August 18, 2008 | Backgrounder on Latin America
In Peru, hard-won economic and political freedom is in jeopardy from foreign interests bankrolled by Venezuela. Although Venezuela's immense oil wealth should belong to all Venezuelans, their far left, neo-populist, and authoritarian President Hugo Chavez is siphoning off much of it to enhance his own political power and spread his toxic "21st Century Bolivarian Socialism" throughout the Andean region. Chavez has been aided in this effort by Bolivian president and populist soul mate Evo Morales. Together, they are busy establishing "ALBA houses" (Casas de ALBA) in the poorest areas of rural Peru in an attempt to chip away at market-based democracy and destabilize the center-left government of Peruvian president Alan Garcia. The Chavistas hope to set the stage for a far-left victory in Peru in the 2011 presidential election.
ALBA is the Spanish acronym for Chavez's vaguely defined "Bolivarian Alternative for the Americas" customs union scheme. It is the vehicle Chavez is using to try to undermine the globalized trading system that would be enhanced by the U.S.-led efforts to create a Free Trade Area of the Americas (FTAA). The ALBA houses are the Peruvian version of Chavez's "Bolivarian Circles" in Venezuela and Morales's "Militias" in Bolivia, both of which were established to create potential parallel government-like structures that could be used to destabilize existing decentralized democratic mechanisms and construct new hierarchic and autocratic political regimes. Sandinista president Daniel Ortega, who returned to power in Nicaragua in 2006 with financial help from Chavez, is following suit in Nicaragua.
Alba means "dawn" in Spanish, but the people of rural Peru are learning that, for them, it might mean a return to the dark nights of tyranny they experienced in the 1980s when guerilla groups such as the Maoist Sendero Luminoso (Shining Path) and the Communist Tupac Amaru Revolutionary Movement (MRTA) terrorized the Peruvian countryside. The Bolivarians intend for ALBA houses to be the next generation of engines for revolutionary change in the 21st century. Unlike the FARC (Revolutionary Armed Forces of Colombia) guerillas of the 20th century, who have attacked the institutions of Colombia's democracy from their bases in the mountains for the last 40 years, the ALBA houses are right in the middle of cities and towns. Their activists undermine democracy from within (as Chavez and Morales have already demonstrated) by taking power through democratic elections and then methodically changing laws to subvert it. ALBA houses are potentially even more destructive and dangerous than the FARC.
Attack of the Carnivores
In their recent book, The Return of the Idiot, Plinio Apuleyo Mendoza, Carlos Alberto Montaner, and Alvaro Vargas Llosa describe the backward slide to socialism in Venezuela, Bolivia, and other Latin American countries. They divide the new wave of leftists into two camps: "vegetarians" and "carnivores." The vegetarians are democratic socialists such as Presidents Garcia, Michele Bachelet of Chile, and Luiz Inacio Lula da Silva of Brazil. These leaders have demonstrated through their policies and actions that they see the many benefits of capitalism and know that the best way to develop their countries economically is to take advantage of the global market system to create good and sustainable private-sector jobs for their citizens. Although the vegetarians lean toward excessive regulation, rigid labor markets, and bloated bureaucracies, they do not pose a fundamental threat to market-based democracy or to the United States and its allies.
On the other hand, some Latin countries are now ruled (yet again) by despotic leftist and populist caudillos (strongmen). Totalitarian dictators Fidel and Raul Castro of Cuba and the resurgent Daniel Ortega have been joined by younger "carnivores," such as Chavez and Morales, as well as former President Néstor Kirchner and his wife, current President Cristina Fernandez de Kirchner, of Argentina. All of these leaders (to varying degrees) oppose the "hegemonic" United States and appear determined to tear apart market-based democratic capitalism and anyone who stands in their way. In place of the "neo-liberalism" they despise, the carnivores would substitute "neo-communism" or "authoritarian fascism."
Bolivarians of the World, Unite!
With the support of his Bolivarian network and flush with oil cash, Hugo Chavez aims to extend his influence in the Andean region. The main obstacles he faces are the democratic governments in Peru and Colombia, and it is upon them that he has targeted his rhetorical fire and propaganda efforts. Chavez is recruiting the most dangerous activists and fighters he can find in southern Peru and aims to use them and the ALBA houses to sabotage democratic institutions so that he can advance the idea that democracy in Peru is not working. Once this is accomplished, Chavez and his Bolivarians will try to bring the extremists to power through the ballot box.
