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Peru’s Pedro Castillo represents a challenge to the Canadian mining industry

Presidential front-runner is taking aim at the extractive sector, wants a bigger share of company profits to benefit Peruvians

Canadian PoliticsLatin America and the CaribbeanSocialism

Peru’s socialist presidential candidate Pedro Castillo, the favourite to win the runoff vote on June 6, will serve as a challenge to the Canadian mineral industry in Latin America. Photo from Twitter.

The June 6 presidential election in Peru will offer voters two candidates of starkly different backgrounds, political orientations, and economic visions: Keiko Fujimori and Pedro Castillo.

Fujimori is the daughter of former president and quasi-dictator of the 1990s Alberto Fujimori (1990-2000). She was educated in the United States and studied business at Columbia University. After her father’s political collapse, she was selected for a prominent role in the new Fujimorista party Alliance for the Future, but created her own party called Popular Force in 2011. Fujimori’s connections to the US ruling class, and particularly the right-wing and business community, are well-documented. When she ran for president unsuccessfully in 2011, Rudy Giuliani served as an advisor.

Castillo, by contrast, was born to illiterate peasants in Cajamarca, one of the poorest regions in Peru, and grew up to be a primary school teacher, union activist, and member of the socialist Peru Libre party.

Socialism or barbarism in Peru

In a result that shocked most domestic and international observers, Castillo won the first round of the presidential election on April 11 in which a total of 18 candidates ran. Although the rise of Peru Libre, which describes itself as a party modelled on the tenets of Marxism-Leninism and Mariáteguism (referring to famous Peruvian socialist and supporter of Indigenous rights José Carlos Mariátegui) took many by surprise, the country has long been ripe for an anti-establishment presidential candidate.

According to Ipsos Peru, over 60 percent of Peruvians believe that corruption is the country’s “main social problem” and 95 percent believe that more than half of Peru’s politicians are involved in illegal activity. It is hardly surprising they think this when, according to teleSUR’s reporting, “almost two thirds of current members of Parliament have been indicted on corruption charges [and] all living former presidents are in jail, wanted or under investigation for corruption.” What’s more, a disastrous economic crisis, the second worst COVID situation in Latin America, and recent political instability have contributed to a general upsurge of public discontent, especially in the historically deprived rural areas. This is the context in which Castillo emerged as the election’s frontrunner.

Despite the fact that pre-election polls showed no candidate earning over 10 percent, Castillo (who, before this election, was mostly known for his leadership in the 2017 teacher’s strike) took first place with just over 19 percent of the vote. His support comes primarily from the rural provinces in the Andean highlands. This contrasts with Verónika Mendoza of New Peru, another left-wing party that draws its support from more urban areas.

There are two primary differences between Castillo and Mendoza which are often highlighted in discussions of the Peruvian left: Castillo is socially conservative and a staunch anti-imperialist who supports the elected government of Venezuela, while Mendoza offers more liberal social positions but has joined the Lima Group and the West in calling Maduro’s Venezuela a “dictatorship.” Despite their differences, however, Mendoza quickly expressed a willingness to look for common ground with Castillo and form a united front against entrenched oligarchic power. This alliance came to fruition on May 5, with the signing of an agreement that stressed the importance of putting aside their differences in order to prevent the return of Fujimorismo.

Even with the party’s promise to make “adjustments” to their resource nationalization plans, Peru Libre presents a far more left-wing economic plan than the parties that have governed the country in the recent past, meaning that it values redistributionism over the inviolability of private enterprise.

“Neoliberalism broke our burgeoning nation along with our public and private industries,” their governing proposal asserts. It continues:

Gains became privatized and losses became socialized. An exclusive monopoly was handed over to transnational companies along with laboring flexibilities that enabled the legal exploitation of the Peruvian worker, incrementing the depth of inequality in our country. Our people have become mere tools of production and simple merchandise. These moves have taken us back to neocolonialism. We are proposing a remedy captured in our slogan: No more poverty in a rich country!

