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April 12, 2011

Fair trader wins in Peru... again. Will US respect the outcome?

Peruvian presidential candidate Ollanta Humala, long a critic of the NAFTA-style US-Peru trade agreement, has won nearly 32 percent of the vote in the first round of voting. This marks the second time Humala has come in first in the first round: in 2006, he won nearly 31 percent of the vote.

Yesterday, Humala's partner on the ticket told reporters that Humala will determine whether past FTAs are compatible with the national interest. Humala's economic team has blasted the U.S. FTA for being between unequal trading partners.

In contrast, former president Alejandro Toledo and vice president Pedro Pablo Kuczynski - who pushed and continue to push the FTA - finished far behind.

Keiko Fujimori, the former president Alberto's daughter, came in second to Humala, and will face him in the run-off election. She has stated that she supports the U.S.-Peru FTA.

As WOLA reports from on the ground in Peru, much is uncertain the weeks ahead. And although many voters remain suspicious of Humala, "he was the only candidate to offer an alternative to the existing economic model, in a country where a significant portion of the population has not benefited from years of steady economic growth."

Now, it is incumbent on U.S. corporations, the Obama administration in the US and the Chavez administration in Venezuela to stay out of the second round of voting, which is set to occur on June 5. Peru is divided enough without all the outside interventions, and U.S. trade policy has been aggravating these divides rather than leading to healing. See here and here.

After the jump, we have a chronology of the outside interventions in Peru's last presidential election. We detail how the Bush II administration pushed through the FTA after Peru's voters had supported two candidates that were pro-fair trade. One of the fair trade candidates, Alan Garcia, had an eleventh hour conversion to support for the FTA, after being courted by Peruvian and international elites.

Here's a brief chronology of U.S. interventions in Peru's political process during the previous election.

Phase I: Divide and Conquer Developing Countries, 2003-05

  • On August 20, 2003, a group of developing countries known as the G-21 and including Peru released a paper that criticized the Bush administration’s trade proposals at the WTO. From September 10-14, 2003, protests from the G-21 and civil society against the Bush proposals helped derail the WTO Ministerial in Cancún.
  • On October 3, Peru’s trade minister Raul Diez Canseco publicly announced that the country was withdrawing from the G-21 – apparently without having consulted with Peruvian president Alejandro Toledo. As explained to La República newspaper on October 13,

“Why did the foreign trade minister make such a controversial decision without advising President Alejandro Toledo and Foreign Minister Allan Wagner? The explanation lies in Prime Minister Beatriz Merino’s mid-September meeting in Washington with Condoleezza Rice, the national security adviser to President Bush. At the meeting, as Diez Canseco himself explained yesterday at the presidential palace, Rice expressed to the prime minister ‘the United States government's concern’ about the G21’s policy of confrontation. But Rice – one of the most influential women in the Bush administration – did not stop at expressing her concern. She made Peru's withdrawal from the G21 a condition for a free trade agreement between the United States and our country…. Another member of the Bush administration who influenced Peru's decision was Ambassador Robert Zoellick (United States' trade representative). ‘He asked us not to let ourselves be used,’ Diez Canseco commented. According to the trade minister, the countries that remain in the G21 are seen as having an extreme position on subsidy negotiations with North America and Europe. ‘Zoellick was very clear: Peru was going to be taken off the United States’ list of countries with which to negotiate free trade agreements if we did not give an immediate answer,’ Diez Canseco explained. ‘It was a matter of life or death,’ he added, to justify his decision further.”

