Peru - Mass uprising defeats privatisation plans

After a week of protests and virtual uprising in the south of Peru, the government has backed down on its plans to privatise the water and electricity in the region. After a week of mass protests and clashes with the police in the southern regions of Peru, the government of Toledo was forced to halt its plans of privatisation of two electricity companies, Egasa and Egesur, and to apologise to the people of Arequipa, the city at the centre of the protests.

This wave of protests erupted on Thursday, June 13, the day before the bids for the two electricity companies were going to be adjudicated. People in the region had been protesting for a long time against these privatisation plans and the mayor of Arequipa Juan Manuel Guillen, had managed to get a court injunction against them on the basis that the regional government is part-owner of the companies and had not been consulted. But Toledo's government decided to proceed and the Minister of Justice even threatened to take the judge to court for prevarication.

Mass protests and strikes against privatisation had already been taking place for months, but on Friday, June 14, a mass rally of at least 20,000 people turned violent when the police charged against the crowd. The anger of the population in Arequipa and other southern regions can be easily explained by a number of factors.

First of all Toledo himself during his populist and demagogical election campaign had promised and signed a written statement in Arequipa to the Regional Workers' Federation promising not to privatise Egasa and Egesur. In fact as a result of his promises he got about 75% of the votes in Arequipa, which is the second biggest city in the country, with some 2 million inhabitants. On top of that, the privatisation plans included the immediate sacking of about 20% of the workforce, and no job guarantees whatsoever for the other 80%.

Privatisation = Corruption

Peru has already had ample experience of privatisations and the balance sheet is a complete disaster, causing jobs losses in their thousands, corruption, and higher bills. During the Fujimori dictatorship there was already a plan of mass privatisations (pushed by an agreement with the IMF) which allowed the state to raise $9 billion. $1.8 billion went straight into paying the foreign debt and a similar figure into some dodgy arms deals, with the result that the people never benefited from the proceeds from these privatisations.

On top of all this, the privatisation of Egasa and Egasur has also been marred by allegations of corruption. Because of the widespread protests that had been taking place for months, most of the bidders withdrew from the sale and on the day there was only one bidder left: the Brussels-based company Tractebel, a subsidiary of the French multinational Suez Lyonaise des Eaux. Suez has been one of the leading multinationals in the world investing in water and electricity services, which have been privatised under pressure from the World Bank and the IMF in the last few years. The record of Tractabel and its parent company Suez is full of allegations of corruption and bribery in order to get contracts in Kazakhstan, Pakistan, Indonesia, Oman, Chile and Brazil, amongst other countries. In Peru the company stands accused of giving a $10 million coima (bribe) to the country's former dictator Fujimori.

Some are asking whether the reason why Tractabel kept its bid in after all the other companies withdrew was not because it had some assurances from the government that the sale was going to go ahead regardless of the protests. Even the fourth vice-president of the government Javier Diez Canseco said that the base price for the sale, $177 million was ridiculously low. According to his data, both companies have fixed assets worth at least $340 million and Egasa alone has yearly profits of $80 million. To add insult to injury the final price paid by Tractabel on June 14 was $10 million short of the base price fixed by the government!

Mass uprising

So it is not surprising that the mass protests in Arequipa soon became very violent. Civil construction workers helped the people to lift the street's cobblestones and use them to build barricades. The offices of privatised banks and different government agencies were attacked by the demonstrators and some were set on fire. The police used tear gas canisters to try to control the demonstrations but finally had to retreat as the mass of people defended themselves with sticks, stones and bottles and managed to maintain control of the city's main square. The demonstrators were chanting "Arequipa, revolution!" and "it's urgent, we need a new president". They also made use of the emergency bells of the cathedral which were traditionally used to rally the population for a revolution or an uprising (of which Arequipa has a proud and rich tradition). Clashes continued throughout the weekend resulting in more than 100 people injured, 52 arrested and damages to property that the government put at $100 million. One student died after being hit directly in the face by a tear gas canister.

