase in government social spending is on social security, which Rodriguez argues is regressive because people in the informal economy don't have access to pensions (an important point, and akin to my convoluted argument about Peruvian labour laws in this post -- i.e. for them to be important, first you've got to have a job).

Weisbrot had also pointed to what he quoted as $13 billion social spending by the Venezuelan state oil company PDVSA. Rodriguez publishes the detailsof the PDVSA budget, showing that of this spending only about a quarter is on health, education and housing (the 'misiones'). The rest of the 'social spending' includes debt refinancing, infrastructure projects, and defense projects.

My question would be: although not as large as claimed, the social programmes funded by PDVSA are new initiatives, and therefore should they not bolster the total proportion of public spending counted as 'social'?

Inequality

In the two previous posts I described how Weibsrot and Rodriguez disagreed about whether inequality, as measured by the Gini coefficient, had gone up or down during the Chavez administration. Weisbrot had been unsure about which sources Rodriguez had used for his inequality measures and suggested that they might have been cherry picked. He cited data from the Venezuelan National Statistics Insitute to suggest that inequality has actually dropped since Chavez came to power.

In his rebuttal, Rodriguez points out that the series cited by Weisbrot excludes people whose reported income is zero (presumably the poorest of the poor). Furthermore, he provides time-series graphs using data derived directly from the Venezuelan Household Surveys. Using different methods (and including people with zero income), these all show that income inequality has dropped from a peak in 2002, but is only now back to the level it was in 1995. Latest data suggests inequality is still on a downward track, but that still excludes the zero-income groups, so the jury is out.

Poverty reduction

Weisbrot had interpreted Rodriguez as saying that many developing countries achieved a two point reduction in poverty for every point of GDP growth -- meaning Venezuela would have had to eliminate poverty entirely by 2007. Rodriguez makes clear that he was talking about the 'income elasticity of poverty reduction', a technical calculation, which, despite digging tentatively into some background reading, I can't entirely understand. Suffice to say that according to Rodriguez, given its level of economic growth, Venezuela should have seen poverty reduced to between 18--22.5 percent, rather than the 27 percent that has been achieved.

In correspondence, Francisco Rodriguez agreed that Peru was a far worse performer again (having seen poverty reduce very slowly from 54 to 43 percent in a period when its economy grew by around 40 percent) but that Chile, Mexico and Brazil are the examples commonly cited as having combined economic growth with good social progress. I'd note that each of these countries is subject to its own debate -- there are some discussions of Chile here and here.

Literacy

Rodriguez had written a paper with co-author Daniel Ortega (presumably not the Nicaraguan Sandinista leader) which cast grave doubt on whether the Chavez government's Mision Robinson literacy programme had taught 1.5 million Venezuelans to read and write. Using information from the Venezuealan Household Surveys, Rodriguez and Ortega pointed out that there were still more than a million illiterate Venezuelans in 2005, barely less than the 1.1 million before the start of the Mision Robinson programme.

Weisbrot complained that Rodriguez had used a question from the Household Survey not designed to measure literacy, and also took issue with some of the methodology in the analysis. But Rodriguez argues in his rebuttal that if we assume the Household Survey data to be accurate, there is no possible interpretation consistent with the claim that Mision Robinson enrolled and educated 1.5 million people. At most, around 40,000 people (a small fraction of the number claimed) could have been taught to read and write since 2003.

Health Indicators

Weisbrot suggested that individual indicators which Rodriguez reported as worsening (low birth-weight babies, ) could be due to measurement errors, since overall the indicators show improvement. Rodriguez counters by arguing that under a government with a strong focus on poverty we should expect to see across-the-board improvements. Instead, infant mortality has declined at the same rate as during the 90s, while some things might have got worse. He concludes by agreeing with Weisbrot that "official Venezuelan statistics are far from...ideal", pitching this as further evidence of a haphazard approach by the government to implementing and evaluating its social programmes..

Conclusions

Phew. There endeth the debate (for now at least). Why have I spent so much time on this, and how indeed do I justify including it in what is supposed to be my development studies journal (ends next week)?

I guess because in looking at development issues there are several different questions to ask. There's the question of what development is, which is a favourite in the humanities section of the academic setting and which I've flirted with in a couple of recent posts. There's the question of how this can be achieved, which is the issue that a lot of the practical and political debate focuses on. Then there's the third question, worth asking before we jump to the second or even the first: do we know what's actually going on?

Stone the Mayor's House, That'll Help

While I'm doing my development studies course, issues I've wondered about before seem to become clearer. Confused and contradictory situtations that baffled me when travelling in Latin America start to slot into narratives of economic structure and class struggle; social indicators and policy choices.

But every now and again I'm reminded that, beyond the classroom and books, the real world is as incoherent as ever.

When I lived in Peru, I became sceptical about the routine of marches, strikes and roadblocks that occurred on an almost weekly basis. These often seemed to be futile, as protesters demanded things which were beyond the government's control, or which wouldn't have made any difference to their problems (such as the resignation of president Alejandro Toledo). The sight of a street blocked by a heap of rocks drew an exasperated sigh, as all it seemed to achieve was to prevent ordinary people from making it to work or school.

At worst, such disturbances were childish and destructive, such as when supporters of Antauro Humala tore up the paving stones in Arequipa's beautiful plaza de armas during the 'Andahuaylazo' in January 2006 (a 'rebellion' in the Andean town of Andahuaylas that achieved only the death of three provincial policeman).

Back in New Zealand, immersed in written history and politics, I castigate myself for becoming so blinkered and bourgeois. Latin American history has seen such unrelenting domination of political and economic power by small elites, and such exclusion of indigenous people and the rural poor, that oppositional politics seems an obvious response, perhaps the only way that marginalised groups have made any gains.

Then I read this article from La Republica, and it takes me back . In the frigid and chaotic Andean city of Juliaca, a group of concerned citizens decided to protest against the price rise of basic goods. Hundreds of people blocked streets with stones, and impeded the transit of the few bicycles and taxis that tried to circulate. Later, a few of the protesters went down to the residence of the regional president and threw stones through his window. Then they did the same at the house of Juliaca's mayor, whom they accused of 'being in league with [Peruvian president] Alan Garcia'

The unavoidable question for me is: why? In the abstract, we can talk about poverty, frustration and exclusion. But how throwing stones through someone's window is ever going to help anything, let alone make food prices go down, is unclear. Sure, the national government continues to appear distant and uncaring, but not even they can do much about the international price of foodstuffs. As for being in league with the president, there are indeed constitutional requirements that regional authorities do not act directly in contradiction of national policies. But these authorities were democratically elected by the people of the region. Privileged local elites, maybe, though the mayor of Juliaca, David Mamaní Paricahua, is (I deduce from his name) of indigenous background

This routine is repeated so often, it's almost as if the blocking streets and throwing stones were themselves the real purpose, and the political cause just an excuse. Maybe it's reactionary, but sometimes you can't help thinking that development problems have their roots in some social and cultural malaise that renders debates about economic structure and social policy largely irrelevant. How to get beyond such a malaise, is something I confess to having little idea about.

Bringing It All Back Home

Despite, or perhaps because of this currently being my 'development studies diary', I should lay off the theoretical discussion and stats for a bit and bring it back to a bit more of a personal level.

This occurred to me in the light of an entertaining and provoking visiting lecture from Jeph Matthias, himself a former Development Studies student at Victoria. I came in a bit late, so didn't catch whether he was a biologist-turned doctor-turned development worker, or had made some other combination of those career movements. In any case, his current role is working in a remote town on the Nepal-Tibet frontier.

Jeph had some philosophical thoughts on development and a couple of nice metaphors about what it means and where we're going. He felt that human development has reached a stage where we are going to see qualitative change: "as boiling water changes state into steam, so we have to decide whether were going to be part of the remaining water bubbling away in the pot, or part of the new state" (ok, so it didn't sound nearly as zealous the way he said it -- Jeph followed all his comments with "maybe").

His another analogy was with a hive of bees -- there have always been insects that fly around by themselves, but at some stage bees decided to dedicate themselves to restricted roles within the greater whole of the hive (again, less totalitarian-sounding the way he described it). It wasn't clear if the bee metaphor best described the way global society would have to reorganize itself as the reality of resource shortages hit, or how highly interdependent late capitalism is organised now.

However, what most caught my attention was a little excerpt he gave us from his 'development studies diary', which he'd written about climbing in the Kaikouras and shooting goats -- making the point about the feral urges continuing to be what drives us, even as we move to supposedly more civilized states. Maybe my diary ought to be a little bit less dry and boring, I wondered.

Jeph showed a photo of his brother-in-law in a yak herder's tent high in the Himalayas and asked us how the two people were different. Discussion concluded that the yak herder had a great array of skills which equipped him to survive in that environment. Jeph's brother-in-law didn't have those abilities, but had use of lots of things (his MacPac gear; a GPS system) that he couldn't possibly have made himself, taking advantage of the massive interdependence of western civilisation (the hive?).

It reminded me of what I said in my first 'why do I care' post. As I said there, even in the not especially remote rural areas of Latin America, people were far more capable of handling the environment with the few tools they had available than I or most other backpackers. Yet we had privileged lives, with more freedom than they could dream of.

There's something disturbing about that -- about the helplessness of the westerner, as well as his privilege. Ever since labour specialisation really got going during the industrial revolution, people have drifted away from the state of being practical and self-sufficient enough to take care of ourselves. Although we live long and comfortable lives, there's an undercurrent of discomfort and angst about having lost -- or never acquired -- the capacity to exercise those practical skills

Reflecting on Jeph shooting his goat, a student in the class mentioned some studies of comparative happiness which found that across a wide range of cultures, the access to the sex, food, water, and shelter were the key determinants of well being. Is development, indeed all human endeavour, just an extension of our biological drives?

I don't mean to really answer that, although I will mention in passing my scepticism towards the pat explanations offered by evolutionary psychology.

Better to talk about my own experiences. There might be children reading this blog, so I won't discuss the first of those biological drives. But it's true that it's hard to find an experience close to as profound as the quenching an intense thirst. Among my vivid memories is working all day in 36-degree heat on a carnival lot in New York and finally getting a chance to slot my $1 into the Coke machine (or was it Pepsi?) and feel the simultaneous explosions of cold, bubbles and sugar in my parched throat.

That same carnival tour (maybe the hardest I've ever worked) holds memories of other intense experiences related to fulfilling basic needs. A mammoth cheesburger of Alberta beef after setting up all day on the carnival lot in Edmonton. A precious few hours drifting into sleep, on a Greyhound bus following a long straight road through the Canadian night. Sleep in particular takes on the character of a sexual or religious experience when you're very short of it.