  • From November 16-21, leaders from throughout the Western Hemisphere met in Miami, Florida to discuss a Bush administration proposal (the so-called “Free Trade Area of the Americas”) which would have expanded NAFTA from Alaska to Argentina. But protestors filled the streets, and, in the suites, negotiators from Argentina, Brazil, the Caribbean and Venezuela balked at the U.S. proposal.
  • But USTR Robert Zoellick had developed a strategy called “competitive liberalization,” which was the trade policy equivalent of the Bush administration’s utilization of a “coalition of the willing” to fight the Iraq and Afghanistan Wars. Thus, as the FTAA summit was breaking down, on November 18, 2003, the Bush administration notified Congress of its intent to negotiate an Andean FTA with Peru, Colombia, Bolivia and Ecuador. These countries were already a part of the Andean Community, a regional trade agreement that included Venezuela, but excluded the United States. Thus the Bush administration, already slammed for its tacit support for the coup against Venezuelan president Hugo Chávez, was continuing to seek to isolate countries not willing to go along with their plans for NAFTA expansion.
  • The State Department press release on the November 18 announcement made clear the implicit threat of loss of U.S. market access that would occur if these countries did not accede to U.S. FTA talks: Zoellick “noted that trade between the United States and these Andean countries is currently conducted under the framework of the recently renewed and expanded unilateral trade preferences of the Andean Trade Preferences Act (ATPA). He said that while the ATPA, which expires in 2006, has been a ‘positive force’ in creating jobs and opportunity in the region, the negotiation of a U.S. free trade agreement with the Andean nations is the next logical step in securing market access on a ‘more mutual and more permanent basis.’”  These threats about Andean preferences were baseless, since (certainly at the time) they were widely popular with both parties in Congress and certain to be renewed, as they had been in 2002. These aggressive U.S. tactics would eventually lead to the rise of anti-FTA presidents in Ecuador and Bolivia, and deep popular resentments against the FTA in Colombia and Peru.
  • In March, Colombian president Alvaro Uribe traveled to meet with President Bush at the White House. Zoellick repeated the threats about loss of U.S. market access, pushed for concessions on investment from Peru in advance of the talks, and played the Andean countries off one another. According to wire service reports, Zoellick said: Bush and Uribe “discussed plans to initiate FTA with Colombia, and we would be having the first session in Colombia in May the 18th and May 19th… I hope that we can have a very quick negotiation… We’ve been also talking about Peru and Ecuador joining those negotiations. We’ve had some issues to resolve in terms of investment and worker’s rights but we’ve been making progress with both countries and we look forward to continuing the work to solve those issues, we hope they’ll be able to join us at the table… [Referring to the Andean Trade Preferences] this has created tens of thousands of new jobs in Colombia ... but that act expires at the end of 2006 so we want to make sure that the FTA is negotiated and in place so that those Colombian people who have gotten jobs could keep their jobs and more could be created” [italics added]. 
  • On May 3, 2004, the five countries began negotiating the FTA. The Bush administration – along with allies in Congress and corporations – continued to pressure the Peruvian government to resolve several outstanding disputes with U.S. investors as a pre-condition for continuing and finalizing talks.  
  • On July 14, the labor union Confederacion General de Trabajadores del Peru (CGTP) launched a general strike against the FTA that they estimated was adhered to by 65 to 70 percent of the population. On March 4, 2005, the CGTP led another protest against the FTA, touting signs that said “El TLC es como la TBC” (translation: “the FTA is like tuberculosis,” which rhymes in Spanish). On July 14-15, the CGTP and the Conveagro campesino federation led protests in Lima against the FTA. 
  • By December 7, 2005, the Bush and Alejandro Toledo administrations announced that the Peru-U.S. bilateral negotiations had concluded, even though the other negotiating partners (at this point only Ecuador and Colombia) had not signed off on the resulting deal.  
  • Toledo’s FTA negotiating tactics had severely threatened the decades-old Andean Community.  It was not surprising, therefore, when Peruvian voters and other voices in the Andean region questioned the deal.

