'The most controversial element of the agreement involved the auctioning off of large tracts of the Amazon to oil and gas prospectors. A process that has placed up to 70% of the Peruvian Amazon in private hands.'

How attempts to help the finances of Peru lead to the resignation of its Prime Minister and Cabinet

Alan Garcia, incumbent president of Peru, surprised many with his political comeback and ideological transformation in June 2006.

After winning the election, he told the nation that he had learned from his mistakes of the past and launched an austerity drive alongside a pledge to stamp out corruption, boost the economy and tackle poverty through a process he dubbed “investment shock”.

He was forced to quit his first term as a leftist president in 1990 when, after five years in office, his approval ratings reached rock bottom at 19%.

The nation suffered food shortages, acute unemployment and hyper-inflation alongside a Maoist guerrilla insurgency led by Sendero Luminoso (Shining Path) rapidly spiralling out of control.

Upon taking office in 2006, now a staunch neo-liberal, he fought aggressively to sign a Free Trade Agreement with the United States, completing a deal by the end of 2007.

Private hands

The most controversial element of the agreement involved the auctioning off of large tracts of the Amazon to oil and gas prospectors. A process that has placed up to 70% of the Peruvian Amazon in private hands.

Garcia believes that promoting private investment in communal areas is the only way to tackle widespread poverty and bring remote communities into the 21 st century.

However opponents say his free market policies have brought little to average Peruvians with as many as 50% still living on $2 a day.

Whilst presiding over a strong economy, due, in large part, to high prices for metal on the world market, his term thus far has been beset with difficulties.

Last month, perhaps his most trying yet, saw the entire cabinet offer its resignation when corruption scandals came to light.

The scandal involved the government’s energy minister and the head of the state oil company Perupetro, allegedly discussing bribes to favour the Norwegian multinational Discover Petroleum in the allocation of oil concessions.

Resignation

Whilst denying any involvement, Prime Minister Jorge del Castillo and his cabinet offered their resignation to protect the reputation of the government: “We will move on with our heads held high and with a clear conscience, we invite a full investigation in the spirit of transparency,” he said.

With inflation woes and ailing popularity ostensibly synonymous with Garcia, workers unions had already planned huge demonstrations in Peru’s major cities to protest against the rising cost of living and low wages.

As the oil scandal surfaced the demonstrations gained momentum and shifted their focus to government corruption.

Indigenous groups have held countless demonstrations against the oil prospectors throughout 2008. In August, a state of emergency was called after thousands of Amazonian tribes-people blockaded energy installations and main roads.

A congressional committee ruling followed and delivered a serious blow to Garcia’s reform policies, as they repealed laws that would have favoured the oil companies over indigenous land rights.

When it was just looking as if things could not get any worse for Garcia, Peru’s military command stated that seven civilians and 12 military personnel had been killed in a bomb attack in the South-Eastern mountain region.

Dormancy

Analysts believe that after a decade of dormancy the bombing was most likely carried out by Sendero Luminoso guerrillas, who it’s claimed are now involved in Peru’s lucrative narco-trafficking industry.

After the government’s resignation, Garcia bid to placate the electorate by announcing that his new cabinet would constitute a broad political spectrum, declaring that it will represent a process of “democratic renewal” and will work to “eliminate corruption completely”.

The next day he surprised many when he appointed Yehude Simon as his new Prime Minister.

The former law-maker for the United Left party served time in prison for alleged links to the Tupac Amaru guerrillas, enemies of the state during Garcia’s first presidency.

Maybe this bold step to attempt to quell the unrest may regain the nation’s trust. Or not.

Martin Piper is a former employee of Christian Aid who now lives and works in South America.

These are personal comments and not necessarily the position of Christian Aid or its partners.

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