Yet there are different things that I remember most keenly; that have made life something to be thankful for. Natural landscapes: the first time crossing Burke's Pass into the tussocky vastness of the McKenzie country; the first awe-inspiring view of the Andes coming into land in Santiago; soft summer evening light over the lush islands of the Whangarei heads; the view from El Morro in Arica towards the distant snowy peaks of Coropuna and Solimana rising out of the blue haze

Cities as well: the first impressions of Paris, with the huge gold domes of Hotel des Invalides rising over the Seine. London's irresistible melancholy, the air heavy with two thousand years of history.

Or some combination of the two: can anyone have dreamed a more beautiful setting than La Antigua, Guatemala, with its ruined baroque churches overflowing with bougainvillea, its green volcanoes turning transluscent in the sunset, and its late wet-season night time flashes of lightning in the hills? A more timeless feeling than looking out from the orange-tree and fish-pond courtyards of La Alhambra in Grenada, Spain, to the Sierra Nevada and the Andalusian plain?

Those make nice pictures, but there are still other things that matter more. Achievements: for me, not the routine expected things like getting a degree or a job as a policy analyst, but occasional successes that somehow belong more in the real world -- a blog post or article appreciated by strangers; a tour to the Colca Canyon sold to a group of sceptical tourists; even something as insignificant as a goal that helps the team win the division 3 lunchtime indoor football match.

And of course, time spent with family and friends, shared experiences, especially if they're combined with some of the other life-enhancing things (food, wine, scenery, success, sport).

Finally, reminding myself of all these things, I hit upon the most and uniquely human experience of all: nostalgia.

The Facts Strike Back for Chavez

There's nothing like a bit of cut and thrust with facts and figures to shake up your prejudices.

In a recent post I cited former economist to the Venezuelan national assembly, Francisco Rodriguez, as casting doubt on the achievements of the Hugo Chavez government, and even suggesting that his image of being oriented towards helping the poor is mostly a public relations coup.

However, I've since discovered a substantive riposte from Mark Weisbrot, economist at US progressive think tank Center for Economic and Policy Research. Weisbrot pulls apart the arguments of Rodriguez, showing how they make distinctly selective use of available data.

These are the specific claims from Rodriguez that Weisbrot disputes:

Inequality has increased under Chavez, with the Gini coefficient going from 0.44 in 200o to 0.48 in 2005

Weisbrot reveals this as cherry picking, with the two figures taken by Rodriguez from different data sources, and no good reason for these two years being chosen. In fact, when the available measures of inequality from various sources (UN Economic Commission for Latin America, the World Bank and Venezuela's National Statistics Institute) are seen over their full periods, there appears to be a decrease in inequality under Chavez. Weisbrot notes that by comparison the Gini index in the US has gone from 40.3 to 46.9 during 1980--2005, a large upward distribution of income.

Other countries have reduced poverty by two percentage points for every percentage point of GDP growth (as opposed to one point in Venezuela)

I did point out in my original post the Rodriguez hadn't named any of these countries. Weisbrot makes the point that if Venzuela had reduced poverty by two percent for every point of GDP growth, it would have completly eradicated poverty -- an implausible achievement in four years.

Chavez has not increased the proportion of government spending on health education and housing

Again, Rodriguez has been selective in his choice of indicators. Weisbrot questions why he only mentions central government spending when there have been large allocations from the National Development Fund run by PDVSA (the state oil company). And the social spending from central government has increased in absolute terms, from 8.2 percent of GDP in 1998 to 13.6 percent in 2006. Overall, social spending is now 20.9 percent of GDP, and in real per capita terms has increased by 314 percent in this period.

Certain indicators such as low birth weight, access to piped water, and number of dwellings with dirt floors have worsened under Chavez

More cherry picking. Showing the full range of social indicators, Weisbrot demonstrates that most have improved over the past few years, with a notable improvement in access to sanitation and a steady decline in infant mortality. Seen alongside the rest of the data, it's possible that the indictators cited by Rodriguez could be measurement anomalies.

There's no evidence that the Robinson literacy programme has had any effect

There's some discussion of the methodology used by Rodriguez to draw this conclusion. Weisbrot says he relies on a survey that wasn't designed to measure literacy. He concludes that there's not enough evidence either way.

Chavez's big spending and the rise in imports threatens to cause a balance of payments crisis

Weisbrot points out that while imports might be increasing, Venezuela still has a very significant balance of payments surplus of around 8% of GDP, which, if it were applied to the United States, would see a surplus f $1.1 trillion rather than their actual $739 billion deficit.

Weisbrot does accept a couple of the Rodriuguez criticisms as reasonable. For one, the exchange rate is over valued, subsidising imports and making non-oil exports too expensive. At 25 percent inflation is also too high, though Weisbrot notes that it was 40 percent when Chavez came to power, and 100 percent in 1996. Finally, there are shortages of basic foods, although Weisbrot sees no reason why Venezuela can't import plenty more, being a very long way from having a balance of payments crisis. He denies that Venezuela is in anything like the situation of previous Latin American governments (Alan Garcia's 80s regime et al) described in The Macroeconomics of Populism.

Weisbrot also argues that social progress would have been a lot better if it hadn't been for the economic crisis caused by the oil company's strike in 2003, at a time when it was controlled by the Venezuelan opposition. The statistical tables show this caused a blip in many indicators, including a temporary leap in poverty. Weisbrot concludes:

"While it is useful to discuss the imbalances in the Venezuelan economy and what might be done to correct them, there is little use in presenting such a grossly exaggerated picture of an economy as if it were on the brink of ruin, and pretending that Venezuela's poor have not benefited from the economy's most rapid economic expansion in decades, and from the government's large increases in social spending and programs."

Against the weight of evidence, it seems clear that Francisco Rodriguez has set out with a pre-formed conclusion about lack of progress under Chavez, and has set out to fit the evidence around that. The reasons may be ideological, or they may date from his personal frustrations in working with the Chavez government, disapproval of its methods, or a belief that the country is headed down the wrong track.

In any case, it's a reminder of how easy it is for basic facts and figures to be politicised. For me, with pre-existing scepticism towards Chavez based on his buffoonery, authoritarian tendencies, and clumsy attempts to interfere in other countries, it's all too easy to just accept claims like those of Rodriguez at face value.

Hugo Chavez -- Not Helping the Poor that Much?

Following on from the previous post about inequality, here's an interesting article in Foreign Policy by Francisco Rodriguez, chief economist to the Venezuelan National assembly from 2000-04. Rodriguez deconstructs the belief, prevalent among not only Hugo Chavez supporters but also his critics, that Chavez has redistributed resources to the poorest in Venezuelan society.
Certainly, there is a wide range of different opinions of Chavez and his government, which we might summarise as follows:

a) Chavez is a dictator who is buying support by redistributing the oil wealth. He will eventually make himself president for life, let all the terrorists camp out in his back yard and form some kind of nuclear alliance with Iran
b) Chavez is popular among many in Venezuela because he has used the oil price boom to establish promising though rather haphazard social programes for people who have always been marginalised. He's an annoying (though occasionally amusing) demagogue who has authoritarian tendencies and but has won his elections fair and square
c) Chavez is the reincarnation of Simon Bolivar and Che Guevara combined, a charismatic leader who is righting the wrongs of centuries and setting a model for 21st century socialism.

What supporters and opponents alike (I'm more or less category B) agree on is that Chavez has redistributed wealth and prioritised helping the poor. Yet this orthodoxy is precisely what is questioned by Francisco Rodriguez. Having worked closely with the Venezuelan adminstration, Rodriguez argues that the perception that Chavez has done a lot for the poor is mainly the product of good public relations campaigns.

Although poverty in Venezuela was reduced from 53 to 27 percent between 2003 and 2007, Rodriguez claims this is almost entirely due to rapid economic growth in the wake of the oil boom. The one percentage point reduction in poverty for every point of GDP growth is a poor return, says Rodriguez, compared with other (unnamed) developing countries which have managed two points of poverty reduction per point of GDP growth. In addition, he says:

The average share of the budget devoted to health, education, and housing under Chávez in his first eight years in office was 25.12 percent, essentially identical to the average share (25.08 percent) in the previous eight years. And it is lower today than it was in 1992, the last year in office of the "neoliberal" administration of Carlos Andrés Pérez -- the leader whom Chávez, then a lieutenant colonel in the Venezuelan army, tried to overthrow in a coup, purportedly on behalf of Venezuela's neglected poor majority.

The further statistics Rodriguez cites include:

-- the Gini coefficient (a way of measuring income inequality, the higher the worse) increased from 0.44 to 0.48 between 2000 and 2005
-- infant mortality has dropped, but at the same rate (3.3 percent per annum) as the previous nine years, and much less quickly than in Argentina, Chile and Mexico (5.2--5.5 percent per annum)
-- the percentage of underweight babies, percentage of people without access to running water, and percentage of people living in house with earthen floors all slightly increased between 1999--2006
-- the much vaunted Robinson literacy programme shows "little evidence [of having] had any statistically distinguishable effect on Venezuelan illiteracy"

The most notable policies of the Chavez administration, according to Rodriguez, have in fact been its nationalisations and expansion of state economic (rather than social) activities. These appear to be leading to a re-run of the 'macroeconomics of populism', a particularly Latin America affliction where expansionary government policies eventually lead to balance of payments problems, spiralling inflation, and a decline in real wages (Alan Garcia's 1985-90 mandate in Peru perhaps winning the prize for the most disastrous example of this cocktail).

His concluding paragraphs strike me as rather wise and, for those who've paid attention to any of my previous posts, run along similar lines to other conclusions I've favoured:

It would be foolhardy to claim that what Latin America must do to lift its population out of poverty is obvious. If there is a lesson to be learned from other countries' experiences, it is that successful development strategies are diverse and that what works in one place may not work elsewhere. Nonetheless, recent experiences in countries such as Brazil and Mexico, where programs skillfully designed to target the weakest groups in society have had a significant effect on their well-being, show that effective solutions are within the reach of pragmatic policymakers willing to implement them. It is the tenacity of these realists -- rather than the audacity of the idealists -- that holds the greatest promise for alleviating the plight of Latin America's poor.

Thoughts for Food

Writing in Dissent Magazine, Thomas Pogge takes on the complex issue of international economic growth and inequality. His main aim is to take issue with the idea that 'first we've got to grow the cake before we share it out' and the assumption that the best way to reduce poverty is through all-out economic growth that will benefit all through trickle-down processes. Instead he suggests that more equitable economic growth may be of much greater benefit to the poorest, even if it's a little slower, at a very small opportunity cost to the richest.