It is hard to imagine a more perfect encapsulation of Peru’s much-loathed political status quo than Fujimori. She, like her father, has served jail time for numerous corruption charges, and she evinces little interest in revising the central tenets of Fujimorismo.

Although Castillo’s initially comfortable polling lead is narrowing, one can imagine Castillo riding a wave of rural support and anti-establishment anger into office. However, it is also not inconceivable that Fujimori will be able to weaponize the legacy of Peru’s multi-decade conflict with the ultra-leftist Shining Path guerilla group against her avowedly socialist opponent.

Tightening polls seem to indicate that, for a significant number of moderate voters, the bogeyman of leftism conjured by the right-wing has succeeded in inculcating a genuine fear of a progressive alternative to hardline neoliberalism. It also goes without saying that Fujimori has far more friends in important places than Castillo does—including the media, the business community, and Washington—and these groups will certainly involve themselves in the election on her behalf just as those same forces recently did in the Bolivian and Ecuadorian elections.

Castillo’s plan to renegotiate mining contracts with multinational companies and to keep at least 70 percent of their profits within Peru has already raised eyebrows in corporate offices around the world. In particular, Canadian mining firms, and the Trudeau government, are likely concerned by Castillo’s proposals. After all, 75 percent of the world’s mining companies are based in Canada, and their interest in Latin America has grown exponentially in recent decades.

Pedro Castillo, who is still neck-and-neck in the polls with business-friendly conservative Keiko Fujimori, addresses a crowd of supporters on May 27, 2021. Photo from Twitter.

Juan Velasco Alvarado and military socialism

In order to understand the dynamics of the mining industry in Peru, one must be familiar with the modern history of the country. The military dictatorship of Juan Velasco Alvarado (1968-1975) is a useful place to start. His was a deeply atypical military dictatorship, if only because the nationwide reforms he attempted to implement focused primarily on land reform and alleviating rural poverty.

Velasco took power in a coup against elected president Fernando Belaúnde. Belaúnde’s reliance on the import substitution industrialization model (ISI) had led to an increase in Peru’s foreign debt (by 1968, this hovered at around $200 million) and a serious recession, which Chief Economic Minister Manuel Ulloa tried to remedy by promoting foreign investment. Additionally, insurgent groups in the impoverished countryside were attempting to overthrow the government and begin a process of radical redistribution similar to that of the successful Cuban revolution, and the spectre of communist guerillas fighting for an equitable share haunted Belaúnde’s presidency (as it would plague almost every subsequent presidency).

Juan Velasco Alvarado

Military men who had witnessed the poverty of the countryside in their campaigns against the insurgencies began to believe that if the bourgeois democratic system did not act to prevent revolution at its roots (through extensive land reform and poverty alleviation programs), then it was very possible Peru would go the way of Cuba, and they would all either be executed or forced into exile.

The army decided to move against Belaúnde on October 3, 1968. Scandal was swirling around the president due to the so-called “Page 11” scandal, in which Peruvian interests had reclaimed control over the La Brea and Pariñas oil fields from the International Petroleum Company (IPC), a subsidiary of Rockefeller’s Standard Oil (now Esso). When it was discovered that the IPC was illegally avoiding taxes they were required to pay under Peruvian law, the fields were transferred to the state oil company with the Talara Act—however, when it was claimed that the eleventh page of the contract was missing from a public release, rumors spread that the government excised embarrassing details about major compensatory payments to the tax-skirting IPC. Discontent rose within the public and Congress, particularly roused by the popular left-wing APRA party. This led the military to intervene and seize power.

The newly proclaimed Revolutionary Government of the Armed Forces (GRFA) was, in the words of José Maria Caballero, “revolution from above… as a way to pre-empt revolution from below.” The government nationalized the IPC’s holdings and other important industries, marginalized the traditional oligarchy, and brought in “leftist petty-bourgeois advisors” instead of “the industrialists, landowners, merchants, and mine owners.” The GRFA spurned the ISI model in favor of an export-oriented developmentalism that sought to industrialize domestically in order to limit the influence of foreign governments in the economy. Velasco also pursued an independent and non-aligned foreign policy, maintaining good relations with the Soviet Union and other leftists in the region such as Cuban leader Fidel Castro and Chilean President Salvador Allende, who visited Lima in 1971.

