Ten thousand Peruvians march through Lima in support of Amazonian people

For two months, indigenous Amazonian people have rallied against laws which they say will open their lands to oil and gas drilling. Violence erupted last Friday in the town of Bagua Grande when more than 2000 native people - many of them carrying spears and machetes - launched a protest over the Peruvian government's drilling plans. About 30 to 50 protesters and 24 police officers were killed in the worst clashes for at least a decade.

After visiting the area, 1400km (870 miles) north of the capital Lima, rights lawyers said hundreds of people could not be accounted for. Indigenous groups are insisting that the government be tried for crimes against humanity. One of the lawyers, Ernesto de la Jara, urged the government to begin an independent judicial investigation.

"Dead bodies may be covered up for now but, little by little, the truth will come out and they (the authorities) will have to respond," said de la Jara. But the government denies any wrongdoing and has launched a publicity campaign portraying the murders of policemen as acts of savagery.

"It has been irrefutably proven that the police were tortured and killed," Maria Zavala, Peru's ambassador to the Organization of American States, said in a speech in Washington.

Approximately ten thousand Peruvians marched through the centre of Lima yesterday in support of the Amazonian people. Riot squads had to use tear gas to prevent protesters from reaching the Congress building. Watch this short clip of the chaos that reigned in Lima's streets.

Text coutesy of the BBC and Living in Peru

Chronic child malnutrition in Peru will drop to 16% in 2011

At the end of 2007, an estimated 750 thousand Peruvian children were suffering from chronic malnutrition in Peru.

Yet in 2011, chronic child malnutrition will drop to 16 percent in Peru, said the executive secretary of the Fight Against Poverty Discussion Forum (MCLCP), Félix Grandez. This reduction will mainly be seen in children under the age of three who live in rural areas.

Grandez added that anemia will have dropped to 20% among children and pregnant women by the same year.

He also remarked that the government is investing approximately 1.2 million dollars in programs to help poor rural populations.

Yet 16% is still an awfully large percentage of the country's child population. It's a reminder that even though Peru's economy is expanding and exports are beginning to increase, the country still has many serious internal problems to deal with.

Text courtesy of Living in Peru

Peruvian Shining Path terrorists recruit child soldiers

Alan Garcia, President of Peru, has said that Sendero Luminoso (Shining Path) will be sued for using child soldiers in their armed conflict against the state.

The terrorists are said to use children to kill wounded soldiers. “This is something very serious, horrific and inhuman that even the world's ruthless terrorist groups have never done", said Garcia at a press conference. It is something that deserves to be sued at international bodies such as the Organization of American States (OAS), the United Nations and the European Parliament.

Last week, Peru was shocked by national programme Punto Final's footage of children brandishing weapons as members of the Shining Path movement. The platoon was led by a boy of about 10 years old. The programme, shown on Peruvian television channel "Frecuencia Latina", shows the training of 17 children armed with automatic weapons and wearing military fatigues.

Click the video link below to see a clip of the footage.

Text courtesy of Andina News Agency

Poverty in Peru reduced to 36.2% last year

A report from Peru’s National Institute of Statistics and Informatics (INEI) states that last year poverty in Peru was reduced by 3.1% - from 39.3% in 2007 to 36.2% in 2008.

According to INEI, in 2007, poverty dropped by 5.2%, from 44.5% (2006) to 39.3% (2007).

The World Bank reported that progression of poverty reduction figures presented by Peru have a reasonable precision, because in last 4 years the country has kept a method of calculation comparable in time.

These studies were supervised by an Advisory Committee comprised of representatives from government institutions, the academic community, think tanks and international organizations such as the World Bank, the Inter-American Development Bank and France’s Institute for Research on Development.

Source: Andina News Agency

Keiko Fujimori would take 25% of the vote in the 2011 election

Keiko Fujimori is the most popular presidential candidate in Peru, according to a poll by Ipsos, Apoyo, Opinión y Mercado published in El Comercio. 25% of respondents would vote for the daughter of former Peruvian president Alberto Fujimori in the 2011 election, up eight points since August:

The recent conviction and sentencing of Keiko's 70-year-old father, Alberto Fujimori, for 1990s death squad killings and forced disappearances have thrust Keiko into the spotlight.

"I think this very harsh verdict will be a boomerang," said Keiko. "If they thought they would defeat Fujimorism with this, they're all wrong." Immediately after the verdict, she called it "vengeful" and predicted public outrage would propel her to Peru's presidency. If elected, she has said she would pardon her father.