Pogge's starting point is one of nifty dynamic graphs of international GDP per capita (at purchasing power parity) along the lines of those developed by and displayed on the
Gapminder website. This one was displayed in the March 2004 issue of the Economist as a piece of one-upmanship on market globalisation critics. Charted at country level, poorer countries have grown more slowly over the last twenty years than rich countries. However, when you account for each country's population (changing the size of the dots on the graph) , the slope of the trend is reversed, thanks to the success of China and India.

All very well, says Pogge. But this considers only one of the dimensions of inequality -- between countries. Also relevant is inequality within countries. Little can be inferred about the poverty-reducing effect of a country's growth in average wealth if all the extra income is going to the richest. For example, survey data indicates that the income of the bottom decile in the United States is not much more than that of the bottom decile in Hungary, and only half that of the bottom decile of Japan or Norway.

Pogge makes what I agree is the important point that the relative income share is also important to consider, because "many things money can buy are positional or competitive: political influence, for instance, and access to education and even health care depend not merely on how much money one has to spend but also on how much others are willing and able to spend on those same goods".

That is a point that can be disputed at an ideological level, and then we get into complicated debates about rewards and incentives. But even if we just stick to differences in absolute income levels, the situation is a lot more extreme when developing countries are considered. For example, the income of the poorest decile in Turkey is nearly three times that of Colombia's poorest (although the two countries have a similar GDP per capita at PPP), and the lowest decile in Colombia earns only 7.4% of the average national income. Even more strikingly, in Vietnam, which is only half as rich as Colombia, the poorest decile has an income more than twice as high as the poorest decile in Colombia.

Pogge goes on to consider China, the great poster child for development through maket globaisation. While he acknowledges that there have been large gains for Chinese, including the poorest, he wonders whether even greater reductions in poverty could have been possible with more equitable growth. Between 1990 and 2005, the national per capita Chinese income grew by 236 percent, but that of the bottom decile just 77 percent, while their relative share declined from 30 to 16 percent of the average. Had the relativities been retained, suggests Pogge, even at the expense of a couple of percentage points of growth per annum, the poorest 40 percent of Chinese would all be better off in absolute terms than they are today.

Finally, he considers inequality between human beings world wide. Here he suggests that China's success may have been at the expense of the global poor elsewhere. With only a limited amount of access possible to the still-protected markets of the rich and powerful nations, could China have crowded out the gains of other developing nations by winning the race to the bottom in terms of labor and environmental standards? It's a provocative thesis, but if valid, would be a caution against supposing that other nations can simply follow China's path.

Overall, comparing humans to other humans paints the most dramatic picture of all. Sticking to PPP terms, the poorest quintile of humanity controls just 0.4 percent of the world's wealth, while the richest 1 percent controls 31.6 percent. Doubling the wealth of the bottom two quintiles (40 percent) of the world's population would take just 1.5 percent of the wealth of the top 1 percent. Pogge concludes:

Most of the massive severe poverty persisting in the world today is avoidable through more equitable institutions that would entail minuscule opportunity costs for the affluent. It is for the sake of trivial economic gains that national and global elites are keeping billions of human beings in life-threatening poverty with all its attendant evils such as hunger and communicable diseases, child labor and prostitution, trafficking, and premature death. Considering this situation from a moral standpoint, we must now assess growth—both globally and within most countries—in terms of its effect on the economic position of the poor.

It's a good argument that helps cut through some of the ideological fog in all the contradictory statistics. But it still leaves the massive question of just how you do engineer economic growth with less inequality. If it requires 'more equitable institutions', what are these equitable institutions, and how should they work?

Categories: development, Latin America

Modernisation, Shmodernisation

Excuse the potted summaries of my development studies lectures. They are part of my 'diary', which will contribute to a portion of my course work grade.

A couple of weeks into the lectures, we got to Modernization Theory, the starting point for any discussion of development theories. This comes from the period around the end of the Second World War, when there was a surge of interest in how the poor benighted masses of the world could improve their lives by becoming much more like us in the West.

On the one hand, getting the starving natives to the point of having a refrigerator and a car in the driveway would make them less susceptible to the Red Peril. On the other hand, if you were a communist, modernisation had to be part of the glorious dialectical march of history.

According to the standard view, modernisation happens along a number of different dimensions. To the uninitiated, a lot of this will look less like a theory than the set of assumptions we still go by most of the time.

Population -- high birth and death rates give way to a period of rapid population growth, then finally to a stabilising population with both birth and death rates low.

Economy -- subsistence agriculture with little specialisation and exchange through reciprocity eventually sees production removed from consumption, a high degree of specialisation, and exchange through money rather than reciprocity.

Society -- tribal societies where kinship networks dominate and social status is inherited give way to meritocractic societies based on the nuclear family and a secular, scientific education. Class becomes a key organising factor of society.

Politics -- tribal groups with local control and close association between political and religious leaders give way to the modern democractic state with mass participation in politics based on political parties, separation of church and state, and mass communication through the media.

Geography -- modernisation diffuses through space, with transport, trade and urban centres hastening the process of modernisaton and vice versa. The spread of modernisation can be measured by things like kms of roads, telephone connections, kids in school, and newspaper circulation (and nowadays mobile phones and internet connections).

Although we are about to learn about all the critiques of modernization theory and how it has been superceded by theories that are more sophisticated or diametrically opposed, much of it clearly still drives how we think about the world. For example, a lot of people might have had deep reservations about the likelihood of the neoconservative dream of turning Iraq into a 'modern, secular liberal democracy' and thereby 'transforming the Middle East'. More people still rejected the means by which it was to be achieved. But there was certainly a general sense that it was a desirable goal.

Joe Stiglitz and His Discontents

Friday evening we went to see Nobel prize winner, former Clinton adminstration and World Bank honcho and best selling author Jospeh Stiglitz 'chat' with NZ-domiciled economic journalist Rod Oram as part of Readers and Writers week at the Wellington International Festival.

In the course of the hour or so of discussion we got for the $25 entry fee, Stiglitz:

--reiterated that 'there needs to be a balance' between the responsibilities of markets and government. He cited his own work on information asymmetries as demonstrating why markets aren't always efficient, and pulled out what was no doubt a favoured quote that 'the reason why the invisible hand is invisible is that in many cases it isn't actually there' .

-- heaped special praise on the the Scandinavian countries as having effectively struck that balance and having succeeded through 'investing in their young people' and being prepared to pragmatically review and revise policies.

-- stressed that governments need to implement redistributive policies to compensate those who lose out under international trade and globalisation. He (to my moderate surprise) slightly favoured Obama to achieve this in the US, but said that 'the policy differences between the two [Democratic candidates] are much less than those with McCain'.

-- argued that central banks should not be restricted to narrow inflation-only targets, but should also have economic growth and employment as objectives. He suggested that former Federal Reserver chairman Alan Greenspan bore some of the blame for the current credit crisis, by encouraging people to take out variable-rate mortagages.

-- in response to the inevitable 'but is economic growth sustainable' audience question, agreed that better measures of economic wellbeing and progress than simple GDP need to be developed, factoring in environmental degradation, resource depletion and so forth (check out the work of Partha Dasgupta for what these might look like).

When asked about whether he preferred a cap-and-trade system or carbon tax, he said that the two were near enough to equivalent if emission credits are auctioned. Giving away the emissions allowances -- as is set to happen in New Zealand -- he thought would 'give scope for corruption'. Ideally, said Stigliz, there should be a fully international auction of emissons permits.

Stiglitz came across as the atchetype sensible progressive, spontaneuously applauded on occasions by the 1,500 or so right-on middle class Wellingtonians. With his friendly-bear demeanour and softly gruff tones, he reminded me of another maverick New England academic, philosopher Daniel Dennett. As was the case when I watched Dennett tear apart creationists in front of a group of atheist or agnostic philosophy students, I thought it might be more fun to see Stiglitz put his well-reasoned messages to a crowded town hall in rural Texas, or maybe Te Kuiti.

Development and Dependence

One of the recommended books to consult in our Development Studies course is a text of sorts called The Companion to Development Studies, edited by Vandan Desai and Robert Potter,

Heading straight for the bits on Latin America, I found confirmation that Eduardo Galeano's poetically fist-shaking The Open Veins of Latin America had its intellectual foundations in a body of work called dependency theory

As described in my review of Open Veins, Galeano describes an exploiting 'core', which dominates industrial production (and makes the decisions), and an exploited 'periphery', which provides raw materials and cheap labour. Core-periphery relations can exist between continents (eg, Europe--Latin America), between countries (eg, Brazil--Paraguay) and within countries (eg, Lima--Andean Peru)

Dependency theory originated with a group of Latin American economists who worked with the United Nations in the aftermath of World War 2 and came to present a peculiarly Latin American perspective on development. Dependency theory was notable in being the first body of thought on these issues that actually originated in the 'developing' world. It's easy to spot its origins in Marxism -- for many dependency theorists, the 'underdevelopment' of the third world periphery is a necessary correlation of the development of the rich countries. Exploitation is seen as inherent in the very nature of capitalism.

A brief glance through the short articles in Desai and Potter told me that dependency theory has been critiqued from several quarters. There have been technical criticisms from within Marxism, which made me glaze over a little even in the one-paragraph versions. There have also been arguments that dependency theory requires excessive ad hoc adjustment to fit the very diverse kinds of economic relations that exist at different places and times.

With a bit more reading, I'm likely to agree with the latter views. However, as I noted in the review, it doesn't need to be a grand theory, and you don't need to be a Marxist, to find Open Veins a compelling historical account of Latin America's economic and political history that strikes to the root of the continent's problems.

As also noted, the book ends in the mid-70s, amidst a dark wave of miltary dictatorships but before the numerous economic crises of the 80s and 90s. The controversies resulting from these events suggest that the debate about dependency theory is far from dead. As I read further, I expect to hear more about how, as colonialism has ended and local democracy has strengthened, the power relations of core and perpiphery have been perpetuated through mechanisms such as debt and trade rules. I might even try to contribute some such thoughts myself.

History Marching On?

One of the advantages of two-hour lectures is that you get potted summaries of frighteningly dense academic texts, which you later recall as actually having read.

Tonight we were introduced to the work of two historians called M P Cowen and R W Shenton, who, in a work of apparently monumental difficulty, tease out the difference between what they call 'immanent' and 'intentional' development.

According to the authors, 'immanent development' is the organic, undirected, potentially chaotic process exemplified by the Industrial Revolution. It involves rapid technological change, massive urbanisation, and the overthrow of old values and institutions, destroying while it creates.

'Intentional development' is the intervention of governments and other institutions to control and direct development. It aims to slow down urbanisation through favouring rural development, and preserving some parts of existing customs and institutions. Most of what we think of as 'development projects', by government agencies and NGOs, would fall into this category.

