Thousands Reject the Extractivist Logic at the World Bank-IMF meeting in Peru
The annual governors’ meeting of the International Monetary Fund and the World Bank opened on October 5 in Peru’s capital city. In the meeting, an estimated 800 representatives from 188 countries were negotiating the shape of the world’s soon-to-be renovated finance infrastructure.
While the international media focused on the official meetings, no news outlets outside of Latin America have mentioned the Plataforma Alternativa conference — a parallel three-day meeting organized under the theme “Belying the ‘Peruvian Miracle.’”
More than 1,200 people attended Plataforma Alternativa’s conference. Dozens of young volunteers zoomed through the marbled hallways of Lima’s Hotel Bolívar, which hosted the conference. Participants represented dozens of organizations and countries as diverse as the Netherlands, China, the United States, Belgium, Zimbabwe, Colombia, Indonesia, Spain, Mexico, the Philippines, Germany, Palestine and Argentina.
On Friday, an estimated 5,000 people marched across 70 blocks in Lima, from Plaza San Martín to the first of three police perimeters around the official conference. Groups at the protest included indigenous feminist organizations, the Lima-based Comando Feminista, Bloque Hip Hop, worker unions, the Peruvian Campesino Confederation, and dozens of others.
Peru reportedly mobilized 20,000 police for this event, many of whom were safeguarding key areas around the city for the 12,000 visitors: from the airport to hotel areas.
The counter-conference was free, open to the public, and streamed online. It featured U.S. economist Joseph Stiglitz, a former World Bank chief economist and an outspoken critic of its policies, as its keynote speaker.
“Inequality is a choice — not the result of inevitable economic laws,” Stiglitz said in his speech after reminding the audience that Latin America has the highest rate of wealth disparity among world regions. At the end of September, Oxfam — one of several organizations in charge of the conference — released a report indicating that, at the current pace, one percent of Latin Americans would be wealthier than the remaining 99 percent by 2022.
“The neoliberal economic model minimizes states and makes them mere functions of economic power,” said Mirtha Vásquez, a lawyer who works with the rural development organization Grufides. Her conference panel also featured Máxima Acuña, an agriculturalist from the Peruvian Andes who has become famous worldwide for standing up to the world’s largest gold company, Yanacocha.
“The company has tried to force me out of my land through violence and delinquency,” said Acuña, her voice quivering as she detailed how police and company employees attempt to intimidate her. “I live with this daily. Everyday I am crushed by them.”
The new documentary film “Hija de la Laguna,” which features Acuña, was screened after the panel. It was the first time Acuña had seen it.
As we walked during Friday’s march, Acuña told me about how the company continues to operate despite a government freeze on its activities. I asked her why, unlike her neighbors, she has refused to sell her land and chosen to become an obstacle — and a target — for the company. “Many people think only about money, but I am attached to my land,” she said. “I would rather die. Because I didn’t sell the rights to my land, I live threatened everyday by the police, who survey my house from their new post overlooking my house.”
Given Peru’s recent experiences with deadly conflicts surrounding mining projects like Tía María, Las Bambas, and La Oroya, it is perhaps understandable that many of the panels focused on conflicts related to extractive industries. For two decades, the Peruvian state has adopted natural resource extraction as the leading engine for its economic growth — under the guidance and financing of the World Bank and IMF.
A study presented at the conference by the Peruvian investigative organization Convoca found that between 1994 and this year, almost 30 percent of all financing from the World Bank Groups’ International Finance Corporation, or IFC, had gone to extractive projects. The IFC has a five percent stake in the mining project that will require Acuña’s displacement.
As the global price of mineral commodities boomed up to its peak in 2013, Peru’s government promptly expanded the scope of extractive activities in its territory. At the same time, however, the number and intensity of social conflicts over these projects also escalated. The ombudsperson’s office documented 223 active socio-environmental conflicts in mid-2013. The same report noted that 196 people were killed and 2,369 were injured in conflicts over natural resources between 2006 and 2011. Most of these tragedies surrounded mining projects.
“There are visible tensions between companies and communities,” Convoca panelist Gabriela Flores told me. “The state allows this to go by without intervening, until everything erupts, and we see deaths, injuries. By the time it has to intervene, it is too late.”
The frequency of conflicts surrounding such projects has also been bad for business. Today, industry advocate and economist Hernando de Soto estimates that protests currently paralyze $70 billion dollars of mining investment in Peru.
A few months ago, IMF President Christine Lagarde argued that Peru’s natural resources would ensure it would develop to levels reaching Canada and Australia within only a few years. Earlier this month, however, the IMF released a report suggesting that Latin America was headed towards the first recession since the end of the global financial crisis, owing to the global economy and reduced demand for raw commodities.
“When countries extract natural resources, they become poorer. They had resources, and now they don’t,” Stiglitz said in his talk. “Unless you reinvest the benefits from below the ground above the ground, you will be poorer, and vulnerable to external shocks, like now.” However, according to Stiglitz, the IMF enacts “tariff structures that make it very difficult for developing countries to diversify their economies.”
Attention at the conference has centered on the recent signing of the Trans-Pacific Partnership, or TPP, a 12-country trade agreement that includes Peru, Japan, Mexico, the United States, Australia and Canada.
The TPP includes some labor and environment protection measures lauded by U.S. President Barack Obama as new and “absent in previous agreements.” However, according to José de Echave, a former Vice-Minister of Environment in Peru, the 2007 free trade agreement between the United States and Peru already included these standards, and in fact served as a template for their wording in the TPP.
De Echave notes that rules within the 2007 trade pact prohibited the rollback of environmental and worker protections. However, in the last two years alone, President Ollanta Humala’s government has approved a series of five reform packages meant to “encourage investment” by altering approval processes and the power of the state’s environmental oversight organization. That the Obama administration has failed to enforce rules set by that earlier agreement is a sobering check on the U.S. president’s optimism about the TPP.
Members of the Inter-Ethnic Association for the Development of the Peruvian Jungle, or AIDESEP, expressed their dismay at the softening of environmental and social standards for extractive industries. “We didn’t use to see economic booms or busts. We are neither rich nor poor — we are self-sustaining,” said Wilmer Sánchez of AIDESEP. “The introduction of these international cycles has been bad for us, and bad for the Amazon.”
Only six years ago, the international political economy made its presence felt in Peru, when it underscored an escalating set of tensions that culminated in the Bagua massacre. Near that Amazonian city, national police were ordered to open fire on indigenous protestors — including members of AIDESEP — who were blocking a highway to demand that the state repeal concessions over their territory granted to logging, oil, and other extractive industries. Some of the protesters retaliated and wounded several police. Leaked cables from the U.S. ambassador warn the Peruvian government that, were it to “give in to the pressure, there would be implications” for the treaty.
The violent confrontation in a remote part of the country crystalized the uneasy meanings of “development” according to the Peruvian state and its international financial supervisors.
“The Trans-Pacific Partnership is almost certainly a bad deal for Peru,” Stiglitz said. “It is a strategy for non-development.”
As in the other signatory countries, the TPP will require approval from Peru’s legislature. This, coupled with the leverage social movements wield as Peru heads into general elections, opens a great opportunity to pressure the government and would-be presidents to reject it.
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