Agrarian reform was central to the military’s poverty alleviation program, and it went much farther than preceding governments in this respect. In the words of Latin American historian Anna Cant:

During Belaúnde’s five-year presidency, 2,625 families had received state-allocated land, usually of poor quality. By contrast, between 1969 and 1974, 175,000 families received 4.5 million hectares. The 1969 reform was also larger in scope and more swiftly implemented than agrarian reforms in other Alliance for Progress countries. In fewer than ten years it succeeded in bringing an end to private latifundismo and introducing a comprehensive system of cooperative farms. These were designed to introduce more democratic systems of labour organisation and establish a state-led agricultural production network that could respond better to the growing global demand for foodstuffs.

The oligarchy viewed these reforms as attacks on their bottom line, and they used their media apparatuses to ceaselessly attack the military government. In response, Velasco expropriated the media on the grounds that its anti-government messaging was compromising the revolution. He would return the media to private hands in 1975, as opposition to the military government grew amongst sectors of the left as well as the right.

Despite initial support from the peasant class, the GRFA soon faced backlash. While its reforms did wrest power from the traditional ruling elite, there was anger across the rural population over the fact that many of their representatives were appointed from above, not elected by locals, and that some landlords were able to avoid expropriation. In short, the facts on the ground did not live up to Velasco’s rhetoric of the emancipation and triumph of the peasant. Strikes ensued, and certain leftists came to the conclusion that the GRFA was unwilling to implement the truly radical and far-reaching reforms needed to eliminate rural poverty in Peru.

In 1975, Velasco was deposed by a more conservative general named Francisco Morales Bermúdez, who guided the country back to bourgeois democracy while reducing state control of the economy. Morales also reversed Velacso’s independent foreign policy by cooperating with Operation Condor, the US-backed program of covert right-wing violence against political enemies across Latin America. In 2017, an Italian court sentenced him to life imprisonment for the “forced disappearance” of 23 Italian citizens, and in Peru he is facing charges related to the kidnapping and forced exile of 13 activists, including journalists, to Jorge Rafael Videla’s Argentina, one of the most brutal Condor states.

Velasco died in Lima in 1977. The successes, failures, and overall character of the GRFA remain fiercely debated to this day, but there is no doubt that his attempts at genuine agrarian reform were far more radical than any Peruvian administration before or since.

Of particular relevance is the fact that, under Velasco, Peru’s mineral industry was centralized and kept largely under state control. When more conservative forces returned to power, they quickly set about dismantling these reforms—however, it would not be until the presidency of Alberto Fujimori that Peru would truly become a stronghold of pro-US neoliberal governance in Latin America.

Alberto Fujimori, a former Peruvian engineer and politician, served as the President of Peru from July 28, 1990 until his downfall on November 22, 2000. Photo by Rafael Rodriguez Campos

The neoliberalization of Peru

After 1980, the year that Morales reintroduced bourgeois democracy to Peru, the country entered one of its worst economic periods. The “Lost Decade” of the 1980s saw a macroeconomic disaster that resulted primarily from Peru’s inability to repay the foreign loans it accrued during the era of ISI, a crisis which led to the strengthening of leftist insurgencies such as the Shining Path and the Túpac Amaru Revolutionary Movement (MRTA), groups which mostly consisted of the dispossessed peasant class. In short, this was exactly the kind of crisis that the GRFA had been hoping to avert.

The Shining Path was especially brutal (according to the findings of the Truth and Reconciliation Commission, they were responsible for 54 percent of the conflict’s deaths) and were known to commit terrorist attacks against other leftist groups and rural Indigenous towns. It was during this time that a young Pedro Castillo worked as a rondero, or a member of a peasant-led militia that did not support the insurgents and instead sought to protect local communities from violence committed by the Shining Path.

Shining Path propaganda poster. 30,000 people were killed during attacks carried out by the group between 1980-1992.