It helps to learn that Cowen and Shenton are Marxists, disapproving of 'intentional development' as a reactionary impediment to the glorious march of history. Seen in this light, their characterisation of 'intentional development' sounds similar to the attitudes of magazine Spiked, whose contributors like Frank Furedi and Brendan O'Neill are cuttingly scornful of the concept of 'sustainable' development and lambast the 'eco-miserabilists' that are pessimistic about human progress.

Spiked writers are contemptuous of the patronising do-gooding of western agencies who set African villagers' sights on a donkey-powered well, rather than a modern reticulated water system. O'Neill has launched an attack on the practice of offsetting carbon emissions by discouraging third-world farmers from using energy-intensive technologies -- something he calls 'eco-enslavement'.

The description of intentional development also sounded to me like Alan Garcia's slogan of 'responsible change' with which he carved out his position in the 2006 Peruvian elections. But if you look closely, here the concept described by Cowen and Shenton is flipped on its head. In Garcia's case, the 'change' didn't refer to development, but to redistributive policies and more help for the poor. 'Responsible' referred to not trying to regulate and redistribute too much -- i.e. not doing anything radical that might frighten investors and financial markets.

This suggests that, since the late 1980s, the dynamic march of global capitalism has come to be seen as the orthodox state of affairs, and upholding it is in effect the conservative position.
The 'immanent', grassroots tendency in many countries is to seek stability and security, and to oppose or put conditions on the unsettling flux of capitalism. This is now seen as radical.

Garcia's actual behaviour in government has been rather different from promised, with less 'change' and rather more 'responsibility' to the business elites that the likes of La Republica columnist Humberto Campodónico claim are his taskmasters. He has declared certain major mining projects as 'in the national interest' and called those who oppose them 'old communists'.

Pondering these paradoxes led me to wonder whether there aren't two conflicting kinds of 'intentional development'. Sure, the NGOs are squirreling away, trying to promote productive rural communities, just as Cowen and Stenton say. But they're overshadowed by the alliance between business elites and government, which pushes more rapid economic transformation than would occur naturally.

There's a name for this -- corporatism. It's at the heart of what Noami Klein is critiquing (in a sometimes overblown, but broadly effective style) in her book The Shock Doctrine. The 'creative destruction' of unfettered capitalism might have originally been an 'immanent' process driven by new technologies and organic social changes. But as Klein and others have argued, in recent times it has often been imposed from the top down.

Why Do I Care?

One of the assignments in the Master of Development Studies programme is to keep a 'journal' of our own 'ideas on development theories and issues' You can imagine that I hardly greeted this task with too much trepidation, given that my amateur musings on trade, energy, poverty reduction, labour rights, economic growth, government policy etc have themselves formed a kind of intermittent journal over the last couple of years.

Indeed, it will be an excellent excuse to follow through with a number of ideas for posts that I had shelved or never started, as priorities such as work, other projects, and generally having a life have intruded.

The suggested starting point for our 'journals' is to bring it all back to our raison d'etre for being interested in development.

So here is my two cents' worth.

Those of us in the handful of 'first world' countries roughly defined by OECD membership are among the few materially luckiest people to have ever lived. About two hundred years ago, things started changing for our forebears in Northern Europe. Whether through the dynamism of the new industrial economies, rapacious exploitation of raw materials from recently 'discovered' colonies, or the unprecedentedly cheap energy delivered by fossil fuels, economic growth started to accelerate. This allowed the production and adoption of a range of new technologies that have literally transformed the world.

We've ended up with longer, healthier, more comfortable lives, and individual freedoms unthinkable even a couple of of generations ago.

Greater material wealth hardly brings utopia. There is some evidence that the contribution of wealth to happiness tops out at between $15,000--20,000 USD per capita. Humans seem to have an in-built status anxiety that means relative wealth differences create stress even when everyone is better off.

Nevertheless, you'd have to be quite perverse to wish yourself into a different place and time. Apart from a very, very few people who really want to live in mud huts, most people who completely reject the 'system' in which they were born and grew up, do so in bad faith. From a personal perspective, having the freedom to travel, and being able to afford effective laser eye surgery, are two things I remain eternally grateful for.
In my view, working out how the rest of the world can have the same opportunities is at least a very interesting puzzle. Ensuring that they do, has at least some moral weight.

There are other, more pragmatic reasons for supporting global development. Increasing prosperity is what writer Robert Wright calls a 'non-zero sum game'. People are just as naturally greedy and conniving when they're rich as when they're poor -- but when there are more riches to go around, there's less of an imperative to grab someone else's share. Greater prosperity gives people more time and space to learn to tame their more venal impulses. If we care about reducing the number of people getting shot or blown up, supporting sustainable material wellbeing is a necessary -- though probably not sufficient -- condition.

It also appears that there may be a tipping point of prosperity when societies begin to see the natural environment as something precious that needs to be cared for, rather than an adversary to be exploited. Again, material prosperity allows us to care about more than where the next meal is coming from.

That's the potted summary of my overall philosophy. My detailed views, and my obsessions and prejudices, mostly derive from my personal experiences living and travelling in Latin America.
Before I ever made it to the continent, I thought I knew something about its history and politics. It's hardly a surprise that my instintctive sympathies were firmly left-wing. I'd been inspired by seeing a film sympathetic to the Sandinista revolutionaries in Nicaragua, and stirred by stories of CIA conspiracies to undermine democratic progress at the behest of neocolonial corporations like United Fruit. On the other hand, reluctant readings of excerpts from the Economist had partially eroded any faith in romantically socialist alternatives.

I was aware that a common way of engaging in these countries -- and a good way to get to stay around -- was working in some kind of aid or development project. But the more I travelled, the more I wondered how I could offer 'assistance' to anyone. For a clumsy gringo with a bright backpack and not even much money, it seemed far more likely to be the other way around. The young guys manouvering dilapidated chicken buses around impossible mountain bends; the women handweaving elaborate and colourful textiles; the peasant farmers raising corn and chickens on difficult patches of land: all were far more capable than I of meeting life's practical challenges.

It's true that their were deep inequalities and horrible injustices on view. But I found that many of my preconceptions were undermined or turned on their head. Some of the charming, educated people that I met and were treated kindly by could probably be characterised as part of the 'oligarchy'. On the other hand, I felt it difficult to engage with the working people and campesinos, except occasionally after a bottle of aguardiente. The villains of some of my reading, the 'oppressive' police and military, were staffed by guys from the same working class, mestizo background as the workers and farmers. And I had to acknowledge that as a vulnerable lone traveller, it was sometimes a comfort to see them around.

I also began to see ways in which people's problems were in part due to simple things that they themselves could change.

Most people were eager to see tourism -- yet couldn't see that the tendency to harass, rip off and otherwise squeeze out every last penny from visitors was the quickest way to ensure they didn't stay around and spend more money. Worse was the tendency to behave the same way towards each other.

I was also surprised by the prevalence of nationalism. While it seems clear to an outsider that the ordinary people of Latin American countries have far more in common with each other than with their local elites, it was depressingly common to see people with unexamined hostility towards a neighbouring nation based on the territorial squabbles of a hundred years ago. Attitudes about race and ethnicity could charitably be described as unreconstructed.

After more time spent in Peru in particular, and study of its history, politics and culture, I started to better understand the underlying reasons for these things -- but continued to believe they could be different.

If I've ended up with any strong belief about development, it would be a kind of militant pragmatism. To take advantage of the potential of the modern economy, there are probably some sine qua nons relating to containing inflation and keeping a relatively stable currency. Beyond that, what works for a particular country will depend very much on that country's people, culture, history, and even physical geography.

I'm sceptical about the simplistic narratives that blame all Latin America's problems on outside exploitation. But I'm far more irritated by those neoliberals who would remake countries in the image of their textbook, based on highly ideologised theories, without any appreciation of the realities of individual societies, or even of their own countries' histories.

One thing I believe firmly is that the countries of Latin America -- and by extension other 'developing ' countries -- ought to be able to work out their own priorities and the mix of policies that will best meet the needs of their citizens.

At the same time, I would call into question any notion of some kind of Hegelian pathway to a 'state of development' that more or less resembles how we live. For all the difficulties of Latin America, there are many aspects of life there that are preferable to New Zealand.

Latin America retains many traditions, languages, skills and cultural memories that have been steamrolled over in many industrialised societies. People have much warmer and more regular contact with their families and neighbours, and those who have visited western countries are often horrified at the neglect sometimes suffered by elderly parents. Children may in my view be over-indulged, but Latin Americans would be rather shocked that what has most stirred New Zealanders to political action in the last couple of years has been defending the right to hit their kids.

Life is intense, exciting, passionate. Romance exists -- though gender politics are often fraught. Music and dancing are part of everyday life. Middle class people like my friends Hugo and Lizbeth have lives that are a little less comfortable and more chaotic than New Zealand suburbanites, but enjoy less commuting and better parties They get to eat a homecooked meal around the kitchen table at lunchtime.

It may sound like a pious cliche, but for me international development is about an exchange of experiences and perspectives, ideally for mutual benefit.

Categories: development, Latin America

US Senate Passes Peru Free Trade Deal

After all kinds of delays and false starts , the US-Peru free trade agreement was passed on Tuesday 5 December by the US Senate with a vote of 77-18.

The Peruvians are pleased with the fact that this was an unprecedented vote in favour of a trade agreement. By comparison, the Chile agreement was passed by 65-32 while the Central American Free Trade Agreement (CAFTA) scraped through by 54-45 and is not counted as a 'treaty' by US law.

For Americans from both the main parties, the Peru deal has ended up being something of a no-brainer, for strategic rather than economic reasons. With Colombia unacceptable for the Democrats at the moment, and the rest of South America hostile or disinterested, the US was in danger of being left with no real friends between Costa Rica and Chile.

From Peru's perspective, there's not much doubt that the trade agreement will lead to further economic growth and more money flowing into the country. Whether that translates into material improvements for the majority of Peruvians depends greatly on the competence and commitment of the government. What is needed is the 'free trade agreement for the interior' promised by president Alan Garcia during the 2006 election campaign.

A good start would be to establish a system of compensation and assistance for the small agricultural producers who will be affected by competition from subsidised US imports. However, La Republica reports that the Peruvian government is still not sure of how such compensation will be provided, nor to whom. There is less than $40 million USD earmarked for this purpose, compared to a $4 billion fund in Mexico and $100 million in Chile. Minister of Argriculture Ismael Benavides said he couldn't explain the reasoning for this amount, since it was determined by the previous government. "I don't know who was the genius that came up with those figures", he said.

For A Few Dollars More

La Republica has a graphic illustration of the struggles developing countries like Peru have had to advance over the last thirty or so years.

The table shows Peru's real per capita GDP, measured in 1994 soles, from 1967 to 2006.