Keiko said she has collected the signatures of 700,000 people who back her father and has set a goal of obtaining 1 million. She told reporters that she plans "a great crusade to clear the name of Alberto Fujimori. We want to go to the most remote villages, above all those that suffered the scourge of terrorism and let it be known how unjust this verdict is."

Although she is the most popular presidential candidate for the 2011 election, many analysts say her appeal is limited. Investigative journalist, Gustavo Gorriti, who was abducted in 1992 for criticizing Fujimori's shuttering of the opposition-led Congress and courts, stated that Keiko's candidacy is "essentially single-issue: Fujimori's freedom."

Watch this short clip of Keiko and Fujimori propaganda, just a taster of the huge red writing scrawled on every spare wall-space along the Southern Panamerican Highway:

Source: Ipsos, Apoyo, Opinión y Mercado / El Comercio
Methodology: Interviews with 1,000 Peruvian adults, conducted from Apr. 15 to Apr. 17, 2009. Margin of error is 3 per cent.

Text courtesy of Angus Reid Global Monitor and The Associated Press

Former President Fujimori is sentenced to 25 years on charges of human rights violations

Peru’s ex-president Alberto Fujimori has recently been sentenced to 25 years imprisonment, following a verdict of guilty on four counts of human rights violations.

Alberto Fujimori was on trial for crimes against humanity for allegedly sanctioning the Colina Group paramilitary death squad that killed 25 people in two incidents known as Barrios Altos and La Cantuta. He also faces various other charges for corruption, bribery, illegal phone tapings, and misconduct during his decade-long presidency.

The sentence, and the verdict, are historic in Peru and the hemisphere, as it is the first time a former president has been tried and found guilty of similar charges. Fujimori has also been sentenced to pay compensation of 62,400 soles to the families of each of the 29 victims of the Barrios Altos and La Cantuta cases, and 46,800 soles to each of the kidnap victims Gustavo Gorriti and Samuel Dyer, a total of approximately $614,000.

Fujimori's eldest daughter, Keiko Fujimori, said she “would not hesitate” to grant her father amnesty if she wins the 2011 presidential elections. Human rights activists have rained heavy criticism on Keiko for this suggestion:

“The congresswoman must be reminded that people who have committed crimes against humanity and have violated human rights, crimes for which her father will be condemned, cannot be pardoned or amnestied nor can they receive any type of political, penitentiary or legislative benefit. This is the core of the matter,” said human rights lawyer Carlos Rivera.

“Fujimori has committed crimes of forced disappearances, and this type of crime cannot be pardoned. The Human Rights Court, in its 2001 sentence in the Barrios Altos case, declared that crimes against humanity and violations of human rights cannot be pardoned or amnestied,” Rivera said. “So someone should tell the congresswoman that the pardon will remain a wish because it’s not viable and it’s not legal.”

Fujimori enacted a controversial amnesty law in 1995 that exonerated all military, police and civilians for any human rights violations committed between May 1982 and June 1995 if they were associated to the counterinsurgency war. The law, argued to be necessary for “national reconciliation,” led to the release of those convicted for the La Cantuta and Barrios Altos massacres.

But in September 2001, the Human Rights Court, at the request of the Inter-American Commission on Human Rights, made an interpretative sentence in which it announced that Fujimori’s Amnesty Laws were without any legal force.

Legislators from different political parties also strongly reacted to Keiko Fujimori’s comments:

“I think that we should evaluate the possibility of writing up a bill that makes it illegal for a person who becomes president to pardon their family members,” said Congressman Juvenal Ordóñez.

Keiko Fujimori is a 32 year-old business administrator and is the probable presidential candidate for Fujimori’s right-wing party “Alliance for the Future”.

Courtesy of The Peruvian Times.

13 Peruvian soldiers killed in El VRAE - The Forgotten Valley of Peru

Almost a year and a half ago I wrote a post about the chaos and extreme poverty that rules in El VRAE, The Forgotten Valley of Peru. Sadly, it seems that nothing much has changed, despite supposed increased government and military presence:

One of the deadliest terrorist operations in years — suspected to have been planned and staged by a former teacher turned guerrilla — has left 13 soldiers dead in Peru’s remote Apurimac and Ene River Valleys, or VRAE, said Defense Minister Ántero Flores Áraoz.

“The attack carried out with dynamite and grenades occurred on Thursday, and the victims include a captain, a junior officer and 11 soldiers,” Áraoz said during a press conference on Saturday, adding that the remote and jungle-covered VRAE and arduous communication in the region explain why there was such a delay in announcing the deadly ambush.

The attack was staged by “Olga," a close friend of Víctor Quispe Palomino, or “José,” the Shining Path’s political leader in the region.