Unlike his economic model, which has been a disaster for Venezuela, Chavez's political strategy is already a proven winner. It is how the Chavistas succeeded in engineering the fall (through the "Gas Wars") of the democratically elected governments of former Bolivian Presidents Gonzalo Sánchez de Lozada and Carlos Mesa after inciting violent protests in what amounted to two coups d'état in 2003 and 2005 that paved the way for Evo Morales to win the election as president of Bolivia in December 2005.
Chavez's "Bolivarian" movement has followed a well-planned strategy with simple objectives. "PetroCaribe" was the first Bolivarian project, using official Venezuelan government "oil diplomacy" through discounted oil shipments to Caribbean and Central American countries to win friends and influence people. Then he began a series of bond purchases (more than $7 billion to date) to bail out his fellow populists--Peronist Presidents Nestor and Cristina Kirchner--as they face growing problems stemming from their mismanagement of the heavily indebted economy of Argentina. Chavez has also supplied financial aid for energy projects in Ecuador and Nicaragua.
Chavez enjoyed a quick political payoff from these "investments" (at least initially) during the March 2008 Colombia-Ecuador border crisis. The Colombian military attacked a FARC guerilla base just across Colombia's border with Ecuador, resulting in the killing of the FARC's No. 2 leader Raul Reyes and the seizure of valuable intelligence on three FARC laptops. They showed significant and ongoing connections and funding between the FARC and Hugo Chavez. At an emergency meeting of the Organization of American States (OAS) to resolve the crisis, however, the vast majority of democratically elected Latin American governments remained disappointingly silent rather than condemning Hugo Chavez's support for the FARC's efforts to defeat President Alvaro Uribe's democratic government in Colombia.
The Peruvian Economy is Strong----at the Macro Level
President Alan Garcia's first term as president in the 1980s ended in disaster for Peru's economy when he pursued leftist and statist policies. Although the trade liberalization begun under President Alberto Fujimori (1990-2000) helped to reduce poverty, as of 2004, the World Bank estimated that half of all Peruvians remained poor and "20 percent were extremely poor." The "poorest departments [provinces] in Peru are [in the south]: Huancavelica (88.7 percent poverty rate), Ayacucho (78.4 percent), Puno (76.3 percent), Apurímac (74.8 percent), Huánuco (74.6 percent), Pasco (71.2 percent), Loreto (66.3 percent), and Cajamarca (63.8 percent)."
Sound economic management under former Peruvian President Alejandro Toledo (2001-2006) resulted in annual real economic growth of nearly 5 percent from 2002 to 2004. Garcia later saw the error of his ways, committed himself to market-based policies, and narrowly defeated Chavista Ollanta Humala to win a second five-year term in 2006. He has continued most of Toledo's economic policies but, facing a congress dominated by the opposition populist party, has not deepened the reforms. Nevertheless, economic growth has been impressive in recent years, aided by the huge increase in commodity prices for Peru's rich mineral resources.
Peru's economy received a score of 63.5 in the 2008 Index of Economic Freedom, published by The Heritage Foundation and The Wall Street Journal, which ranks it the 55th freest economy out of 162 countries surveyed. Peru's score reflects improvements in 2007 under the Garcia administration in five of the 10 economic freedoms. Peru is ranked 13th out of 29 countries in the Americas, and its overall score is higher than the regional average. Inflation is also low, and prices are not significantly influenced by the state. Privatization is moving forward, particularly in infrastructure.
President Garcia advocated successfully for ratification of the U.S.-Peru Free Trade Agreement (FTA) by both the Peruvian and U.S. congresses and has painted himself as the market-friendly alternative to Chavez in the Andes. Eric Farnsworth of the Council of the Americas has reported that, thanks to Peru's FTA with the United States, its sovereign debt has recently been upgraded to investment grade. This will make it easier and less expensive for Peru to borrow from lenders in developed countries and invest to upgrade its infrastructure. Foreign direct investment in Peru also rose with the FTA.
Massive Improvements in Rural Peru's Infrastructure Needed----Fast
Peru continues to face significant economic challenges, particularly in labor freedom, property rights, and freedom from corruption. The Peruvian judicial system is slow, unpredictable, and vulnerable to fraud. Economic development is impeded by a restrictive labor market that regulates costly employee dismissal procedures and inflexible working hours.
These problems are magnified in the less densely populated, poorer regions of Peru, mainly in the high Andes and the southeast, where the majority of people (if employed at all) work in the informal sector. The structural flaws in the Peruvian economy are especially aggravated by the need for extensive development in rural areas. Some facts about current infrastructure needs in Peru illustrate this point:
Unless these problems are addressed, and quickly, poorer Peruvians (particularly in the south) may be tempted by the false promises of 21st-century Bolivarian Socialism.