As can be seen, current income per person is only a little higher than it was in the mid-60s, and has just crept above the previous high point in 1975, at the end of the presidency of nationalist General Juan Velasco Alvarado.

Each successive president has a small claim to fame. Alan Garcia's previous term saw a minor peak in 1987, before GDP crashed amidst hyperinflation. Alberto Fujimori introduced the 'Fujishock' of neoliberal reforms in 1990, but even amidst the sell-offs and influx of capital of the mid-90s, his best year was not even as good as Garcia's.

It's quite intriguing that after fifteen years of neoliberal policies, per capita income has only just surpassed what it was at the end of seven years of rule by the Soviet-aligned nationalist Velasco. However, as columnist Humberto Campodónico points out, in these last years of strong growth, wage and salary earners' share of GDP has dropped from 25 to 21.8%.

Of Dogs and Demagogues

While commending Peruvian president Alan Garcia for engaging directly with the public in written form, I have to join many other critics in finding his arguments distinctly lacking and his style dogmatic and bullying.

At best, his 'dog in the manger' article amounts to a grand statement of faith in the tenets of neoliberalism, about ten or fifteen years out of date. At worst, it's an apology for a continuation of the 'open veins' economy -- sucking out the country's natural wealth for the benefit of foreigners and a small local elite.

The first major problem with Garcia's article is that he offers nothing really new. Peru's president could be channelling the International Monetary Fund as he stresses need to establish (large-scale) private property rights and declares his faith in the transformative power of 'investment'. But Peru has already had at least ten years of neoliberal orthodoxy, and five years of steady economic growth, little of which has so far trickled down to ordinary people.

It was impatience with this state of affairs that drove the 2006 election. Garcia was elected to deliver a stronger State and enact social democratic reforms. His slogan of 'responsible change' captured rather well the national mood for improving the lot of the majority, while maintaining a cautious faith in free-market fundamentals.

On the campaign trail, Garcia promised to finish the stalled General Labour Law, end large-scale employment outsourcing, establish royalty payments for mineral resources (whose soaring prices are giving mining companies bonanza profits), and review the trade agreement with the US 'line by line' to strike a better deal for Peru.

These are politically difficult tasks, and the current government can't be entirely blamed for not having made much headway with any of them. But instead of explaining how the same objectives can be achieved gradually or through different means, Garcia seems to have tossed aside any ambition for the government to play a role in building a fairer society.

Worse than Garcia's ideological swing is the weakness of his excuses for not doing more. When he says that there is no money to meet demands for a health and social security safety net he conveniently ignores the fact that Peru has the lowest tax take in Latin America, notably lower than comparable market economies like Chile and Colombia. He completely dismisses concerns about the environmental impact of mining as 'last century' but presents no plan for an independent environmental authority that might be trusted to assess the real impact of individual mining projects.

The second major problem with Garcia's rhetorical positions is that they're divisive and antagonistic. The ongoing poverty and exclusion, especially of those in the rural south of Peru, means democracy remains extremely fragile. Strike and marches are commonplace. Nationalist leader Ollanta Humala is always ready to stir up trouble, and memories linger of his brother Antauro's aborted 'uprising' at New Year 2005.

You'd assume that a social democrat with ambtions to statesmanship would try reaching out to those who voted for Humala and convincing them that more can be achieved through democratic reform than by constant fist-shaking. Instead, Garcia chooses to blame and browbeat. His tirade about the 'idleness' of the land, forests and oceans appears to imply that the occupants are themselves idle, and to be blamed for their own poverty. He accuses dissenters and and environmentalists of being 'old communists', brushing aside the same genuine concerns about the environment and labour rights that led US Democrats to insist on changes to the US-Peru trade deal.

Finally, and most seriously, Garcia offers nothing positive. There are no case studies of successful small business or communities; no empowering vision of how ordinary Peruvians can develop their unique skills and traditions into valuable niche industries -- indigenous textiles, jewellery, crafts, eco-tourism, wine and pisco, highland crops and health foods being just a few contenders.

There is dismissal of any other form of ownership other than large scale commercial property. Garcia is probably right in saying that there needs to be more medium-size farms with the ability to invest in modern production. But he fails to describe how ordinary Peruvians might make such advances themselves through co-operatives, better access to credit, or his own government's Sierra Exportadora programme. The suggestion seems to be that small landowners should just sell up to foreign investors and join the migration to the already-overcrowded cities.

The only mention of a positive example is the town of Ilo, which Garcia says is 'the most advanced in Peru' thanks to 'mining and fishing'. This is disingenuous. Ilo's progress has come after 20 years of co-ordinated community action, battling with the Southern Peru Copper Corporation to clean up the town's contaminated air and beaches As late as 1997, sulphur dioxide emissions around the town were fourteen times the level recommended by the World Health Organization.

A further irony lies in the countries he holds up as examples of progress: Germany, Japan and Korea are all relatively resource-poor nations that got where they are today through the hard work and ingenuity of their people, rather than by exploiting mines and forests.

With deep divisions that go back to the Spanish conquest, Peru desperately needs constructive leadership that convinces people they are capable of improving their own lives. Technocratic previous president Alejandro Toledo was a failure in that respect -- muddling his way to a historically low approval rating of 7 percent. Alan Garcia is a much more populist figure, with a gift for appealing directly to the public. It's a pity, then, that in this case he has wasted his considerable rhetorical talent by delivering a message that is anything but unifying.

Categories: Alan Garcia, economic development, Peru, el perro del hortelano, Amazon

Alan Garcia's Dog in the Manger

It's always good to see governments be open with the public about the vision that drives their policies and actions. It's also relatively rare that they attempt to persuade by written arguments that can be analysed and critiqued. For this reason, it's quite impressive to see Peruvian president Alan Garcia publish a lengthy op-ed in Lima newspaper El Comercio, in which he argues that Peruvians opposing greater exploitation of the country's natural resources are 'dogs in the manger' who are impeding progress.

So I've translated the entire article and posted it below. Even for those who aren't especially interested in Peru, this is an interesting contribution to the debates about economic development, environmentalism, sustainability and democracy. This is not to say that I agree with all or even most of Garcia's argument: in many respects it's disappointing, out of touch and even perplexing in its choice of theme. In another post I'll discuss some of these criticisms.

Translation note: I've kept it pretty literal, so it has a slightly awkward feel in places. Garcia uses in several places the expression 'poner en valor' (literally to 'put into value'), which I understand has no real English equivalent, being a Spanish transliteration of the French phrase 'mise en valeur'. I've generally translated this as 'to make productive'.

By Alan Garcia Perez, President of the Republic

There is great demand for legal titles to family homes. Every Peruvian knows that a legalized property that can be sold, mortgaged, or passed on through inheritance, can improve their situation. But Peru as a whole has the same problem and doesn't know it. Many of her goods can't be made productive, can't be sold, invested in, or made to generate employment.

There are millions of hectares for forestry that are idle, millions of hectares more that communities and local associations haven't cultivated nor will cultivate, as well as hundreds of mineral deposits that can't be exploited and millions of hectares of sea that are never commercially fished. The rivers that run down either side of the cordillera are a fortune that goes to the sea without producing electrical energy. There are, as well, millions of workers that don't exist, although they labour, since their jobs don't provide them with social security or a pension for later on in life, because they don't contribute what they could to building national savings.

So there are many unused resources that aren't tradeable, don't receive investment, and don't generate employment. And all that because of the taboo of left-behind ideologies, because of idleness, indolence, and the law of the dog in the manger who prays: “If I don't do it, let nobody do it”.

The first resource is the Amazon. It has 63 million hectares and abundant rainfall. Within it forestry could be established, especially in the 8 million hectares already destroyed – but for that, property rights are required; that is, a secure plot of land of 5,000, 10,000 or 20,000 hectares, since on smaller areas of land there won't be formal, long-term investment with high technology.

At present the only concessions that exist depend on the will of the Government and the bureaucrats who can [later] modify them. For this reason nobody invests, nor creates one job for every two hectares, as should be the case; nor is there wood processing or furniture exporting. For the most part, these concessions have only served to extract the finest wood, deforest and abandon the land. In contrast, formal property ownership by large collective businesses like pension funds will allow long-term investment, from planting through to harvesting, years later.

Those who are opposed say that property rights cannot be granted in the Amazon (and why so in the coast and the sierra?). They also say that granting property in large lots would give profits to big business; sure, but it would also create thousands of formal jobs for Peruvians who live in the poorest areas. It's the dog in the manger.

Let's respect the virgin native forests, but let's start with the 8 million hectares that have been turned into deserts and destroyed in recent years by the scorched-earth concessions, the [cultivation of] coca and indiscriminate logging. There, a million jobs can be created, as well as employment in the manufacture of furniture.

It's an embarassment that Chile exports US $2 billion in wood without having a hectare of the Amazon, Uruguay $1 billion, Brazil $8 billion, while Peru barely exports $200 million.

The same is true in a second area – the land. For there to be investment, secure property rights are needed, but we've fallen into the trap of granting small plots of land to poor families that don't have a cent to invest, so apart from the land, they have to ask the State for fertilizers, seeds, and irrigation technology as well as guaranteed prices. This 'minifundista' model without technology is a vicious circle of misery. We must support medium-sized properties, and an agricultural middle class that knows how to obtain resources, find markets, and can create formal employment.

But what do we see in this country? When someone sees a beautiful beach, someone else already claimed it years ago and hasn't invested a cent to make a nice swimming area, so it will stay for decades more without value. The hills that surround Lima are like that – where investment could work miracles. So are all the cement quarries claimed but never worked.

In addition, there are true peasant communities but also artificial communities that have 200,000 hectares on paper but only use 10,000 hectares while the rest is idle property, 'dead handed', while its inhabitants live in extreme poverty waiting for the State to bring them help instead of making their hills and land productive, leasing them, trading them. Because if this land is unproductive for them, it would be productive with a high level of investment and the know how that a new buyer brings.

But the rhetoric and deception says that these lands can't be touched because they are sacred objects and that this communal organization is the original organization of Peru, without realizing that it was a creation of Viceroy Toledo to round up the indigenous people into the unproductive lands.

The third area is mineral resources, of which Peru has the greatest riches in the world, not only for the quantity but also the variety of minerals, so that if there's a drop in price it can be compensated for with other products. However, barely a tenth of these resources are being exploited, because here we still debate whether mining techniques destroy the environment, which is an argument from last century. Of course it destroyed [the environment] in the past, and the environmental problems of today are basically because of the mines of yesteryear, but currently mines exist alongside cities without problem. And in any case it depends on how strict the State is in the technological requirements placed on mining companies and in negotiating greater economic and labour participation for the regions where the mines are.