The situation was clearly out of the government's control. The mayor of Arequipa called on the army reservists to join in the struggle. Finally, on Sunday, June 16, Toledo declared the state of emergency in Arequipa for a month, suspending constitutional freedoms, declaring a curfew and putting the region under the control of the army. Some 700 soldiers and 1,000 police officers tried to regain control of the city.

On Sunday the clashes spread to the airport. A group of hundreds of workers, peasants and students joined a group of residents of the barrios jovenes (poor neighbourhoods) from the area and forced their way into the airport where they destroyed equipment in the runway area. It took the army 3 hours of fighting to take control of the installations.

The declaration of the state of emergency, far from bringing the situation under control, added petrol to the flames. On Monday, the Broad Civic Front of Arequipa declared an indefinite general strike and protests spread to the neighbouring regions of Tacna, Cusco, Puna and Moquegua. Through their organisations, most of these provinces decided to no longer recognise the authority of President Toledo. Everywhere the different frentes (Fronts) that have been set up to fight privatisation took over the leadership of the protests and called for an indefinite strike. These Fronts (the Broad and Civic Front in Arequipa, the Patriotic Front in Tacna, the Regional Interests' Defence Front in Ayacucho, the Regional Front in Moquegua, the Popular Organisations' Front in Puno, etc) are made up of local and regional trade union branches and organisations, students' organisations, peasant organisations, women's organisations, and so on - although their composition varies from place to place, in some provinces they include the local chambers of commerce and the mayors (who in most cities and towns went on hunger strike), and in others they have a more strictly working class and peasant composition.

Thus in Cusco, protests remained largely peaceful. The leaders of the protests there seemed more afraid of the demonstrators than of the government! Washington Roman Rojas, a leader of the Cusco Front declared that they were holding talks with government representatives "to avoid the protests getting out of hand". He added that: "it is not easy to control the rank and file in places where the organisations are not yet very strong. This is not the case in Cusco, where there is not going to be any violence, since we have a solid structure and we are all together: the front, the mayors, the chamber of commerce," etc. While workers and peasants, students and the youth were fighting the police and resisting army occupation of their cities, Roman was in the Congress building begging them "to suspend the privatisation process if they want to calm the people down". In every strike and every struggle leaders are put to the test, and, given enough time, the masses, learning through their own experience, always move to replace those who are more prone to making compromises and concessions by those who are most reliable, more responsive to pressure from below, and more decided to carry out the will of the struggling people.

In Tacna, thousands of people marched on the city centre armed with sticks and stones and attacking public administration buildings on their way. The police was unable to regain control of the situation despite using a large amount of tear gas canisters. Also in Tacna, groups of peasants set up a road block on the main Panamericana highway.

The general strike was also solid in Juliaca and Puno and mass demonstrations attacked public buildings and the offices of banks and privatised companies. It is worth noting that this was not just senseless aimless looting, but was first of all the result of the anger at the brutal repression against the people of Arequipa and secondly was directed against the offices of privatised companies and banks (which were sold off during the Fujimori rule, mainly to Spanish multinationals). The participation of women, who were amongst the first to set up barricades in Arequipa, and the youth from poor neighbourhoods was noticeable everywhere.

In Arequipa itself, the clashes continued despite the state of emergency and the curfew. The population came out on the streets en masse three times a day in a cacerolazo (banging of pots and pans) protest. The Broad and Civic Front leader Leonardo Maquera announced that a mass assembly of the Front had decided to "continue the resistance and not to allow the new owners to access the sites of the privatised companies". The Front also called the people to "get organised through committees of struggle in every neighbourhood, district and province, in order to participate in the indefinite strike".

The conflict clearly adopted some of the characteristics of the Cochabamba uprising against water privatisation in Bolivia in April 2000. The formation of committees of struggle, the de-recognition of national authorities, mass assemblies to decide the course of the struggle, clashes with the police and the army in which the population managed to temporarily repeal the forces of the state, the spreading of the movement to other regions, etc. These are all symptoms of the rapid process of advance in the consciousness of the masses in periods of struggle.