Phase II: Divide and Conquer Peruvian Voters, 2006

  • By the end of 2005, polls showed that more voters intended to vote for Ollanta Humala, a former Peruvian military leader who had lead at attempted coup against the autocrat Alberto Fujimori, than any other candidate. The poll also showed that Humala – who campaigned on a platform of FTA opposition and revising mining contracts – would win the run-off election.
  • On January 5, 2006, Zoellick’s political gambit to pit Andeans against one another and split up the Andean Community paid off when Humala visited Venezuelan president Hugo Chávez, who was widely admired by the poor Peruvians that constituted Humala’s base. As the Miami Herald reported, “‘It gives me great pleasure to greet Ollanta Humala and his wife,’ said Chávez, who went on to praise Humala for opposing a regional free-trade agreement with the U.S. Chávez said ‘nationalism’ was the ‘savior of sovereignty’ against the influence of the United States in Latin America, a concern shared by Humala in an interview with The Miami Herald in October. At the time, Humala praised Chávez but said repeatedly that he had never met Chávez and denied allegations that he was receiving financial aid from Chávez.” Toledo immediately withdrew his ambassador from Caracas, and Venezuela’s Foreign Ministry immediately put out a statement saying that Chávez's comments regarding Humala “should not be interpreted as Venezuela interfering in Peru’s internal affairs… We profoundly respect the sovereignty of other nations.”  
  • But, the damage was done, and Humala’s opponents got a readily exploitable gift. Humala’s appeal among middle class swing-voters was tarred by the Chávez association (which actually helped among many poorer voters), regardless of the lack of evidence of any real connection between the two politicians. And over the course of the campaign, the hot-headed Chávez and Toledo would issue attack and counter-attack, and the Bush administration – which loathed the left-nationalist tide sweeping Latin America – was able to appear to take the moral high ground, despite its own interventions in the electoral process. 
  • Bush wasted little time exploiting Chávez’s missteps as a way of subtly undermining Humala. On January 19, 2006, Toledo received a visit from the president’s brother, Governor Jeb Bush of Florida. Governor Bush pushed the FTA –and the FTAA. According to CBS News, “‘I believe President Chavez will try to influence elections, not only here but in other places,’ Bush said, when asked if he thought Chavez would negatively affect Peru's electoral process. ‘But I believe Peruvians are proud to be Peruvian and do not want to receive instructions, either from the United States or Venezuela,’ he said to applause. ‘The situation with populism is it cannot deliver. They can promise the world, the sun and everything else, but it does not deliver.’”
  • On March 9, 2006, Toledo traveled to Washington. While visiting members of Congress, Toledo explained the purpose of his trip to the Associated Press: “This is an official visit” to discuss “common challenges” like signing the FTA and battling narcotrafficking and terrorism. “And the fight against populism, to be clear… We need Latin America to be stable to continue economic growth.” When asked by reporters if the “fight against populism” meant developing a strategy with Bush to oppose Humala’s anti-FTA candidacy for the Peruvian presidency, Toledo said, “No, no, no… I have a responsibility of leading a clean and transparent process, and I will respect whatever the will of the people is… On July 28, I’ll give the presidential sash to whomever is elected… but Peru and Latin America need stability.”  The day later, he met with President Bush for a two-hour meeting at the White House – Toledo’s first audience there in his five-year term. He committed to signing the pact on April 7, shortly before he was to leave office on July 28.   
  • On March 13, Humala’s rival and former president Alan García told voters that “I suggest to Mr. Toledo that he respect the country. If he dares to sign (the FTA), I’ll simply erase his name so that it can be discussed by the people.” 
  • The two leading candidates – Humala and García – were demanding a renegotiation of the deal, and that in any case the matter be left to the next president and Congress. Toledo bowed to pressure from the candidates, and both pro-FTA businesses and anti-FTA unions, to postpone the FTA until after the presidential vote.  Members of Toledo’s own party in Congress cleverly co-opted the demand to postpone the demand to postpone until after the April 9 elections, knowing that there would likely be no clear winner and thus a run-off election would have to be scheduled. However, Toledo’s party drew the line at waiting until the next president and Congress had taken their positions. As the president of the Congress said: “What would happen if we leave it (to the next Congress that will be seated in July)? It would not be ethical because the next (legislators) that come in will have ‘zero ammo’ (information), because it’s a technical subject, and therefore, I estimate that they would delay for at least two years to be able to understand the issue.”  At the same time, he dismissed holding a popular referendum on the FTA, because “The population will not understand, because even the legislators that participated (in the negotiations) don’t understand very much.” 
  • In late March, Peruvian campesino groups led two days of protests against the FTA,  as García “attacked the FTA negotiated by the government of President Alejandro Toledo, saying that ‘the campesinos fear, for good reason, that the FTA will open the door to subsidized agricultural products.”
  • In early April, according to wire reports, “Peru’s National Election Board approved a citizens initiative - backed by 100,000 signatures - against the trade pact so that a referendum would be held.” But Toledo’s allies in Congress blocked the measure. Congressman Javier Diez Canseco “denounced the ‘maneuvers’ by President Alejandro Toledo to ensure that a referendum on the FTA is not held. According to Diez Canseco, the recently-signed trade pact was negotiated with ‘absolute subjugation.’ ‘It’s an agreement between unequal countries that doesn’t differentiate between a country that is more developed and a country that is less developed,’ he said.” 
