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Politics: Well-balanced choice of advisers favours growth
By Naomi Mapstone in Lima
Markets have applauded Ollanta Humala’s decision to swap his signature red T-shirt and revolutionary rhetoric for a sombre suit and pledges to protect the rights of investors.
However, the Peruvian president’s abrupt shift in message has left observers, and some of his own supporters, waiting to see what he does next.
“Humala is a work in progress,” says Michael Shifter, president of Inter-American Dialogue, the Washington policy forum.
“The initial signs are basically positive on economic and social policy. The concerns are more in terms of his statements on human rights and some of the advisers he has on security and democracy issues.”
The new president has promised “more action and fewer words” than Alan García, his predecessor.
Mr Humala’s first acts included the brokering of a $1.1bn windfall mining levy, the creation of a new ministry of social inclusion and the signing of a law granting communities the right to be consulted over investments.
His choice of cabinet and advisers casts more light on his thinking on policy, and how he plans to balance the radical leftist elements of his support base with the moderates who helped him win the election.
Luis Favre, an Argentine communist-turned-socialist adviser sent to Peru last year by Brazil’s Workers’ party, has been instrumental in Mr Humala’s political makeover.
Mr Favre’s experience – he worked closely with the campaign that carried former Brazilian president Luiz Inácio Lula da Silva to victory – helped him turn a radical ally of Venezuela’s President Hugo Chávez into someone the business community could warm to.
For the role of prime minister, Mr Humala chose his closest adviser, Salomón Lerner, a 65-year-old millionaire businessman. Mr Lerner has had a long history on the fringes of Peruvian politics, and has headed a state-owned fishmeal company, a radio station and a bank, in between running a helicopter business. He says the government regards the private sector as an important motor of development.
The appointment of Harvard- and Johns Hopkins-educated Luis Miguel Castilla as finance minister has been greeted as a strong sign of continuity in macro-economic policy. Mr Castilla, who served as deputy finance minister in the previous administration, is prioritising private investment in major infrastructure works.
“We need to sustain growth of 6-7 per cent for poverty reduction along with our social programmes,” he says. “Without growth it’s very difficult to reduce poverty. And that’s a fundamental objective of ours.”
As head of the new ministry of development and social inclusion, Kurt Burneo, a former director of the central bank, will be charged with fulfilling Mr Humala’s key electoral pledges. Mr Burneo, who began the 2011 campaign as the head of former president Alejandro Toledo’s economic team, will oversee implementation of a pension scheme targeting poor over-65s, and the broadening of Juntos, the conditional cashtransfer scheme.
In the key portfolio of mining and energy, Mr Humala chose Carlos Herrera Descalzi, an engineer who briefly held the post in 2000 after the collapse of the Fujimori government. Mr Herrera has moved swiftly to broker the new mining levy and demand that Camisea, the country’s flagship natural gas project, operated by a consortium led by Pluspetrol of Argentina, must prioritise domestic markets. He will also review Peru’s multibillion-dollar agreement with Brazil to build up to six hydroelectric dams in the Amazon. “We respect commitments, but the previous government approached this in a very bad way. I want to see how far it has advanced,” he said in an interview.
To alleviate lingering concerns that he was about to make a radical turn in economic policy, Mr Humala also persuaded well-respected banker Julio Velarde to remain as central bank governor.
Humberto Speziani, president of Confiep, Peru’s employers’ association, says Mr Humala managed to “dispel the doubts” with his cabinet picks.
“We’re very satisfied. The president has been pragmatic, acting in the interests of the country. He’s shown that Peru will have continuity in economic policy,” he says.
Business approval came at the expense of discord among the more radical elements of Mr Humala’s base, who mutter that the president is allowing “the enemy to steer the ship”.
Aída García Naranjo, a prominent feminist activist and educator, and the new minister for women, is flying the flag for the left in the cabinet, backed up by vice-ministers such as the trade unionist Pablo Checa in the labour ministry.
Susana Baca, a renowned singer and the first female Afro-Peruvian minister, was a popular choice for the culture ministry.
Mr Humala’s selections for the ministries of the interior and defence have been more controversial, prompting criticism that he fudged electoral promises to appoint civilians.
The president tapped two retired military officers, Daniel Mora and Oscar Valdez Dancuart, to head defence and the interior respectively. Home affairs is particularly sensitive in Peru, given the recent dramatic rise in coca production in remote zones controlled by remnants of the Shining Path insurgency of the 1980s and 1990s.
Mr Humala also raised eyebrows with the appointment of Adrian Villafuerte, once a close associate of Vladimiro Montesinos, the disgraced former spymaster, as a military adviser.
More than a little shy, Mr Humala favours scripted public appearances and the occasional tweet over interviews. When pressed, he tends fall back on a watch-this-space-style message. “More than words, judge me for what I do,” he said this month. The world is watching.
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