When I go to the city of Ilo and see its urban development, which is the most advanced in Peru, I know it's the product of mining and the fishing industry, and it pains me to compare this with the town of Ayabaca, which has more mineral resources than the Cuajone mine in the south, but lives in great poverty. And it's there that the old anticapitalist communist of the 19^th century disguised himself as the protectionist in the 20^th century, and changed his shirt once more in the 21^st century to be an environmentalist. But always anticapitalist, against investment without explaining how, with a poor agriculture, a leap forward can be taken to greater development.

And against petroleum they've created the figure of the 'isolated' jungle native; that is, unknown but presumed [to exist], because of which millions of hectares must not be exploited, and Peruvian oil must stay in the ground while the world price of oil is US$90 a barrel. It's preferable that Peru continues importing and improverishing itself.

A fourth area is the oceans: Japan has fewer marine riches but eats five times more fish per capita per annum than Peru, because it has developed its aquaculture. But here, whenever it is proposed to grant an area of sea for an investor to put their fish farms, this is opposed by the local small-scale fishermen who see the birth of more modern competition and say that it will block their free access and pollute the ocean, while others invoke the Sacred Sea of [Peruvian war hero Miguel] Grau, instead of accepting this activity that could generate hundreds of thousands of jobs.

In addition, Peru has enormous riches from the rain that falls in the cordillera. It's calculated that 800 billion cubic metres of water annually flows down in the rivers that head towards the Pacific and the Atlantic. Of that which goes to the Pacific, we use a small amount for agriculture and electrical generation, but with the water that goes to the Atlantic, we do practically nothing.

How to make the most of it? Now that the price of oil keeps going up, we must think about electrical generation that is renewable, almost inexhaustible, and clean. And to think about its use and sale in continental terms. Large electric plants on the Marañón and in the rapids of the lower Urubamba would allow us to sell energy to Ecuador, Colombia, Chile and Brazil. For this it would be necessary to obtain large amounts of private or international capital that needs long-term security to invest billions and be able to achieve a return on the investment. But the dog in the manger says: 'Why are they going to make money from our rivers? Better that the regional government does it' But they don't say with what money.

In fifth place, people's own labour is not made productive for those who work. Informal employment is dominant, which is work not incorporated into the economy and without legal status; it doesn't provide social security because payments are not made, and it doesn't contribute to any pension system. To give value to this work and benefit the individual, the logical thing would be to make progressive advances so that the employees of small business, who number in the millions, have in the first place the fundamental minimum rights – health insurance, a pension, and an eight hour day. That's more than they have now. This would strengthen the pension fund and health insurance fund.

But the demagogues oppose this progressive access, saying: “Full rights must be given immeidately to all the employers of small family or informal businesses”. But they don't know (or perhaps they do) that the only thing they'd achieve is that the small businessman, unable to pay these costs, would close the business and lay off lots of employees, so the cure would be worse than the sickness.

There are also others who say: “If it's not possible to provide workers all the fringe benefits and 30 days holidays just yet, the State should provide full health cover and a minimum pension without them having to contribute. But it turns out that these are the same ones who are against investment in forestry because the jungles are sacred, against opening more mines because Peru should only be agricultural, and that don't want aquaculture in the oceans. And so, without investment, without jobs created, they think that the State is a bottomless well from which all resources can eternally emerge, and they end up saying: “Cut the work day to 6 hours, pay more salaries, even if Peru doesn't produce any more”.

As a final point, I could add that neither are the brains of our students and childrens made productive. Education is delivered in the majority of cases to pass with an 11 [out of 20] instead of promoting excellence and to aim at an 18. A group of bad teachers and bad bureaucrats refuse to be evaluated in order to hide their mediocrity and so the system carries on producing worthless results. And the same ones as always say: “Give me more, without me changing or making any effort”. So, they are allies of informal mining, clandestine logging, peasant poverty, informal employment and lack of merit or effort.

Faced with the philosophy of the dog in the manger, reality tells us that we must make productive the resources that we don't use and work with more effort. We have the example of successful peoples: the Germans, the Japanese, the Koreans, and many more. And this is the bet for the future, the only thing that will make us progress.

Categories: Alan Garcia, economic development, Peru, el perro del hortelano, Amazon

Peruvian Communities Vote Against Mine

Peruvian news sources report on a highly-charged plebiscite in the sierra of Piura, northern Peru, where local communities voted overwhelmingly last Sunday against the development of a planned copper mine, which local farmers and environmentalists say could poison water sources and affect biodiversity in the region .

More than 90 percent of voters in the districts of Ayabaca, Pacaipampa and Carmen de la Frontera, voted against the plans of Chinese-owned company Minera Majaz to mine copper and molibdenum in a project known as Rio Blanco. Around 60 percent of 31,000 registered electors turned out across the three districts, some walking many hours to arrive at a polling station.

The vote, which was organised by the mayors of the three district municipalities, was criticised in advance by Peru's national government, which called it 'illegal' and 'non-binding'. Peru's electoral office (ONPE) and national election jury (JNE) had refused to recognise the plebiscite, and called for the confiscation of official electoral materials that were to be used in the vote.

But the vote went ahead peacefully, despite prior claims of threats against locals who do support the mine. International observers from Ecuador, Bolivia, Canada, Spain, the United Kingdom, Germany, and Switzerland attended.

Majaz Minera is a subsidiary of British company Monterrico Metals, which has recently been acquired by Chinese consortium Zijin. Exploratory work has been occurring in the region since 2002. Preliminary results from a study by the University of Texas suggest that this phase has already caused some damage to the region's biodiversity, which includes the Andean spectacled bear and highland tapir. Local farmers fear that mining operations will diminish the quantity and quality of rivers which irrigate both the western (Pacific) and eastern (Amazonian) slopes of the Andes. The latter is a notable coffee-exporting region.

The Peruvian government has claimed that the vote was promoted by 'anti-mining' NGOs, who along with foreign missionaries it blames for stirring up opposition to the mine. Prime Minister Jorge del Castillo said that 'people who oppose investment can't demand its benefits'. President Alan Garcia called anti-mining activists 'old communists' responsible for 'a conspiracy to stop the country growing and producing'.

But analysts say that opposition owes more to bad historical experiences with mining operations in Peru. They cite lack of direct benefit for mining regions, weak governmental regulatory capability, and a poor record of mining company environmental and labour practices.

Also, Peru doesn't have a Ministry for the Environment or independent environmental agency. The organisation responsible for assessing environmental impact reports for mining projects is the Ministry of Energy and Mining, which is also charged with attracting and promoting mining investment.

Del Castillo is now calling for dialogue between the government, mining company and local authorities. District mayors have said they would be happy to engage in dialogue but that it must include community leaders from the respective districts.

The mining company, whose public face until now has been its English spokesman Andrew Bristow, says it is also prepared to talk. But for now, local communities have had the final say.

Categories: mining, Rio Blanco, Peru, Majaz, Piura

Trade Agreement in the Final Stretch

After many doubts and delays, there's now a better-than-even chance that Peru's free trade agreement with the United States will be ratified in the near future. According to statements made by US officials to the Peruvian media, the House Ways and Means Committee is set to hold a hearing on the 25 September, after which the agreement would be voted on sometime in October.

Of the four trade deals negotiated by the US government before President Bush's 'fast track' authority expired in June, Peru's will be the first to go to a vote, and the most likely to be approved (the others are with Panama, Colombia, and South Korea). But with some Democrats still unconvinced about the Peruvian government's commitments to enforcing labour standards, there may be yet be stumbles as the agreement goes through Congress.

When I last posted on the topic, Republicans and Democrat leaders had stuck a deal to allow the Peru and Panama agreements to be considered if their labour and environmental conditions were strengthened. Amendments were drafted, and swiftly accepted by Peru's congress. A deputation of US representatives was to visit Lima to offer 'technical assistance' to ensure that Peruvian labour and environmental standards were on the road to acceptability.

That visit in August -- where Democrat Charles Rangel met with president Alan Garcia, representatives of all political parties, and labour unions -- produced warm words and grand statements. Garcia said that the agreement could be the start of a 'new New Deal' in international commerce. Rangel opined that it could be a 'flagship' agreement, noting that 'for the first time, workers' rights will be a part of trade agreements -- to be enforced'.

But not everyone was convinced about the Peruvian commitment to improving labour standards. On the campaign trail in 2006, Garcia had promised the elimination of 'services', companies that provide outsourced labour to other businesses. But a year later Garcia had changed his tune, proposing that such companies merely be regulated rather than eliminated. In August the government announced a law would be prepared with the aim of reducing the number of employees contracted through 'services' from 20% to 10% of the workforce.

According to American magazine Inside US Trade, some Democrats are also unimpressed that their concerns about outsourcing and union rights are being addressed through a series of governmental Surpreme Decrees -- which can be modified later -- rather than through the unfinished General Labour Law. The latter is currently stalled after being negotiated over the last five years. The two largest Peruvian labor federations, CGTP and CUT, have sent an open letter to congressional Democrats asking them to vote 'no' to the trade agreement.

Nevertheless, a hearing of the Senate Finance committee on September 11 on the Peru deal met with few objections. The American labour federation AFL-CIO is agnostic about the deal and has decided to neither promote or actively oppose it, but to concentrate their efforts on opposing the Colombia and South Korea agreements. AFL-CIO policy director Thea Lee said that the new labour and environmental conditions "represent significant progress in crucial areas we have fought to achieve for many years".

Political analysts say that 60 to 120 congressional Democrats are likely to vote in favour of the Peru agreement, meaning that it would pass with a considerably more comfortable margin than the Central American FTA, which passed by 2 votes with just 15 Democrats in favour. But after all the twists and turns that have occurred so far, nothing is certain yet.

Categories: free trade, United Statess, Peru, FTA, trade agreement

Trick or Trade? Uncertainty Remains on US-Peru Trade Deal

With flak coming from all corners of the political spectrum, the Democrat-Republican deal to allow the US-Peru trade agreement to pass must have got something right. Or perhaps its most salient feature it that, for now, its details are unclear.

In a previous post I linked to an outline of the deal. A fuller summary can be seen here. To retirate, the key points are that:

• parties to trade agreements with the US will be required to adopt and enforce the five basic standards in the 1998 International Labour Organization declaration, and the labour sections will be subject to the the same dispute resolution mechanisms as the rest of the agreement
• parties must ratify and enforce seven key multilateral environmental agreements, and the environmental sections will be subject to the the same dispute resolution mechanisms as the rest of the agreement
• intellectual property requirements are softened to allow earlier availability of generic medicines to US trade partners
• Peru is specifically required to crack down on illegal logging of mahogany

In the Times Online, columnist Irwin Stelzer blustered that this represented "the end of free trade as we know it". He lamented that:

We can sue our trading partners if they violate the agreement, and they can sue us. For example, if some country such as Panama decides we are violating trade-union rights here at home, they can bring a suit to press Congress to change the law.

