Tuesday, November 29, 2016

Peru's New Leader Champions Trade In The Trump Era

Peru’s new leader champions trade in the Trump era

Former World Bank economist vows to push back on protectionism and deepen China ties
Peru’s new president Pedro Pablo Kuczynski is gearing up for the challenges posed by Brexit and the election of Donald Trump. His crammed desk is piled with books such as The Populist Deception, along with Peru and the United States: The Condor and the Eagle.
Uppermost in his mind is the threat of rising protectionism. Hosting this year’s Apec summit in Lima this November, the former World Bank economist emerged as Latin America’s champion of free trade.
“In the US and Britain, protectionism is taking over,” he told delegates from the 21 nations gathered at the summit. “It is fundamental that world trade grow again and that protectionism be defeated.”
Speaking to the Financial Times at his offices after the summit, Mr Kuczynski says: “If the Apec meeting was going to do anything of international relevance, it had to warn against the dangers of protectionism in view of these recent elections.”
Mr Kuczynski’s stance on global trade should come as no surprise. Elected in June after pledging to deliver economic growth to fund social investment, and seen as a centrist, pro-market figure, the new president has an exalted internationalist background.
The son of a German-Polish migrant, he is a cousin of French-Swiss film director Jean-Luc Godard, attended the Royal College of Music, and studied at Oxford university in the UK and Princeton in the US.
In the past four decades, the 78-year-old president has worked as a mine manager in Guinea, a Wall Street investment banker, and served as Peru’s prime minister, and finance and mining minister. A former US citizen, he relinquished his nationality a year ago to stand for election in Peru.
Peru’s top trading partners are China and the US. But although the country’s relationship with the US remains strong, Mr Kuczynski says, he is seeking to deepen ties with Beijing: “We are putting due emphasis where it belongs, which is our biggest market.”
Following June’s elections, the new president visited China before any other country. Peru hosted Xi Jinping, the Chinese president, on a state visit on Monday last week, the day Mr Trump vowed to scrap the Trans-Pacific Partnership (TPP), of which Peru is a signatory.
Chinese investment in Peru currently stands at about $14bn. But even with low prices for natural resources weighing on his country’s copper-dependent economy, Mr Kuczynski is confident he can entice China to invest more. “The Chinese feel good that my first visit was to them, not to America,” he says.
Peru’s economy is forecast to grow 4 per cent this year, making it Latin America’s fastest major economy. But, says the president, that would be “disappointing” and he aims to lift it to 5 per cent by 2018.
Given the uncertainty surrounding the future of the TPP, Peru is considering the merits of a rival Chinese initiative, the Regional Comprehensive Economic Partnership. But Mr Kuczynski has not given up on the TPP. “It’s not the end of the world [if the US does not join TPP]. Some of us at Apec had a discussion on whether you could do TPP without the US,” he says.
Mr Kuczynski also criticised Mr Trump’s plan to build a wall along the Mexican border. “This talk about a wall is nonsense. First, the idea that walls deter people is questionable. It did deter East Germans from leaving through Berlin, but there are not going to be armed Stasi guards along 3,500km of wall. You have to forget about the wall.”
Mexican immigrants are not a problem for the US, he says, adding: “Latin American immigration into the US, on balance, has been highly positive, because it has made the profile of the population much younger; you can argue Latin American immigrants saved US social security.”
This talk about a wall is nonsense. The idea that walls deter people is questionable. It did deter East Germans from leaving through Berlin, but there are not going to be armed Stasi guards along 3,500km of wall
Pedro Pablo Kuczynski, Peru’s president
Mr Kuczynski does not spare his Latin American neighbours from criticism, particularly crisis-ridden Venezuela. While other new leaders in the region have flip-flopped in their stance towards Caracas, the Peruvian leader has been consistent.
“My concern is when people say ‘Venezuela is not my issue’. But it is your issue, it is an important country in Latin America, it has the world’s largest oil reserves yet people get no medicine, hospitals are collapsing. We have a problem and we have to face it.”
His solution for Caracas would be to establish a transitional government that could work the country out of the collapse. When he suggested this to Venezuela's President Nicolás Maduro, he was roundly condemned as “a tool of American propaganda” — an impossibility, he argues, since “no American official has talked to me about Venezuela”. 
Given Mr Kuczynski’s internationalist connections, Caracas could perhaps be forgiven for its assumptions. But despite his exalted background, he remains resolutely down to earth.
“I hate protocol,” he grumbles. “The other day, as I left the meal I offered Xi Jinping, I saw a line of Chinese cars going around the square waiting for him. I only had a police car and a motorbike to flank me.”
This relaxed attitude, he believes, will be key to helping him tackle one of Peru’s most intractable problems, a series of simmering mining conflicts, and open the door to fresh investment. “We have to get some mining projects unstuck,” he says.
He plans to pay a visit himself to Cocachacra, a farming town close to the Tía María copper and gold mine, owned by Southern Copper, to meet locals who have clashed with security forces amid concerns over water resources. Last year, three were killed and hundreds wounded in violent clashes, and riot police are now stationed in the area.
“I’m going to go to Cocachacra and talk to the people there,” he says. “Of course everybody wants to do it with protocol, a lot of security, that’s nonsense. If the guys want to feel you are doing something for them, you sit down with them like a human being,” he adds. “I have always been pretty loose.”