Alberto Cerrón Palomino, or “Camrade Artemio,” is the only known Shining Path leader from the group’s original directorate never killed or imprisoned. He still commands a force of some 200-300 insurgents in Peru’s central jungle region.

The Shining Path has been largely dormant since 2000. The once 10,000-strong Maoist rebel group nearly brought Peru’s government to its knees during the 1980s with car bombings, assassinations and brazen attacks on police and military outposts. But the group lost momentum following the 1992 capture of its founder Abimael Guzman, who is serving life in a naval prison.

Nevertheless, sporadic Shining Path attacks still claim lives every year.

The recent spike in deadly attacks is largely attributed to a fresh offensive by the Peruvian military, launched last August by Peru President Alan García.

The isolated VRAE is located at the confluent river borders separating the rural departments of Ayacucho, Cusco and Apurímac. The zone is a hotbed for drug traffickers and their hired guns — mostly guerrilla remnants of the Maoist Shining Path insurgency — who regularly carry out deadly roadside ambushes against police and assassinate local officials in retaliation for raids on cocaine processing labs.

Last November, four police officers were killed and four others wounded by Shining Path rebels armed with machine guns on the outskirts of Tingo María, in the Huánuco region of Peru ’s central jungle. Some 40 guerrillas armed with automatic weapons and hand grenades ambushed a four-car police convoy in the coca-producing Huallaga valley at the height of kilometer 23 of the Federico Basadre Highway, as the convoy was leaving Tingo María, on its way toward Pucallpa.

Then, on Oct. 10, 2008, Shining Path guerrillas ambushed a column of military trucks with a bomb and gunfire, killing 13 soldiers and two civilians and wounding 14 other soldiers and three civilians. The rebel attack was the past decade’s deadliest.

Civilians were riding with soldiers in trucks returning to the Cochabamba Grande base in Huancavelica - near the jungle-covered VRAE, where about 30 percent of Peru’s coca leaf is harvested – when they were ambushed near the town of Tintaypunco. Rebels detonated a bomb as the convoy rounded a bend, and then opened fire with automatic weapons. In days prior to the ambush, the army claimed that five rebels were killed in the area, and that 15 others were captured.

On Nov. 16, four police were killed in another ambush by narcoterrorists on the road just outside the city of Huanta, in the department of Ayacucho. The highway patrol was attacked by about 30 men armed with machine guns and rifles. At the time, then Minister of Interior Remigio Hernani said the attack appeared to be in revenge against continuing police raids in the area to combat illegal coca and cocaine production.

According to Jaime Antezana, a sociologist and expert in illegal coca and cocaine production, these attacks indicate that the anti-narcotics program is not achieving its objectives. He reports 21 rebel ambushes since July 2003. These attacks have killed a total of 35 soldiers, 23 police and more than a dozen civilians.

Peru was once the world’s leading producer of coca. But the country slashed its production by 70 percent between 1995 and 2001 primarily because of low coca prices, interdiction, forced eradication of coca fields and programs that encourage farmers to grow alternative crops. But by 2002, the number of hectares used to illegally grow coca in Peru increased as efforts to eradicate the crop in Colombia forced production southward.

This can be explained by the balloon effect, or the drug fields’ tendency to shift elsewhere and sometimes to smaller and harder-to-reach plots in response to local eradication campaigns, and the fact that for farmers, the coca harvest provides more money than any other crop: up to five times as much can be earned for a kilogram of coca than for a kilogram of coffee.

In June 2008, a study conducted by Peru’s National Commission for the Development of Life without Drugs, or Devida, and the United Nations Office on Drugs and Crime indicated that coca crops had increased by 4.5 percent in 2007 and that approximately 92 percent of Peruvian coca production is destined for the fabrication of cocaine paste and cocaine hydrochloride.

In the VRAE, production of the alcoloid-packed leaf has risen steadily from 14,170 hectares in 2002 to 16,019 hectares last year, according to the United Nations Office on Drugs and Crime.

Courtesy of The Peruvian Times

Wall Internship Program Peru

This video is about Wall Luxury Essentials Internship Program in Peru and The Colour of Hope's involvement. Natali, one of our most promising young people, talks a bit about her past and how much her life has changed thanks to Wall and The Colour of Hope's help.

Trip to Huancayo

Last Saturday I travelled up to Huancayo, one of Peru's Andean regions, to visit a project being run by NGO, El Shaddai, in conjunction with The Peru Children's Trust. I was able to take part in the charity's Christmas celebrations and meet many of the children and young people who are benefitting from their projects. We also visited a few of the children's homes and saw the conditions they were living in (see photos).