  • On April 9. 2006, Peru held elections where a flock of congressional candidates ran and won on an anti-FTA platform.  In fact, the main party critical of the FTA – Humala’s Unión por el Perú – was the single largest vote getter of any party, winning over 21 percent of the congressional seats.  Humala himself came out first in the presidential race, where there were three major candidates: Humala (30.9 percent) and García (24.5 percent), who both campaigned against the FTA, and Lourdes Flores, who campaigned for the FTA and came in last among the major candidates.  In other words, an absolute majority of Peruvians voted for candidates who were critical of the FTA. This set in motion a June 4 run-off election, since no single candidate received over 50 percent of the vote.
  • Shortly after the first round, the Bush administration and the lame-duck Toledo administration signed the FTA on April 12, 2006.  The move was immediately blasted by Humala. But on April 13, García hedged his position on the FTA, stating that, “The FTA is a pact we’ll have to continue to study, how well it’s working, how poorly it’s working, as with everything in life. And in accordance with Peru’s interests, successive governments will make their decisions.”  García and other elites also launched an even more aggressive campaign to smear Humala – made all the easier by Hugo Chávez’s repeated attacks on García, Toledo and Lourdes Flores.
  • On April 25, Peru’s Prime Minister Pedro Pablo Kuczynski said that Humala was more opposed to the FTA than García. 
  • On May 1, García said, without providing evidence, that “Humala is trying to obscure the fact that he has been contracted by Chávez. He has a contract. When someone is financially dependent on someone else, he has a contract. He can say that García is the son of Bush, but there was no one that was more anti-imperialist than me with respect to the United States, and I proved it when I was president” in 1985-1990. 
  • On May 6, Toledo endorsed García (who was from a different political party), saying, “The next elections are not a competition between one candidate and another. These elections are a decision between democracy and authoritarianism.”  This was the final rupture in Toledo’s promise to administer an objective campaign season.
  • In early May, the Bush administration announced that it had revoked Humala’s visa, over his alleged involvement in a 2005 takeover of a police station in which members of his family participated in, but which Humala denied participating in. Humala accused the U.S. ambassador of “sponsoring” García.  While the U.S. Embassy in Lima claimed that the visa revocation was an accident, the timing of the announcement could not have been worse, and came after years of well-publicized U.S. threats about Peru’s U.S. market access being cut off if an FTA were not signed. 
  • On May 21, in the final presidential debate, Humala asked García three times whether he was in favor of the FTA: García did not answer, and instead talked about oil prices and other matters.  
  • On May 23, the U.S. Chamber of Commerce threw itself into the Peruvian election with subtly threatening comments about the FTA. “Almost a million Peruvians have a job that is dependent on U.S. exports, which is equal to over 40 percent of the country’s formal labor sector,” said vice-president John Murphy. “I think that, whoever is elected president and passes to the presidential seat will see things a bit differently after the election campaign.” He told a Spanish wire service that, because Peru’s U.S. trade preferences were slated to expire in December 2006, “I think they’ll have a great incentive to say yes to the agreement.” 
  • The FTA signing and deceptive election tactics set off a wave of protests in Peru. On May 24, campesino demonstrators marched through Lima. According to a wire service, Antolin Huáscar Flores, president of Conveagro, said that “if the government persists in ratifying the FTA, the federation and other groups would radicalize their protests and call for an indefinite national strike. Huáscar reiterated that today’s protest ‘is part of the fight against the FTA, that, in his estimation ‘was signed on the backs of the Peruvian people.’… Huáscar stated that he didn’t want to ‘interrupt’ the voting, but that he also did not want to see ‘the government taking advantage of the moment’ as happened on the April 12 signing.”    
  • On June 1, García accused Humala of having a “Shining Path”-based political discourse – a statement intended to scare Peruvians who had lived in fear of the leftist terrorist group for decades. Humala responded by saying that, “García has sold out and wants to make a deal with the United States because now he promotes an FTA that could be revised every five years. That really says it all, because he’s the candidate of the United States and against regional integration.” 
  • On the June 4 runoff, García won only 52.6 percent – with Humala winning almost half of the votes.  Given the level of fright tactics that were used, this outcome demonstrated the staunch level of opposition to the FTA in Peru.
  • On June 22, “demonstrations against the free-trade pact signed by Peru and Washington” blocked railway service to Macchu Picchu  – a tactic that would be repeated several times over the course of the FTA implementation. 
  • Peru’s Congress passed the implementing legislation on June 28 of that year, after a flock of legislators-elect had been ejected from the floor of Congress after bursting in, “pumping their fists in the air, waving placards and chanting anti-free trade slogans.”  As a wire service reported, “Over the course of the congressional debate, which lasted 18 hours, García’s party criticized the agreement, but said that that García government would amend it, or, eventually, would demand that Washington renegotiate the agreement, after testing its negative impact. With this argument, the 24 members [of García’s APRA party] present in the session (out of a block of 28) voted for the FTA.”  Javier Diez Canseco, an opposition member of Congress said that the vote shows that “Alan García will not keep any of his promises. Now he says that he’ll renegotiate the FTA, as if the United States would accept that. I’m sure that no member of Congress has read the 500 pages of text before voting for it. They’ve hidden the dire consequences of the FTA from the country.”

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