The Madre de Dios department in the Amazon region of southeastern Peru produces 10 percent of the nation’s gold output at a time when gold prices have risen nearly 25 percent over the past year (and more than 450 percent over the past 10 years). But none of that wealth is apparent during a visit to its mosquito-infested capital of Puerto Maldonado. An open drain runs by the central plaza, steps away from a sparsely equipped health clinic, where a tattered medical notice warns of the perils of dengue fever.
Nearby, one of the continent’s most ambitious projects—the Interoceanic Highway linking Brazil’s Atlantic coast to Peru’s Pacific ports—promises to turn the region into a bustling crossroads of international commerce. An unfinished bridge jutting out over the Madre de Dios River is the final link of the mostly Brazilian-built highway, which opened for business in January.
The sharp contrast between the region’s rich promise and its poverty is bitterly obvious to Puerto Maldonado’s citizens.
“With so much wealth around us, I just don’t understand how we can be so poor,” said retired schoolteacher Ricardo Gahona Salas, 61, president of Puerto Maldonado’s government-run public welfare society.
Gahona’s tiny office, a back room off an unpaved side street, where I found him one sweltering afternoon, underscored his point. There is no electricity hookup, much less a computer, and Gahona was poring through a dusty pile of paper records. He is responsible for administering the health care and welfare programs for this jungle town, including operating a daily soup kitchen for some of the surrounding area’s approximately 80,000 inhabitants.
Gahona’s disillusionment with the central government in Lima, 660 miles away, is understandable. He sent his five children to study in Central America and Europe rather than the capital, and they may stay abroad.
And Gahona is not alone. Peru’s transformation—from near-collapse under a violent insurgency in the 1990s to one of the world’s fastest-growing economies—has mostly bypassed the rural poor. The widening gap between Lima and rural regions in the country’s interior fueled a significant protest vote during the April 10 presidential election that sent two inexperienced politicians from opposite ends of the political spectrum on to the June 5 second round of voting.
Former army officer Ollanta Humala, 48, a left-wing nationalist, and Keiko Fujimori, 36, a right-wing congresswoman and daughter of jailed former President Alberto Fujimori, defeated three seasoned, moderate politicians who had split the vote among centrist voters.
In effect, poor voters discounted in advance the promises made by the mainstream candidates—former President Alejandro Toledo, former Lima Mayor Luis Castañeda and former Prime Minister Pedro Pablo Kuczynski. The message they sent was clear: it was time to give the alternatives a chance.
Keiko Fujimori’s strong showing in the shantytowns around Lima and in the industrial north suggested that the human rights abuses and corruption of her father’s authoritarian government between 1990 and 2000 resonated less with low-income Peruvians than memories of that government’s success at ending hyperinflation and bringing security to the country. The elder Fujimori was sentenced in 2009 to a 25-year prison sentence for his role in approving death squad murders and kidnappings during the government’s struggle against the Maoist Sendero Luminoso (Shining Path) guerrilla insurgency (deadliest between 1980 and 2000). But his daughter’s supporters also associate the Fujimori name with rural development initiatives, such as low-budget housing and microlending.
Nevertheless, it was Humala who best captured the underlying discontent of the rural poor. He earned 32 percent of the first-round vote, beating Fujimori by eight percentage points and Kuczynski by 13 percent.
In Madre de Dios, the least populated of Peru’s 26 districts, Humala won 45 percent of the votes. Gahona, who supported Humala during his first bid for the presidency in 2006, felt compelled to do so again this year.
“I had no choice,” he explained, complaining that the traditional politicians “don’t do anything for the provinces—they never have.”
After an unprecedentedly tight and polarizing run-off vote, Humala won the presidency with 51.5 percent of the vote, while Fujimori captured 48.5 percent. In the second round, the upper class largely rallied around Fujimori because they believed she was the most likely candidate to maintain the current economic model. But the surprising results of the first-round voting clearly highlighted Peru’s deep paradox: spectacular economic growth and growing social discontent.
Humala and the younger Fujimori were able to exploit nationwide frustration with the rising profits of international mining firms that have failed to tangibly benefit the majority of Peruvians. The mining firms were a logical target in a country where copper, gold, silver, and other metals account for 60 percent of exports and the bulk of fiscal revenue.
But it was Humala who appealed more directly to the sense of resentment simmering in places like Puerto Maldonado—pledging to empower rural Indigenous communities and to work toward better income distribution.
Peruvians who support Humala believe the elder Fujimori and his pro-market successors have preferred to coddle foreign investors at the expense of national needs.
Both candidates proposed taxing the windfall profits of mining companies when metals are fetching high prices on international markets to fund social programs. Peru would be the first country in Latin America to implement such a tax.
What Kind of Change?
Humala appealed to poor residents of Puerto Maldonado despite substantially moderating his rhetoric in the five years since he narrowly lost the last presidential election. In 2006, he barnstormed the country calling for a Venezuela-style transformation and railing against neoliberalism. He memorably demonstrated his ideological sympathies by campaigning in a fiery red polo shirt.
