Javier Diez Canseco describes himself as “an independent” congressman within the ruling Gana Perú coalition. He has been appointed by President Ollanta Humala to head up a congressional investigative omission into corruption. The commission will probe malfeasance allegations levied against the last government led by former president Alan García (2001-2006). Diez Canseco was the second most voted congressman of the Gana Perú coalition in the April 2011 general election and is a well-respected politician who helped cement Humala’s more moderate campaign stance in his second presidential bid. Since the election, however, Diez Canseco has not always toed the coalition line, criticising the government for not making the mining royalty reform more exacting and for failing to remove Vice-President Omar Chehade from the congressional investigative commission (amid allegations of influence peddling by Chehade). Chehade eventually stood down from the commission on 27 October. Diez Canseco has long been a human rights advocate and leads the Partido Socialista. His party colleague, Aída García Naranjo, is the minister for women. This interview was conducted in London, UK, on 14 October.
Latin American Newsletters (LAN): Could you give us some of your reflections on the current political juncture in Peru?
Javier Diez Canseco (JDC): We have a change of government and that means changing policy to construct an economy with growth and social inclusion. What we have experienced up to this point is exclusive growth.
We have a government that is not entirely a Gana Perú government, it is rather a coalition government driven forward by a rainbow cabinet; it includes all ideological currents from the Left to the Right. We as Gana Perú got 32% [of the vote] in the first round and to get through to the second, we had to make agreements and alliances. This meant pruning the manifesto, but keeping its core: redistribution, greater tax reform (in particular mining) and building a common front to fight against corruption. Without a doubt, that, in addition to the stability the government experienced at the beginning of its mandate, meant that a certain amount of those at the neo-liberal end of the spectrum got on board with our idea of distributive growth and social inclusion. These individuals are now involved in the economic management of the government. The government has balanced these appointments with those of left-wing, centrist and progressive ministers who make up the other part of the rainbow cabinet.
LAN: What do you think will be the biggest hurdles and challenges within the cabinet – what issues are going to become the most important battlegrounds?
JDC: Tax reform and the redistribution of new rents, in particular mining rents, will be a significant challenge.
1. Mineral, oil and gas rents. We need to harness these so that Peru can use its natural resources in a project of national industrialisation that enables it to generate employment. The main objective is to establish a system whereby ‘he that earns more pays more’ and the mining industry has an important role to play.
2. Financial capital also needs to be the sticking point of this reform. Financial capital has incredible rent profitability potential in a country where inflation is between 2% and 3% and credit costs between 25% and 30% for average Peruvians. Corporate credit is at 4% whilst consumption/retail credit has an annual interest rate of between 42% and 120%. This needs to be confronted, not just in order to boost domestic consumption and make the domestic market dynamic, but also in terms of small and medium businesses which cannot survive with such high rates because they need to be making huge profits to succeed.
3.The third potential source of tax to be tapped is from mid- to high-level service professionals who evade taxes by not submitting full income receipts – these include lawyers, private doctors, psychiatrists – who have high income levels but pay next to no taxes. The country needs to be a lot firmer in this area.
The country also needs to clamp down on illicit capital flows, especially drug-related money laundering. Money laundering is a serious problem. The previous government used an internal intelligence team within the Sunat [government tax body], which investigated a total of four cases in five years. This is a joke and it is an expression of limited political will to investigate corrupt practices properly, in spite of there being more than enough information in the public realm to open serious cases. I think, and I hope, that Humala takes a tough stance and if it comes to re-organising this in intelligence units, that he does so thoroughly in order to enable the recovery of these resources and the creation of a more formal economy.
Another major challenge is altering the relation between the state and the market. This is related to whether production should be focused on internal or external markets. Naturally, there will be tensions. The state is not going to be a socialist state, much less a centrally planned one, but the state needs to recover its planning function and to give the country’s construction a ‘North’, a purpose and perspective. The state needs to comply with its regulatory role, and strictly, which today it does not fulfil. The state needs to recover sovereignty over its natural resources so that it can not only receive rents but also promote their expenditure in ways that push Peru’s industrial and social development forward. We need a state that supports the growth of the internal market, regulates to generate a competitive financial sector, in particular the rates of credit, and it needs to fulfil a regulatory role in terms of agricultural property and the strengthening of strategic state owned companies such as PetroPerú.
LAN: How does counter-narcotics policy fit into the government’s strategy?
JDC: It is a top priority for the government. The first thing we have proposed is to contain [coca] growth; we have not even proposed reducing production yet. Differently to the previous government, which established 40% reduction targets, we have opted to contain the growth and focus our activities on the control of precursor chemicals, money laundering and to offer an alternative development path for those that grow it. This needs to be managed in an integrated way.
LAN: The situation in Bolivia is a case in point of how difficult it can be to maintain both a policy of sustainable development which respects indigenous rights and a development policy that has, as its base, the exploitation of extractive industries.
JDC: To me it seems natural that there are tensions because the nature of the relationship between mining and water or agriculture is one that is contradictory by nature. A balance needs to be struck between the benefits and the conditions for the community and the needs of the country. To me, what Evo [Morales, President of Bolivia] appears to have been lacking is a more careful management of this balance. Even so, roads and large infrastructure works are likely to impact on things that have an intangible value to some people.
I do not subscribe to the theory of the ‘Noble Savage’ and that all that is primitive is necessarily better than that which is modern. I am acutely aware that a world without mining simply is not possible. We need metals and minerals for the continued development of humankind. Therefore, working towards equilibrium is of utmost importance, which implies that better conditions need to be provided by the companies that enjoy incredible profitability. Antamina, linked to Glencore [International PLC, a Swiss-based mining and commodities trading company], last year had sales of US$3bn; its operating costs in Peru came to US$600m, so they had US$2.4bn operating profits before tax in Peru. It is impossible that a company with that level of profitability cannot give the country greater say in its operations. In reality, there are 10 companies that control 85% of mining production in Peru.
End of preview - This article contains approximately 1316 words.
Subscribers: Log in now to read the full article
Not a Subscriber?
Choose from one of the following options