The government tried again to convince the people of the goodness of the privatisation process. This is not like the privatisations under Fujimori, they said - this is a "privatisation with a human face". The president of the Ministerial Council, Dañino tried to explain that Tractabel had promised to keep all the jobs, to invest $90 million in providing 60,000 people in Arequipa with access to electricity and to generate at least 2,700 jobs through a land irrigation programme. All these promises made no difference to the population in southern Peru, particularly since Tractabel spokesmen declared that they had not promised anything.

On Wednesday, June 19, the government, unable to quell the movement, sent a high level commission to Arequipa to negotiate, but their bus was received by the population with stone throwing. In Cusco, 10,000 students marched in protest at the death of one of their comrades in the clashes in Arequipa, and occupied some of the faculties. The student who died, the first martyr of the movement, Edgar Adolfo Pinto Quintanilla, was buried in Arequipa after an impressive funeral procession attended by thousands of people despite the state of emergency. In Tacna on the same day, thousands of workers and peasants clashed with the police while trying to take over the airport. The general strike remained solid throughout the southern regions, paralysing transport, education, shops and industry.

In fact, the movement acquired a broader character. The struggle was no longer to stop the privatisation of Egasa and Egasur, but also to reverse the privatisation of Etecen and Etesur, to demand extra reconstruction funds for Maquegua (badly damaged by last year's earthquake) and a general opposition to the government's economic policies.

The empty promises of Toledo's campaign

During the protests, the US ambassador in Peru, John Hamilton welcomed the decision of the government to stick to its privatisation plans despite popular opposition: "What foreign investors look for is a strong government, with a firm policy and able to stick to it." It is clear that these privatisations were a key part of the government's policies. In a letter of intent signed with the IMF, Toledo set himself the target of raising $700 million from privatisations this year. The main aim was to reduce public deficit to 1.9% of GDP and to be able to repay all its foreign debt obligations.

The problem he faces is that he was elected on a populist programme promising to put the interests of the poor first and not to privatise any public companies. Toledo came to power in the wake of the popular mass movement that overthrew Fujimori at the end of 2000. The masses were not only fighting against Fujimori because he was a dictator, they were also fighting against his economic policies which had plunged the country into recession, privatised a great share of state assets, and created widespread poverty. In order to win the elections nearly a year ago, Toledo used his Indian roots and his poor family origins to appeal to the masses of workers, peasants and the poor. However his origins had been left behind a long time ago. He was a Harvard-educated, former World Bank functionary, firmly committed to capitalist policies. It was only a matter of time before the same mass movement that resulted in him coming to power would turn against him. In fact it is quite clear that this movement is stronger precisely in those areas where Toledo got the highest percentage of votes, and even many of the mayors now on hunger strike are members of his own party.

Strikes, mass demonstrations and protests have been going on at least since last September, barely a couple of months into his presidency. Police sources say that they have registered 500 such protests in the last period. The movement reached a first peak on May 14, when the regional fronts and trade union organisations called a national strike with the support of the General Confederation of Workers of Peru (CGTP).

The government defeated

Finally, faced with a spreading rebellion which was not able to control by means of repression, and with the threat of a national general strike, the government caved in on Thursday, June 20. The Arequipa Declaration, signed with the leaders of the Arequipa Front, included the suspension of the privatisation of Egasa and Egasur, a public apology on the part of the Justice and Interior Ministers who had been the most belligerent in their statements and actions against the movement, and the lifting of the state of emergency in 48 hours.

This was too much to stomach for the more right-wing sections of the government and precipitated the resignation of Interior Minister Fernando Rospigliosi (who resigned rather than apologising to the people of Arequipa) and the Deputy Minister of Justice, Pedro Cateriano, the president of the government's privatisation agency ProInversion, Ricardo Vega (although he later on backtracked on his decision and stayed on in his job). There were rumours that even the head of the Council of Ministers, Dañino, was also to resign.

