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By Jorge Balarezo and Henrik Wiig

The mighty few vs. the silent majority - Barriers to resource extraction for poverty alleviation in Peru. By Jorge Balarezo and Henrik Wiig International Department, Norwegian Institute of Urban and Regional Research.

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By Jorge Balarezo and Henrik Wiig

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  1. The mighty few vs. the silent majority - Barriers to resource extraction for poverty alleviation in Peru By Jorge Balarezo and Henrik Wiig International Department, Norwegian Institute of Urban and Regional Research. Presentation at NORAD/WB seminar onnaturalresources, Oslo 12. April 2012 Work in progress, do not quote!

  2. Peru – Rich in resources… • Exploited • Highlandmining • Fisheries • Unexploited • Oil • Gas (Camiseastarted) • Forests and Agri (2% vs. 8% in Brazil) • Hydroelectricity (178 GW only in Amazon) • Mining (Amazon)

  3. …starting to reduce poverty! • Still high at 34.8 % • Extreme poverty reduced, 17% in 2005→11% in 2009 • Highland/rural and Amazon • Current president García • Powersocialist in distribution, but private operations • Main development strategy to extract natural resources • Impressive growth, 8% pa • Highland mining gives state income • Room for tax exemptions create employment • Humala leading candidate, indigenous culture but national resources Source: Informe Pre-electoral, Administration 2006-2011

  4. Wants more, but unable to act • President elected ”benevolent dictator” for 5 years • Mandate: ”Developthecountry!” • Assume not driven by corruption (controls exist) • Decide unilateraly, if follow existing laws (Stoltenberg Lofoten pollution law) • Natural resources are property of the nation • All over/under land surface (including threes…) to nation in constitution • State dominion, on behalf of the nation • Resistance at all levels! • CSO/NGO/International • Local governments resist central level • Unclear laws (right to consult) gives judiciary system importance • Congress respond to pressure • State lack territorial control • Anything goes after Fujimori dictatorship • Blocking roads and regions/departments/districts where extraction activity takes place, violence and death

  5. Failure 1 (moderate): Highlandmining • Huge increase in volume and price • 60% of total exports, • Huge potential: 16% of world minerals, silver, zink, led • State/companies must negotiate locally • Community, district, department (canon) • In reality must leave if no deal • Pulls out if do not succeed • Antamina Gold • Prospectors locally are thrown out physically!

  6. Failure 2: Agrobusiness in Amazon • Amazon unexplored due to Andes barrier • Look to Brazil! • Unregulated encroachment over time, cattle, biodiesel • Peru state planning: Giant agro plantations concessions of palm oil, biodiesel, etc. • Barriers and proposed solutions • Forests law restrict agricultural plantations • L.D. 1090 exempts land for forest production from Forest Resource definition (reduced only to lands for forest protection)(Public lands) • L.D.1064 redefine land for forest production to agriculture lands (Private lands with state as owner) • Solve later other property and territorial claims (indigenous, invaders) • Would open 45% of Amazon to agro-business plantations • Congress could repeal, but did not act (agree implicitly) • Deadly protests in 2009 succeds • Indigenous population unite claiming territorial rights using §169 and UNDRIP on Free and Prior Informed Consent (soft law) as moral justification of civil unrest • Blocking Amazon region for two months, 50 dead at Bagua (executions), then congress backs out

  7. Failure 3: Hydrocarbons • Camisea in Cusco • Gas consumption in Peru and LNG exports • Consession for explorationofoil and gas, butfewactually do • 53 Concesiones given (assume EIA and consultations) • 7 exploit • Unsurewhathappens to the rest, some in fieldpreparationsothersno action? • ResultofBagua? • Mostlysmall and tecnically less sophisticatedcompanies • Statoil afraidofreputation, environment and indigenouspotentially a dangerousmix • Norwegianoilmosquitocompanygotconcession, corruptactdisclosedwhichtoppledthegovernment

  8. Failure 4: Hydroelectricity • 174 GW hydroelectric potential only in Amazon • 132 GW is Norwegian production • Brazil-Peru trade and investment agreement • 6 large scale and 9 small scale dams (mostly Amazon) • EIA including consultations prior to concessions • No agreement on ”Law of Consultations” • Proposed by congress, but Garcia refused to sign as long as do not explicitly state ”The right to be consulted is not a right to veto” • Opens for judicial process to decide if consultations have taken place or not • Proposed “Urgency decree” of EIA after concessions, but withdraw due to regional government protests • Only some first studies has taken place

  9. Failure 5: Small scale mining • “Phyrrus victory” of beating the state, as a humiliated state takes revenge • Buying subgroups with projects, split and conquer • Blind eye to land invasions all contamination all over • The Amazon region of Madre de Dios is being converted into a desert by “informal” goldmining • 32,000 ha is deforested and 307,000 in process of destruction. • Around 18000 miners, or 50.000 people in all, from all over the country, government do not take risk of social conflict if try to stop • Mercury spills directly into the river, no controls whatsoever • Finally, government intention in huge policy operation • Granted concessions rather than stopping the activity (assume they follow the pollution law…) • Now 3200 mining concessions granted, for 1 usd each

  10. Why powerless president? • State lack territorial control • Locals can decide ”not in my backyard” • Decentralisation enforce regional governments • ”Strong” independent president demonised • Presented as personal decision (“Garcia is crazy”) • Congress elected independently • Not responsible for development implications • React to populist sentiments • Voters lack ownership to process and state • Extremes Humala (Chavez friend) vs. Fujimori (dictator’s daughter), uncoordinated centre Castañeda, Toledo and Kuczynski • Previously president approval rates below 10% in general, while Garcia 26% • One dollar for government, is not one dollar for me! • Too small state, cannot spend all income • Environment vs. development is large scale planning, not many marginal decisions • Dams, zonal planning, interoceanic roads • Norwegian forest program should pay for absolute natural service • Environmental protection needs to be accepted by government to be efficient

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