ALBA Houses: Breeding Ground for 21st-Century Caudillos?
The latest front opened in Chavez's Bolivarian struggle against democratic capitalism is the establishment of the ALBA houses. On the surface, they appear to be simply benevolent local associations offering literacy programs and delivering health care with Chavez-paid, Castro-supplied Cuban doctors. Local Peruvian Chavistas who operate the ALBA houses claim that they are merely engaged in charity work and point to the 5,000 impoverished Peruvians they have sent to Venezuela for eye surgery.
What the ALBA house landlords fail to mention is that, at the same time, they are indoctrinating poor, mostly young Peruvians in the ideology of the extreme left and terrorism. The Cuban doctors frequently operate as Cuban intelligence officers. Although the Chavez government insists that it is not supporting the ALBA houses, Peruvian officials have said that Chavez's financial support for the houses is being funneled through Bolivia. In the Bolivian capital of La Paz, Chavistas are building a large "Bolivarian Common Embassy." There they have assembled a group of young Peruvians from the main cities in the south (Cuzco, Puno, and Tacna) to receive indoctrination and military training. They have made no secret of it: Its address is 107-109 Costanerita Avenue in the Obraje neighborhood of La Paz.
The unimaginative and retrograde collectivist socialist models aggressively peddled by Chavez, Morales, and others are proven failures, but getting the positive message of prosperity through market-based democracy to the poor in rural Peru is increasingly difficult when that message is drowned out by the well-funded ALBA houses. In order to counter ALBA propaganda, the question is: How can the gains that Peru has realized (mainly in Lima and the other large cities) be translated into better living standards and infrastructure improvements that poor people in rural Peru can see and experience?
President Garcia says that there are 200 ALBA houses operating in Peru, most of which are located in the mountainous southern highlands region where the majority of the population is indigenous. The Peruvian congress is currently conducting an investigation to determine the extent of political interference coming from ALBA, but personnel at Andes Libres (a conservative think tank based in the highland town of Cuzco near Machu Pichu) do not need the congress to tell them how much trouble ALBA is causing; they live with it every day.
The View from Cuzco
There are numerous ALBA houses operating in Cuzco. Mimicking the modus operandi of the FARC's "boy soldiers" in Colombia, ALBA houses recruit and subsequently exploit "poor, uneducated children and young adults," recruiting them for ideological indoctrination. To offset the inroads being made among these poor citizens, the Peruvian government and supporters of market-based democracy must take the ideological fight to the same people being recruited by ALBA. This is a war of ideas, and groups such as Andes Libres are engaged in the battle on the ground every day--promoting free trade and free market principles among the rural population.
To reach the young people targeted by ALBA, Andes Libres and other conservative groups in Peru conduct programs to offset leftist indoctrination and teach local high school and university students through courses in economics, political science, law, health care systems, education policy, and environmental issues from a pro-democracy and free-market viewpoint. They also organize workshops, seminars, and forums to develop future leaders who are already in the workforce. The groups also seek to strengthen the financial systems of the local governments by advocating for more local control of tax revenues and they track the positions taken by local officials and politicians on local issues so that they can inform the citizenry to widen the public policy debate.
Political Opponents on the Ground
With their free-market, pro-democracy message, Andes Libres and the other center-right groups in Peru encounter strong opposition from the Chavistas, particularly when they have an especially popular program. The ALBA houses are just one of the very visible parts of the international leftist network, known as the "Sao Paulo Forum," that opposes market-based development in Peru and the entire Andean region. These leftist groups are supported not only by the Venezuelan government, but also by powerful international non-governmental organizations (NGOs), a fact that was underscored by the recent rescue of FARC hostages in Colombia. As Mary Anastasia O'Grady of The Wall Street Journal has noted, when Colombian military personnel posed as representatives of a fictitious leftist NGO in order to trick the FARC into releasing their hostages, FARC guerillas had not been the least bit suspicious. That indicates that the FARC has had friendly dealings with international leftist NGOs in the past.
ALBA houses and leftist NGOs organize many protests against the government, private corporations (especially international mining companies hoping to extract Peru's rich mineral resources), and other potential foreign investors. Their advertisements for protests appear in local newspapers, TV and radio programs, and through news reports of leftist politicians spreading outright lies and exhorting people to oppose Peru's democratic system.