Both The Peru Children's Trust and its Peruvian branch, El Shaddai, appear to have a great deal in common with The Colour of Hope. Their work aims to raise the standards of living for poor children and young people in the Huancayo area, improving their housing, funding healthcare, enabling their education and providing family guidance and teaching. The team has recently built an extensive set of workshops, helping the young people to learn vocational skills such as hairdressing, welding, carpentry, dressmaking, cooking and grain milling. This support will hopefully enable the young people to find employment or set up their own small businesses in the near future.

The Colour of Hope trustees offered to share our training courses with El Shaddai so that they can extend the support they are already providing their young people, helping them to find work, and perhaps setting up a microcredit scheme. We will maintain good links with the El Shaddai team and hope that there will be further opportunities to work together in the future.

The Colour of Hope Chair's Report

3rd October 2008

LIMA - It has proved a wonderful experience for me to travel out to Lima this month to see The Colour of Hope's work first hand. I have been able to monitor what is happening at grassroots level and to assess what might be needed in the future.

I am very pleased to report that the charity's youth reintegration project, "Action for Independence" is being extremely well run. It is obvious that a great deal of careful thought and planning have gone into it and it is now paying off. Over the weeks that I have been here I have been able to meet most of the young people we are supporting. It has been a pleasure to be able to put a face to a name at last and to see just how much they are benefitting from our help.

Our Project Director, Amy New, has been particularly stretched this month, dealing with teething problems with Hugo and Angelica's grocery shops, as well as helping Gabriela to set up her market stall - not to mention accompanying Edinson and Bilela to obtain the necessary paperwork before any formal job applications can be made. Getting papers here is not a simple affair and it calls to mind most vividly Dickens' Circumlocution Office. Having accompanied Amy in this, I have realised just how much time she spends travelling miles across Lima and waiting for people to turn up. The work can, at times, be very rewarding, but a lot of the time it is stressful and frustrating by its very nature.

After being here a month, it is very clear to me that Amy needs more help with the daily running of the charity as she is stretched at the moment and intends starting with another group of young people very shortly. I am also strongly recommending that the charity takes active steps to affiliate itself with another organisation doing similar work. In light of this, we have been networking with contacts here in Lima and I am happy to report that Amy is now receiving support from two psychologists. They will be helping her with some of the training sessions for the new group, as well as providing much needed psychiatric help to the young people. Three volunteers have also come forward from our contact with the Diamond Way Buddhist Centre. Thank you friends! We are also hoping that local funding will be forthcoming to pay project staff and to help our single mothers with childcare.

I am leaving Peru with some appalling memories - of sprawling squalor in the shanty towns, of being escorted up and down a mountain to avoid being robbed when visiting Natali, Hugo and Angelica, of street violence and choking traffic fumes. Yet because Peru is a country of contradictions and extremes, I also leave with wonderful memories of people who, in spite of having nothing, are happy and smiling, of people who dance when there is nothing to dance about, and of kindness and love shown by strangers who welcomed me as family.

Margaret Stevens

U.S.-born global financial crisis metastasized: Peru’s year-end inflation expected to top 7.6 percent

Peru's average national inflation rate is expected to rise well beyond the Central Bank's set goal of 2 percent to a decade-high of 7.6 percent by the end of 2008, according to Lima's Chamber of Commerce, or CCL.

Imported inflation, which occurs when imported raw or partly-finished goods become more expensive, often as a result of currency depreciation, no longer drives inflation in Peru. According to the CCL, 75 percent of inflation is due to internal factors, such as a greater internal demand for goods.

“Before, external factors were the most important component of inflation,” CCL Economic Institute’s Director, César Peñaranda, told daily La Republica. “But now, they have reduced the prices of food and oil. The Central Bank’s measures are good and couldn’t be any more forceful because that would complicate the economy.”

Peru’s average national inflation rate for the first eight months of this year registered at 4.7 percent, beyond the Central Bank’s set goal of 2 percent, and rose slightly from 0.56 percent in July to 0.59 percent in August. Consumer prices rose 0.57 percent in September, and transportation costs have surged.

But, Peru’s Central Bank, who in August lifted deposit requirements for borrowers in an attempt to control inflationary pressures, has yet to budge on its benchmark interest rate fixed at 6.5 percent.

“This decision is based on the high level of uncertainty concerning the world economy’s evolution and the impact it will have on global economic activity, our exports and imports’ international prices as well as the international financial flows,” said a representative of the Central Bank Thursday after a monthly monetary policy meeting.