The truth is that this was a serious blow to the Toledo government. His popularity ratings (which stood at more than 60% just a few months ago) have now slumped to only 15%. Foreign investors will not be keen to put their money in Peru now, in case popular protests force the government to reverse them. The country's currency slumped and JP Morgan Emerging Bond Index Plus increased Peru's country risk rating as a result of the government's defeat.

And yet this is not the end of his troubles. The government has already announced the introduction of an austerity plan of cuts in social spending "to make up for the revenue lost with the reversal of the privatisation of Egesur and Egesa". The Minister of Economy, Pedro Pablo Kuczynski, has stated that the economic plans of the government will not be changed and privatisation will continue. This is clearly a finished recipe for new explosions.

In fact, this victory has encouraged the movement in other regions. In Arequipa itself the victory was celebrated with a mass rally of 20,000 in the city's main square which took place in a carnival-like atmosphere, despite the fact the state of emergency was still in force. However, in Cusco, the victory march was cancelled by the Regional Assembly and Front leader Washington Roma, fearing that "third parties wanted to turn it into a protest march to launch a new indefinite strike". Some organisations and parties criticised Roma and Cusco's mayor Carlos Valencia for "backing down in this struggle without having achieved the definitive suspension of all privatisations".

The mood was also a militant one in Puno and Juliaca, where rank and file organisations gave the government six days to give a satisfactory reply to all their demands, including the cancellation of the privatisation of Etecen and Etesur and the fulfilment of its election promises. This was agreed in rallies which took place at the end of mass demonstrations in both cities. In Puno, the leader of the Popular Organisations Front, Toribio Saravia, called on all workers to be alert since, he said, "what happened in Arequipa does not mean an end of the privatisation of San Gaban, Electro Puno, Juliaca Airport, San Antonio de Poto Mines and other strategic companies in Puno".

In Tacna, the organisations involved were discussing whether to continue with the indefinite strike. The general mood was that until a high level government delegation composed of at least four ministers was sent to Tacna to deal with their demands the strike should not be called off. The Moquegua Interests Defence Front which is composed of local trade union organisations, also considered the Arequipa Declaration as insufficient to put an end to the movement in their region and continued with the strike. A demonstration of 5,000 people also demanded the government send a high level commission to deal with their demands, particularly reconstruction aid which had been promised by Toledo in his election campaign.

With ups and downs it is clear that the mass movement against the Toledo government will continue and in the process the mass of workers and poor peasants will draw more and more advanced conclusions. They will realise that the problem lies not just in one government but in the capitalist system itself and the enormous pressure that imperialism exerts on their country. Through the school of mass action they have already learnt that they can overthrow a dictatorship, that they can fight back the state of emergency and reverse a key government decision. This will give them more confidence in future battles. The key task for trade union and left activists in Peru now is to create a leadership with a clear understanding of the challenges ahead, particularly of the need to link the struggle against privatisation, against poverty, to defend jobs and conditions, with the struggle for the socialist transformation of society.

This process is not taking place in a vacuum, but rather in a period in which the mass struggle of the working class and the peasantry is advancing everywhere in Latin America. The revolutionary movement in Argentina, the recent mass movement which has also defeated privatisation in Paraguay, the revolutionary movement which defeated the coup in Venezuela, mass struggles in Bolivia, the general strikes in Uruguay, etc. The Argentinean contagion does not only mean the spreading of the economic crisis throughout the continent, but also the spreading of the revolutionary methods of mass struggle.

All these events are full of lessons from which the advanced sections of the workers and youth must draw the necessary conclusions: only with the combined struggle against imperialist oppression and the national bourgeoisie can the oppressed masses of the continent really achieve genuine freedom, in the framework of a Socialist Federation of Latin America.

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