In many poor communities throughout rural Peru, the radio is the only means of receiving information and is, therefore, an important resource for reaching the poorest Peruvians in the battle of ideas. Hernan Fuentes, the leftist governor of Puno province on the border with Bolivia, "gained prominence locally...[through a radio show where his] on-air perorations feature[d] anti-U.S. tirades and bouquets for Chavez and Morales." To reach the poor, the broadcasts must be presented in Quechua (the indigenous language). Conservative think tanks and NGOs working in those communities could do broadcasts in Quechua if they received additional funding.
More Protests and Disruptions Planned
In addition to local protests, the left also organizes protests nationwide. The next big national protest is set for November 2008 when the Peruvian government will host the annual summit meeting of member nations of the Asia-Pacific Economic Cooperation (APEC) Forum. To "staff-up" for the APEC demonstrations and the planned national protests in 2009, the Chavistas aim to establish additional ALBA houses. "They [the ALBA houses] are beachheads for ideological indoctrination of people of low incomes, driving the message that their situation has not improved despite recent economic growth," says Peruvian Defense Minister Antero Florez.
At least five of the principal Peruvian Chavista leaders who are affiliated with leftist groups in Peru and are planning future national protests traveled to Bolivia in 2007 and 2008. Miguel Palacin, a top official at the Cordinadora Indigena de Naciones Andinas (CAOI--a leftist group that purports to speak for poor indigenous Peruvians) and former president of the anti-mining NGO "Conacami," traveled to Bolivia three times in the last 12 months. Mario Palacios, current president of Conacami, was also in Bolivia three times in the first four months of 2008. Antolin Huascar, president of the Agricultural National Confederation, was in Bolivia in January 2008 and also visited Venezuela (August 6, 2007) and Cuba (April 10, 2008). Alberto Pizango, an official with the Interethnic Association of Development of the Peruvian Jungle, arrived in Bolivia on August 20, 2008, where he stayed three days. Melchor Lima, General Secretary of the Peasant Confederation of Peru, also made the pilgrimage to Bolivia. All of these leftist Peruvian officials are closely identified with the ALBA houses network.
Neighboring Governments Should Support President Garcia
While watching from the sidelines as the Venezuelan government interferes in domestic Peruvian politics, Brazil and Chile have inexcusably maintained impartiality to avoid conflict with Chavez and to stay close to the principles of Chilean and Brazilian leftist parties that see Hugo Chavez as a member of their ideological family. These governments, however, have a higher responsibility to promote democratic institutions and should come to the aid of Peru.
In addition to the threat they pose to the stability of Peru and the Andean region, the ALBA houses and the Bolivarian movements are also, in the widest sense, part of a campaign by the Chavistas to reduce U.S. influence in Latin America. In Ayacucho--one of the poorest cities in Peru--the U.S. government is helping to build health care facilities. But ALBA and other leftist groups are spreading lies about the project, claiming that the facilities are not really being built with U.S. funding, but instead with ALBA money. They are also propagating other lies (e.g., that the U.S. is trying to take the water from the poor "to fight global warming"). This agitprop is reminiscent of the old Soviet disinformation "baby parts" rumor-mongering scare tactics that the international left has used in the past against U.S. interests in Central America and other parts of the world. The U.S. government should redouble its efforts to counter these ongoing leftist propaganda attacks.
What Should Be Done?
How can the poorest Peruvians recognize the benefits of continued strong economic growth in Peru? How can they be taught to appreciate the value of market-based democracy? How can they begin to see it working for them?
In order to confront the challenges posed by the ALBA houses and to reduce the appeal of Chavista demagoguery, the Peruvian government should:
The international community of pro-market democracies should also come to the aid of Peru. Specifically,
The Chilean, Brazilian, and Colombian governments should publicly and clearly affirm Peruvian democracy and expand their countries' trade links with Peru.
The Bush Administration, through the U.S. embassy in Lima, should aggressively counter ALBA propaganda and disinformation, as well as expand other public diplomacy efforts to complement ongoing U.S. development assistance projects in Peru.
To encourage continued economic progress and stability in Colombia, which would directly benefit Peru, the U.S. Congress must approve the U.S.-Colombia Free Trade Agreement (FTA).
James M. Roberts is Research Fellow for Economic Freedom and Growth in the Center for International Trade and Economics (CITE) at The Heritage Foundation, and Edwar Enrique Escalante is the Executive Director of ANDES LIBRES in Cuzco, Peru. CITE Research Assistant Caroline Walsh and Intern Alexandra Canulli made valuable contributions to this report.
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