Stelzer failed to mention that , in requiring wholesale adoption and implementation of American trademark, copyright and patent laws, the original agreement cut across national sovereignty in far more significant ways.

At the other end of the political spectrum, US netroots activists were furious with the secretive process that had been followed and bemoaned that drafting of the actual legislative language would be delegated to the Bush White House. They also cast doubt on how enforceable the labour and environmental conditions would be.

Blogger David Sirota lambasted the press for applauding the deal when they hadn't seen the all-important legislative language. He pointed to similar, unfulfilled claims about labour and environmental standards being made in relation to the North American Free Trade Agreement (NAFTA) more than ten years ago.

However, a blogger identifying himself as DemHillStaffer claimed that "we defeated the Bush trade agenda and got 100% of what Democrats have been demanding for years". He asserted that the labour and environmental standards will be "FULLY enforceable and subject to the same dispute settlement procedures as every other part of trade agreements, including investment, and intellectual property...EXACTLY what Democrats demanded before the election".

In a later update, Sirota reported the White House as saying that labor and environmental standards would not be written into the core text of trade agreements, "but instead will mean merely unenforceable NAFTA-esque 'side agreements' or even weaker 'letters' of understanding".

In fact, this is something Peruvian representatives were saying at least a week ago.

Somewhat missing in all this angst was what Peruvians might think about the deal. Alan Garcia's government has been presenting the trade deal as a sine qua non for the country's development, by supporting export-led growth and creating much-needed jobs.

But while Peru's televised media has repeated this line, it is far from a universal viewpoint. In La Republica, columnist Javier Diez Canseco launched a scathing attack on Garcia, whom he characterized as 'Toledo II' (previous president Alejandro Toledo, who was a cheerleader for the free trade deal, and who helped the outgoing Peruvian congress controversially push the agreement through on the eve of last year's election).

Diez Canseco pointed out that Garcia had raised significant concerns about the trade agreement during his election campaign and promised to "retire his signature [if Toledo signed the agreement] and review it line by line". But now in government, Garcia had allied himself with "the powerful business Right" and become a "yes man" for the agreement. To the Democrats proposal that Peru's trade preferences be unilaterally extended for two years while issues were sorted out, Garcia "remained mute".

With ratification looking imminent, the attention in Peru has turned back to the impact of the trade agreement on agriculture. The most prominent concern in Peru has been that the FTA will allow an influx of subsidised American products which will push out small farmers - who will then have the option of joining the influx to the already overburdened cities, or perhaps turning to growing coca.

The government has suggested that a system of compensation will be put in place for farmers affected by the trade deal - particularly producers of corn, wheat, and cotton. But La Republica reported that the agricultural subcommission charged with developing such a system had not yet determined which products would be significantly affected, let alone worked out how to implement such compensatory subsidies.

In any case, with specific regulatory change required of Peru at least in respect to mahogany logging, and many rank-and-file Democrats apparently wanting the new conditions to be written into the agreement itself, it's hard to see how only "process" remains for the agreement to enter into force. There may yet be an opportunity for Diez Canseco - and other Peruvians angered by the lack of transparency in trade negotations - to see "a national and congressional debate on the issue".

Categories: free trade, United Statess, Peru, FTA, trade agreement

Peru - US Trade Agreement Likely to be Ratified

The free trade agreement between the United States and Peru now looks certain to be approved by the US Congress before its August recess, after Democratic legislators and the Republican administration reached an agreement that will also set a framework for future US trade agreements, including those that have recently been negotiated with Panama and Colombia.

The Democrat-Republican accord that opens the way for ratification was announced last Friday 10 May by House Speaker Nancy Pelosi, who called it "a new day for our trade policy".

Pelosi stressed that "we have certain principles which we must accept as the foundation of how we talk about trade...labour standards form a core element of our agreements".

The stronger labour and environmental standards that Democrats had been arguing for are now likely to be included in annexed letters to the main agreement, meaning it will probably not have to be renegotiated, or re-ratified by Peru's congress. These new policies include requirements that US trade agreement partners adopt and enforce five core International Labour Organization labour standards and seven major multilateral environmental agreements. Intellectual property-based restrictions on generic medicines are also softened, and Peru is specifically required to act against illegal logging, particularly of mahogany. A summary of the key adjustments to US trade policy can be read here.

If ratified as expected, the agreement will come into force towards the end of 2007 or early in 2008. Until then, Peru's existing trade concessions under the Andean Trade Preferences and Drug Eradication Act (ATPDEA) will be automatically renewed.

Peruvian sources credited the recent visit of President Alan Garcia to Washington with helping convince US legislators of the importance of the trade agreement to Peru's development.

In a forthcoming post, I'll summarize the key issues and controversies of the US-Peru trade agreement.

Categories: free trade, Latin America, Peru, FTA, TLC

In Peru, Working Hard is Not Enough

On the suburban block in Arequipa where Hugo and Lizbeth live, there's no fewer than six family-run grocery stores. That's six on the one block, not the whole street.

There's also a constant stream of yellow "Tico" taxis buzzing by. According to Hugo, there are 40,000 taxis in Arequipa. With a population of around 1.3 million, that means a remarkable ratio of approximately one taxi for every six families.

Taxis and grocery stores provide just two examples of Peru's overcrowded economic geography, where too many service and retail providers compete to supply a limited market. Regardless of how hard they work, the pickings are stubbornly slim.

This situation stems from the Peruvian economy's inability to provide more than 30 percent of its people with formal employment. By necessity, the others become self-employed entrepreneurs. But most don't have the ability to accumulate capital or invest in something risky and innovative. So they must scramble to carve out a share of the limited internal market for basic goods and services.

Fifth-form economics tells us that supply increases to meet demand. But what this means depends on where you are. In Western countries, the decision to 'supply' is usually based on whether an enterprise can turn a decent profit. In Peru, the threshold is much lower, based on the need to simply subsist. So, wherever there's a stable, predictable demand for a good or service, the market is not just supplied, but saturated.

Meanwhile, other costs don't go down. Most taxi drivers, for example, have to work hard just to cover the rental of their vehicle and keep it gassed up. With a typical taxi shift running from around 7:00 am to 7:00 pm. it's effectively only around 2:00 pm that drivers actually start earning money for themselves.

And taxis or corner stores are fairly high up the complex hierarchy of service providers. At the bottom are the people, mostly children or the very old or disabled, who sell sweets two or three at a time out of big bags. This is effectively indistinguisable from begging.

Then there are the itinerant vendors who peddle cigarettes and gum from trays hung around their shoulders. Success is graduating to having a trolley which is parked on a street corner and adds cookies, potato chips and bottled drinks to the inventory. At night, these "carritos" sell hamburgers, hot dogs, herbal drinks and anticuchos. Other people carve out a little retail niche by buying and reselling popular items a few at a time. In tourist areas they wander along vending t-shirts, crafts, paintings, sunglasses; on the market streets it's nail scissors, cutlery, photo albums, shoelaces, or anything else that can be moved.

All this is great for the consumer, who has a choice of products at her fingertips most hours of the day and night. But the majority of hopeful entrepreneurs are barely getting by.

And being skilled is no guarantee of breaking out of the rut. In a turnabout that would make the Western householder chortle with irony, tradesmen wait around on the street to be hired. You can wander down to the corner and find an electrician, carpenter or builder for as little as 15-20 soles per day ($5-7 USD).

The phenomenon of chronic service oversupply continues up into an industry that in theory should be turning a decent profit - tourism. When I first arrived in Arequipa in April 2004, I estimated there were about 90 agencies selling the same things - the Colca Canyon, Misti, Chachani, and city tours. By March 2007 the number had risen to about 120.

What hadn't changed was the number of tourists. Even within Peru, Arequipa struggles to attract its share; the regional government, which has done little to effectively promote the area, estimated in 2006 that just 14 percent of visitors to Peru make it to Arequipa.

No one was offering anything very different or innovative, and the conditions for tourism hadn't changed. The road into the Colca valley was as potholed and arduous as ever. The same two bus companies offered the same crowded, uncomfortable service up into the sierra.

In such a static market, the growing number of providers produces a predictable result - intensifying competition on price. Relatively few of Arequipa's agencies actually operate the tours, which involves organizing transport, food and guides for the tourists. But the craft shops, internet cafes and hotels that throw in a desk and a sandwich board advertising "Colca, Chachani, Misti" are happy to clip the ticket, and shave a few dollars off the margin of the eventual operator.

And even among the operators, there's little compunction about joining the race to the bottom. Costs are squeezed by hiring a less experienced guide, providing less food for the tourists, or simply by taking a loss on the first few sales in order to get a group together.

A couple of years back, Lizbeth employed a woman called Yunisa in the Incaventura agency After a while, Yunisa quit and started her own agency. She installed herself in the corner of a crafts shop, half a block further up the calle Santa Catalina. Her sales tactic? She waited until tourists came out of the Incaventura office, having had the tours explained to them. Then she sent one of the three or four girls that hung round her office to run after the tourists, bad mouth Lizbeth, find out what price they had been offered, and undercut it.

Little encapsulates the Peruvian economic situation better than these "jaladores" (literally "pullers"). Normally students or otherwise unemployed young people, they are paid purely on commission, but this hardly dents their eagerness to work. They are often bright, articulate, and may even speak some English. But with a limited pool of possible sales to be made, any hard-won income is earned directly at the expense of each other.

In fact, in some places, so intense is the competition to "jalar" a tourist that it's to the mutual detriment of all. In central Cuzco the tourist is assaulted at almost every step by people promoting tours, bars, and restaurants, or selling crafts, jewellery, and clothing. It makes for a somewhat hostile environment, which doesn't encourage visitors to stay around and spend more of their money. Often their response is to retreat to the sealed-off, foreign-owned venues where they won't be hassled.

Tourists themselves hardly help the situation. They come with the expectation that Peru is a cheap country, and expect to have amazing adventures for orders of magnitude less expense than what they would pay for a similar experience in a developed country. In Arequipa, many are happy to cruise from agency to agency, looking for the cheapest offer. They assume that if someone charges them a few dollars more, they are being ripped off. I wonder whether their attitude would be different if they knew that the $2-3 USD they just bargained off a tour price had come at the expense of a couple of meals worth of wages for the guide, or the meagre commission of the girl who works in the office, or the profit margin of the agency which is used to pay its rent and employment costs?

Despite its diminishing returns, tourism is still seen as a bright propspect by many. These days, I instinctively groan when another young student tells me enthusiastically that "one day I'd like to open an agency of my own". How many more do we need, I ask?