“We must emphasize that recently prices have fallen for raw material and oil, that imported food prices tend to fall, and that this favors the gradual reduction of inflation in the country.”

Article courtesy of the Peruvian Times.

Peru's March Consumer Prices Climb Most in Four Years

Peru's consumer prices climbed the most in four years last month, and more than economists estimated, led by higher costs for fruits, vegetables and fish.

The monthly inflation rate accelerated to 1.04 percent in March from 0.91 percent in February, the national statistics agency said today. Annual inflation quickened to 5.55 percent from 4.82 percent in February, the agency said.

Economists had estimated monthly inflation of 0.5 percent and annual inflation of 4.99 percent last month, according to the median estimates compiled by Bloomberg. The central bank may force banks to keep higher levels of reserves on deposits, thereby decreasing liquidity, said Jorge Sanchez, an analyst at Lima-based consulting firm Maximixe Consult SA.

"Inflation was higher than expected,'' Sanchez said in a telephone interview. "It's partly due to food wholesaler speculation and rising prices of imports, which is beyond the bank's control.''

Fish prices rose 7.4 percent last month as demand increased during Holy Week, when many practicing Catholics remove meat from their diets and eat more seafood. Fruit and vegetable prices jumped 9.5 percent as flooding and landslides during the rainy season limited food supplies.

Prices will drop by May as an economic slump in the U.S. blunts demand for commodities, central bank President Julio Velarde said March 27. The bank targets annual inflation of no more than 3 percent.

"Recent cuts in tariffs to food imports and excise taxes to fuels are likely to be helpful, but not in the very short term,'' Boris Segura, an economist at Morgan Stanley in New York, wrote in a March 30 report. "Food inflation is likely to keep exerting pressure.''

Peru's currency, the sol, strengthened 0.7 percent to 2.731 per dollar at 1:25 p.m. New York time.

March's monthly inflation rate was the highest since February 2004.

Alex Emery, Bloomberg.com

Rising prices, accelerating inflation and falling exchange rates are all affecting The Colour of Hope and our work. Funds go considerably less far now than they did a few months ago. We're hoping that the situation evens out by May, as predicted.

Peru's government to get rid of Lima's child labor and begging in 8 months?

In sixteen special operations, child labor and begging will be eradicated from Lima's streets in the next eight months, announced today Peru's Labor Minister, Susana Pinilla.

She affirmed that the aim was to get 35 to 40 children off Lima's streets with each operation, assuring that child labor and begging could be eliminated from the capital's streets in sixteen sessions.

Pinilla explained that 60 percent of the children begging in Lima's streets were doing so because they were being exploited by someone else, while 40 percent was attributed to extreme poverty or family violence. She stated that poor children begged in the street because they did not have enough to eat at home. According to Pinilla, another factor that influenced begging was child abuse.

In an effort to help mothers and fathers learn how to treat their kids, Peru's Labor Ministry is also setting up parenting schools for parents that beat their children. Pinilla stated this was being done because there are a great deal of parents that have admitted to abusing their children.

Once children are taken off Lima's streets, they will be transported by bus to a health center, where they will undergo physical and psychological evaluations. "That is where we will know if the child is abused, if they have marks on their bodies", said Pinilla. "At that point we will make ourselves responsible for the child and take them to an orphanage."

Text courtesy of Living in Peru

This story was posted on Living in Peru News section on 19th February 2008. Since then, it has sparked off some very interesting and pertinent comments from readers -

"Will they really care for the kids in an orphanage? Will the children really get what they need? Will they have a better future???"

"I find it unfortunate that they did not pay any attention to these children before. And what about all those children in other cities and villages? Why only in Lima? I believe that the only reason to this now is to clean up their image before the APEC starts in November. After that it will be back to the daily practice."

"Poverty and marginalization destroy families and lead kids to the street. Not even 16 police operations can change that. How about sixteen operations to eradicate extreme poverty in Lima?"

The Colour of Hope seconds all three of these comments. There are now a good number of orphanages/children's homes in Lima, but not enough for 640 more children to be properly cared for. And dumping Lima's child worker population in care homes isn't going to solve the problem; it's just a plaster on the wound. It seems that "sixteen operations" is an awfully good way to appear to be doing something about the problem, whilst in reality, everyone knows it will only scrape the surface.

Business Executives Annual Conference 2007

Each year, a Business Executives Annual Conference (Conferencia Anual de Ejecutivos – CADE) is held in Peru.

The 45^th CADE took place this year from 29^th November to 1^st December in the city of Trujillo in northern Peru. The objective of this year’s debate was to determine “Everything we need to be a just and prosperous country”, or in the words of the CADE committee, to determine what Peru needs to do in order to become a first world country within the next 30 years.