The decade of war and instability led to the 1990 election of Alberto Fujimori. Although he ran as a moderate fiscal conservative and a political outsider, he quickly introduced hardline neoliberal reforms and instituted aggressive military action against the insurgencies. Fujimori was able to exert significant control over Congress and the judiciary following the “self-coup” of 1992, in which he ordered the military to send soldiers to the Congressional building and deploy tanks into the streets. The military used tear gas and water cannons against protestors, and some of Fujimori’s political opponents were persecuted and arrested. The self-coup was followed by an executive action known as Decree Law 25418, an unconstitutional decree which gave the executive branch broad powers to reorganize the economic, judicial, and military branches of the Peruvian government.

Fujimori, in collaboration with the World Bank, instituted a structural reform program that opened huge areas of Peruvian natural resources to foreign companies. As a result, the international mining industry was given unprecedented access to previously unexploited lands. “In 1991,” José de Echave writes, “registered mining rights covered 2,258,000 hectares; in 1997—a peak year—they reached 15,597,000 hectares.” It was during this time that Latin America in general, and especially Peru, became one of the most attractive regions for the international mining industry anywhere in the world. It was also when Canadian mining companies began to play an important role in the region.

Cerro Verde copper mine, located about 20 miles southwest of Arequipa, Peru.

Canadian mining companies in Peru

Currently, Canada is the third-largest investor in the Peruvian mineral sector, following Switzerland and China. It accounts for 16 percent of foreign direct investment in the industry, and by 2012 there were 96 registered mining projects in Peru, operated principally by Barrick Gold, Teck, Pan American Silver, Iberian Minerals, Fortuna, and Málaga. In the history of Canada-Peru relations, however, this is a relatively recent development. As de Echave writes:

Toward the middle of the 1990s, Latin America was consolidated as the primary region to attract mining investments at a global level. Within that context, investments from Canadian mining companies started arriving in Peru. It should be pointed out that prior to the last decade, direct Canadian investments in Peru in general had not been significant, and even less significant in the mining sector. At the middle of the last decade, investments to that country took an important jump, directed primarily to the mining sector. This is how Canadian mining companies started playing an important role in the process of transferring companies and projects that were under the control of the Peruvian state, and in the development of new mining projects.

He also notes that “this expansion produced conflicts between mining companies and rural communities that multiplied across the entire country.” This is the grim truth of the Canadian mining industry: everywhere it operates, it leaves a trail of environmental degradation and brutal exploitation in its wake. As a recent article by Yves Engler pointed out, Canadian mining companies are currently embroiled in lawsuits related to (among other things) tax evasion, environmental destruction, and worker abuse in Mexico, Guatemala, Brazil, and Argentina, to name only a few examples within Latin America. Their recent history in countries such as Ecuador and Colombia paints an equally unpleasant picture of massive multinational companies devastating the lives of poor locals and using all options within their means to wriggle their way out of even the most meager accountability.

Social conflicts have frequently erupted around mining companies in Peru due to their often blatant and unapologetic disregard for the local environment and population. Examples are too numerous to list here, but an important one is the resistance to the Toronto-based Manhattan Minerals’ mining project in the town of Tambogrande.

Manhattan Minerals bought the mineral rights to the area in 1996 and quickly discovered large amounts of copper and gold. The company’s proposal for the extraction of these minerals was callous in the extreme. In order to begin its open-pit mine, the firm planned to displace 8,000 to 25,000 inhabitants and divert the flow of the area’s main river, the Piura. Further, the company did not account for underground deposits of iron sulphite which likely would have contaminated the town’s water supply and devastated their agricultural sector. The population formed a “Defence Front for Tambogrande” in order to halt the project. They organized a local vote and discovered that 98.65 percent of the town opposed the mine. The Peruvian state first rejected the legitimacy of the Defence Front, but ultimately agreed that the project would be needlessly harmful to the local region and halted construction. Manhattan Minerals attempted to fight this decision through every available legal procedure, but failed to gain access to the area’s minerals.