This year, he portrayed himself as a supporter of the economic growth and social welfare model pursued by Brazil under former President Luiz Inácio Lula da Silva, promised lower gas prices, and campaigned under the rainbow flag today associated with the ancient Inca Empire. Humala’s moderation reflected national surveys by Datum, a local polling firm, which showed that the country Peruvians most want their own state to resemble is the United States, followed by Brazil, Chile and Japan. A mere 1.7 percent wants to copy the Venezuelan socialist experiment.
At the same time—despite his moderate makeover—Humala presented himself as the only candidate who put the interest of Indigenous peoples in the provinces ahead of international mining companies or the Lima stock exchange. His supporters in Puerto Maldonado consistently said they felt ignored by their government and wanted change. By change, they did not mean a dramatic revolution; rather, they sought basics like access to clean water, a greater voice in decision-making and more employment opportunities.
More than anything else, they saw Humala as a vehicle for changing the bleak prospects the next generation faced. “I want my kids to have the chance to make something of themselves,” said Daniel Orranco, a 25-year-old mechanic, as he watched his two small children play on the banks of the Madre de Dios River, which is contaminated with toxic mercury.
“The main concern is access to good public services,” said Hugo Santa Maria, director of Ipsos Apoyo, another local polling company. “When you ask the population if they want to see any radical change in the economic model, almost 30 percent answer yes. When you ask what kind of radical changes, they ask for better education, better services and less corruption. They don’t ask for state-owned enterprises or more government intervention or price controls.”
Peru’s overall poverty rate has fallen from around 54 percent to 32 percent in the past decade, but the rural poverty rate is still 54 percent, according to the latest government statistics, suggesting that growth is not trickling down evenly. 1
Lingering rural poverty helps explain why disillusionment with the government of President Alan García is widespread. Building on the foundations of the 2001 to 2006 government of Alejandro Toledo, the architect of Peru’s free-trade agreement with the United States, García fiercely prioritized foreign investment as the key to economic growth, job creation and development.
Peru has lined up some $40 billion in mining projects for the next decade. It is also one of the region’s most committed free traders, with agreements in force with more than a dozen countries, from China to Mexico.
To be fair, many reforms meant to tackle rural poverty are simply incomplete. When decentralization began in 2002, the central government ostensibly devolved greater power and funds to regional governments. Half the royalties from international mining firms were meant to be distributed among district and provincial governments to help spur development. But though the central government turned over funding and responsibility on paper, it has not yet clearly defined the role of local governments or empowered them to carry out their most basic functions. And in some cases, districts don’t even have the capacity to spend the money they receive from mining taxes.
Indigenous leaders like Alberto Pizango, however, think García’s neglect of the provinces is not merely a consequence of low capacity or bad management. Instead, they say, it is part of a pattern of disregard for Indigenous issues.
Pizango is the head of AIDESEP, an umbrella organization for Peru’s Indigenous groups. Indigenous communities in Peru have not been able to develop a political presence to the extent groups in neighboring Bolivia and Ecuador have, and are in many cases distrustful of the state. Pizango, though, has long demanded that García’s government enact a law to bring Peru into compliance with the UN Indigenous and Tribal Peoples Convention of 1989.
García’s government accused Pizango of fomenting unrest. It blamed him for a massacre at Bagua, where clashes between police and Indigenous groups protesting against opening ancestral lands to mining and oil exploration left 33 people dead in June 2009—the low point of García’s presidency. Pizango denies inciting violence and was not in Bagua at the time.
While Fujimori also made a direct appeal for the Indigenous vote—even speaking a few words in Quechua during the televised presidential debates—leaders generally have more confidence in Humala. Though he was born in Lima, his military family is from the southern Ayacucho region. His father, Isaac Humala, is a former Communist who founded the Indigenous nationalist doctrine etnocacerismo, which invokes Peru’s Inca roots, seeks to form an alternative nation-state identity, and rejects inclusion in the global economy.
For tribes and all Peruvians living in previously remote regions like Madre de Dios, new oil concessions and the Interoceanic Highway are constant reminders that Peru’s focus on investment and trade is no longer confined to major ports and coastal cities. The giant highway project will transform the Amazon’s economy and provide Brazil with a long-sought gateway to lucrative Asian markets. And economists say the road will contribute significantly to Peru’s GDP by enabling the country to export agricultural and manufactured goods to northern Brazil.
Many rural Peruvians remain skeptical. Their doubts stem from a long-held perception that international trade and investment do not benefit them.
I found Geraldo Navarro, 24, leaving the office of Brazilian company Odebrecht after an unsuccessful bid for employment there. The company is in charge of building the bridge across the Madre de Dios River that will complete the first of three highway routes. Navarro, unemployed, had hoped to find a construction job.
He doesn’t have any illusions about who the highway will benefit, though. “This is going to help Brazil,” Navarro said. “It doesn’t seem like it’s going to do anything for us.”
1. "Gobierno anuncia que la pobreza en el Perú se reducirá a 29,5% al 28 de julio," América Economía, May 29, 2011, http://www.americaeconomia.com/economia-mercados/gobierno-anuncia-que-en... (Accessed June 15, 2011).