Peru’s new cabinet
President Humala appoints Oscar Valdes as new prime minister
Article added on December 13, 2011 at 16:09 Swiss time; last sentence added at 16:19
  
Ollanta Humala, a not so reassuring president

Peruvian voters regularly manage to chose leaders that others would describe as dangerous and/or incompetent. The current President Ollanta Humala Tasso (*1962) makes no exception.

President Humala’s entire family is not very reassuring: Ollanta Humala’s father, Isaac Humala was a communist and ideological leader of the Ethnocacerista movement. His brother, Antauro Humala, is serving a 25-year prison sentence for kidnapping 17 police officers and killing 4 of them in an unsuccessful military rebellion. Ollanta’s brother Ulises Humala is a professor of engineering in Lima. The most “normal” family member, he considers himself a nationalist too. He run against his brother Ollanta in the 2006-election. garnering a meager 0.2% of the vote. Ollanta’s mother distinguished herself the same year by calling for homosexuals to be shot.

Ollanta Humala is of course only responsible for his own statements and actions. They were not much better. In 2000, Humala led the unsuccessful occupation of a mine owned by Phoenix-based Southern Copper Corporation by some 40 Peruvian soldiers to protest against the corruption in the government of then-President Alberto Fujimori. In the 2006-presidential election, the former army officer declared himself an admirer of the Venezuelan President Hugo Chavez. Humala also praised former left-leaning Peruvian dictator Juan Francisco Velasco Alvarado, who ruled Peru from 1968 to 1975.

In the June 2011-runoff presidential election, Ollanta Humala managed to beat the daughter of former Prime Minister Alberto Fujimori, Keiko Fujimori (*1975). Most observers assumed that her main goal was to free her father, who is serving a prison sentence for human rights abuses, corruption and other crimes.

Humala or Fujimori, that was a choice between two evils. Too many moderate candidates had presented themselves in the first round of the 2011-presidential election, splitting the votes between them and paving the way for two not very recommendable politicians to go into the runoff.

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From Lerner to Valdes: a new prime minister and a new cabinet after just five months

On July 28, 2011 Ollanta Humala appointed Salomón Lerner Ghitis (*1946) as Peru's prime minister. Lerner is a former Peruvian businessman of Jewish faith, a former rector of the Catholic University in Lima and a former head of the Truth and Reconciliation Commission investigating the abuses under Fujimori's regime. In addition, President Humala appointed Luis Miguel Castilla Rubio, an economist with Canadian (McGill University) and US (Harvard and Johns Hopkins University) degrees, as minister of economy and finance.

With this key choices, a rational approach reconciling the promised social reforms with economic discipline seemed possible, the worst case scenario including nationalizations in Venezuelan style avoided. And indeed, so far, Humala’ government has been a moderate one. Peru’s economy grew 8.8% in 2010 and is expected to grow some 6.7% in 2011, although the current unrest against mining projects could hamper this year’s projected growth.

On December 10, 2011 the Peruvian businessmen of Jewish faith, Prime Minister Salomón Lerner Ghitis (*1946) surprisingly resigned. In  his resignation letter, written the same day, Lerner outlined that his government had carried out actions that improved the confidence in the economic and productive sectors of Peruvian society. “Growth with social inclusion, equal rights and opportunities, economic and social dialogue at the national level, and a historic reunion with rural Peru” were the guidelines of his government.

Lerner wrote that “the beginning of a new era of governmental work requires adjustments in the general conduct of government, as well as the government’s strategy, and implementing an agenda that responds to the government’s policy guidelines. For that sole purpose of allowing you to have complete freedom to make such adjustments, I present to you my resignation as Prime Minister.”

Lerner had only been in office for five months. Therefore, the letter did not make sense.

President Humala accepted the resignation and, immediately on December 11, appointed Oscar Valdes Dancuart (*1949), Lerner's interior minister, as the new prime minister. Like Humala, Valdes is a former army lieutenant colonel. He once taught Humala at a military academy in Peru's capital Lima. This raised concerns about a possible militarization of the government or at least a move towards a more authoritarian style of government.

After Lerner stepped down, former president Alejandro Toledo announced that his Peru Possible party was leaving the government. Toledo said: “We do not support the militarization of the Humala government... we have been offered offered to join the new cabinet, but we have said, no thank you”. Members of Toledo’s Peru Possible party held the ministries of defense (Daniel Mora) and labor (Rudecindo Vega).

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A mining dispute, foreign investments and the search for economic credibility

The new prime minister, Oscar Valdes Dancuart said: “There is no crisis. What is happening is that there are some adjustments, as is often done”. To change the prime minister after just five months is not a simple “adjustment”.

The main reason for the resignation of Lerner is the poor handling by the government of a crisis over a disputed $4.8 billion gold and copper mining project in the Cajamarca region in northern Peru. The local population had organized two weeks of protests against the Conga mining project favored by President Humala who, on December 4, declared a 60-day state of emergency to restore order by suspending a series of constitutional rights.

Pushing through the Conga mining project is President Humala’s way of reassuring investors around the globe that he is no longer an adept of Hugo Chavez, that foreign investments in Peru are safe. The Congo mining project is a joint venture between the Denver-based Newmont Mining Corporation and its Peruvian partner in the Peruvian provinces of Celendín and Cajamarca. Newmont has already been active in  Peru’s Minera Yanachocha properties north of Cajamarca since 1994. The Conga Project is currently Peru's biggest investment plan; some $50 billion in mining investments are expected to take shape within the next decade.

Local protesters raise environmental concerns, e.g. regarding water quality in the region. Furthermore, the local population would like to profit from Peru's natural resources too.

The mining conflict led to a reshuffle of the cabinet. President Humala made sure his economic credibility would not be questioned.

According to the Peruvian constitution, the entire cabinet had to step down with the prime minister. The new prime minister made clear that Minister of Finance Luis Miguel Castilla and Minister of Social Inclusion Carolina Trivelli would retain their posts. In total, 10 of the 19 ministers of the Lerner cabinet were replaced by Humala and Valdes. Foreign Trade Minister José Silva retained his office, another symbolic measure signaling economic continuity. Jorge Merino, head of mining at Peru's private investment promotion agency, was named new mining and energy minister.

New Prime Minister Valdes told Peruvian Panorama television that his government was “a cabinet of managers and specialists that aims to combine economic growth with social inclusion”, a statement pretty much in line with the ones made by the previous Lerner cabinet.

Prime Minister Oscar Valdes Dancuart is a former leader of the Chamber of Commerce of Tacna as well as other chambers of commerce in southern Peru. In an interview published by Peru's El Comercio newspaper, Cajamarca regional President Gregorio Santos accused Valdes of being “accustomed to resolving problems with bullets.” Concerns remain that the new government could adopt a more militaristic approach.

Time will tell whether the December 2011 government reshuffle was just a needed fresh start to reassure both Peruvians and investors or whether this was the beginning of a more authoritarian rule in Peru. So far, Humala’s more centrist approach is also due to the fact that his party does not control a majority in parliament.