The removal of Oscar Valdés as prime minister and his replacement with Juan Jiménez represents a slight shift back towards the centre from the right, but by no means a return to the programme on which President Ollanta Humala was elected last year.
Valdés, who Humala selected last December in a bid to ‘tough it out’ with those protesting against the Conga project in Cajamarca, proved a remarkably poor appointment. Not only did he fail to appease the Fujimorista right, but he helped split the Gana Perú coalition, forcing those like Javier Diez Canseco and others on the left to part company altogether. He proved unable to silence the protesters in Cajamarca; indeed he managed to exacerbate the problems there. At the same time his team of ministers managed to further excite existing tensions on other mining disputes, notably that of Tintaya in Cuzco.
It is unclear whether Juan Jiménez will fare any better. His appointment has been seen as a move to a more conciliatory approach with those who are fighting for a more balanced policy towards extractive industries. But Humala will remain under intense pressure from the business community to maintain the ‘open doors’ policy towards foreign investment, particularly in the mining sector.
As his government enters its second year – its popularity sharply down and its credibility devalued – Humala will probably seek to re-launch the idea which he espoused when he came to office on July 28 last year. Namely, that growth is the consequence of foreign investment, and that without growth there can be no increase in social spending. In essence, this was the approach that Lula had followed in Brazil and which Humala promised to copy in Peru.
However, the link between foreign investment, growth and social welfare is by no means automatic. Indeed, Peruvian history seems to show that investment-led growth does not necessarily reduce the deep inequalities between social classes or different parts of the country that have been a hall-mark of the country’s development. Those who profit tend to already be among the wealthiest sectors of Peruvian society, while – geographically – most of the money created from extractive industries ends up in Lima, not in the parts of Peru where it is generated.
In order to prove investment in such industries is really working to the benefit of those in the poorest parts of the country, Humala will need to show he has policies that will work to this effect. His creation of a new social development ministry, with an experienced team in charge, was a positive sign that new approaches were possibly in the offing. But, a year after he took office, the results are so far few. One of the problems is that Peru lacks the institutional machinery to turn new social policies into something really effective. Where many of the poor live, the state barely exists.
Expectations were raised by Humala’s election, and thereafter dashed. As his second year in office begins, there is an opportunity to revive those hopes of something new, especially in social policy. However, the chances of this happening seem slim. As during his first year, he is likely to remain a prisoner of the business elites and the political right.