However, the conclusion this year seems sadly little more than a reinforcement of what was established in previous years, namely, the need to gain a better understanding of how to breach the ever widening ‘rich poor divide’.

Things have advanced very little since 2006. As one of the members of the audience commented, “Peru is a long way off being a just and prosperous country, because it’s much easier to be prosperous than just.” Only very few of the many speakers who attended the event commented on what actually needs be done to combat poverty and to encourage social integration.

The two foreign speakers, Juan Enríquez Cabot and Xavire Sala-i-Martín claimed that the only way to attain justice, equality and prosperity is by investing in the future, and specifically by investing in education. 84% of those who attended CADE 2007 agreed that the Peruvian government’s main goal should be to improve the quality of the country’s education.

Yet the need to invest in education comes as old news – the last Global Competitiveness Report from the World Economic Forum ranked Peruvian primary education 95^th out of 131 countries - the worst in the whole of South America.

The president of CADE 2007, Diego de la Torre (pictured above), called attention to the need for greater social responsibility and anthropological sensitivity as new concepts that should be form the basis of any enterprise in Peru. And the president of the Peruvian Institute of Business Administration (Instituto Peruano de Administracion de Empresas - IPAE), Claudio Herzka (pictured above), stated that in order to become more competitive, Peru needs to focus on the long-term.

Yet both of these proposals require long term investment, commitment and stability; goals that despite nearly 6 years of steady economic growth, Peru still hasn’t attained. Fernando Zavala, ex Economics Minister stated that Peru’s economy is above the average for Latin America and 95% of those who attended CADE 2007 agreed that Peru is advancing. Yet there is still a lot of work to be done with regards to poverty reduction – 43% of Peru is still living below the poverty line.

Javier Abugattás, a member of the panel, confirmed that one of the main obstacles to reducing poverty is the radical centralism that characterizes Peru. And Jaime Saavedra, another panel member, added that there is a great deal of inequality regarding the distribution of the country’s basic services – it is almost impossible for prospective businessmen from jungle regions to generate a sizeable income when the communication and transport systems are so deficient.

The discussion could have gone on for much longer, but when Fernando Zavala requested a second 6-minute extension, many members of the audience complained that they’d “be late for lunch”. It seems they had discussed poverty reduction for far long enough. Unfortunately, for the majority of Peruvians the debate is only just getting started.

Photo courtesy of El Comercio, Sunday 2nd December edition

Update - Falling exchange rates and rising prices in Peru

Here is a comment that a Colour of Hope supporter made in reply to post, Falling exchange rates and rising prices cause alarm across Peru, from Wednesday, 10th October -

The dollar is indeed weak worldwide, and food price inflation is indeed a universal phenomenon (there have even been boycotts of pasta in Italy over its increased prices), but that doesn't of course make the situation any less devastating.

The good news is that with the orthodox macroeconomic policy pursued by Alan Garcia, Peru almost certainly won't see the hyperinflation it experienced when he attempted to spend more money than the government had in the 1980s. The bad news is that with stockpiles low worldwide food prices won't get any lower over the next year or two.

Expect the Peruvian government to come under increasing pressure to follow countries such as Argentina, and, most recently Russia, in imposing price caps on food. While this is superficially appealing, it has the perverse effect of increasing scarcity (because shops can't afford to stock goods that they have to sell at a loss) and forcing the government to spend vast amounts of money to keep prices low, which, in the long run, is what would make hyperinflation more likely again.

What is the situation at the moment? Have food prices dropped at all? Are price controls being discussed? Is the government getting the blame? Are Humala or any other populist figures capitalising on the issue?

The situation in Peru hasn't changed so far, unfortunately. Food prices haven't dropped and exchange rates haven't returned to what they were before 10th October. The good news though, is that rates haven't fallen any further. Although the dollar has remained at an all-time low, it seems to be stable for now.

I think there are mixed views about the government - Alan García has recently raised the minimum wage, which brought him some popularity amongst lower-middle classes. But after the 1980's fiasco, many people are extremely sceptical about the government's ability to control inflation. I haven't heard much about price controls so far, but there was talk of introducing a maximum price for milk.

El VRAE - The Forgotten Valley of Peru

More coca is produced in the VRAE (River Apurímac and River Ene Valley) than anywhere else in Peru. Naturally, it has become an epicentre for cocaine production and is a regular drug trafficking route.

The entire valley has only one local police station and six policemen. The station is cut off from all communication given that the only telephone was disconnected 6 months ago due to unpaid bills.