Some people have bright ideas, like Tessy and Rafael who are saving to set up a hotel and tourist operation in Cotahuasi, picturesque location of the world's deepest canyon. But for now it's not viable; the destination is poorly promoted, and it's 11 juddering hours away from Arequipa on a mostly unsealed road. Few visitors make it that far.

The well-meaning outsider is tempted to question why more Peruvians don't band together to produce something of higher value, and to criticize the unfortunate habit of ripping off or undercutting one's neighbour. But once you appreciate the lack of confidence created by an unstable history, unhelpful government, and inadequate infrastructure, the tendency to grab at what's going becomes more understandable. So, until Peru can find ways to allow ordinary people more of a chance to get a slice of the economic pie, its citizens are condemned to continue the current vicious circles, scrapping over stale crumbs from the crust.

Categories: Peru, Arequipa, economics, tourism

Señor Garcia Goes to Washington

Prospects for ratification of the Peru-United States free trade agreement (FTA) inched forward last week when Peruvian president Alan Garcia met with George W Bush and Democratic and Republican legislators during a trip to Washington DC.

Democrats continue to insist on changes to strengthen the labour and environmental conditions of the agreement. But they look set to reach a compromise with Republicans that will allow the agreement - which has already been approved by Peru's congress - to be debated and passed by the US Congress before its August recess.

Garcia's meeting with Bush was full of hearty cordiality, as they discussed both the trade agreement and measures to counter narcotrafficking. Bush said that Garcia was "a good guy, and he gives good advice" ('escape to Colombia at the end of your presidential term to avoid investigation', perhaps?).

But in a later meeting, Democrat Senate leader Harry Reid continued to press for changes in environmental and labour sections of the FTA, as did congressman Bill Pascrell who said there was still much to be improved in these areas before he would be convinced to support the agreement.

On day two of his visit, Garcia met with Charles Rangel, chairman of the Ways and Means committee, one of the two Senate committees charged with reviewing the trade agreement. Rangel declared that the chances of congress ratifying the agreement were "better than good" but could not specify a timeframe. He stressed the need to continue work through details with the Republicans and the executive branch.

Accompanying Rangel was fellow Democrat Sander Levin, who had previously expressed misgivings about the trade agreement after a four-day fact finding mission to Peru.

While there is general consensus that the FTA will help produce the economic growth needed for Peru's development, critics say that it will hurt small rural producers that will have to compete with imports of subsidized American corn, rice, cotton, sugar and beef. They also worry that stricter enforcement of intellectual property law under the agreement could restrict Peruvian access to modern medicines.

Levin would like to see the US use its influence to support more stable, equitable growth when negotiating trade agreements with developing countries. He has argued that countries should be held to International Labor Organization minimum standards, rather than merely enforce their own laws, which may fall short of ILO standards. He also asserted that "it's necessary to assure access to generic medicines for Peruvians".

Garcia also met with congressional majority leader Nancy Pelosi - who reiterated her conditional support for the agreement - as well as Charles Cresley and Max Baucus from the Senate Finance Committee, the other body required to review the FTA. The Peruvian leader assured the press that he was confident of a way ahead. He stated that "it's a matter of process, rather than of reopening the negotiations".

By the end of the trip, Garcia had met with 43 representatives from the Congress and Senate, and declared that he was "leaving satisfied". Later, Peruvian chancellor José Antonio García Belaunde announced that there were "rumours" in Washington that Democrat and Republican leaders would soon sign a pre-agreement that would allow the agreement to be ratified by Congress before August.

But meanwhile, nationalist members of Peru's congress were planning to travel to the US with the aim of convincing US representatives not to ratify the agreement. They claimed to represent the "98 percent of business people who have been completely excluded from the negotation of this agreement". In an open letter to Harry Reid and Nancy Pelosi, they argued that the trade agreement as it stands will exacerbate rural poverty and force poor farmers to turn to the illegal cultivation of coca.

(quotes as reported on Peruvian current affairs show 90 Segundos)


Categories: free trade, Latin America, Peru, FTA, TLC

Blood of a Continent

After all this time and four visits to the relevant part of the world, I finally got around to reading Eduardo Galeano's The Open Veins of Latin America. I remember on my very first day in South America, an intense young Spanish political science student explaining to me on a hot hostel terrace in Santiago that I sould read this book if I wanted to understand the continent's tortured history, society and politics.

He was right. I regret to say that in the intervening time, I lazily inherited a view of the book as an "it's all the gringos' fault" polemic that oversimplified the issues facing Latin america. I came to associate it with some of the tub thumping nationalist politics I encountered in Peru and Bolivia, and the assumption that wealth is something static that you find or steal, rather than create.

There's certainly enough in Open Veins' outrage-flecked prose style to give succour to those who would blame it all on the foreigners. Yet it's also consistent with the view of some local writers that Latin societies are hobbled by self-inflicted woes that include fatalism, lack of a work ethic, unhealthy hero worship, corrupt politicans, weak institutions, and systematic bureaucractic obstacles to entrepreneurs.

You don't by any means have to share all of Galeano's politics to appreicate Open Veins as a compelling story of how Latin America came to be the way it is.

Galeano's thesis is simple. Systematic exploitation and underdevelopment didn't contingently happened to Latin America - they were the continent's colonial raison d'etre. He documents how it became a "source and reserve of...raw materials and food for the rich countries".

These raw materials were initially gold, silver, and copper; later coffee, bananas, sugar, cotton, rubber, nickel, tin, and oil. Their extraction was on the backs of the enforced labour of native populations, replaced or supplemented by the slave traffic from Africa as the former were exhausted.

Colonisation, in the sense of the gradual establishment and building of a new society, was never the point. Rather, the aim was plunder, and to funnel the raw materials out through "veins" that led to the ports or capital cities. Ticket-clipping local elites got rich enough, at the expense of their hinterlands, to be able to buy back some of the finished goods from Europe.

While it was the Spanish and Portuguese crowns that undertook the original conquests, by the 17th century they were weak, overstretched and indebted. It was British and Dutch capital that financed the Latin American imperiums, and it was British, Dutch, French, and later American interests that determined the course of the continent's (under) development.

So far, so Marxist, you might say. But once we get past the undeniable horror of the conquests, the encomiendas, and the slave trade, Galeano's historical diagnosis is relatively uncontroversial. The ongoing failure of Latin America is its inability to develop a strong, indigenous capitalism that adds value to raw materials and spreads wealth through the wider society by broadening and deepening the economy.

Galeano explains the systematic protectionism of the northern European countries and the United States as they built their industrial economies, and documents how attempts to follow a similar process in Latin America have been kneecapped politically, often from the outside. The sine qua nons of development - improvements in agricultural productivity, land reform, and strengthened internal markets - have rarely got past first base.

It's a moot point how much this is due to external manipulation, and at what point local weakness and incompetence shares the blame. For Galeano, the underlying causes are the same.

In any case, Galeano has enough evidence that the odds have been sufficiently stacked against Latin American producers as to make modern cries for "free trade" seem hypocritical. In just one example he cites from the 60s, Brazil agreed to tax its own exports of soluble coffee, so as not to undercut US producers (given their handicaps, is it surprising that the wannabe entrepreneurs of Latin America have conspired to develop the one industry where they do have full control of resource extraction, processing, distribution and marketing: cocaine).

In order to appreciate the problem description, you don't have to agree with the solution. Galeano's unabashed cheerleading for Fidel Castro and the Cuban revolution slightly embarasses even this pinko leftist. In our world of post-Friedman orthodoxy,his favourable view of the big-government adventures of various nationalist caudillos - including Peron in Argentina - seems almost as radical. But if you factor in the diagnosis, even avowed economic liberals might concede some of his rationale. So weak were local capitalists, argues Galeano, so passively complacent the thin upper-middle classes, that if anyone was going to deepen and diversify the local economy, it had to be the state.

Part II of Open Veins deals with the post-industrial age, where Galeano accounts for the partial development of parts of Latin America. His concept of "poles of development" refers to how the subjugation of Latin America by the West is mirrored locally: through Brazil and Argentina's dominance of their smaller neighbours, and, within countries, the "exploitation by the big cities and ports of their internal sources of food and labour".

He argues that much "foreign investment" actually results in a net outflow for Latin countries. Auto assembly, for example, involves local subsidiaries of large Western companies paying arbitrary prices for parts from their head office, and then remitting most of the profits back to their home country.

There's a lot that could be critiqued by political and economic historians, and indeed I would be interested to see his empirical evidence subjected to scrutiny (rather than simply sweeping it under the carpet and calling him a Marxist).

But part of what is so compelling about the narrative of Open Veins is that it ties together much of what one experiences when getting to know Latin America.

The poor internal transport links and communications between countries and regions; the land sitting idle (parts of Peru had a more comprehensive network of roads and more agricultural land in production during the Incan empire than they do now); the upper class people more likely to have visited Miami than Cuzco. The arbitrariness of wealth, where some people work frantically hard, and other people have money, but there's no discernible connection between the two. The local and central government more likely to hinder citizens' attempts to get ahead than to help them. The prearranged deals which make it easier for politicans and bureaucrats to be corrupt than honest.

In many ways, it's remarkable that this was published in 1973. So much of what we associate with Latin America's contemporary history has happened since. Pinochet's coup in Chile; the Argentinian military dictatorship; financial crises; revolution and war in Nicaragua, El Salvador and Guatemala; Peru's Shining Path insurgency; IMF neoliberal makeovers leading up to the "Bolivian gas wars" and Argentina's 2003 financial collapse.

Reading Open Veins makes me eager to hunt down Galeano's more contemporary writings to see what he makes of all these events. In particular, I'd like to know whether he thinks the current state of affairs is an improvement on the dark days of his 1977 epilogue.

Because, perhaps with unreasonable optimism, I believe a corner may finally have been turned in Latin America's long struggle for maturity. Whether you approve more of Evo Morales' nationalisation process, or Chile's incremental social democractic reforms (and reasonable people might concede that both approaches are appropriate for the respective countries in their different situations), it seems that a majority of countries are now electing governments better equipped and prepared to tackle their underlying problems. More are insisting on the right to tackle their own unique challenges in their own way.

There are also signs that the countries of Latin America are, in an intermittent and still bitchy way, putting aside their artificially sustained national rivalries and working towards greater integration and a greater say in world affairs.

Of course, setbacks and failures are still ahead. The greatest challenge will be to empower and unleash the creativity of the masses of people who have long been nothing more than a source of cheap labour. Who knows how long it will take to shake off Latin America's historical legacy and ensure that blood flows heathily through and around its body, nourishing all its members?

Categories: Eduardo Galeano, Latin America, Peru