Another illustrative example is that of Vancouver-based Cadente Copper’s Cañariaco mine. In 2013, the company faced numerous protests against the project in Lambayeque. Locals claimed that the gold and silver producer showed them a lack of respect and ignored their customary rights, such as when 95 percent of the community voted against the mining project, but Candente Copper rejected their decision and pushed ahead anyway. This led the community to blockade roads, and eventually the company postponed, but did not permanently suspend, its project in the region.

These successful protests represent a minority of cases, however. Most towns are unable to halt the operations of foreign mining firms. For instance, another mine called Antamina, which is jointly operated by Swiss, Japanese, and Canadian companies, was found to have polluted the water supply of the Ango Rajo community in 2009. Additionally, toxic waste spills from the mine afflicted numerous local children with blood poisoning, and inadequate working conditions caused arsenic and metal poisoning among local workers. The Peruvian state ended up sanctioning the operators of the mine for their breaches of humane environmental and labor practices.

Barrick Gold’s Lagunas Norte project (which it sold to a Singaporean company earlier this year) also faced significant criticism for its atrocious environmental and labour practices in Peru. After the mine’s establishment, the company frequently clashed with the local population on issues of water pollution and with their own employees on labour rights. They were also sued by the people of El Sauco, Quiruvilca, who wanted the company to pay indemnifications for its pollution of nearby water sources.

In 2014, an Inter-American Human Rights Commission examined the environmental impact of the Lagunas Norte mine. Alan Fairlie Reinoso and Esthefany Herrera summarize their findings:

[The Commission]’s report on the Lagunas Norte project denounced serious pollution of the Perejil, Chuyuhual, and Caballo Moro rivers, with adverse effects on crops and small-scale livestock herding in that area. The Marianist Social Action Association…monitored regional river pollution and showed that mining had polluted the waters of the Perejil, Chuyuhual, and Caballo Moro rivers. Barrick Gold replied that water pollution was caused by small-scale mining…

This is how the Canadian mineral industry operates in Latin America and around the world. Whether under the Conservatives or Liberals, they put profit over people and sustainability every time.

The future of Canadian mining companies in Peru

Although Prime Minister Justin Trudeau constantly employs the rhetoric of human rights to sustain his respectable image, there has been almost total continuity between his administration and that of his predecessor, Stephen Harper, in regard to the Canadian government’s support for companies which so often devastate the ecological and social fabric of the communities whose minerals they extract.

Like Harper, Trudeau has not made Export Development Canada’s financing of the mineral industry conditional on human rights, and his Trade Commissioner Service provides these companies with diplomatic support around the world. The only significant difference is Trudeau’s creation of the Canadian Ombudsperson for Responsible Enterprise (CORE), an oversight body which was ostensibly formed to monitor the behavior of Canadian companies and make suggestions to the government when abuses arose. However, it was never granted the power to demand documents from companies, and its recommendations have been consistently ignored.

Trudeau’s failure to confront the depredations of the Canadian mineral industry is no different than Harper’s, and by offering diplomatic support for initiatives such as the Lima Group which have worked to remove leftist governments in Latin America, he has placed his government at the service of multinational business.

If elected, Castillo will serve as a challenge to the Canadian mineral industry: he is a left-wing populist who promises to hold foreign mining companies to account, and a regional integrationist in the Bolivarian mold. Given Canada’s aggressive attitude toward those associated with Latin American socialism, and given the huge importance of Peruvian minerals to Canadian mining companies, it is likely that Castillo will face substantive challenges from both the mining industry and the Trudeau government if he wins the presidency on June 6. But he will have the support of the rural poor, the Indigenous population, and the historically dispossessed who have suffered throughout Peru’s history. These are the groups which faced down so much violence and fear during the time of the insurgencies and the “Lost Decade” of the 1980s, and worked for their economic betterment during the abbreviated revolution of Juan Velasco Alvarado.

The conflicts which a Castillo presidency will face will simply be one more stage in a long battle between Peru’s dispossessed and the country’s affluent, along with their wealthy foreign backers. Whether or not Castillo can win, it is clear that a large and often forgotten portion of the Peruvian population still hungers for change.

Owen Schalk is a writer based in Winnipeg. His areas of interest include post-colonialism and the human impact of the global neoliberal economy.


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