54.27% of the valley's population is poor and 44.84% is extremely poor. 51% are suffering from chronic malnutrition.

80% of housing lacks potable water and 77% has no street lighting.

The life expectancy for women in the valley is 60 and 64 for men.

Of the 200,000 people living in the valley, only 10,000 (5%) have finished secondary school.

30% of the population as a whole and 49% of women in the valley is illiterate.

Anteccasa, one of the valley's typical towns, has no running water, electricity or medical service. There is only one primary school for the 40 children and the teacher hardly ever turns up. If the children want to study, they must walk more than 3 hours in order to reach the next school. The nearest secondary school is even further away; nobody in Anteccasa has ever been.

The medical centre in Pichari, another VRAE town, is falling to bits. Patients must queue for hours to register because notes are taken by hand. Even if there were a computer it wouldn't be of much use because the electricity cuts out on a regular basis, ruining the few bits of medical equipment the centre has managed to obtain. Vaccinations have to be put between blocks of ice until the electricity returns and the night team quite often works by candlelight. The centre's medical staff has to work around the clock because there are not enough of them for the number of patients. The situation is the same in 8 other medical centres throughout the VRAE and there is only one hospital for the entire valley.

In 2006, the Peruvian government initiated "Plan VRAE" - "an option of peace and development for the VRAE", yet there have been no great changes to the valley's education system, medical service and general standard of living so far. The VRAE police headquarters, opened by the Plan in December last year, has only one van - hardly even sufficient to patrol the edges of the 13,000 square kilometre valley. The Plan's budget has been increased for 2008, and after a recent terrorist attack in Ocobamba, the area has been re-declared a state of emergency. But this is not enough for the VRAE people. They need to see change now, not in two, three or four years time.

Last Monday, 5th November, I posted a report by Andres Oppenheimer, entitled, "Peru may be the next rising star in Latin America". Oppenheimer states, "Peru has a long way to go, especially when it comes to competing in the global economy...but people who are optimistic about Peru in the long run may be right...it may indeed become a star economy in the not-so-distant future." This optimism may well be true for the country's economy in general; many parts of Peru are seeing steady progress and change. But the VRAE is by no means one of these parts; in the general air of development and success, the VRAE and other similar areas are all too easily forgotten.

Map courtesy of uterodemarita.com

The Oppenheimer Report - Peru may be the next rising star in Latin America

When I asked senior World Bank economist Marcelo M. Giugale in a recent television interview which countries will be the economic stars of Latin America over the next 20 years, I was surprised by his answer. The first country he mentioned was Peru.

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''Peru?'' I asked, somewhat incredulous. When economists talk about Latin America's bright spots, the first country they usually cite is Chile, which has been growing steadily for nearly two decades and has reduced poverty from about 40 percent in the early '90s to about 15 percent today, more than any other country in the region.

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When pressed for other examples of Latin American countries likely to prosper in the near future, many cite Brazil. It's a giant country that is moving toward modernity at a snail's pace, but -- with more than 50 percent of South America's GDP -- is raising high expectations because of its sheer size, and its leftist government's generally sound economic policies.

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But Peru, until now, has seldom come up as a country of the future. Most often, it has been associated with political scandals, natural disasters and political uncertainty.

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Last year's elections had pitted former President Alan García, whose irresponsible populism had ruined the country during his 1985-90 term, and Ollanta Humala, a leftist former military officer who was publicly backed by Venezuela's narcissist-Leninist leader Hugo Chávez. When Garcia won by a thin margin, Peru's business community welcomed his victory as the lesser of two evils.

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''Making predictions for the next 20 years is somewhat risky, but I would look at countries like Peru,'' Giugale said in the soon-to-be-aired Oppenheimer Presenta television interview. [Excerpts can be seen now at www.MiamiHerald.com/americas].

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''The countries that will succeed are those that find the right balance between economic efficiency and social solidarity,'' he said. ''That's because countries that follow that middle-of-the-road path are the ones that will have the most political feasibility to get things done.''

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Giugale, who cited Colombia as another country that may surprise everybody for the better in coming years, especially if it gets its free trade agreement with the United States approved by the U.S. Congress, said Peru is already showing pretty impressive growth figures. Consider:

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• Peru's economy has been growing at about 6 percent a year for the past six years, a longer period of steady growth than most countries in the region. The United Nations Economic Commission for Latin America is projecting a 7.3 percent growth for 2007, and a 6 percent increase for 2008.

• Poverty has fallen from 54 percent of the population in 2001 to about 44 percent, according to official figures.

• Inflation is at about 2.8 percent, one of the lowest rates in the region.

• Exports have risen at an average annual rate of 24 percent since 2001, including an 18 percent annual rise in nontraditional exports, mostly agricultural goods and textiles.

• Foreign direct investment has soared from $810 million in 2000 to $3.5 billion last year.

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My opinion: Peru has a long way to go, especially when it comes to competing in the global economy. Just Wednesday, the World Economic Forum's new ranking of the world's most competitive economies ranked Peru 86th among 121 countries, down eight places from its spot last year.

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But people who are optimistic about Peru in the long run may be right. García has had the wisdom to continue the sound economic policies of his predecessor, Alejandro Toledo, who despite his low popularity set the stage for long-term economic growth and a reduction of poverty.

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This is no small achievement in Latin America, a region long characterized by boom and bust cycles where many presidents love to proclaim themselves founding fathers of supposedly new and ''revolutionary'' economic models -- like we are now seeing in Venezuela, Bolivia and Ecuador -- that help them gain absolute powers, but most often at the cost of destroying their countries' economies and increasing poverty in the long run.

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Chile, and most recently Brazil, have opened a new chapter in Latin America's modern history: They are leftist-ruled countries that pursue responsible economic policies, attracting investments and creating the base for long-term growth. Peru is a welcome addition, and it may indeed become a star economy in the not-so-distant future.

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Andres Oppenheimer
aoppenheimer@herald.com

Peruvian government takes drastic measures to ensure 2007 census success

Tomorrow, Sunday 21st October, a census will be carried out countrywide in Peru. Its purpose is to identify and gain better knowledge of the population distribution and their level of education, birth and infant mortality rates, housing and the materials used for construction and problem areas, such as towns with no access to running water, drainage or electricity. The information gathered will help to improve the country’s social aid programmes, hopefully meaning that more support will reach the areas where it is most needed.

Therefore, in part, this is very good news. However, in order to carry out the census, the government has issued a complete ban of all forms of transport nationwide! The ban will last from 8am to 6pm, meaning that between those hours there will be absolutely no buses, taxis, private cars or other forms of transport allowed on the road. People found outside will be asked to return home until 6pm. The same happened in 1993, resulting in thousands of people across the country being arrested and fined, simply for leaving their homes! Fortunately since then it has been agreed that this is actually against the law and against the right to freedom, so this time the authorities do not have the power to arrest or fine anyone, but they will still “recommend” people return home.

The entire country being ordered to stay shut in their homes all day just for a census seems absurd to me, and probably does to most other Westerners too. Other countries seem to manage to complete their census without having to shut the entire population inside! But quite aside from it being absurd, it is also preventing many Pervians from going to work. Most people in the West think of Sunday as a day of rest, but in Peru it is just one more working day for the vast majority of people. They need to work 7 days a week in order to bring in enough money for their families; the idea of a day off is a luxury. So for these people the census is a loss of income, perhaps meaning that their children go hungry that day.

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On the other hand, some Peruvians have explained to me that due to the lack of cooperation amongst the people, the results of the national census have not shown an acurate reflection of the reality. This in turn, has meant less effective social aid programmes. In order to combat this non-cooperation and improve aid programmes, the government has had to take some drastic measures. I’d be interested to know what other people think about this issue. Please feel free to leave comments on this blog entry.

Falling exchange rates and rising prices cause alarm across Peru

The Dollar to Nuevo Sol (local Peruvian currency) exchange rate has crashed from 3.15 to 2.96 in the space of days. This means that for every $100 exchanged, people are receiving 19 Nuevo Soles fewer - the equivalent of 19 bus fares or about 4 average restaurant meals. This is extremely worrying for many local businesses who hold bank accounts in dollars and citizens whose monthly wages are paid in dollars.

The Peruvian government recently stated that the dollar has devalued worldwide, not just in Peru, and that therefore there is no reason for concern. This has done little to calm the Peruvian people however; in the 1980’s the current President, Alan Garcia, froze all bank accounts held in dollars!

At the same time, prices are beginning to rise – bread has almost doubled in price over the last few months and other basic food stuffs, such as eggs, have gone up too. What with Alan Garcia back as President, people are worried that they will suffer again the terrible hyperinflation of his 1980’s government, which was worse than that of post Nazi Germany in the late 40’s. People are scared for their savings, their livelihoods and their future.

The devaluation of the dollar and rise in prices has affected The Colour of Hope too – it means that for the near future we will need to spend more to achieve our aims. It also means that the young people we help are even more in need of aid than before – rising prices and falling exchange rates are worrying enough for those who are lucky enough to have jobs; for the unemployed they’re devastating.